How Are Cost-Share Payments Calculated For Establishing a CRP Practice?

How Are Cost-Share Payments Calculated For Establishing a CRP Practice?

A neighbor says he planted trees on his Conservation Reserve Program land and only had to pay 10% of the cost of the trees. Is that true?

FAQ: A neighbor says he planted trees on his CRP land and only had to pay 10% of the cost of the trees. Is that true?

Answer: Provided by Vickie Friedow, conservation program specialist at the state FSA office in Des Moines.

In some cases it may be. You need to look at how these cost share payments are calculated. Two separate payments are issued to reimbursement for the costs relating to the installing of a conservation practice. The first is the cost share payment and the second is the practice incentive payment or PIP. After the CRP practice has been completed and the bills are submitted, county offices begin calculating the amount of the cost share payments.

Each payment is actually made up of a series of different components. Components are all of the activities or items that go into establishment of a practice. These components could be seedbed preparation, fertilizer, grass seed, cost to plant the trees and the trees and shrubs themselves.

The amount that is paid on each component can be calculated in two different ways. A component could be a flat rate paid per acre. These flat rates are the average cost to complete a standard practice, such as disking for seedbed preparation. If the component is not a flat rate, then the cost share is calculated based on 50% of the bill submitted not to exceed a dollar limitation per acre.

Q: Can you please give an example how this is figured?

A: Let's say a farmer turns in a bill of $400 for trees, that component has a 50% cost share, but the "not to exceed" limit is $350 an acre. In this case, the farmer will get 50% of the $350 for this component. To determine if each component is a flat rate or has limits, look on the cost share documentation or the AD-245 page 2 form. It is all listed there.

So first, the cost share is calculated. Then, a PIP or Practice Incentive Payment of 40% of the cost is made. So an additional 40% is paid on eligible costs. While a producer could get 90% reimbursement, that same producer could get considerably less if their bills exceed state averages or per acre limitations. Just as the above example showed on the trees, only an additional 40% will be paid on the $350.

The same is true if the producer decided to apply more seed, fertilizer, or plant more trees than what the Conservation Plan of Operation calls for. Cost share is only paid on what is required and anything that exceeds those limits will not be paid.

If you have questions about cost share payments, contact your local FSA office and they will be happy to go over how your payment was calculated.

Q: Are tree windbreaks part of the general CRP signup which is only held perhaps once a year? Or are windbreaks part of the continuous CRP signup? In other words when can I sign up for windbreaks cost-sharing? Also, do I have to plant trees—can I plant shrubs or bushes instead?

A: Tree planting practices can be found in both types of sign up. However, field windbreaks are a part of the continuous CRP sign up, and producers can be applied for this practice at any time. Most the tree planting practices for CRP require that there be a combination of tree and shrubs established.

If you have specific questions or need details regarding USDA farm programs, contact your local USDA Farm Service Agency office. You can also get news and information about DCP, ACRE and other USDA programs at www.fsa.usda.gov.

Two Iowa State University Extension Web sites have farm program information and analysis. They are ISU's Ag Decision Maker site at www.extension.iastate.edu/agdm and ISU Extension Specialist Steve Johnson's site at www.extension.iastate.edu/polk/farmmanagement.htm.

And be sure to read the regular column "Frequently Asked Questions about the Farm Program" that appears in each issue of Wallaces Farmer magazine and at www.WallacesFarmer.com

TAGS: Extension
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