How are CRP rental rates figured?

How are CRP rental rates figured?

One of the more frequently discussed topics about the Conservation Reserve Program is the payment.

USDA’s Conservation Reserve Program pays a yearly rental payment in exchange for farmers removing environmentally sensitive land from agricultural production and planting species that will improve environmental quality. How does USDA figure the CRP rental rate per acre, to pay landowners enrolled in the program?

The first day of the 49th General Conservation Reserve Program sign-up was Dec. 1, 2015. The sign-up period runs through Feb. 26, 2016. Land offered in general CRP sign-up periods are typically large, whole-field offers with a limited set of associated soil and water conservation practices. This USDA program is administered by the Farm Service Agency.

CELEBRATING 30 YEARS: The CRP program is 30 years old and is one of the most successful, effective USDA conservation programs ever. Contracts for land enrolled in CRP are 10 to 15 years in length.

In our column this month, John Whitaker, state director of the FSA in Iowa, answers questions about one of the more frequently discussed CRP topics: soil rental rates.

Question: How are CRP soil rental rates determined?

Answer: CRP policy specifies that county average rental rates must be set at levels that reflect the average cash rental rates per acre for non-irrigated cropland for the production of the predominant annually tilled crop for each soil type within a soil survey area in a county during the past year, adjusted for inflation. A three-year average of National Agriculture Statistical Service data is used to establish these rates.

Question: Is there a per acre cap on soil rental rates? Is there a maximum annual CRP payment?

Answer: Yes, General CRP offers have the weighted average soil rental rate capped at $240 per acre. Maximum CRP soil rental rates are calculated using the three predominant soil types that comprise the acreage being offered for CRP.

In addition to soil rental rates, FSA will pay up to 50% of the eligible cost to establish a CRP practice. The maximum annual non-cost share payment that an eligible person can receive under CRP is $50,000 per fiscal year. This is a separate payment limitation applying only to CRP non-cost share payments.

NOTE: There are two ways you can participate in CRP: the general CRP signup and the continuous CRP signup. There is no soil rental rate cap for continuous CRP offers, reflecting the environmental benefit of smaller acreage contracts including buffer practices, wetlands, grassed waterways, wildlife specific plantings, etc.

Question: Are soil rental rates routinely reviewed and evaluated to ensure economic relevance?

Answer: Yes, CRP soil rental rates must be set at market levels to ensure that these rates do not distort local rental markets.  Likewise, the soil rental rates must make CRP competitive with other programs and economically viable for producers. FSA revisits soil rental rates on a biannual basis or as needed for the implementation of a general CRP signup. FSA most recently revisited soil rental rates in spring 2015.

Question: Once soil rental rates are set, can they be disputed or reconsidered?

Answer: Yes, FSA has procedure in place in which FSA County Committees (producer-elected representatives) can request that the FSA state office, state committee and the FSA national office consider alternate county average rental rates where strong evidence suggests a need, such as areas with strong cash-rent markets.

Question: Are soil rental rates fixed for the life of the CRP contract?

Answer: Yes, once soil rental rates are established, they are fixed for the duration of the 10- to 15-year CRP contract.

Question: Is it true that landowners can elect to receive lower rental payments to make the CRP offer more competitive?

Answer: Land offered for general CRP is “bid” into the program on a competitive basis and ranked on environmental benefits and cost. Thus, from a cost standpoint, landowners can voluntarily elect to accept less than the established soil rental rate in order to make the offer more competitive.

Landowners and producers interested in learning more about the Conservation Reserve Program should visit fsa.usda.gov or contact your local FSA office: offices.usda.gov. If you would like to watch an informational video on CRP, click here.

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