Gro Data Shows Where US Conserved Farmland Enrollment Might Shift

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Weak US corn and soybean prices may lead many farmers to shift some of their least profitable farmland out of development and into the government’s newly reopened Conservation Reserve Program (CRP). Gro Intelligence’s county-level CRP data and local price data across the Corn Belt can help users determine which areas are most likely to see shifts into the program.

CRP enrollment rates have the potential to significantly affect crop supplies and prices at the national and local levels. Currently there are 22 million acres of farmland enrolled in the program. That compares with 319 million acres planted to principal crops in 2018.

An analysis of historical data shows the impact of local crop prices on CRP enrollment. In Nelson County, North Dakota, for instance, local soybean prices stood at $13-$14 per bushel in 2013, close to a historic high. The following year, the number of acres in the county enrolled in the CRP fell by 31% and continued to drop in the ensuing years. Similar historical relationships between local crop prices and the CRP can be found across the US corn and soybean belts and can be used to project future farmer decisions. Gro’s platform includes county-level CRP acreage data from the USDA Farm Service Agency. The platform also has thousands of local-level crop prices from across the United States from USDA AMS and DTN, which is available to Gro API clients.

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Gro’s county-level data allows users to analyze the historical relationship between local crop prices and Conservation Reserve Program enrollment. In Nelson County, North Dakota, local cash prices (green line) hit record highs in late 2012 and held strong through 2013. CRP enrollment for the purpose of restoring wetlands (blue line) dropped sharply in the years that followed. Soybean prices in the county now sit near $8.00 per bushel, which may draw more land back into the conservation program.

Gro’s prevent plant model also can provide insights into what areas are most likely to set aside acres for the CRP. Farmers are less apt to risk planting in regions that are prone to flooding and susceptible to delays when crop prices are weak.

The CRP was created in 1985 when American agriculture was in recession. It provided annual government payments to landowners who chose to take cropland out of development for 10 or more years. Between 1986 and 1995, the maximum number of acres that could be enrolled in the program was 45 million. By 2014, it was cut to 24 million. Now, the 2018 Farm Bill boosts the maximum acreage to 27 million by 2023. It's the first increase since 2007.

Since CRP acreage enrollment peaked in 2007 at just under 37 million acres, American farmers have taken more than 14 million acres out of the program. That shift corresponds with rising crop prices. Corn demand increased as greater quantities of corn ethanol were blended into gasoline, and Chinese demand for soybeans soared with higher meat consumption rates. By 2012, the average price of corn on the Chicago Board of Trade (CBOT) was nearly $7 per bushel, after sitting at around $2.00-$2.50 in the early 2000s. The price strength kept US farmers from reenrolling in CRP as their contracts expired. Even poor-yielding land and areas prone to flooding were able to provide returns when prices were high.

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As US corn prices rose between 2006 and 2012, farmers shifted their Conservation Reserve Program-enrolled acreage back into production. This chart shows the sharp rise in corn futures prices on the Chicago Board of Trade (red line) during that period, and the ensuing decline in acres enrolled in the CRP. The area in the program (blue bars) has dropped by more than 14 million acres since 2007.

Since 2015, the demand for corn ethanol has flattened, and over the past year the US-China trade war has severely limited the demand for American soybeans. Corn prices have dropped sharply, and for the past five years, CBOT corn futures have generally been below $4.00 per bushel.

The USDA has not held a general CRP sign-up since 2016, and there’s speculation it could draw the biggest number of applications in over a decade. Announcing the launch of enrollment, Secretary of Agriculture Sonny Perdue said, “we’re looking to see one our largest sign-ups in many years.” Still, the government has modestly reduced the per-acre payment rates, which are determined by local factors, and that could discourage some growers from participating.

Farmers apply to enroll in the CRP by specifying a conservation purpose, such as wetlands restoration or wildlife habitat. The program might require planting of, say, wild grasses, to fulfill the conservation pledge. Owners of land that has been farmed in four of the past six years are eligible to apply to the program. And CRP contracts that expired since the last sign-up period as well as contracts that will expire in 2020 can apply for reenrollment.

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