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Farm Programs
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The Conservation Reserve Program has By comparison, the 2021 average CRP which is about 3.5 million acres below the maxia long history of promoting conservation rental rate in the 13 counties in the 13 mum level of 25.5 million acres for 2022 established practices and farmland stewardship in county south central Minnesota Farm in the last Farm Bill. Of the total CRP acres, the United States. The CRP program was Business Management region was $214 approximately 10.2 million acres are enrolled under established in December of 1985 as part per acre. Based on the 2021 FBM sum- a General CRP contract, 6.8 million acres in of the 1985 Farm Bill. mary, the average direct and overhead Continuous CRP, just under 3.9 million acres FARM PROGRAMS By Kent Thiesse MARKETING expenses — including property taxes — to maintain CRP land was $92 per acre in 2021, resulting in a net return of $122 per acre. According to the 2021 FBM summary, the average cash rental rate non-farm landowners received from farm operators in 2021 was about $225 per acre, before property taxes and overhead expenses. Cash The initial goal of CRP was to reduce soil erosion on highly-erodible cropland and to help curb the over-production of farm commodities. Secondary objectives of CRP included improving water quality, fostering wildlife habitat, and providing income support to farmers. More recently, the CRP program has been identified as a valuable tool enrolled in the grassland program, and the balance of the acres in CREP, wetlands and other special CRP initiatives. Forty-three percent of the Continuous CRP and CREP acres are enrolled in the Clean Lakes, Estuaries and Rivers (CLEAR) program. There are nine states which have over or near 1 million acres currently enrolled in CRP as of April, 2021 — mainly in the Upper Midwest and Plains through the Federal gov- regions. CRP acres ernment as a method to enrolled in these states promote “carbon seques- include Texas (2.3 miltration” on working farm- lion), Colorado (2 milland. Currently, getting lion), South Dakota (1.8 farmland enrolled into the million), Kansas (1.7 CRP program is being million), Iowa (1.7 milchallenged by very posi- lion), Nebraska (1.5 miltive economic returns lion), North Dakota (1.2 from crop production and million), Washington by tight grain supplies (just over 1 million worldwide. acres), and Minnesota Economic challenges for the CRP program The rising dilemma for the CRP program is that current farm economics (just under 1 million acres). CRP acreage in many of these states has dropped considerably in recent years. tend to counteract enroll- Expiring CRP acres ment into the CRP pro- and re-enrollment of gram. Based on the 2021 CRP acres South Central College Farm Business Management Summary for over 350 crop farms in south central Minnesota, the average return on cash rented farmland over direct expenses for seed, fertilizer, chemicals, fuel, repairs, etc. — including land rent, land rent — was $442 per acre for corn and $334 per acre for soybeans. The average return above all direct and overhead expenses, including annual machinery and facility investments, was $335 per acre for corn and $260 per acre for soybeans. rental rates for 2022 are likely to be 10-15 percent higher than 2021 rental rates in south central Minnesota. As a result of the 2018 Farm Bill, expiring CRP acres in 2022 could only receive a maximum of 85 percent of the average county cash rental rate, based on U.S. Department of Agriculture data, compared to 100 percent of the average rate when the Given the current challenge to get more acres enrolled into the CRP program, one concern is the rather large number of CRP contract acres expiring in the next couple of years. CRP contracts will expire on nearly 4 million acres on Sept. 30, plus an additional 2 million acres in 2023. A General CRPP sign-up was held earlier this year (CRP sign-up number 58), in which USDA accepted early 20,000 CRP contracts representing just shy of 2.1 million acres into the CRP program starting Oct. 1. This represented land was originally enrolled into the CRP program. approximately 87 percent of the CRP contracts and In some cases, that may result in landowners actu- 90 percent of the acreage offered by landowners in ally getting a lower CRP rental rate for 2023 than the latest CRP sign-up period. they received under the current contract. At the Only about half of the CRP acres expiring in same time, average land rental rates for 2023 in the 2022 were re-enrolled into the CRP program dursame county may be 20-25 percent higher than ing the 2022 sign-up. The balance of those acres, rental rates a few years ago. over 1.7 million acres, will likely be returned to Refer to the accompanying table for additional crop production in 2023. The data for the 2022 CRP economic data and average rental rates. CRP sign-up period indicated that 75 to 100 perCurrent CRP enrollment As of April 30, 2022, there were a total of just over 22 million acres enrolled in the CRP program, See THIESSE, pg. 17 cent of the expiring CRP acreage was not offered for re-enrollment in 2022 in southern and western
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CRP Economic Comparison for Minnesota
Minnesota Region 2021 Crop Returns Cash Rent Paid CRP Rental Rate (FBM Regions) (FBM Average (2021 FBM (2021 USDA Returns per Acre) Average Rent) Average Rate) Corn Soybeans Corn Soybeans
South Central $442 per acre $334 per acre $229 per acre $230 per acre $214 per acre
Southwest $463 per acre $292 per acre $228 per acre $225 per acre $196 per acre
Southeast $401 per acre $269 per acre $220 per acre $225 per acre $202 per acre
West Central $374 per acre $219 per acre $186 per acre $184 per acre $169 per acre
State Average $395 per acre $237 per acre $202 per acre $184 per acre $146 per acre Notes: 1. The “Minnesota Regions” are the Minnesota State College and University Farm Business Management regions. 2. The “2021 Crop Returns” are the average “return over direct expenses” for corn and soybeans, before overhead expenses for machinery, etc., based on the 2021 FBM Annual Summary data. 3. The “Cash Rent Paid” is the average 2021 cash rent paid by farm operators for corn and soybeans, based on the 2021 FBM Annual Summary data. 4. The “CRP rental Rate” is the average 2021 rental rent received by landowners, based on USDA CRP county average rental data, before direct and overhead expenses, including property taxes.
Soybean market will keep close watch on the weather
NYSTROM, from pg. 15
May and nearly spot on with the trade expectation. This is a 5 percent increase from last year. Soyoil stocks were 1.774 billion pounds compared to the estimate of 1.765 billion pounds.
Argentina raised the minimum biodiesel blend from 5 percent to 12.5 percent for 60 days, then decreases it to 7.5 percent in an effort to stem diesel prices. The processing industry would like to see the increase made permanent.
U.S. soybean planting as of June 12 was 88 percent complete and in line with the average. Emergence was 70 percent vs. 74 percent on average. In its first rating of the year, the soybean crop was rated 70 percent good/excellent and compares to last year at 62 percent good/excellent. Minnesota and Kansas were in the five lowest rated states for both corn and soybeans.
Outlook: While lower for the week, November soybeans may be set up for a test of the $15.75 area if the weather is non-ideal. Near term support for new crop soybeans is $15.13 per bushel, which is the 50-day moving average as we headed into the Juneteenth holiday weekend. Weather, weather, weather, and larger economic forces will be closely monitored for our next steps ahead of the June 30 reports.
For the week, July soybeans tumbled 43.5 cents to $17.02, August dropped 39.75 cents to $16.22.25, and November was 30.75 cents lower at $15.37.5 per bushel.
Whichever direction November soybeans closed on the June 30 report day, it followed the same direction the day after only half the time in the last 12 years.
Weekly price changes in July wheat for the week ended June 17: Chicago wheat lost 36.5 cents to $10.34.25, Kansas City plunged 57.5 cents to $11.05, and Minneapolis sold off 52 cents to $11.69.5 per bushel. v
Next Farm Bill will play a big role in CRP’s future
THIESSE, from pg. 16
Minnesota and Iowa, as well as in eastern North and South Dakota and northeast Nebraska. The percent CRP re-enrollment for 2022 was much higher in states such as Texas, Kansas, Colorado and other western states.
Summary
The future of the CRP program is likely to garner considerable discussion in the next couple of years during the writing of the next Farm Bill. The CRP program has a long and successful history of preventing soil erosion, improving water quality, enhancing wildlife habitat, and aiding in carbon sequestration. While it may seem quite logical to utilize expansion of the CRP program to reach further goals related to environmental stewardship and carbon sequestration, there could be some obstacles in accomplishing those goals. Commodity prices for corn and soybeans are their highest levels in the last decade and farm profit levels have been very solid in recent years, which is also resulting in higher land rental rates in many areas. This makes it difficult to convince farmers and landowners to take farmland out of production to enroll in the CRP program or to reenroll some expiring CRP acreage — unless there are some added financial incentives.
For more information on the current CRP enrollment, expiring CRP acres, rental rates, etc., landowners and farmers should contact their local USDA Farm Service Agency office or refer to the USDA CRP web site at http://www.fsa.usda.gov/crp
Kent Thiesse is a government farm programs analyst and a vice president at MinnStar Bank in Lake Crystal, Minn. He may be reached at (507) 7262137 or kent.thiesse@minnstarbank. com. v
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