9 minute read
Farm Programs
The Conservation Reserve Program has er than 2021 rental rates in south cen- million acres currently enrolled in CRP as of April, a long history of promoting conservation tral Minnesota. 2021 — mainly in the Upper Midwest and Plains practices and farmland stewardship in the United States. The CRP program was established in December of 1985 as part of the 1985 Farm Bill. 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 FARM PROGRAMS 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 land was originally enrolled into the CRP program. In some cases, regions. CRP acres enrolled in these states include Texas (2.3 million), Colorado (2 million), South Dakota (1.8 million), Kansas (1.7 million), Iowa (1.7 million), Nebraska (1.5 million), North Dakota (1.2 million), Washington (just over 1 million acres), and Minnesota (just under 1 million acres). CRP acreage in many of these states has dropped considerably in recent years. of CRP included improving water quality, By Kent Thiesse that may result in landowners actually Expiring CRP acres and re-enrollment of CRP fostering wildlife habitat, and pro- getting a lower CRP rental rate for acres viding income support to farmers. More recently, the CRP program has MARKETING 2023 than they received under the current contract. At the same time, Given the current challenge to get more acres enrolled into the CRP program, one concern is the been identified as a valu- rather large number of able tool through the Federal government as a CRP Economic Comparison for Minnesota CRP contract acres expiring in the next coumethod to promote “car- Minnesota Region 2021 Crop Returns Cash Rent Paid CRP Rental Rate ple of years. CRP conbon sequestration” on (FBM Regions) (FBM Average (2021 FBM (2021 USDA tracts will expire on working farmland. Returns per Acre) Average Rent) Average Rate) nearly 4 million acres on Currently, getting farm- Corn Soybeans Corn Soybeans Sept. 30, plus an addiland enrolled into the CRP program is being South Central $442 per acre $334 per acre $229 per acre $230 per acre $214 per acre tional 2 million acres in 2023. A General CRPP challenged by very posi- Southwest $463 per acre $292 per acre $228 per acre $225 per acre $196 per acre sign-up was held earlier tive economic returns Southeast $401 per acre $269 per acre $220 per acre $225 per acre $202 per acre this year (CRP sign-up from crop production and by tight grain supplies West Central $374 per acre $219 per acre $186 per acre $184 per acre $169 per acre number 58), in which USDA accepted early worldwide. State Average $395 per acre $237 per acre $202 per acre $184 per acre $146 per acre 20,000 CRP contracts Economic challenges for the CRP program The rising dilemma for the CRP program is that current farm economics tend to counteract enrollment into the CRP program. Based on the 2021 South Central College Farm Business 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. representing just shy of 2.1 million acres into the CRP program starting Oct. 1. This represented approximately 87 percent of the CRP contracts and 90 percent of the acreage offered by landowners in the latest CRP sign-up period. Management Summary Only about half of the for over 350 crop farms in south central Minnesota, average land rental rates for 2023 in the same CRP acres expiring in 2022 were re-enrolled into the average return on cash rented farmland over county may be 20-25 percent higher than rental the CRP program during the 2022 sign-up. The direct expenses for seed, fertilizer, chemicals, fuel, rates a few years ago. balance of those acres, over 1.7 million acres, will repairs, etc. — including land rent, land rent — was Refer to the accompanying table for additional likely be returned to crop production in 2023. The $442 per acre for corn and $334 per acre for soy- CRP economic data and average rental rates. data for the 2022 CRP sign-up period indicated beans. 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. By comparison, the 2021 average CRP rental rate in the 13 counties in the 13 county south central Minnesota Farm Business Management region was $214 per acre. Based on the 2021 FBM Current CRP enrollment As of April 30, 2022, there were a total of just over 22 million acres enrolled in the CRP program, which is about 3.5 million acres below the maximum level of 25.5 million acres for 2022 established in the last Farm Bill. Of the total CRP acres, approximately 10.2 million acres are enrolled under a General CRP contract, 6.8 million acres in that 75 to 100 percent of the expiring CRP acreage was not offered for re-enrollment in 2022 in southern and western 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 summary, the average direct and overhead Continuous CRP, just under 3.9 million acres The future of the CRP program is likely to garner expenses — including property taxes — to main- enrolled in the grassland program, and the balance considerable discussion in the next couple of years tain CRP land was $92 per acre in 2021, resulting of the acres in CREP, wetlands and other special during the writing of the next Farm Bill. The CRP in a net return of $122 per acre. According to the CRP initiatives. Forty-three percent of the program has a long and successful history of pre2021 FBM summary, the average cash rental rate Continuous CRP and CREP acres are enrolled in venting soil erosion, improving water quality, non-farm landowners received from farm opera- the Clean Lakes, Estuaries and Rivers (CLEAR) enhancing wildlife habitat, and aiding in carbon tors in 2021 was about $225 per acre, before propprogram. sequestration. While it may seem quite logical to erty taxes and overhead expenses. Cash rental rates for 2022 are likely to be 10-15 percent highThere are nine states which have over or near 1 See THIESSE, pg. 17
Soybean market will keep close watch on the weather
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Next Farm Bill will play a big role in CRP’s future
NYSTROM, from pg. 15
U.S. soybean conditions in the week ended June 19 fell 2 percent to 68 percent good/excellent compared to 64 percent on average. Illinois was 10 percent lower at 66 percent, Iowa down 2 percent at 80 percent, and Minnesota was 3 percent better at 64 percent good/excellent. Soybean planting was nearing completion at 94 percent complete.
Weekly export sales were at a marketing year low for old crop at 1.1 million bushels. Total commitments at 2.213 billion bushels continue to surpass the USDA’s expectation for 2.17 billion bushels of exports this year with 10 weeks left in the marketing year. New crop sales were 9.8 million bushels. Total new crop sales are 491.3 million bushels compared to 279.6 million bushels sold last year by this date.
Outlook: Weather and the upcoming reports will set the tone for price direction in the short term. Weather will remain as a driver through the summer, as usual. Adding to the mix this year is the war in Ukraine and the outlook for the U.S. economy. Politicians’ statements and proposals to fight inflation (and recession) will be closely monitored since money will follow sentiment.
For the week, July soybeans were down 91.25 cents at $16.10.75, August crumbled $1.01.5, November crashed $1.13.25 to $14.24.25, August meal was $11.10 lower at $411.40, and August soyoil fell 5.33 to 66.93 cents. The daily trading limit for soybeans is $1.15 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. In seven of the last 11 years, U.S. soybean stocks have been below the trade estimate. In nine of the last 11 years, soybean acreage has been below the trade estimate.
Weekly price changes in September wheat for the week ended June 24: Chicago wheat down $1.10.25 at $9.36.5, Kansas City down $1.13.75 at $9.98.25, and Minneapolis down 99.5 cents at $10.70.5 per bushel. v
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THIESSE, from pg. 16
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 re-enroll 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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