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2014 Farm Bill Drill Down: Conservation – Working Lands Programs

February 10, 2014

With the 2014 Farm Bill recently signed into law, NSAC is doing a blog series that delves into the details of the bill for sustainable food and farming systems.  Our coverage of the conservation title is divided into three parts: this one on working lands conservation programs; the linkage between conservation and crop insurance; and easement, land retirement, and energy programs.  Previous posts dove into the overall farm bill by the numbers and beginning and socially disadvantaged farmer issues.

Privately owned crop, pasture, and rangeland together account for roughly half of the landmass of the lower 48 states, with private forestlands making up another 20 percent.  In addition to providing food and fiber, farmers and ranchers are in a unique position to help provide healthy soils, clean water, habitat for native wildlife, renewable energy sources, and other conservation benefits.

Since 1985, the farm bill has represented our nation’s commitment to helping farmers conserve natural resources through public investments in conservation programs on agricultural and forested lands.  The 2014 Farm Bill Conservation Title in large part renews this commitment, but for the first time since 1985 the new farm bill takes a step backward by reducing overall funding for conservation programs.

The final bill cuts Conservation Title funding by roughly $4 billion over ten years directly, and that number increases to $6.1 billion under the upcoming automatic cuts to conservation under the sequestration process that was not changed or modified by the farm bill.

On the plus side, the new bill for the first time ever makes wetland and grassland easement funding permanent, meaning there will not be a need to find new funding for it when the next farm bill is taken up.  In addition, conservation funding is “no-year” money, meaning that any mandatory funds not used in a particular year will remain within the Title for later use, rather than being sent back to the Treasury.  The bill also reduces the eligibility limit for farm bill conservation programs to $900,000 ($1.8 million for married couples filing separately) while removing both the previous distinctions between farm and non-farm sources of income and the possibility of a waiver.

Unlike the Conservation Title, the Energy Title stayed out of the red, and will receive $879 million in new money over ten years to invest in renewable energy and energy efficiency programs on farms and in rural communities.  This sum almost exactly matches the amount for the energy title in the 2008 Farm Bill.

This post provides further details on how specific working lands conservation fared.

Conservation Stewardship Program

NSAC’s platform heading into the 2012 farm bill debate included an extensive set of policy proposals relating to the Conservation Stewardship Program (CSP).  First and foremost, we argued that the program should be retained and strengthened as a stand-alone working lands program.

At the same time, we argued that the farm bill should improve coordination between CSP and other conservation programs, including specific transition proposals to CSP from the Environmental Quality Incentives Program and the Conservation Reserve Program.  Our platform also included proposals to address several issues relating to how payments are made and how contracts are ranked, including ways to make the program even better by providing greater support for higher cost, bigger environmental payoff conservation activities.  We also proposed streamlining the confusing five-step ranking criteria to focus solely on environmental benefits, with cost effectiveness as a tiebreaker.

In addition, we argued that CSP should provide financial assistance to producers for comprehensive conservation planning; that the CSP stewardship thresholds should be strengthened; that producers should be able to renew their CSP contracts regularly as long as they are increasing their level of stewardship; and that CSP should provide increased, supplemental payments for on-farm research and demonstration project.

Wins – To begin with, the CSP remains intact and will continue to be the largest USDA conservation program in terms of the acreage enrolled.

Heading into farm bill conference late last year, several important differences existed between the House and Senate versions of CSP.  First, the House bill sought to eliminate language that establishes CSP as a program broadly intended to improve the quality and condition of natural resources.  Instead, the House bill narrowed the purpose of the program to focus only on addressing a specific subset of priority resource concerns.  In the end, the Senate language prevailed continuing CSP as a comprehensive conservation program.

Second, the House bill authorized USDA to provide supplemental financial assistance to producers to make improvements to resource-conserving crop rotations, while the Senate bill did not.  We are pleased to report that the final bill includes the House language.

Finally, the farm bill conference report includes important report language regarding conservation planning and the CSP application ranking process.  Thus far, NRCS has not provided financial assistance to help farmers develop comprehensive conservation plans.  NRCS is not allowed to provide payments to producers for practices that do not incur a cost; and according to USDA lawyers, conservation planning fits into this bucket.  The final conference report very clearly states that, in developing a conservation plan, farmers incur significant costs and income foregone.  Additional report language improves the CSP application ranking process by urging NRCS to measure not only the number of priority resource concerns to be addressed, but also the extent to which the proposed conservation activities will accomplish conservation goals.

Losses — Rather than enrolling 12.8 million acres per year, as was the case under the 2008 Farm Bill, the 2014 Farm Bill decreases the annual enrollment to 10 million acres.  This is significantly higher than the House bill’s 8.7 million new acres per year, but slightly lower than the Senate bill’s 10.3 million acres.  The national average payment rate per acre, including both financial and technical assistance and administrative costs remains at $18 an acre (on average), with no other provisions added to encourage the most environmentally beneficial conservation enhancements.

The new acreage cap means that NRCS will enroll roughly 2.8 million fewer acres in working lands conservation per year for the next 10 years.  An additional 2,000 farmers and ranchers per year will be turned away from the program, which even now can only enroll half of the producers who apply each year.

Apart from the improvements and report language outlined above, the final bill’s CSP language closely mirrors that of the House and Senate bills heading into conference.  Rather than ranking CSP applications solely by their projected environmental benefits based on the totality of the conservation activity on the farm, the final farm bill maintains a more complicated ranking system that has had the effect of NRCS perversely providing greater points to those who enter the program with less conservation on the ground and fewer points to those with the highest level of conservation, in some cases keeping the most committed stewards out of the program.

The bill even adds a new ranking factor that will assign ranking points to applicants who are seeking to enroll expiring CRP land in CSP.  We strongly believe that the farm bill should make it easier for farmers to seamlessly enroll expiring CRP acres in CSP; however, this objective is better accomplished elsewhere in the bill.  By including it as a factor on which applications are ranked, the new language unfairly favors applicants who have expiring CRP acres, regardless of whether or not the landowner is offering a high environmental pay off relative to other proposals.

Rather than making the program work more fairly for New England, Appalachia and other areas with a predominance of small acreage farms, the new bill continues to base payments on size of farm, with no allowance for a minimum contract rate beyond beginning and minority farmers and ranchers.

Rather than clarifying the 2008 Farm Bill provision encouraging farmers to voluntarily undertake on-farm conservation research, the bill eliminates it as an option altogether.  There is a silver lining, however.  On-farm research and demonstration was included as an eligible activity under the Conservation Innovation Grants program, a separate NRCS conservation program.

The 2014 Farm Bill also includes several changes that we consider neither wins nor losses, per se.  The impact of these changes will depend entirely on how NRCS chooses to implement them.

First, the new bill eliminates all references to the Conservation Measurement Tool (CMT) — the engine that drives CSP enrollment — leaving the future direction of the program and its basic operating system in a bit of an in-limbo mystery.  We expect NRCS to preserve the basic structure of the CMT, though we will have to wait to see whether any major changes are proposed.

Second, where the 2008 Farm Bill directed states to select between three and five major resource concerns (water quality and soil quality, for example), the 2014 Farm Bill directs states to choose at least five more targeted resource concerns, such as airborne particulates and soil compaction.  While some degree of targeting is a good thing, we fear that may confine their targeted priority resource concerns to a single major resource concern, say, water quality or soil conservation, thereby leaving behind other critical resource concerns such as soil health, energy conservation, or wildlife habitat.

Moving forward into implementation, NSAC will work to ensure that this change does not undermine the original purpose of the program – to promote comprehensive conservation and to begin to change the farm bill reward structure for agriculture.

Environmental Quality Incentives Program

Since 2011, NSAC’s primary focus with regards to the Environmental Quality Incentives Program (EQIP) has been on improving the EQIP Organic Initiative, which provides assistance to organic and transitioning-to-organic farmers and ranchers.  The 2008 Farm Bill included new language to address the unique conservation needs of this group of producers; however, it also established a separate payment limitation on organic transition assistance, and created a number of burdensome administrative requirements for transitioning-to-organic producers.  As a result, enrollment in the EQIP Organic Initiative has been limited.

Nearly 40 percent of EQIP funds are spent on irrigation equipment installation and waste storage facilities for concentrated animal feeding operations (CAFOs).  In our platform, we proposed that the farm bill should reduce the program-wide payment limit for EQIP from $300,000 to $200,000 per contract, without waiver provisions.  The EQIP payment limit prior to the 2002 Farm Bill was $50,000, and the average contract is still to this day smaller than half that original payment limit.

Our platform also argued that if Congress continues to fund CAFOs through EQIP, it should eliminate payments made to new or expanding operations as well as those located within flood plains.  We also pursued amendments throughout the farm bill process to ensure that producers do not use irrigation efficiency payments to bring new land into production, thereby further reducing in-stream flows.

Since 2011, we have argued that changes should be made to the EQIP Conservation Innovation Grants program to increase transparency and accountability.  We argued that farm bill should require NRCS to publically report project outcomes, lessons learned, successes and challenges, as well as any NRCS plans to use and build on the results of each CIG project.

As the farm bill debate progressed, it became clear that Congress would wrap the Wildlife Habitat Incentives Program (WHIP) into EQIP.  The House bill dedicated five percent of EQIP funds to advancing the purposes of WHIP, while the Senate bill dedicated at least five percent.  NSAC fought to retain the Senate language in the final farm bill.

From the get go, NSAC pursued a number of reforms to ensure that Conservation Title programs work for beginning and socially disadvantaged farmers and ranchers.  We argued that the percentage of an EQIP payment that may be made in advance to this group of producers for the purposes of purchasing materials and contracting should be increased from 30 percent to 50 percent.  We also proposed that the funding set aside within CSP and EQIP for beginning and minority producers should be increased from 5 percent to 10 percent.  For more on the advance payment provision and set asides, visit our earlier post on what the 2014 Farm Bill means for beginning and socially disadvantaged producers.

Wins — We are pleased to report that the final bill includes our recommendations on CIG reporting, the five percent funding floor for WHIP, and the increase in advance payments for beginning and socially disadvantaged producers.

The final farm bill cuts EQIP funding only slightly, with nearly that entire cut coming from the repeal and consolidation of WHIP into EQIP.  In the 2012 version of the farm bill, EQIP paid its fair share of Conservation Title cuts.  The shift from fair-share cuts to CRP and CSP taking bigger cuts and EQIP being held nearly level is is the biggest change in terms of conservation title funding over the course of the three-year farm bill debate.

Losses — Unfortunately, the bill makes no changes to the EQIP Organic Initiative, leaving in place the separate and unfair payment limit of $80,000 per contract as well as the burdensome administrative requirements for transitioning-to-organic producers.

This lack of reform is an enormous slap in the face to organic producers, given that the final farm bill increases the payment limit for general EQIP from $300,000 to $450,000 per contract.  As a result, large CAFOs and farms expanding irrigated acres are likely to walk away with even more of the total funding.  The bill includes no reforms at all to how or when payments are made to these entities.

Finally, the bill does not build upon the success of the set aside for beginning and socially disadvantaged producers.  Instead, it retains the existing set aside of 5 percent.

Regional Conservation Partnership Program

In the summer of 2011, NSAC proposed that two programs—the Cooperative Conservation Partnership Initiative and the Agricultural Water Enhancement Program—be merged to form a single conservation partnership program.  This proposal became the basis of the new Regional Conservation Partnership Program (RCPP).  In our farm bill platform, we urged that the new partnership program be able to pull money not only from the working lands programs, but also from the conservation easement programs.  We further argued that the farm bill should provide for flexibility to adjust elements of the conservation programs if such adjustments increase environmental outcomes, better reflect unique local circumstances, and help achieve the purposes of a project.

Our platform called for Congress to add to the purpose of the new partnership program so that NRCS could work with producers to address climate change and address rural commodity development goals and conservation goals simultaneously.  We also urged Congress to retain the AWEP cooperative agreement option to provide technical assistance and outreach funding to partners.  This would allow communities and NGOs to better access the program and provide the technical assistance and outreach needed to impact a project on a community-wide scale.  Finally, we proposed that the farm bill include clear language directing USDA to work with partners to address nutrient management and water quality.

Wins — We are very pleased to report the creation of the Regional Conservation Partnership Program in the new farm bill.  The program is the result of a consolidation of CCPI and AWEP, along with the Chesapeake Bay Watershed Initiative (CBWI) and Great Lakes Conservation Initiative (GLCI).  The new program retains existing baseline funding from CBWI and AWEP, both of which had permanent funding from the 2008 Farm Bill.  In addition to this baseline, like its predecessor, CCPI, the program pulls funding from other existing conservation programs, referred to in the statute as “covered programs.”

As with CCPI, the list of covered programs includes EQIP and CSP.  Unlike CCPI, however, RCPP now also pulls funding from the conservation easement programs.  Heading into farm bill conference, the House bill dictated that 6 percent of funding for covered programs should be dedicated to RCPP.  The Senate bill pegged that number at 8 percent.  The final farm bill dictates that 7 percent of funding for covered programs be reserved for RCPP.  This is on top of the $100 million per year baseline that is transferred from AWEP and CBWI.

The farm bill provides increased flexibility to shape program components to meet local needs, and allocates 25 percent of total funding to states; we would have preferred a higher number but are glad the local focus did not get diminished even further.  USDA national headquarters is allocated 40 percent of total funding, and the remaining 35 percent is to be allocated for projects in Critical Conservation Areas.  The bill direct USDA to establish no more than 8 of these areas, but leaves it to the Department to determine what those areas will be.  We anticipate that they will track some of the major watersheds around the country, such as the Chesapeake Bay and the Mississippi River Basin.

The final version of RCPP includes important nutrient management and water quality language.  This language was not included in the House bill, and faced strong opposition at times.

Losses –Unfortunately, the final bill does not direct NRCS to prioritize RCPP projects that address rural development and conservation goals simultaneously, nor does it authorize NRCS to use RCPP to help producers mitigate and adapt to climate change.  It is our hope USDA will nonetheless take these additional steps that are entirely consistent with Administration priorities as they implement the program.

Perhaps most disappointing is the fact that the new RCPP language does not allow the Secretary to offer cooperative agreements through RCPP to partner organizations that want to provide technical assistance expertise to producers through a partnership project.  Instead, partners will have to apply for a cooperative agreement separately and sequentially rather than being able to request and receive this support through the project proposal process.  This restriction is unnecessary, bureaucratic, burdensome and inequitable and means that potential partners will withhold their proposals because they do not know whether they will be able to get support for technical assistance.

Categories: Commodity, Crop Insurance & Credit Programs, Conservation, Energy & Environment, Farm Bill

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