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2018 Farm Bill

Bowhunter,
The 1/3 drop in rate is questionable across the board IMO but not saying it can't happen. CONSIDER your example above, if those rates for CRP were not adjusted why would the landowner not put 100% of that farm in CRP at $200 since you are "only" paying $170/a.c. Thus the reason the rate adjustment is needed unless you want to start cash renting farms at $200 when $170 is more in line for row crop cash rent based on current commodity markets. CRP rates have historically been based on USDA landowner tenant surveys with the ability to adjust A LITTLE on a state/county level. Most rates I am aware of in MO are staying relatively flat or going up a bit but they didnt ever go as high as Iowa's. Iowa's CRP rental rates are above market cash rental rates thus why so many acres went into pollinator contracts right before hitting the 24mil cap and thus the need for a reduction in Iowa CRP rental rates.
 
Muskrat24 said:
Bowhunter,
The 1/3 drop in rate is questionable across the board IMO but not saying it can't happen. CONSIDER your example above, if those rates for CRP were not adjusted why would the landowner not put 100% of that farm in CRP at $200 since you are "only" paying $170/a.c. Thus the reason the rate adjustment is needed unless you want to start cash renting farms at $200 when $170 is more in line for row crop cash rent based on current commodity markets. CRP rates have historically been based on USDA landowner tenant surveys with the ability to adjust A LITTLE on a state/county level. Most rates I am aware of in MO are staying relatively flat or going up a bit but they didnt ever go as high as Iowa's. Iowa's CRP rental rates are above market cash rental rates thus why so many acres went into pollinator contracts right before hitting the 24mil cap and thus the need for a reduction in Iowa CRP rental rates.
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I hope 1/3 drop is not reality... if it is, it will have a negative impact... more on that in a second.

I think everyone agrees the rental rates from the 2014 farm bill are too high for today's climate. I am not arguing for those rates; not in the least. You are exactly right. Folks were enrolling tons of ground because it was a much better deal than cash renting. A lot of ground (entire farms) is now locked up for 10 or 15 years and it shouldn't be that way. That was never the intent of CRP. Realize the 2014 farm bill was being written during a time of record crop prices. As soon as it was implemented prices dropped and the gap between CRP payments and cropping rates was substantial.

Now, if CRP rates do drop by 1/3 on average, it is going to have the exact same affect in inverse. Lets say landowner Johnny Smith has an expiring CRP contract. He starts looking at his options. Take it all out and farm it for $165 or get a CRP rental rate of $130. Lets just say he has some decent tops, lots of hillsides, and a creek meanders through a lot of it. The best scenario would be to take the tops out & farm them, reenroll the stuff along the creeks into riparian buffer, and put the hill sides into CRP. That is a win-win right? The problem is Johnny has to take a big hit in his pocket book to do this. Oh and by the way, cost share is gone and he has to pay to plant the CRP. Most folks just won't do it. So, in most cases, I see Johnny taking it all out and cropping it. Meanwhile all the gains in cover for all sorts of critters is wiped out, gains in water quality start going backwards, and we are right back to 2012 when people are farming tons of ground that shouldn't be farmed. Back then it was because of record crop prices. This time it could be because CRP is not attractive. That is my fear and should be for many others. This is what the conservation groups have been lobbying to prevent in this farm bill for the past 12+ months. The government and society is notorious for over reactions/corrections. If they do it here, conservation will be impacted. There is no doubt. To what level remains to be seen.
 
Agreed!! I'm on your side in this debate. ;-) Given how the surveys are used to partially establish rates I'll be shocked by a 33% drop. As mentioned the rates I work with in MO ARE flat to up and in line with current crop rates.
 
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FYI- from fsa newsletter.


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Muskrat24 said:
How many $/ac and what % if you don't mind sharing Hardwood?
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I have pretty good tillable on the my new farm...the old rate was around $300/acre, the new rate is $225. I have to own it for one year to be eligible. I might put 10 acres in the future, not sure, hope it qualifies.

---50% cost share now, so the upfront $$ is more
 
Hardwood11 said:
I have pretty good tillable on the my new farm...the old rate was around $300/acre, the new rate is $225. I have to own it for one year to be eligible. I might put 10 acres in the future, not sure, hope it qualifies.

---50% cost share now, so the upfront $$ is more
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25% reduction with 50% cost share seems reasonable. To my previous posts, 33% reduction with no cost share becomes pretty unattractive.
 
The 50% cost share is set by law. But the 40% practice incentive payment is what was cut out for this sign up period. There are not any sign up incentives this period either. They may come back next sign up and if authorized in next farm bill.
Farm the best and crp the rest..... if it's what you want to do. It's a voluntary program. So each operator gets to decide what suits them the best. Sure is nice to have such a program that supports conservation, helps wildlife, and helps farmers all at once. It ain't perfect, but sure beats nothing.
 
2018 farm bill passed out of committee on a 20-1 vote. That version of the bill added 1M acres to the cap, making it 25M acres. That's a big difference from the talk of 30M acres. It will probably get changed several more times before signed into law.
 
I had 4.65 acres coming out at only $114 an acre. I extended it for 1 year. If the rate doesn't increase I will probably let it grow. It is right next to a 13 acre young tree field and I would rather have the taller brush than mowing it and killing everything off and waiting 3 years for switchgrass.
 
Hardwood11 said:
I have pretty good tillable on the my new farm...the old rate was around $300/acre, the new rate is $225. I have to own it for one year to be eligible. I might put 10 acres in the future, not sure, hope it qualifies.

---50% cost share now, so the upfront $$ is more
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In the above example that is the current rate down from the “old rate” but new Crp under the current house version would be down another 20%. It seems to be the perfect bill from a politicians stand point. Add a bunch of acres to keep the conservation/environmental groups happy ,but cut the rental rates to where the farmers are no longer forced to compete against CRP.
 
hans1 said:
In the above example that is the current rate down from the “old rate” but new Crp under the current house version would be down another 20%. It seems to be the perfect bill from a politicians stand point. Add a bunch of acres to keep the conservation/environmental groups happy ,but cut the rental rates to where the farmers are no longer forced to compete against CRP.
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Marginal land might go in- any county with good tillable will lose all its CRP

In Iowa a lot of bottom fields will be back in crop
 
Hardwood11 said:
Marginal land might go in- any county with good tillable will lose all its CRP

In Iowa a lot of bottom fields will be back in crop
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Whoa- really? Yikes!
Here’s a SPECIFIC question...... I have seen a lot!!! “Whole farms will not be put in crp”. I understand reasoning & thinking there. Dude takes all “300 tillable acres” & just puts whole thing in- be nice to spread out to other owners PLUS target the most vulnerable soils only. I get it. BUT..... what happens if a dude has a 60 acre farm with 30 tillable. Is the line of thinking that part of the 30 acres must be left in crop? That’s a case where it doesn’t make any sense to not enroll the whole thing. U start having a guy trying to farm a tiny amount of acres & just gonna be a pain & sure doesn’t hurt conservation purposes to enroll “whole small farms”. I wish they’d do an acre maximum per farm or figure out a way to make sure the small farm guy doesn’t get screwed because a “whole farm” for a 30 acres is vastly different than a “whole farm” for 300 acres. If anyone knows how that might work - be interested.
 
CRP has to be somewhat competitive. Now with 50% cost share. Fewer CRP tree programs will go in (meaning less permanent new cover).

It’s too bad, I think we are going to see crop prices jump in next 5 years and CRP will be even less attractive.

I did hear they are looking at smaller blocks of cover (not looking at big fields)...hopefully they still have pollinator program, we will see.
 
Sligh1 said:
Whoa- really? Yikes!
Here’s a SPECIFIC question...... I have seen a lot!!! “Whole farms will not be put in crp”. I understand reasoning & thinking there. Dude takes all “300 tillable acres” & just puts whole thing in- be nice to spread out to other owners PLUS target the most vulnerable soils only. I get it. BUT..... what happens if a dude has a 60 acre farm with 30 tillable. Is the line of thinking that part of the 30 acres must be left in crop? That’s a case where it doesn’t make any sense to not enroll the whole thing. U start having a guy trying to farm a tiny amount of acres & just gonna be a pain & sure doesn’t hurt conservation purposes to enroll “whole small farms”. I wish they’d do an acre maximum per farm or figure out a way to make sure the small farm guy doesn’t get screwed because a “whole farm” for a 30 acres is vastly different than a “whole farm” for 300 acres. If anyone knows how that might work - be interested.
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Historically there have been scenarios where certain programs allowed interior acres to go in because they are not real farmable after the CRP. The idea is for the sensitive areas to wildlife, water quality and erosion to go in CRP with the best farmable acres being farmed.
 
Hardwood11 said:
CRP has to be somewhat competitive. Now with 50% cost share. Fewer CRP tree programs will go in (meaning less permanent new cover).

It’s too bad, I think we are going to see crop prices jump in next 5 years and CRP will be even less attractive.

I did hear they are looking at smaller blocks of cover (not looking at big fields)...hopefully they still have pollinator program, we will see.
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Just wondering but what do you base your increasing crop prices theory on? Just wondering, you have at least a 33% chance of being correct. Up, down or flat :).
 
Muskrat24 said:
Just wondering but what do you base your increasing crop prices theory on? Just wondering, you have at least a 33% chance of being correct. Up, down or flat :).
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Well crop prices are so low, that’s part of it. I read that corn carryover will be reduced this fall. Simple supply and demand. This China tariff issue is overblown, it may actually create an unstable market and shoot prices up for corn in the fall, then soybeans in 19...

Hard to predict though.
 
The real wild card to the farm bill is what changes will be made to crop Insurance. RMA has about 10%of the employees of NRCS And about 10 times the budget. If they don’t make some changes to crop insurance ie, prevent plant, price loss coverage and other widely abused coverages, all it will take is a high spring corn price and look out. I also can’t see in the 2018 farm bill if the crop years needed to make land eligible will move forward.right now I think it is 2008-2014 and you need 4 out of those 7.
 
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