The CSP and Farm Bill 2007

The upcoming 2007 Farm Bill is the focus of much attention from both federal and international lawmakers. While discussion of the Title I commodity price support programs is an area of primary interest, especially with respect to higher commodity prices and WTO compliance, Title II conservation programs such as the CSP are also being subjected to scrutiny. The CSP was developed as part of the 2002 Farm Bill, but only commenced in 2004, giving enrolled producers a maximum of four full growing seasons of contract

payments through to the end of 2007. This is a short period for any nationwide program to be evaluated over and should be a serious consideration of all lawmakers when addressing improvements in the CSP, especially when producers in many watersheds never even had a chance to apply.

Whatever road lawmakers take with CSP, it is critical that confusion over the

objectives of the program is addressed. If the program intends to promote the preservation of resources other than soil, then appropriate measures for all resources need to be in place and made explicit. A nutrient measure that addresses water quality concerns as discussed in other studies (Heller 2005) would be an important first step.

NRCS personnel have indicated that beginning in 2008 stewardship practice payments will be indexed with the costs of implementation rather than their estimated

societal value. This is essential if the CSP compensation disparities to the degree highlighted in this report are to be removed so the program can remain eligible for the WTO’s green box rules.

The USDA released a report of recommendations for improving all Title II programs in the 2007 Farm Bill (USDA, 2007). It concurs with the findings of this and other reports that duplicity between programs should be addressed. For the CSP they suggest this can be achieved as part of greater simplification where components such as cost sharing incentives for new practices, also offered by EQIP, might be removed. There is also the

recommendation to expand the program from the current (2007) 15.5 million acres to 96.5 million acres with an additional $500 million in the next 10 years.

The challenge for the current administration is appropriating $5 million dollars per year for the next 10 years when the federal deficit is at record levels. Bruce Babcock from Iowa State University’s Center for Agricultural and Rural Development (CARD) suggests one option is to capitalize on the drop in demand for loan deficiency and counter cyclical payments from grain producers, currently enjoying a period of sustained high prices, and spend “scarce public funds on programs that serve broad public interests” such as

The issues with the CSP contained in this report are merely a symptom of what lawmakers, producers and taxpayers have been wrestling with for a number of years: how to ensure an affordable reliable and secure food supply and protect the environment and the profession of farming for future generations. A truly progressive approach for lawmakers to take would be to design a stewardship program that facilitates more multifunctionality among farmers, where risk management, environmental protection and other social services such as “research, energy, nutrition and rural development” are all addressed simultaneously and become intrinsic components of the farm business with greater independence from price support.

As the UK experience with similar reward-based stewardship programs shows, even if this is achievable, diverting funds into programs that have the best intentions is only

addressing part of the problem, and implementation of programs of this nature have struggled to have lasting impact. The pattern seems to be that most programs of this nature single out producers who would be inclined to invest in conservation even without program support. This does not have to be a bad thing; older conservation programs are notorious for spending more money on the program opportunist than the steward administrators would like other producers to use as an example. Where it becomes a problem is if we expect this approach to solve the broader environmental problems that modern agriculture in Iowa is contributing to. Rewarding the “best” only has an impact here if the “rest” have an incentive to at least cease practices that result in negative environmental externalities.

With this and the current high prices for commodity crops in mind, an effort could be made to enforce conservation compliance on those enrolled in commodity programs such that producers unwilling to participate in environmental protection do not negate the good work of environmental stewards. By all means encourage producers who are struggling with compliance to use cost-share programs such as EQIP to improve on-farm conservation. This will not only allow “the best” stewards conservation activities to have an impact on

environmental problems, but will force them to become more familiar with conservation programs. If reward payments for “the best” are always more than what “the rest” can receive through cost share payments, then there is the potential for all producers to have an incentive

to participate in higher levels of conservation in a way that addresses larger environmental problems.

When lawmakers attempt to simplify CSP for administrators and producers, they may also want to consider the impact that program complexity has on political support for

conservation programs. Of the 1077 producers who took the time to respond to the mail survey in this study over two dozen attached hand-written letters expressing their

disappointment at the manner in which CSP was implemented. One approach lawmakers could take for simplifying the program and improve its efficiency is to include producers more in the administration of the program. A number of the interviewed producers would like to see the money distributed among farmer groups such as drainage districts that operate autonomously from administrators, being audited periodically. The Australian Landcare program has operated on this principle for over 15 years with much success in Australia and other countries such as New Zealand, South Africa and the Philippines (Sutherland and Scarsbirck, 2001; Cramb, 2005).

Whatever route lawmakers take with the CSP for the 2007 Farm Bill, it does have the potential to create a unique and lasting incentive for Iowa producers to improve and maintain their levels of stewardship and return value to the taxpayer through improvements in natural resource conservation. If key issues with the rule structure, duplicity, other Title II programs and complexity are addressed, and funds that might otherwise have been absorbed by price support payments for cash grain producers are made available to the program then it has the potential to grow and improve. Most importantly producers who are at all levels of

stewardship and taxpayers stand to gain from fair transfers of public funds to support a safe and affordable food supply produced in an environmentally responsible manner.