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Tuesday, August 7, 2012

Conservation Compliance and U.S. Farm Policy

Megan Stubbs
Specialist in Agricultural Conservation and Natural Resources Policy

The Food Security Act of 1985 (P.L. 99-198, 1985 farm bill) included a number of significant conservation provisions designed to reduce production and conserve soil and water resources. Many of the provisions remain in effect today, including the two compliance provisions—highly erodible land conservation (sodbuster) and wetland conservation (swampbuster). The two provisions, collectively referred to as conservation compliance, require that in exchange for certain U.S. Department of Agriculture (USDA) program benefits, a producer agrees to maintain a minimum level of conservation on highly erodible land and not to convert wetlands to crop production.

Conservation compliance affects most USDA benefits administered by the Farm Service Agency (FSA) and the Natural Resources Conservation Service (NRCS). These benefits can include commodity support payments, disaster payments, farm loans, and conservation program payments, to name a few. If a producer is found to be in violation of conservation compliance, then a number of penalties could be enforced. These penalties range from temporary exemptions that allow the producer time to correct the violation, to a determination that the producer is ineligible for any USDA farm payment and must pay back current and prior years’ benefits.

As Congress considers the reauthorization of farm policy through the next farm bill, issues related to conservation compliance have emerged. The reduction in soil erosion from highly erodible land conservation continues, but at a slower pace than following enactment of the 1985 farm bill. The leveling off of erosion reductions leaves broad policy questions related to conservation compliance, including whether an acceptable level of soil erosion on cropland has been achieved; whether additional reductions could be achieved, and if so, at what cost; and how federal farm policy should encourage additional reductions in erosion. These broad policy questions, in addition to general concerns of program oversight and implementation, continue to influence the farm bill debate.

One of the most controversial issues has been the idea that crop insurance subsidies should be added to the list of benefits that could be lost if a producer is found to be out of compliance. Federal crop insurance subsidies were originally included as a benefit that could be denied under the compliance provisions. However, they were removed in the Federal Agricultural Improvement and Reform Act of 1996 (1996 farm bill) to increase producer flexibility, while at the same time direct payments were added. Presently, high commodity prices have resulted in few or no counter-cyclical payments, leaving conservation program participation and direct payments as the remaining major benefits that might motivate producer compliance with conservation requirements. The Senate-passed version of the 2012 farm bill (S. 3240) would eliminate countercyclical and direct payments, and retie federal crop insurance subsidies to compliance requirements. The House-reported farm bill (H.R. 6083) would also eliminate direct payments, but does not tie crop insurance subsidies to compliance requirements. Many environmental and conservation groups support the re-tying of crop insurance subsidies to compliance requirements, while some farm organizations and the crop insurance industry continue to oppose the measure. Both the Senate-passed and House-reported bills establish a “sodsaver” provision for new crop production on native sod. The provision reduces crop insurance premium subsidies and prohibits benefits under the Noninsured Crop Disaster or general commodity programs on land that has never been tilled. Under the Senate-passed bill, the sodsaver provision would apply nationwide, while the House-reported bill would only apply to five states in the prairie pothole region.

Date of Report: July 24, 2012
Number of Pages: 22
Order Number: R42459
Price: $29.95

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