Using the Conservation Reserve to Reduce Program Crop Plantings

This paper examines the policy instrument by which a land retirement program designed primarily for conservation purposes attempts to reduce surplus commodity production as well. A simple model incorporating the cropland allocation effects of entry into the federal Conservation Reserve Program (CRP) is developed to estimate the reduction in aggregate crop acreage brought about under two program alternatives: (1) the "base bite," which requires a reduction in a farm's commodity base as a condition of CRP entry (the current law) and (2) no base bite, which for planting reduction purposes would rely upon a "displacement" of acreage actually available for planting. Data from the first eight rounds of CRP bidding (through February 1989) show that the base bite reduces CRP entrants' aggregate annual program crop plantings by 14.9 million acres under 1987 program rules, while displacement would have reduced plantings by 13.1 million acres. Under "1990 rules" (no set-aside required for participation), the base bite provision would reduce plantings by 19.6 million acres. Displacement is unaffected by set-aside levels. If the base bite were removed, the concomitant lower opportunity costs of entry would result in either an increase in CRP acreage or a decrease in budget outlays, depending upon program administration.