Wednesday, July 20, 2011

Threat to crop subsidies raises environmental concerns

 It’s an axiom among many critics of U.S. farm policy that crop subsidies to grain and cotton subsidies encourage practices that are bad for the environment.  What those critics may fail to realize is that producers who take that money have to comply with restrictions on how they farm environmentally sensitive land, such as slopes that are prone to erosion. End those subsidies, or cut them so much that farmers stop taking them, and those producers will be largely free to farm how they like at a time when high commodity prices are encouraging growers to plant fencerow to fencerow.

 With Congress likely to make deep cuts in farm spending as part of a deficit-reduction plan, there’s a chance that the $5 billion in fixed, annual direct payments to growers will be slashed or replaced altogether. Conservationists are worried about what that could mean for highly erodible cropland.

 “The end of direct payments would have a significant impact, a negative impact, on the compliance incentive,” USDA economist Roger Claassen said at a meeting this week of the Soil and Water Conservation Society.

 About 25 percent of cropland is subject to the restrictions. Farmers can meet the requirements in a number of ways, including reduced tillage and planting grass waterways, strips that trap water and sediment flowing from fields. 

 How much of a difference ending direct payments would have on erosion rates isn’t clear. Land that’s subject to those restrictions accounted for 25 percent of the reduction in soil erosion that took place between 1982 and 1997. (The restrictions were put in place in 1985.) But it’s not known exactly how much of the erosion reduction would have taken place anyway.

 One alternative under discussion is to make compliance with the conservation restrictions mandatory for farmers who buy federally subsidized crop insurance. There was just such a requirement from 1985 to 1996.

 The problem is that the farmers who are most dependent on crop insurance live in areas such as the Dakotas, and they are less likely to have problems with soil erosion than farmers in, say, Iowa, who have less need for crop insurance, as Claassen explains. Farmers who are the least dependent on crop insurance could theoretically be tempted to drop their coverage if they don’t want to be bothered with the farming restrictions. 

 The lesson for critics: Be careful what you wish for.

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