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Federal “Green Payments” for Entrepreneurial Farms At Risk

Bush administration squeezes environmental farm program

January 28, 2004 | By Patty Cantrell
Great Lakes Bulletin News Service

Gary Howe
  “Green payments” could, among many other things, help operators of northern Michigan cherry orchards make the transition from conventional to organic growing practices.

The U.S. Department of Agriculture is proposing to substantially amend a path-breaking new federal program that Congress established two years ago to help farmers better conserve their land. The program would pay farmers in Michigan and other states to develop and execute 21st-century management practices that keep air and water clean and lead to soil, energy, and habitat conservation.

The Conservation Security Program, an innovative provision of the 2002 federal farm policy bill, provides “green payments” that encourage farms to build more profitability into their businesses by conserving natural resources and producing cleaner, healthier products for more diverse markets.

The program’s unconventional approach to securing family farms, though, has caused delays in its implementation, and disagreement between the White House and Congress about how much to pay for it. The latest turn occurred on January 2, when Agriculture Secretary Ann Veneman issued long-awaited rules to implement the program that look nothing like what Congress intended, according to farm, food, and environmental organizations monitoring the process.

The rules as now proposed, and which USDA’s Natural Resources Conservation Service will administer, undermine the program by dramatically reducing payments to farmers and restricting who can receive them, said Ferd Hoefner, of the Sustainable Agriculture Coalition, a Washington-based group that represents farm and food organizations.

Mr. Hoefner and other sustainable farm advocates expressed bewilderment at the administration’s proposal because just last month Congress passed, and earlier this month President Bush signed, a budget bill that will provide an estimated $7 billion over 10 years to fully fund the Conservation Security Program.

On February 10 Michigan farmers will have the opportunity to change the administration’s proposed rules during a national “listening session” that the Natural Resources Conservation Service, a unit of the Agriculture Department, will hold in, among many places, Lansing. The Lansing meeting begins at 1 p.m. at the Clarion Hotel, 3600 Dunckel Road. The Sustainable Agriculture Coalition says it is critical for farmers and other concerned citizens to attend and publicly support implementing the program as Congress intended and the President signed into law.

Action to Change White House Position
In a national email alert today, Mr. Hoefner wrote that the administration’s proposed rules assume that there is much less money available to fund it. As a result, he said, “The proposed rule is so restrictive and proposes such low levels of financial assistance it is doubtful whether many farmers could qualify or if any would bother trying.”

Ms. Veneman has defended the proposal, asserting that the administration was concerned that the program could run up huge costs. “The direction given by Congress on the Conservation Security Program was very open-ended,” she said in a statement. “Since the passage of the farm bill, Congress has made three legislative changes to CSP that have required us to make adjustments in how we are proposing to implement the program. Completing the proposed rule was complicated by uncertainty over the funding level.”

The Bush administration’s rules, which critics say severely constrain the Conservation Security Program, have attracted considerable attention. Many farmers in Michigan are looking to the program as a vital source of funding to support conservation practices that not only protect their assets, like soil fertility, but also help them break into new and growing markets, such as grass-fed milk and beef. Such significant changes in cultivation or animal husbandry practices are expensive, and the cost discourages more farmers from trying them.

Big Help to Michigan
Michigan’s farm sector could benefit substantially from the program because it would reach blueberry, asparagus, apple, carrot, mint, nursery, and other farmers that are not currently eligible for conventional subsidy payments. The state’s 52,000 farms produce a range of crops that is the second-most diverse in the nation, behind California. But just a few of the state’s crops — corn, soybeans, wheat, and several more — receive federal commodity support. From 1995 to 2002 Michigan ranked 21st in the nation in the amount of total federal farm support, or $1.9 billion, compared to Iowa’s top-ranked $10.2 billion. 

As originally written and signed into law, the Conservation Security Program is an important tool for the most threatened group of Michigan farms: Mid-size operations, which own 26 percent of the state’s 9.8 million acres of farmland.

For example, it allows mid-size dairy farm families to try new options beyond either selling out or taking on the significant financial and environmental risks of converting to a much larger, factory-like scale of operation. One way the program does this is to provide support for switching from conventional dairy farming to intensive, rotational grazing of dairy cows. In the first system, animals are confined in large buildings and fed expensive grain that farmers have to buy or produce themselves with expensive machinery. The alternative can cut equipment and feed costs and increase the market value of the milk with a “grass fed” premium while simultaneously protecting soil and water.

Payment Gap
The Bush administration says its primary concern about the Conservation Security Program is its potential cost to the budget. But in approving the program by an overwhelming majority, Congress two years ago recognized that not rewarding conservation produces costs that vastly exceed any of the White House’s budget estimates. Those costs are paid by communities across the country that must clean up polluted water, limit soil erosion, deal with the negative health effects of agricultural chemicals, and endure economic decline as farms that can no longer compete in federally subsidized commodity markets go out of business.

As approved by Congress, the Conservation Security Program was designed to provide farmers with enough money to make conservation worthwhile on their farms. For instance, Congress approved paying farmers up to 75 percent of the cost of implementing new and maintaining existing conservation practices. Though costs differ by farms, it typically costs $10,000 or more to design and execute a conservation plan, which might include buying electric fencing to hold cattle in different pastures as part of a rotational grazing program that protects water quality and improves soil fertility and the health of the animals.

The administration’s proposed rule would limit the payments to as low as 5 percent of a farmer's cost. In addition, with the proposed rules, the administration limits eligibility to specific watersheds and restricts payments only to farmers that have actually put into place the practices, and achieved the results, that the program was intended to stimulate.

Three Big Changes Needed, Say Farm Groups
The administration’s critics contend that the rules are written specifically to discourage farmers from applying, an assertion denied by the Bush administration. According to the Sustainable Agriculture Coalition, the top three improvements that the Natural Resources Conservation Service must make to ensure that the program is effective are:

  1. Remove restrictions limiting enrollment to certain watersheds and classes of farmers. The original law calls for the Conservation Security Program to be available to all types of producers in all regions of the country with all types of conservation needs.
  2. Remove the limitation that prevents farms that are in transition from conventional to sustainable farming practices from participating. The rule should be modified to retain high environmental standards, but they should also allow farmers and ranchers to remain in the program while they work to achieve those high standards, for perhaps three years.
  3. Revise the proposed payment structure to encourage participation. Currently proposed rates are too low to be effective incentives.

A Crucial Program for Change
Before the Conservation Security Program was passed, the more responsibly farmers treated their land, the less help they received. “There are a lot of producers out there who are being penalized for doing a good job of stewardship,” said Chuck Cornillie, director of the Michigan Agricultural Stewardship Association, a statewide farm group.

For example, traditional crop subsidies are calculated on a “base payment” that corresponds to how much and how often farms plant corn, soybeans, and a handful of other crops. Farms that give their land a rest from intensive cropping, however, lose out on subsidy income because they aren’t planting as many acres of the subsidized crops every year and thus their “base” diminishes.

Yet the environmental benefits of resting their land is higher because interrupting the cash crop cycle for a year or two — and instead planting grasses, clovers and other soil-enhancing crops — helps to build soil fertility, prevent soil erosion, and reduce chemical fertilizer use.

“The Conservation Security Program is a way to recognize those folks and compensate them for taking care of our land and water,” Mr. Cornillie added.

Patty Cantrell, a journalist and economist, directs the Michigan Land Use Institute’s Seeds of Prosperity project, which is attracting economic development attention and resources to entrepreneurial agriculture and community food systems.  You can reach her at patty@mlui.org.

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