CONSERVATION RESERVE PROGRAM Issue The Conservation Reserve Program was created as part of the 1985 Farm Bill to help producers cope with Highly Erodible Land restrictions contained in the same bill. At its inception, emphasis was placed on enrolling highly erodible land into the program. Over the years, other environmental concerns also have been incorporated into the enrollment criteria. Today, ending stocks for many crops are at or near historically low levels. Increasing domestic and export demand is projected to keep stocks at low levels for some time to come. Projections indicate an additional 390 million bushels of corn and 500 million bushels of soybeans will be exported per year by the end of the next decade just to meet the expected export demand. Considering the conservation purpose of the CRP, can some CRP acres be brought out in an environmentally sensitive manner? A penalty-free release of nonsensitive CRP acreage may provide additional acreage to meet growing worldwide demand for agricultural commodities. Background CRP is a voluntary program that assists farmers, ranchers and other agricultural producers in using their environmentally sensitive land for conservation benefits. Producers enrolling in CRP plant long-term, resourceconserving covers in exchange for rental pay-
ments, cost-share and technical assistance. Participants enroll in CRP contracts for 10 to 15 years. Land that comes out of the CRP prior to the contract completion date faces a severe penalty, essentially requiring the farmer to pay back all of the past rental payment, plus other penalties. The 2008 Farm Bill capped CRP enrollment at 32 million acres. There are two types of enrollment – continuous and general enrollment. Land enrolled in the continuous CRP program tends to be filter strips and riparian buffers that will not return to production. Land enrolled in the general CRP program may return to production under the appropriate economic conditions. Of the 30.9 million acres currently enrolled in CRP, 26.1 million acres are in the general program and 4.8 million acres are in the continuous program. In September 2011, there will be 4.25 million acres expiring from the general enrollment with an additional 6.25 million acres expiring in September 2012. The acreage enrolled in general contracts that expire in 2013 will decline to 3 million acres. It will then decrease 2 million acres per year from 2014-17. Set aside programs, such as CRP, are considered non-trade-distorting by the World Trade Organization because the purpose of the set-aside is for conservation, not supply control. However, early removal of land from CRP strictly to increase production would be
Questions 1. Would a penalty-free release of non-sensitive CRP cropland encourage increased grain supply and benefit farm families? 2. Would this help meet demand for food and feed? 3. What are the ramifications to the public? considered trade-distorting. Reductions in the number of overall acres eligible for the programs because of budget reductions (such as deficit reduction or reductions in farm bill allocations) would not be considered supplyrelated for WTO purposes. The impact of having land returned to production depends on where the land is located. Release of CRP acres in high production areas will have a greater impact than increasing acreage in less productive areas. Of the 4.25 million CRP general enrollment acres expiring in 2011, about 11 percent are located in the Midwest and 28 percent are located in the Upper Plains. Similarly, of the 6.25 million acres of CRP general enrollment acres expiring in 2012, 15 percent are located in the Midwest and 28 percent are located in the Upper Plains. An analysis of the production potential of CRP acreage located in the Midwest suggests
that an additional 500 million to 700 million bushels of corn can be produced if that acreage is returned to corn production. Similarly, an analysis of the wheat production potential for acreage enrolled in CRP suggests that in excess of 100 million additional bushels of wheat can be produced if that acreage were returned to production. Farm Bureau Policy Conservation Reserve Program: “We support the continuation of the Conservation Reserve Program and the continuous Conservation Reserve Program. Tenant farmers’ rights must be protected. Reasonable limits on participation should be included to protect the economic stability on individual counties or regions. Highly erodible land producing all crops should be eligible for enrollment in CRP.” “We support: The current rule limiting CRP acres to 25 percent of the total county crop acres including Conservation Reserve Enhancement Program and all experimental pilot projects except for small acreage enrolled in continuous CRP. Any waivers in effect when expiring contracts were enrolled should remain in effect, as determined by the appropriate state Farm Service Agency committee.” “CRP contracts should be allowed to remain as written. There should be no additional restrictions put on the use of the land when it comes out of the long-range CRP.”
SOIL SAMPLING AND DIGGER’S HOTLINE Issue Legislation was introduced in the 2011 Nebraska Legislature to clarify whether persons performing soil sampling are required to contact the Nebraska Digger’s hotline. Background In December 2010, the Nebraska Agri-Business Association learned that an agricultural retailer in the Columbus, Neb., area was told by a technician from a utility company that the retailer could not take soil samples without first contacting Nebraska Digger’s Hotline. The
Questions 1. Should persons be required to contact the Digger’s Hotline if soil samples exceed a certain depth? If so, what is an acceptable depth? Suggested depths have been from 12 to 24 inches. 2. How would calling Digger’s Hotline affect your farming practices? Do the people who provide soil sampling services for you currently contact Digger’s Hotline? Do you contact Digger’s Hotline when you are doing deep field work? Do your friends and neighbors? How does the safety concern balance with normal everyday risks in farming?
company contacted the hotline for confirmation and was informed that the technician was correct. The Digger’s Hotline employee said that any time the soil is disturbed, the hotline must be called. Legislation adopted in 1994 required notice of excavation to be given to the Digger’s Hotline. For 16 years, farmers, ranchers, agricultural input suppliers, soil testing labs, NRDs and other consultants have not been notified, nor have they been apprised, that they should notify Digger’s Hotline when disturbing the soil. To Nebraska Farm Bureau’s knowledge, there has not been a widespread problem associated with these practices. The Agri-Business Association and Sen. Tom Carlson, chair of the Agricultural Committee, requested an informal Attorney General’s opinion on this issue to determine the interpretation of the law and whether or not agriculture is truly exempt. The current statute indicates that one of the exemptions to the definition of excavation is “tilling of soil and gardening for seeding and other agricultural purposes.” Because the statute is not clear on the meaning of “agricultural purposes” and because the review of the history of the original legislation and debate is not specific on the meaning, the Attorney General’s office maintains that the “agricultural purposes” exemption was meant to exempt farmers performing certain excava-
tion activities on their own land, where they are most likely aware of the location of underground facilities. Soil sampling was not discussed in the debate, and the Attorney General’s opinion stated that soil sampling is a “normal agricultural activity.” However, because most of the time soil sampling is not done by the farmer, but rather by a third party such as a crop consultant, “individuals presumably not as familiar with the land upon which they are collecting samples,” this may fall outside of “other agricultural purposes.” Thus the request for legislative clarification. Because of this request, Sen. Galen Hadley introduced LB 484 in the 2011 legislature on behalf of Nebraska Farm Bureau and the Nebraska Agri-Business Association. Nebraska Farm Bureau began a dialog with the One-Call Notification Board of Directors and various utilities concerned about the legislation, which as introduced, would allow a blanket exemption for soil testing.
LB 484 was discussed extensively during the session, although not on the floor. In March, Atty. Gen. Jon Bruning clarified his original informal opinion relating to the issue. He said, “To be clear – farmers, their employees and any third parties they contract with to do routine soil sampling for agricultural purposes do not need to call the Digger’s Hotline prior to taking a soil sample.” While the attorney general has clarified what the current language is to mean in practice, it is possible that the utilities or Digger’s Hotline will bring forward legislation on this topic. Based on discussions from 2011, the area of interest would be agreeing on a depth below which soil samplers would have to call if they were to sample more deeply. Farm Bureau Policy Nebraska Farm Bureau does not have specific policy on this topic.
AGRICULTURAL LAND CLASSIFICATION Issue A constitutional amendment offered in the 2011 Nebraska Legislature would have allowed classes of agricultural land to be treated differently in regard to the requirement in the Nebraska Constitution that property taxes must be levied uniformly and proportionally. Such an amendment, if adopted, would allow irrigated, dryland and pasture land to be treated differently for property tax purposes. Background Currently Nebraska’s constitution allows agricultural land to be treated differently from other classes of property, but taxation of agricultural land must be uniform and proportionate across all classes of agricultural land. Thus, one class of land, irrigated, cannot be valued at 75 percent of market value, while another, such as pasture, is valued at 70 percent. During the 2011 legislature, Sen. Ken Schilz of Ogallala introduced LR 9 CA, which sought to amend Nebraska’s
constitution to allow the different treatment of classes of agricultural land -- as long as taxation within the class is uniform and proportionate. As an example, irrigated land could be valued differently than pasture, but as long as the valuation within the class of irrigated land was uniform, it would be constitutionally sufficient. The measure remains in the Revenue Committee and could be considered again in 2012. UNL Ag Land Study Schilz’s idea came in part from a 2010 study by Dr. Bruce Johnson, UNL professor of agricultural economics, at the request of Nebraska Farm Bureau. The study examined the potential effects of converting to an incomecapitalization approach to valuing agricultural land. One of the findings of the study was that rates of return on pasture or grassland, as a percent of assessed value, fall considerably below the rates of return for cropland. Therefore, on the basis of an income-capitalization
approach, the current levels of assessed values for grassland are significantly high, relative to other classes of agricultural land. According to the study, if earnings-toassessed-value ratios for pasture were similar to dryland crop ground, assessed values for pasture would be roughly 50 percent of current assessed levels. One Idea: Reduce Level for Pasture One approach to address this disproportionate result of the present valuation system would be to reduce the level of value for pasture. The current constitutional requirement for uniformity and proportionality across all classes of agricultural land would not allow such a change, however; thus the need for the constitutional change. Persons who oppose such a change argue that valuing classes of agricultural land at different levels would be difficult for county assessors and the Property Tax Division of the Department of Revenue to administer, which would lead to higher costs.
Opponents also question the constitutionality of treating classes of agricultural land differently from other classes of real property. Farm Bureau Policy Current Farm Bureau policy supports an income capitalization approach as the most equitable means of valuing agricultural land for tax purposes. It also says that if an income capitalization approach is unattainable, Farm Bureau would support lowering the current 75 percent of market level of value.
Questions 1. Should Nebraska’s constitution be changed to allow classes of agricultural land to be treated differently? 2. If so, should valuation levels for pasture be reduced in relation to valuation levels for irrigated or dry land?