NY Times, April 9, 2008
The Food Chain
As Prices Rise, Farmers Spurn Conservation Program
By DAVID STREITFELD
Out on the farm, the ducks and pheasants are losing ground.
Thousands of farmers are taking their fields out of the government’s
biggest conservation program, which pays them not to cultivate. They are
spurning guaranteed annual payments for a chance to cash in on the boom
in wheat, soybeans, corn and other crops. Last fall, they took back as
many acres as are in Rhode Island and Delaware combined.
Environmental and hunting groups are warning that years of progress
could soon be lost, particularly with the native prairie in the Upper
Midwest. But a broad coalition of baking, poultry, snack food, ethanol
and livestock groups say bigger harvests are a more important priority
than habitats for waterfowl and other wildlife. They want the government
to ease restrictions on the preserved land, which would encourage many
more farmers to think beyond conservation.
Kerry Dockter, a rancher in Denhoff, N.D., has about 450 acres of
grassland in the program. “When this program first came about, it was a
pretty good thing,” he said. “But times have definitely changed.”
The government payments, Mr. Dockter said, “aren’t even comparable
anymore” to what he could make by working the land. He plans to devote
some of his conservation acres to growing feed for his cows and some to
grazing. He might also lease some land to neighbors.
For years, the problem with cropland was that there was too much of it,
which kept food prices low to the benefit of consumers and the detriment
Now, because of a growing global middle class as well as federal
mandates to turn large amounts of corn into ethanol-based fuel, food
prices are beginning to jump. Cropland is suddenly in heavy demand, a
situation that is fraying old alliances, inspiring new ones and putting
pressure on the Agriculture Department, which is being lobbied directly
by all sides without managing to satisfy any of them.
Born nearly 25 years ago in an era of abundance, the Conservation
Reserve Program is having a rough transition to the age of scarcity. Its
35 million acres — about 8 percent of the cropland in the country — are
the big prize in this brawl.
Groups like Ducks Unlimited and Pheasants Forever want the government to
raise rental rates to keep the same amount of land in the program or
even increase it. While offering more money to farmers might be a
difficult sell in a year of record farm profits, Jim Ringelman of Ducks
Unlimited said, “There are overriding environmental issues here.”
The bakers and their allies have a different set of overriding issues:
high commodity prices. The rising cost of feed is hurting ranchers, the
rising cost of corn is hurting ethanol producers and the rising cost of
wheat is hurting bread makers.
“We’re in a crisis here. Do we want to eat, or do we want to worry about
the birds?” asked JR Paterakis, a Baltimore baker who said he was so
distressed at a meeting last month with Edward T. Schafer, the
agriculture secretary, that he stood up and started speaking “vehemently.”
The Paterakis bakery, H&S, produces a million loaves of rye bread a
week. The baker said he could not find the rye flour he needed at any
price. That gives him two unwelcome options: close half of his
operations starting in July, or experiment with a blended flour that
will yield a different and possibly less-than-authentic rye bread.
Such problems were never contemplated when the Conservation Reserve was
conceived as part of the 1985 Farm Bill. Participants bid to put their
land in the program during special sign-ups, with the government
selecting the acres most at risk environmentally. Average annual
payments are $51 an acre. Contracts run for at least a decade and are
nearly impossible to break — not that anyone wanted to until recently.
“Older farmers put their land in the program rather than renting to a
younger farmer or selling,” said Dale Schuler, who grows wheat in Fort
Benton, Mont. That made it difficult for farmers who wanted to expand as
well as farm equipment dealers, supply co-ops and other services, which
suffered declines in business.
“It’s certainly been a polarizing issue,” Mr. Schuler said. “Half the
people love it and half the people hate it.”
While few urban dwellers ever heard of Conservation Reserve, it found
support among two important constituents: hunters had more land to roam
and more wildlife to seek out, with the Agriculture Department
estimating that the duck population alone rose by two million; and
environmentalists were pleased, too. No one disputes that there are real
environmental benefits from the program, especially on land most prone
The program peaked late last summer, with more than 400,000 farmers
receiving nearly $1.8 billion for idling 36.8 million acres. Put all
that land together and it would be bigger than the state of New York.
The group doing the most to undermine this amiable coexistence is the
farmers themselves. Last fall, when five million acres in Conservation
Reserve came up for renewal, only half of them were re-entered. While
the program has gained some high-priority land in the last few months,
in part from an initiative to restore bobwhite quail habitats, the net
loss is still more than two million acres.
That is just the beginning, warns Ducks Unlimited, a politically potent
organization with more than half a million members in the United States.
Ducks Unlimited is concerned about the three-quarters of a million acres
of grassland that were removed from the program last year in the
so-called duck factory in the Upper Midwest.
“We foresee a dramatic reduction,” said Mr. Ringelman, a conservation
director for the association.
Ardell Magnusson, a farmer in Roseau, Minn., shows the changing mood. He
said the program was “a godsend” when he put 300 of his 2,300 acres into
it eight years ago. “I needed some guaranteed income or my banker was
going to tell me to find another occupation,” Mr. Magnusson said. It is
not exactly a bonanza: he gets about $12,000 a year.
He calculates he can make more than that by farming sunflowers or wheat
or soybeans. When his contract expires in two years, he plans to
withdraw about half his land. It would not be a shock if the Agriculture
Department cut him loose sooner. “Another nine months of wheat at
today’s prices and there will be political pressure on this program like
you wouldn’t believe,” Mr. Magnusson said.
That pressure is exactly what the bakers and their allies are aiming
for, saying the Conservation Reserve costs taxpayers and hurts consumers.
“This program is taking money out of your pocket twice a day,” said Jay
Truitt, vice president for government affairs for the National
Cattlemen’s Beef Association. “Do you think it’s right for you to pay so
there’s more quail in Kansas?”
The cattlemen and bakers argue that farmers should immediately be
allowed to take as much as nine million acres out of the Conservation
Reserve without paying a penalty, something they say would not harm the
“The pipeline for wheat is empty,” said Michael Kalupa, a bakery owner
in Tampa, Fla., who is president of the Retail Bakers of America. Mr.
Kalupa said the price he paid for flour had doubled since October. He
cannot afford to absorb the cost and he cannot afford to pass it on.
Sales have been falling 16 percent to 20 percent a month since October.
He has laid off three employees.
Among farmers, the notion of early releases from conservation contracts
is prompting sharp disagreement and even anger. The American Soybean
Association is in favor. “We need more food,” said John Hoffman, the
The National Association of Wheat Growers is against, saying it believes
“in the sanctity of contracts.” It does not want more crops to be grown,
because commodity prices might go down.
That is something many of its members say they cannot afford, even with
wheat at a robust $9 a bushel. Their own costs have increased, with
diesel fuel and fertilizer up sharply. “It would decrease my profit
margin, which is slim,” said Jeff Krehbiel of Hydro, Okla. “Let’s hurt
the farmer in order to shut the bakers up, is that what we’re saying?”
Mr. Krehbiel said his break-even last year was $4 a bushel. This summer
it will be $6.20; the next crop, $7.75.
In the struggle between those who would shrink the program and those who
would bolster it, the Agriculture Department is leaning toward the
latter. When Mr. Schafer spoke recently before wildlife and hunting
groups in Phoenix, he opened the door to significantly raising rents on
Randy Schuring, a dairy farmer with 200 acres in the program, said there
was no possible solution that would make everyone happy.
“If the government lets the land out and then crop prices fall, that’s
going to hurt a lot of farmers,” said Mr. Schuring, whose farm is in
Andover, S.D. “If it doesn’t let the land out and prices keep going up,
that will hurt a lot of consumers. If only we had a crystal ball.”