Capital press., June 30, 2017, Page 15, Image 15

June 30, 2017
CapitalPress.com
15
HARD CHOICES LOOM
As farms exit conservation program
Photos by E.J. Harris/EO Media Group
More than 50,000 acres are set to expire from the Conservation Reserve Program across Oregon’s Umatilla, Morrow and Sherman counties.
By GEORGE PLAVEN
EO Media Group
P
ENDELTON, Ore. — It was about
a year ago when Pendleton farmer
Henry Lorenzen learned, much to
his surprise and disappointment,
that a portion of his land would not be
re-enrolled in the federal Conservation Re-
serve Program.
As a third-generation wheat grower with
4,000 acres west of town, Lorenzen remem-
bers hearing “horror stories” from his father
about dust storms that would sweep across
the fi elds, eroding soil and kicking up a
dusty haze that reached all the way to In-
terstate 84.
Not only did the gusts cause some very
serious traffi c problems — like the 1999
pileup on I-84 that killed six people and
injured 27 others — but created signifi cant
farm management and environmental is-
sues as well.
“You lose topsoil, and ultimately you
lose productivity,” Lorenzen said.
The Conservation Reserve Program, or
CRP, was established in 1985 to help pro-
tect vulnerable areas. Administered by the
Farm Service Agency under the U.S. De-
partment of Agriculture, CRP is essentially
a rental agreement between the government
and landowners where a portion of farm-
land is taken out of production and planted
in native grasses, which in turn helps pro-
tect against erosion, increase wildlife habi-
tat and improve water quality.
General CRP contracts run for 10-15
years, with payments averaging around
$45 to $65 per acre. Land enrolled tends
to be less suitable for growing crops, and
is scored by the feds based on a number of
environmental criteria, known as the Envi-
ronmental Benefi t Index.
The program, however, was slashed in
the 2014 Farm Bill, which lowered the na-
tional enrollment cap from 32 million acres
to 24 million acres. A report by the Con-
gressional Research Service indicated the
reduction would save $3.3 billion over the
next 10 years.
More than 50,000 acres are set to expire
from CRP later this year across Umatilla,
Morrow and Sherman counties in Eastern
Oregon, and that is forcing landowners to
make some diffi cult decisions about what to
do next. They could get it back into farm-
ing, though the low price of wheat may
make it diffi cult to turn profi t. They could
try to sell the land, but without a steady
stream of revenue, the value may not be
nearly what it was.
For Lorenzen, the situation is less dire.
Only a small portion of his farm was en-
rolled in CRP, and he has already managed
to lease half of that ground to another farm-
er.
The real challenge, Lorenzen said, is for
people who retired and put their entire prop-
erty in CRP. Given the market conditions,
it will be an uphill struggle to fi nd growers
Large swaths of Stage Gulch near Interstate 84 are currently in the Conservation Reserve
Program.
willing to take on substantially more acres.
In Sherman County, growers were to
meet Friday to discuss their options moving
forward. Meanwhile, Lorenzen also wor-
ries about worsening erosion along I-84.
“It’s going to be a signifi cantly changed
environment,” he said.
Simple math
Umatilla County has 143,994 acres en-
rolled in the program, along with 110,913
acres in Morrow County and 78,800 in
Sherman County, according to fi gures pro-
vided by the Farm Service Agency.
To satisfy the shrinking cap, all three
counties will see 13-18 percent of those
acres expire by the end of the fi scal year
Oct. 1 — including 21,456 in Umatilla
County, 20,122 in Morrow County and
10,794 in Sherman County.
Taylor Murray, conservation specialist
with the Farm Service Agency state offi ce
in Tualatin, said there was no general CRP
sign-up this year and he does not expect
one will be held for the foreseeable future.
There is a subset of CRP, called the
Highly Erodible Land Initiative, that still
has room under the cap, though Murray
said the criteria for enrollment are much
more strict, leaving many farmers on the
outside looking in.
“I do fi rmly believe that, going forward,
the process is going to be much more com-
petitive,” Murray said.
Murray is cautiously optimistic that the
new USDA administration, led by Agricul-
ture Secretary Sonny Perdue, could allo-
cate another half-million acres nationwide
for general CRP.
“We could defi nitely get a piece of
that,” Murray said.
Until then, local growers are crunching
the numbers to determine their best course
of action.
Bill Jepsen, who farms wheat about 14
miles south Ione, has fi gured out the equa-
tion. As of Wednesday, soft white wheat
was selling at $4.86 per bushel. For south-
ern Morrow County growers, they pay an
additional 70 cents per bushel to ship the
grain west, putting the net price at $4.16.
Assuming an average yield of 45 bush-
els per acre, that’s $187.20 per acre on a
crop that’s grown once every other year —
given the region’s summer-fallow rotation.
Now, a typical lease agreement divvies the
receipts up one-third for landowners, and
two-thirds for farmers. That leaves $56.16
per acre to the landowner every other year.
Compare that to CRP, where a landown-
er may make up to $65 per acre every year,
and it’s not diffi cult to see where the eco-
nomic advantage lies.
“It’s pretty simple math,” Jepsen said.
“The lease won’t compare to CRP.”
Don Wysocki, extension soil scientist
for Oregon State University, said negotiat-
ing those leases will be the biggest point of
contention for farmers looking ahead.
“Do you really want to take on more
land with the price of wheat, is the ques-
tion,” Wysocki said.
Land values
Murray, with the Farm Service Agency,
said he’s heard of people try to sell land
instead of putting it back into farm produc-
tion. But that poses its own set of economic
challenges.
Todd Longgood, a broker with the
Whitney Land Co. in Pendleton, said the
issue of declining CRP acreage is having
an appreciable effect on land values. Three
or four years ago, Longgood said, CRP
ground was trading at an all-time high,
around $1,000 to $1,300 per acre. Now, it
has fallen to around $500 to $700 per acre.
“Today, we’re seeing a drastic decrease
in the land values,” Longgood said.
There is still demand for the high-pro-
ducing agricultural land, Longgood ex-
plained. But without the steady income that
CRP provided for less productive acres,
sellers are being forced to adjust their ask-
ing price.
While there hasn’t been a market glut
yet, Jim Whitney, the owner and president
of the Whitney Land Co., said there is a
“very real possibility” they could become
oversupplied with CRP land depending on
how landowners react.
“It makes no sense to put more ground
into wheat right now,” Whitney said.
There are other natural attributes that
could make expired CRP land attractive to
potential buyers. Some farmers may con-
sider using the ground for growing organ-
ic crops, since it hasn’t been sprayed with
chemicals in over a decade. Any springs or
water sources could provide fl exibility to
convert the land to cattle pasture.
Wildlife and recreational opportunities
are also a big plus, Whitney added.
“People pay a lot of money for recre-
ation today,” he said.
Though the market is cyclical, Long-
good said the conditions now have lent
themselves to a perfect storm.
“There’s still demand for (land). It just
has to be priced adequately,” Longgood
said.
Being picky
Eric Orem, a Morrow County wheat
grower who farms primarily on leased
ground, said that while CRP is a good tool,
he was never a big fan of the program and
felt it took opportunities away from young-
er farmers.
“If you look back in the mid-’70s, there
were 270 to 280 farmers and now there’s
about 75 or 80,” Orem said. “A big chunk
of that was ground put into CRP.”
With more land available, Orem said
more farmers could get the chance to start
working, which would benefi t communities
economically.
As opposed to CRP payments going to
landowners who may not even live in the
county, growers will be out hiring employ-
ees spending money at local farm equip-
ment dealers.
But he acknowledged that is easier said
than done with today’s wheat prices, not to
mention the high up-front cost of putting
CRP ground back into production.
“Those are really tough grasses to kill,”
he said. “It takes a lot of heavy tillage to get
it worked out. Then, what you fi nd there are
almost no nutrients left in the soil.” Orem
said he expects farmers will be picky if they
decide to take on more leased land, espe-
cially on ground that may already be mar-
ginal at best.
Murray said he realizes the diffi culties
growers are facing, while adding the Farm
Service Agency is doing everything it can
to advocate for more acres in the program.
“There will be some hard decisions, for
sure,” Murray said.
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