USDA won't say if it will ease land reserve exits
Mon Dec 4, 2006

By Charles Abbott

WASHINGTON (Reuters) - The U.S. Agriculture Department declined to
say on Monday if it would ease stringent penalties for farmers who
want to cash in on high grain prices by pulling land out of the long-
term Conservation Reserve.
The reserve is seen as a potential source of land to expand U.S.
grain output, now strained by the ethanol boom. Corn prices are at a
10-year high and U.S. stockpiles are expected to be halved in the
coming year.
If landowners want to withdraw land before their Conservation Reserve
contracts expire, they must refund all rental payments they have
received plus interest and liquidated damages, said a USDA spokesman.
"We do not want to speculate on the question that USDA may be
considering changes," said spokesman Wayne Baggett in an e-mail.
Comparatively small amounts of land will be released from the 36.7
million-acre Conservation Reserve in the next couple of years as
contracts expire compared with the 325 million acres or so of U.S.
cropland.
About 3 million acres were released this fall, USDA data indicates,
with 1.1 million acres (440,000 hectares) expected to mature in
October 2007 and 3.6 million acres in September 2008.
Agricultural economist Otto Doering at Purdue University said last
week that growers were likely to turn some pasture land to corn
production next year. Farmers also are likely to shift land to corn
from other crops or stay with corn rather than following the pattern
of rotating to another crop, he said.
Ethanol is forecast to consume 20 percent of this year's corn crop.
Some agribusiness groups say the figure will reach 35 percent in
coming years and have suggested that USDA's land stewardship programs
should go on a diet.
Created in 1985, the Conservation Reserve pays landowners an annual
rent if they idle environmentally fragile land for at least 10 years.
Average rent is $43.88 an acre for a payment total of $1.8 billion a
year.