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http://www.eenews.net/eenewspm/print/2007/02/05/1

Allison Winter, E&ENews PM reporter

The Bush administration wants to put a hold on the nation's largest land retirement program next year, in response to soaring prices for grains and land brought on by the ethanol boom.

Agriculture Secretary Mike Johanns said today he wants to eliminate a general sign-up for the Conservation Reserve Program and the Conservation Security Program in 2007 and 2008.

Johanns said the proposal on CRP, which pays to idle working farmland, was due to the "need for increased corn production to meet demand."

"There doesn't seem to be a lot of doubt there is a lot of pressure out there," Johanns said. "The price of corn is very, very high. People are trying to make a decision on what they are going to do."

The demand for ethanol has pushed corn prices to record highs of over $4 per bushel, double the amount from two years ago. The climbing prices have started to place a strain on some livestock and food producers, and some groups have called for land to come out of CRP and into production.

Environmental and hunting groups have been pushing against any changes to CRP because of the benefits and habitat it provides to ducks, pheasants and other birds. USDA expects there would be 33.6 million acres enrolled in 2008, down from 36.1 million acres last year.

USDA chief economist Keith Collins said the decision would give farmers more time to decide if they want to plant any of the CRP land but also save the government money since it has to bid against the market for the per-acre payment.

"To run CRP, you have to pay the going rental rate for land, which is going up sharply, so it not only takes land away from commodity production, it also results in an inordinately expensive CRP," Collins said.

The fiscal 2008 budget request that the administration released today includes funding for CRP and the Conservation Security Program, but USDA officials said that would go toward ongoing contracts or deterred future sign-ups. The budget includes just over $2 billion for CRP and $316 million for CSP.

The administration would also put sign-ups on hold for the CSP, which pays farmers for environmental stewardship on working lands, and save the money for an increase in the program in 2009.

"What we are proposing is that we lay that funding over the life of the program and get the money out there faster," Johanns said. "This is one area where our proposal will do a lot of good."

Johanns said the structure of CSP calls for a big increase in spending in the eighth or ninth year of the program.