Opposition Mounts Against Johanns Corn Decision

WASHINGTON – Thirty-seven national and state organizations representing a broad spectrum of U.S. agribusiness, livestock and poultry have urged Secretary of Agriculture Mike Johanns to reconsider his March 30 decision not to allow penalty-free early release of acres from the Conservation Reserve Program (CRP) for 2007.
calendar icon 4 May 2007
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In a previous letter to Johanns, many of the same organizations had noted their support for the goal of reducing reliance on fossil fuels and imports of foreign oil. But they cautioned that the market faces significant challenges in producing adequate quantities of corn and other grains to meet growing ethanol demand, particularly during the next several years given the uncertainty over when – or even whether – cellulose becomes proven as an economically viable feedstock. The groups advised it was unwise to base government policies “strictly on the hope that a technological breakthrough will occur at some future unknown point in time, in particular when so many sectors’ economic health” are riding on the outcome.

During and subsequent to the release of the U.S. Department of Agriculture’s (USDA) initial plantings intentions report on March 30, Johanns said that penalty-free early release of CRP acres would not be permitted in 2007. At that time, he also said he would delay a decision on whether to allow penalty-free early outs from the CRP for 2008.

The National Grain and Feed Association (NGFA) and the other organizations noted that weather uncertainties between now and harvest – including the delay in spring corn planting – could adversely affect the size of the 2007 corn crop. The groups encouraged Johanns to reconsider his decision that no acreage be released from the CRP penalty-free in case such action is warranted to meet food, feed, fuel and export needs.

Further, “even with a large crop in 2007, another substantial increase in corn acreage will be required again in 2008 to meet the rapidly increasing production of corn-based ethanol,” the organizations added. “Although non-environmentally sensitive cropland in CRP cannot provide all the additional cropland for corn next spring, this CRP acreage can, nonetheless, provide a good measure toward meeting the anticipated, necessary expansion of cropland for corn next year.”

Current projections are that ethanol plants already in operation or under construction will have a production capacity in excess of 14 billion gallons by 2010, which would consume more than 5 billion bushels of U.S. corn – representing about half of U.S. corn produced last year.

USDA’s current rules impose prohibitive disincentives for bringing land out of the CRP before contract expiration. Landowners are required to repay all rental payments for every year the land has been in the CRP, as well as all cost-share payments. Further, landowners are assessed interest and liquidated damages on both rental and cost-share payments, plus liquidated damages amounting to 25 percent of one year’s annual rental payment. These USDA-imposed penalties do not include the additional costs associated with preparing CRP-idled tillable land that has been planted to grasses or other cover crops.

The NGFA and the other organizations also urged Johanns not to authorize a general CRP signup in either 2007 or 2008. Rather, the organizations said, any new CRP enrollments should be limited to lands that have the highest environmental value, such as buffer strips and grassed waterways that are eligible for the CRP’s continuous sign-up provisions. Johanns has said USDA does not plan to offer a general CRP signup in 2007, but remains “open to the possibility” of doing so in 2008.

The NGFA, established in 1896, consists of 900 member companies from all sectors of the grain, feed, processing and exporting business that operate about 6,000 facilities nationwide and handle more than 70 percent of all U.S. grains and oilseeds.

Twenty state and regional grain and feed associations affiliated with the NGFA joined in co-signing the letter to Johanns, including the: Agribusiness Association of Iowa, California Grain and Feed Association, Grain and Feed Association of Illinois, Indiana Grain and Feed Association, Kansas Grain and Feed Association, Michigan Agribusiness Association, Michigan Bean Shippers Association, Minnesota Grain and Feed Association, Missouri Ag Industries Council, Nebraska Grain and Feed Association, North Dakota Grain Dealers Association, Northeast Ag and Feed Alliance, Ohio AgriBusiness Association, Oklahoma Grain and Feed Association, Pacific Northwest Grain and Feed Association, Penn Ag Industries Association, Rocky Mountain Agribusiness Association, South Dakota Grain and Feed Association, Tennessee Feed and Grain Association, and Texas Grain and Feed Association.

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