Published on 02/05/96

Farmers Face Decisions as CRP Contracts Expire

For the past 10 years, farmers raised trees instead of annual row crops on almost 2 percent of Georgia's 37 million acres as a part of the Conservation Reserve Program.

But contracts expire on more than a third of that land during 1996, and landowners have to decide whether to keep their land in pine trees or convert it back to row crops.

"The land in the program is unsuitable for row crops," said David Moorhead, a forest regeneration specialist with the University of Georgia Extension Service. "Partly because of that, most farmers will see long-term profitability in keeping the land in trees."

The 10-year CRP contracts on almost 260,000 acres expire in 1996 -- nearly five times as many acres as in 1995. Through 1999, contracts on another 400,000 acres expire.

The CRP began in 1985 as a part of that year's farm bill, and most participating farmers signed contracts in the first three years of the program.

The land farmers chose to enter in the program is highly erodible and historically grew row crops. CRP designers aimed to protect that land by converting it to less intensive agricultural use.

Had they kept their land in row crops, Moorhead said, farmers would likely have lost money.

"The cost of producing crops on that land would have been greater than the sale value of the crops grown," he said. "The land just wouldn't have been able to support the crop."

Putting the land in trees trimmed surplus commodity stocks, reduced soil erosion (which improved water quality) and supported larger wildlife and game populations. And annual payments helped farmers pay to manage the land while they weren't producing crops.

"In this region, pine trees offer fantastic rates of return over time," Moorhead said. "Farmers have several options for land coming out of the CRP, but keeping it in trees could be the most profitable one."

While the land is still under contract, farmers can lease the land for hunting but can't harvest any other commodity. Support payments averaging $43.06 per acre per year provide an income for farmers to maintain and manage their program acres.

Now that farmers are looking for another income plan for their CRP land, they need to carefully weigh their choices.

Keeping land in trees could be the most profitable choice, but immediate income would be low. Besides leasing the land to a pine straw harvester, farmers may have to wait three to five years before seeing any income, Moorhead said.

Most CRP trees are 10 to 12 years old. At about 15 years, the stand must be thinned to allow the remaining trees enough room to keep growing. Trees cut down in the thinning process can be sold as pulpwood.

After 15 years, tree stands can be thinned every five to seven years to keep the stand healthy. Georgia ranks fifth in the world in pulpwood harvests.

"Think of the stand as a living savings account," Moorhead said. "Every five or so years, the stand has accumulated a certain amount of interest the farmer can withdraw."

Keeping the land in trees isn't farmers' only option. Others include leasing the trees to pulpwood contractors until they reach maturity, or clear- cutting them to produce annual crops.

"Farmers need to remember why they chose this land for the program as they make their decisions now," Moorhead said. "If it wasn't profitable to produce row crops 10 years ago, it probably won't be now."

Some farmers near urban areas may be able to sell their land to developers, but Moorhead said only 2 percent to 5 percent would reasonably have that option.

The county Extension office has more information about the CRP and can help landowners make sound management decisions as their contracts end.