USDA says 'no' to penalty-free CRP opt-outs

Secretary of Agriculture Ed Schafer announced today that USDA will not allow penalty-free opt-outs this year for acres currently enrolled in the Conservation Reserve Program (CRP).

"We believe the decision that we are announcing today strikes best balance between supporting programs to protect natural resources and meeting the demands for grain production," Schafer said.

Schafer said record-high corn prices have retreated 25%, while soybean prices dropped 14%. He added that this year's floods may have had less of an impact than originally believed, and crop conditions continue to improve, with the latest conditions above the five-year average.

Even without penalty-free opt-outs, Schafer said the 2008 farm bill will lead to a smaller CRP. The farm bill lowers the cap on CRP acres, he said, from 39.2 to 32.0 million. That means the 34.7 million acres enrolled now will shrink. In September this year, 1.1 million acres expire, followed by 3.8 million in 2009 and 4.4 million in 2010. Of course some of those acres will be re-enrolled, but others will likely enter into production.