Conservation Security Program Moves Toward Implementation

Farm Business Management Update, February/March 2004

By Jim Pease

What is the Conservation Security Program?

The Conservation Security Program (CSP) is a new conservation program offered by USDA/NRCS through the 2002 Farm Bill. CSP is a voluntary conservation program providing payments and cost-share to producers who implement conservation systems on working lands of their farms. The program will reward producers who meet the highest standards of environmental management. The motto proposed by NRCS is "Reward the best, and motivate the best."

Roanoke was the site of the January 13 NRCS listing session on the proposed rules determining how the CSP will function. NRCS is currently conducting a series of 10 such listening sessions throughout the country. Comments on the new rules will be accepted until March 2, after which the program will begin to function under the final rules. This article refers to the program provisions as described in the proposed rules. Readers should note that final rules are likely to have some changes from the proposed rules, and substantial changes are always possible.

CSP was born of strange political origins. Originally proposed as a "green payments" program by environmental groups, a Senate agriculture committee chaired by Senator Tom Harkin, Democrat of Iowa, wrote it into law. After the Republican Party regained Senate control with the 2000 elections, it was widely considered that the program would never be implemented by a Republican Congress and Administration. There were proposals at one time to restrict CSP to operate as a pilot program in Iowa, but now the program has some funding and the possibility of much more.

How Will the Program Work?

A producer does not bid for CSP participation - if the producer's land qualifies and the producer submits an acceptable plan, participation is an entitlement, and a contract is developed between USDA and the producer. CSP contracts are for 5 to10 years. The producer must demonstrate control over the contract acreage for the duration of the contract, which has caused concerns from producers who rent most or all of their farmland.

The CSP program will have periodic sign-ups for producers in selected priority watersheds, depending on annual program funding and the ability of NRCS to manage the work load. NRCS will prioritize watersheds throughout the country based on a composite index of existing natural resource, environmental quality, and agricultural activity data. A watershed is the drainage area of a stream and may be defined at various scales. The scale used by NRCS will be the 8-digit U.S. Geological Survey (USGS), of which 48 are partially or totally in Virginia.

To participate in the program, the majority of a producer's farm must lie within the priority watershed. In addition, NRCS will identify enrollment categories and (possibly) sub-categories within each priority watershed, and such categories will prioritize producers within the watershed for funding until appropriations are exhausted. The definition of these enrollment categories will likely be state- or watershed-specific, based on sustaining past environmental programs addressing national resource concerns; on natural resource, demographic, and other data; and on potential for technology innovation. Higher priority categories will require additional conservation activities but will receive the highest payments. A CSP application from a farmer will be placed in the highest priority enrollment category for which it qualifies. Eligible land for a CSP proposal is defined as private agricultural land, including incidental forested land (such as a woodlot). Land that is under a CRP, Wetlands Reserve Program, or Grasslands Reserve Program contract is excluded, as is land that has not been planted or considered planted in four of the six years preceding the 2002 Act. Eligible lands include crop land, pasture land, vineyards, and orchards.

CSP participation will have three tiers, with higher tiers reflecting both greater environmental management and higher payments for implementing and maintaining conservation systems to address resource concerns. Resource concerns may vary by county and state, but the national Field Office Technical Guide (FOTG) lists Soil, Water, Air, Plant, and Animal resource category. Soil quality practices to address these concerns include crop rotations, cover crops, prescribed grazing, and others. Water quality practices include conservation tillage, filter strips, prescribed grazing, nutrient management, and others. For Tier I, the producer must have previously (prior to the application) implemented measures addressing water quality and soil quality resource concerns to the minimum treatment level as described in the state-level FOTG on part of the operation and must address the water quality resource on all the contract acreage to FOTG standards by the end of the contract. For Tier II, the producer must have previously implemented FOTG-acceptable practices to address water quality and soil quality concerns on the entire operation and must agree to address one additional resource concern on the entire operation by contract end. For Tier III, the producer must have implemented a resource management system addressing all identified resource concerns to the FOTG standard on the entire operation and must commit to additional environmental enhancement activities as defined in the contract.

CSP payments will include one or more of the following elements: 1) an annual base component, calculated as a proportion of NRCS estimates for locally rented land in 2001 of the type proposed in the contract; 2) an annual existing practice component; 3) a one-time new practice component; and 4) an enhancement component to provide incentives for exceptional conservation efforts beyond the minimum required. The five enhancement components are 1) installing additional conservation measures; 2) addressing local conservation needs; 3) participating in watershed conservation efforts; 4) on-farm research and demonstration; and 4) CSP program assessment and evaluation activities. To date, no examples give laying out possible total payments, and the proportion of payments from each of the four payment elements has not been firmly established.

Payments under CSP are subject to payment limitations by tier of participation. Tier I contracts are for five years, and payments are limited to $20,000 annually. Tier II contracts are for 5 to10 years, and payments are limited to $35,000 annually. Tier III contracts are for 5 to10 years, and are limited to $45,000 annually. These limits are not likely to be reached at the current level of program funding. The appropriations bill just passed by the Senate capped CSP expenditures at $41 million for FY2004 (ending September 30 this year). How the program develops will depend upon congressional actions, NRCS administration of this new program, and producer enthusiasm for participation. Further information can be found at www.nrcs.usda.gov/programs/csp/, or contact Virginia NRCS.

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