Farmers in “priority” watersheds will be the first to receive funding from an innovative new conservation incentives program that links federal farm conservation payments to environmental performance.

The U.S. Department of Agriculture in December released the rules for the Conservation Security Program, which pays farmers $20,000 to $45,000 annually for greater levels of conservation on their farms. Payments could be in several forms, including payments for new practices, maintenance of existing practices and exceptional conservation efforts.

“The Conservation Security Program will reward the best and motivate the rest by identifying those agricultural producers who historically have been the best stewards of their land, while providing incentives for those who want to increase conservation practices,” said USDA Secretary Ann Veneman.

Many conservation and farm groups hailed CSP as the centerpiece of a farm bill that dedicated unprecedented funding for farmland conservation programs. Many in the Bay region have seen the CSP as a way to encourage even greater efforts to curb runoff from agricultural lands, which contribute about two-fifths of the nutrients reaching the Chesapeake.

Whether the region will immediately benefit, though, is unclear. Congress has capped funding for a program that was originally designed to be an entitlement program with unlimited funding, and only provided $41 million for the current fiscal year.

To focus funds, the rule proposes to prioritize eligibility in selected priority watersheds. Once the eligible watersheds are announced, farmers would be given the opportunity to enroll in the program next summer.

CSP advocates were glad the new rule was finally released, but were disappointed that the USDA limited the program to priority watersheds.

“This quite simply is not the Conservation Security Program as it was passed by Congress and signed by the president,” said Ferd Hoefner, policy director of the Sustainable Agriculture Coalition. “The authority to severely limit the program in this way simply does not exist, either under current law or under the terms of the pending omnibus appropriations bill. Farmers were promised a nationwide, comprehensive stewardship program and they should let the USDA know they do not favor being denied access in this fashion.”

Hoefner noted that other Farm Bill provisions permit the USDA to target conservation funds at high priority watersheds, and that the USDA has not yet implemented these provisions.

Under the proposal, agricultural land in cropland, orchards, vineyards, pasture and range will be eligible for CSP, regardless of size, location or crops produced. Forest land or land enrolled in USDA land retirement programs, such as the Conservation Reserve Program, Wetlands Reserve Program or Grassland Reserve Program, are not eligible.

Farmers hoping to receive payments from the new program must address water quality and soil quality concerns, and enrollment will be targeted to those demonstrating the highest levels of stewardship. CSP payment limitations will be based on three “tiers” that represent increasing levels of “resource treatment,” according to the USDA.

The three tiers are capped at $20,000, $35,000 and $45,000 annually and will last for five years for Tier I and 5-to-10 years for Tier II and Tier III.

To be eligible for a $20,000 payment under Tier I, a farmer must meet USDA water and soil quality practice standards for part of their farm. To be eligible, for Tier II, farmers would have to meet USDA water and soil quality standards for their entire farm.

Water and soil quality practices include crop rotations, cover crops, tillage practices, prescribed grazing, nutrient and manure management, wind barriers, conservation tillage, filter strips, terraces, grassed waterways, pesticide management, and better use of irrigated water. The USDA has recently updated the agency’s official standards.

To be eligible for Tier III, farmers must have addressed “all resource concerns” to a “resource management level” and must agree to implement additional conservation practices. The USDA has also promulgated rules and regulations to clarify the steps farmers must take to meet this relatively high standard.

The Omnibus Appropriations Bill for fiscal year 2004, which was pending before the Congress at press time, restores the CSP to an entitlement program with unlimited funding. But, some officials and observers expect Congress to continue to provide annual appropriations for a program that could cost $7 billion or more over the next 10 years.

The USDA pledged to reconsider the rule if Congress restores the program to an entitlement program.
Some agricultural analysts think the CSP and other conservation programs could ultimately provide a “relief-valve” for traditional subsidy payments for grain, cotton and rice producers. Those payments have increased so much that they run afoul of limits set by trade agreements.

Such subsidies are not supposed to exceed $19 billion annually, and that cap may fall to $10 billion under a Bush administration proposal. The administration has proposed to lower such “trade distorting” subsidies to $10 billion if other nations agree to lower tariffs on U.S. exports.

“CSP could provide a simple way to reward performance and boost farm income without violating future trade agreements,” said Allen Hance, senior policy analyst for the Northeast-Midwest Institute, a Washington, D.C. think tank. “Farm groups are at least as excited about this program as conservation groups, and might really embrace CSP as one way to build a farm safety net that meets their economic needs and complies with our trade agreements.”