Agriculture Reference
In-Depth Information
and environmentally sensitive cropland and pasture from production (USDA-FSA
2009). However, millions of acres of erodible land may be removed from CRP in the
following years due to farmers adopting different soil conservation practices on lands
leasing CRP or reverting to potentially erosive row crop production (RCP). Shakya
and Hitzhusen (1997) carried out a BCA concerned with the sustainable future use of
the most erosive and downstream damaging croplands. The question addressed was
whether planting trees on these lands could be one economically viable choice. BCA
of CRP, white pine plantation (WPP), and RCP suggests that WPP is a viable option
for some more erosive CRP lands in the Midwest with proximity to a paper mill.
Furthermore, federal expenditure could be minimized by reducing corn subsidies to
a level where WPP would maintain its economic feasibility when compared to both
CRP and RCP. Besides meeting all the goals of CRP, WPP also ensures longer-term
environmental protection and provides a marketable product.
A more recent BCA of CRP in an M.S. thesis by Sarah Kiger has been concerned
about the reduced CRP enrollment from higher corn prices resulting from increased
demand for food, feed, and ethanol fuel feedstock (Kiger 2009). The latter has been
compounded by corn ethanol subsidies and protective tariffs (Wright 2011). The
focus of the Kiger thesis research is twofold: to extend Shakya's (1992) research on
the economic estimates of the downstream environmental benefits of and costs of
CRP and to do a preliminary assessment of the technical and economic potential of
ethanol production from CRP land cellulosic feedstock.
M.S. thesis research by Kiger conducted both financial and economic analysis of
CRP land in Ohio. These analyses are different but complementary since financial
analysis takes the accounting stance of the individual CRP-enrolled farmer, while
economic analysis takes a societal accounting stance. The following variables are
considered as benefits (+) and costs (-) for CRP depending on whether one is doing
financial or economic analysis:
CRP:
financial:
F
s
+
B
on
+ 1/2
C
ec
- 1/2
C
mc
=
R
l
(10.3)
economic:
B
of
+
B
on
+
B
w
+
B
rh
-
C
op
-
C
cc
-
C
ec
-
C
mc
=
R
s
(10.4)
where
B
of
= off-site benefits from reduced soil erosion;
B
on
= on-site benefits from
reduced soil erosion;
B
rh
= benefits of recreation, including freshwater recreation,
hunting;
B
w
= benefits of wildlife viewing;
C
ec
= establishment costs for CRP cover
crops;
C
mc
= maintenance costs for CRP land, including mid-harvest management;
C
op
= social opportunity cost of land, includes rental value of land without consider-
ing federal crop subsidies;
F
s
= government rental payment for CRP;
R
l
= return to
land (to the farmer); and
R
s
= return to society.
For the financial analysis of CRP, the annual rental rate paid by the government
(
F
s
) is considered a benefit as it is a source of farmer income for enrolling in the
CRP and not producing a crop. The other benefits of CRP included in this analysis
are the on-site benefits from reduced soil erosion (
B
on
) calculated for the average of
Ohio in the economic analysis. The costs of CRP to farmers are 50% of the yearly
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