U.S. Program that Pays Farmers to Idle Cropland Shrinks to 25-year Low

The U.S. program that pays farmers to idle fragile cropland soon will protect the smallest amount of land in a quarter-century, the government said on Monday, the result of several years of sky-high commodity prices that have encouraged farmers to plant as much as possible.

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WASHINGTON (Reuters) - The U.S. program that pays farmers to idle fragile cropland soon will protect the smallest amount of land in a quarter-century, the government said on Monday, the result of several years of sky-high commodity prices that have encouraged farmers to plant as much as possible.

The Conservation Reserve will hold roughly 25.3 million acres (10.2 million hectares) on October 1, down in size by one-third from its peak of 36.8 million acres in 2007.

It would be the smallest area in the long-term set aside since 1988, when the program was two years old. Some 26.9 million acres is enrolled at present. Contracts on 3.3 million acres expire at the end of this fiscal year and 1.7 million acres are approved for entry on Oct 1.

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Enrollment has fallen during the agricultural boom that began when global demand for crops surged. Market prices for U.S. corn and soybeans have more than doubled since the 2006 harvest. Keen for profits, owners returned land into production.

"Prices have been high, obviously," said Pat Westhoff of the think tank Food and Agricultural Policy Research Institute. He said the lower prices expected to follow this year's harvest could the annual payment from the reserve more attractive.

Participation in the reserve is voluntary, with landowners submitting bids for an annual rental payment and the Agriculture Department looking for land with the highest environmental benefit if held out of production.

The farm bills pending in Congress would lower the cap on enrollment to 24 million or 25 million acres later this decade. It has been as high as 39 million acres and was set at 32 million acres in 2008.

Lawmakers expected to get credit for saving money by lowering the Conservation Reserve ceiling. But the savings will be smaller if enrollment drops on its own and if the new farm law is not passed soon.

(Reporting by Charles Abbott; Editing by Leslie Gevirtz)

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