The Effects of Changing Commodity Prices On the CRP

How might increases in commodity prices, along with the acreage reduction mandated in the 2008 Farm Act, impact the Conservation Reserve Program (CRP)? Modeling StrategyThe Likely To Bid (LTB) model “restarts” the CRP from scratch. Uses National Resources Inventory data to find parcels “likely” to offer acreage to the CRPPolicy scenariosWe consider several scenarios, both with and without increases in CRP rental rates.Continuation of current prices, which are well above prices prevalent when most CRP contracts were enrolledPredicted prices due to an increase in biofuels production to 15 billion gallonsExpectation that summer 2008 prices will be the normFindingsContinuation of current, relatively high commodity prices would have noticeable impacts on the costs and environmental benefits of the CRPAdditional impacts due to increasing ethanol production (from 6.5 to 15 billion gallons) would be relatively minorAdditional impacts of a recurrence of summer 2008 prices would be substantial