oversight

General Accounting Office's View on the Conservation Provisions of the 1990 Farm Bill

Published by the Government Accountability Office on 1990-03-15.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                   United   States General    Accounting      OfWe
                   Testimony




For Release         General     Accounting      Office's        View on the
on Delivery         Conservation       Provisions        of   the 1990 Farm   Bill
Expected    at
10:00 a.m. EST
Thursday
March 15, 1990




                    Statement   for the record     of John W. Harman
                    Director,   Food and Agriculture      Issues
                    Resources,    Community,   and Economic
                    Development    Division

                    Before    the
                    Subcommittee     on Department       Operations,
                    Research,     and Foreign    Agriculture,
                    Committee     on Agriculture
                    House of Representatives




GAO/T-RCED-90-49                      /                                  GAOForm160(12/271
Mr. Chairman      and Members of the Subcommittee:


        We appreciate        the opportunity      to present     for the record GAO's
views on soil and water programs related                  to the Food Security        Act
of 1985, and on potential              changes the Congress may want to consider
for the 1990 farm bill.               This statement    is based primarily        on
information       contained       in three GAO reports'       and on-going     work for
Chairman E. (Kika) de la Garza, House Agriculture                      Committee,    on
conservation         compliance     and for Chairman Mike Synar, Environment,
Energy,     and Natural         Resources subcommittee,       Committee on Government
Operations,       on the U.S. Department          of Agriculture's       (USDA) water
quality     efforts.        The on-going     work, discussed       with the permission
of the requesters,            is preliminary     and subject     to change.

        Conserving        and protecting       soil and water resources              is
important     not only to the agricultural                community but to the nation
as a whole.         The Food Security         .Act of 1985 (P.L. 99-1987,                contained
several    new conservation           provisions      in Title      XII,    including       the
conservation        reserve program (CRP), conservation                   compliance,         and
provisions       that prevented         the conversion         of fragile      lands to
cropland.        In addition       to these programs,           USDA began a Water
Quality    Initiative        in 1990 to protect          water resources          from the
harmful    effects        of agricultural        chemicals      and fertilizers,           and has
an on-going        effort    on low-input,        sustainable       agriculture         (LISA)
methods that use fewer chemicals                   and fertilizers.




'Farm Programs:       Conservation  Reserve Program Could Be Less Costly
and More Effective       (GAO/RCED-90-13,  NOV. 1989); U.S. Department of
Agriculture:     Interim    Report on Ways to Enhance Management
(GAO/RCED-90-79,      Oct. 26, 1989); and Agriculture   Issues (GAO/OCG-
89-12TR, Nov. 1988).
                                                1
       Over the past several         years, GAO has undertaken        work in each
of these areas.        In summary, our work shows that the agricultural
community has made gains in conserving              and protecting     the nation's
soil    and water resources.         However, opportunities        to achieve even
greater    benefits    from these programs have been missed.              The new
farm bill    provides      the opportunity    to achieve even greater        benefits
in the future       by expanding     the coverage of these programs and
through increased        integration     and coordination     of the programs.

IMPROVEMENTS IN SOIL CONSERVATION
HAVE OCCURRED, BUT MORE
CAN BE ACHIEVED

       Two programs established           by the Food Security           Act that
influenced    the nation's        soil conservation        efforts     were the CRP and
conservation     planning     for farms not participating              in the CRP.
These programs,      directed      at highly     erodible     cropland,     helped reduce
the environmental       impacts of agricultural            production.       However,   the
CRP was less effective          than it could have been because of how USDA
implemented     the program.         Further,    because the act applies          to only
the most highly      erodible      land (about one-third           of the 423 million
acres of cropland)        in the United States,           there is an opportunity         to
achieve even greater        benefits       in the future.

       As we stated     in our previously    issued report     on the CRP, the
program has had a positive         impact on soil conservation.        Under this
program,   the Secretary      of Agriculture    can enter into contracts       with
producers    to remove highly      erodible  cropland   from production     for 10
to 15 years     in return   for annual rental      payments.    As of January
1990, about 34 million        of the authorized     45 million   acres have been
enrolled.      USDA estimates    that soil erosion     on these acres will      be
reduced by about 650 million          tons per year.

     While reducing         soil erosion     was a major objective     of CRP, USDA
chose not to target         cropland   eroding   at the highest    rates--land
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eroding    at 70 or more times the rate at which new soil is replaced.
USDA could have targeted          the enrollment   of the most highly
erodible     land by evaluating        bids on the basis of their      contribution
to reducing      soil erosion     or on the basis of the cost per ton of
soil    saved.    By including      soil erosion  criteria      in its bid
acceptance      system, USDA would have increased           enrollment   of cropland
eroding     at the highest     rates and increased       program effectiveness.

        Further,      USDA relaxed        the implementing       regulations       for the
conservation        compliance       provisions      of the act that were designed,
in part,      to encourage enrollment             of the most highly         erodible
cropland      in the CRP. By relaxing              the conservation         compliance
rules,    USDA eliminated          the incentive       for farmers to enroll           their
most highly        eroding     land in the CRP. Instead,             under alternative
conservation        plans,     producers      can continue      farming their        most
highly     erodible      acres,    although     they must still         reduce,    to some
extent,     erosion      on these acres.          As a result,      about     70 percent     of
the most highly          erodible      land eligible      for the program,         as measured
by actual       erosion,     had not been enrolled           through      1988.    To some
degree, however, USDA's ability                 to target      and enroll      the most
highly     erodible      land is limited        by the provision          of the act that
restricts       enrollment       to 25 percent       of cropland      in any one county.
As a result,         enrollment      has been closed in about 60 counties.

      Producers   with highly   erodible   land that is not enrolled            in
CRP must develop conservation       plans to continue      receiving      federal
farm program benefits      on such lands.     Our on-going     work for
Chairman de la Garza shows that over 1.3 million             conservation
plans have been prepared,      as of January 7990.       About     27 percent      of
these conservation     plans have already     been implemented.         The
remainder   must be implemented     by 7995.


        Changes in farming practices   called  for in these plans                     could
significantly     reduce soil erosion  if actually   implemented.
However, actual      soil savings may be less than anticipated.                       For
                                              3
example,   some plans require      the installation        of terraces    that may
not be affordable     given the level       of funding     available   for cost-
sharing  and technical     assistance.       As a result,      some of the plans
may not be implemented      as initially       anticipated     and thus are
subject  to enforcement     actions      or renegotiation.

       Since conservation            planning     addresses     only about one-third
(142 million         acres) of the 423 million             acres of U. S. cropland,
there are millions             of acres that may be experiencing             moderate to
severe erosion,           but that are not required            to have conservation
plans.      For example,         land eroding       at 50 tons per acre per year
would be classified             as highly     erodible     under USDA's definition,          but
if that land were eroding                at 30 tons per acre per year it would not
be considered          highly    erodible     and therefore       not subject     to the act.
While attacking           erosion    on the most highly          erodible   land was a
reasonable       first      step given USDA funding           and staffing      constraints,
it may now be time to consider                 addressing      lower but still       high
levels    of erosion         on the remaining        cropland.       There is considerable
potential      for environmental           benefits     on these lands and
incorporating          them into agricultural           resource     policy   is important.
Therefore,       gradually       expanding      conservation      planning    to include     all
eroding     cropland       may be advisable.

WATER RESOURCESNEED
MORE ATTENTION

        The agriculture     sector   is a major contributor           to the
degradation      of water quality      from non-point      pollution       sources
through its use of pesticides            and fertilizers.         Efforts    to minimize
agriculture's       impact on water quality          will surely     alter   future
production      practices.    Although     USDA has taken some steps to
protect     water resources,      our issued reports       and on-going        work
highlight     opportunities     to improve the protection            of our water
resources.


                                               4
         In our CRP report,            we pointed      out that while the opportunities
existed      to address surface           and groundwater            degradation,      USDA
implemented        the program primarily             as an erosion         control     program.
Reducing soil erosion               on CRP acres has, to a limited                 extent,
reduced sedimentation               of reservoirs       and streams and the amount of
chemicals        and fertilizers         washed into such water bodies.                    However,
USDA did not take any specific                  action     to address water quality
concerns until         the sixth CRP sign-up              period       in 1988, after        22
million      acres were already           enrolled.        At that time USDA expanded
the CRP eligibility             criteria     to include        "filter     stripsn2      for
 cropland      that pose a substantial              threat     to the degradation            of water
quality.         Because of this late start,               only about 49,000 filter
 strip     acres were enrolled           through January            1990.

       Further,      when establishing       maximum acceptable        rental    rates,
USDA tended to favor areas suffering                predominately       from wind-caused
erosion    over areas suffering         predominately       from water-caused
erosion    problems,      thereby missing      another opportunity          to address
water quality        concerns.     As a result,      more land suffering         from
wind-caused       erosion    tended to be enrolled        in the CRP compared with
land suffering        from water-caused       erosion,    which is generally
considered      to cause greater       environmental      damage.      After   the sixth
CRP sign-up,       USDA did raise      maximum rental       rates by $5 to $25 per
acre in about        600 counties     where water quality         problems are a
concern.

        Issues  that warrant    consideration     in the 1990 farm bill   are
allowing   continued    enrollment      in the CRP, up to a maximum of 45
million   acres,    and modifying     the 25-percent    county cap in areas
suffering    from water quality      problems.      USDA has made similar
proposals    in its report     on the 1990 farm bill.



2Filter  strips  are 66-to 99-foot   wide strips     of grass,    shrubs,                        or
trees planted   along streams and bodies of water to reduce the
amount of sediment    and chemicals  entering    surface   waters.
                                    5
      As a result     of our interim    report     on management issues to the
Secretary    of Agriculture,     we found that the implementation          of the
Department's    strategy     to address water quality        reflected  individual
agency programs and that more coordination              between agencies was
needed.     We also found that greater         involvement     by the Secretary
was needed on this issue.

         Our on-going       work for Chairman Mike Synar supports                    this view.
Even though USDA has been operating                   programs related          to water
pollution       for more than 35 years,            it only recently         developed
official      policies      encouraging     producers       to consider       the effects
their     farming     practices     could have on water quality.                  In 1986 the
Department        issued a policy       on non-point        source contamination.              The
following       year USDA developed         a policy      on groundwater          protection.
However, these policies            do not cover all aspects of water quality
and overlap.          For example,      the policies        do not prohibit          point-
source pollution          of surface      waters by agricultural            operators.
Further,      the existence       of two overlapping          policies      is potentially
confusing       and may increase        the risk that water resources                  may be
contaminated.           For example, when ridge tilling               practices        are used
to reduce the runoff            of agricultural         chemicals,      in compliance         with
the non-point         source pollution        policy,     the water is more likely               to
percolate       through the soil        to groundwater,         possibly      taking      chemical
contaminants         with it.

         In addition,     although     USDA has developed          numerous coordinating
mechanisms,       such as the Secretary's           Policy     Coordination       Council    and
the Working Group on Water Quality,                 to oversee its water quality
efforts,     it has not established            a permanent,      full-time,       Department-
wide mechanism to oversee the planning,                    implementation,        and
evaluation      of all of the Department's            water quality          programs and
activities.         Currently,     responsibility        is divided       between the
Working Group on Water Quality               and numerous Assistant             Secretaries
with water quality-related             programs.      The working         group does not
appear to have authority             to monitor     overall     water quality        progress
                                                6
and to change the directions       of programs,     if necessary. In
addition,    it is unclear  if this working group is responsible                         for
both internal     as well as external    coordination.

         Further,       USDA has not coordinated             its Water Quality
Initiative,          begun in 1990, with its LISA program.                    The Water
Quality      Initiative           is designed      to determine     with more precision        the
nature of the relationship                  between agricultural         activities     and
groundwater          quality,       and to develop and induce the adoption               of
economically          effective       agricultural       and chemical     management
practices        that protect         water quality.        The LISA program Offers
research       and education          grants     to develop and encourage the use of
 farming practices              that substitute       management skills         for the use of
 some purchased           inputs,     such as agricultural          chemicals.      Although
 both programs focus on the effects                    of agricultural        chemical    use and
 are designed         to combine the efforts             of various     USDA agencies      and
 outside      groups,       the LISA program was not included               in plans for the
water quality           initiative.         As a result,       farmers may be adopting
 conservation          systems that compound problems such as groundwater
 contamination          when a LISA system might be more appropriate.

      We believe,  on the basis of past and on-going        work, that USDA
needs to develop a comprehensive      policy   on water quality     that takes
into consideration   other program activities      and to designate      a
focal point within   the Department     with responsibility     for all
aspects of the water quality     issue.

       Another area related        to water          resource    management that needs
more attention      is the "swampbuster"              provision     of the act, which
attempted     to protect    the nation's           wetlands     by denying federal       farm
program benefits       to producers     who        plant     an agricultural       commodity
on wetlands     converted     to cropland          after     December 23, 1985.
However, according        to our on-going            work, producers         do not risk
losing    program benefits      until   they         actually    plant on the land they
drained    or modified.       Thus, under          the act farmers can drain wetlands
                                               7
and receive    benefits   as long as they don't plant      a crop.   Further
in other years,      when crop prices    are high, producers    can choose not
to participate     in federal    farm programs and can then plant on the
drained wetland without       penalty.

         An issue for consideration              in the 1990 farm bill       is to close
loopholes      that currently          allow conversion      of fragile    lands without
penalty     until      an agricultural        commodity is planted.        Further,   a
requirement         that converted        wetlands    be restored    or the damage
mitigated,        if possible,       in order for participants          to regain their
eligibility         for farm program payments may be needed to stop
conversion        of such lands.

       In addition,      consideration      might need to be given         to
incorporating       water quality      concerns    into conservation       planning.
The dynamics between soil and water are closely                 linked     in some
cases, and thus their          stewardship     should be considered        together.

GAO OBSERVATION REGARDING THE NEED
FOR A FLEXIBLE BASE ACREAGE SYSTEM

Government farm policy       has varying     objectives      and goals which can
sometimes conflict.        On the one hand, government policy             has
encouraged   farmers to strive       for high yields        on program crops to
maximize their     farm program benefits,        which means intensive         use of
agricultural    chemicals    in most cases.        These chemicals       have been
associated   with increasing       environmental      problems,      such as long-
term damage to soil and water quality.               On the other hand, USDA
encourages   farmers to be good stewards of their                land and water and,
in some cases, requires        them to comply with soil and water
conservation    provisions     of the Food Security         Act.

      During the 197Os, for example,    and again in recent years,
market prices    for soybeans have been high relative   to corn.   Yet,
soybean plantings    are down because high government price    support
                                            8
payments encourage production      of other program crops--most   notably
corn.     With high target  prices  for corn, compared to market prices,
farmers have an economic incentive       to preserve base acreage  by
continuing     to plant corn every year.

        Farmers growing program crops depend to a great                       extent   on
agricultural       fertilizers        and pesticides         as insurance     for high
yields     and the related        price     supports.        As such, fertilizer       use--
particularly       nitrogen--has         increased     steadily     over the past 30
years or so.         As farmers have shifted             to growing varieties         of corn
that are responsive            to nitrogen,      continuously       or in short rotations
with soybeans,         the demand for nitrogen             has increased      from about     58
pounds per acre in 1964 to 137 pounds per acre by 1981, and it has
since remained relatively              steady.      Similarly,      total   pesticide     use
has increased        from about       225 million      pounds in 1964 to about 560
million      pounds in 1982, while total              acres cultivated        remained
relatively       constant.

        Flexibility         to switch among crops is mostly                limited     to
cropland      that is not allocated             to base acres.          In effect,       this
locks in production            patterns      that favor program crops,              such as feed
grains     and cotton,        at the expense of non-program                crops.      In
addition,        the need to preserve           base acres and yields             and thus
ensure high program payments may discourage                        farmers from switching
to alternative           production     systems,       such as those developed             under
LISA, because it may result                in a loss of base acres or a
significant         reduction      in yield.       As a result,       legislative        changes
to encourage the use of alternative                     methods that reduce
environmental          damage may be necessary.              In our transition           report     on
agriculture         issues,     we supported       the idea of allowing            a flexible
acreage base as a way to respond to changing market conditions.
Our on-going          work on water quality            also identifies         the current       base
acres system as a disincentive                  to alternative        agriculture         systems.
As such, we believe             that allowing        for a flexible         base so that
 farmers are given the opportunity                   to move toward farming            practices
                                                 9
that will     better    protect     soil and water resources,       as well    as
allowing    them to respond to changing market conditions,                 is an issue
for consideration          in the 1990 farm bill.      In addition,      protecting
existing    farm benefits        for some period --perhaps    3 to 5 years        until
alternative       production     systems  have been incorporated        into farm
operations     may be warranted.         USDA has made similar       proposals      in
 its report    on the 1990 farm bill.




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