The Conservation Reserve Program as a Means to Subsidize Bioenergy Crop Prices

The Conservation Reserve Program (CRP), enacted in the 1985 Farm Bill, removes environmentally sensitive cropland from production in exchange for annual rental payments from the federal government. To reduce the cost of the program, economic use of CRP acres in exchange for reduced rental payments were proposed, but not implemented in the 1995 Farm Bill. This paper examines the potential impact an economic use policy would have on the market prices of bioenergy crops if they were permitted to be harvested from CRP acres. The analysis shows that at average yields of 11.25 dry Mg/ha/yr (5 dry tons/ac/yr) and total production of 9.1 million dry Mg (10 million dry tons) subsidized farmgate prices of as low as $16.5/dry Mg ($15/dry ton) for switchgrass and $24.2/dry Mg ($22/dry ton) for short-rotation woody crops can be achieved. Furthermore, the government can reduce the cost of the CRP resulting in a potential win-win situation