Farmers cannot pull land out of their Conservation Reserve Programcontracts without penalty, the Bush administration has decided, easingenvironmentalists' concerns about millions of acres being withdrawn toplant corn for a growing ethanol industry.

Agriculture Secretary Mike Johanns said Friday he did not see a need to release more CRP land, given the large number of acres that farmers are already planting in corn. USDA had been considering loosening its requirements for CRP -- which pays farmers to idle land for wildlife habitat or soil and water conservation -- to excuse more farmers from their seven-year contracts.  "As circumstances exist today, I would not anticipate a change in this policy in 2007," Johanns said.  The decision followed a USDA projection last week that farmers would plant more than 90 million acres of corn this year -- millions more acres than previously predicted and the largest corn planting since World War II. 

Farmers, livestock groups and the ethanol industry have been eyeing the millions of acres of land in CRP for corn. They have been opposed by hunting and environmental groups, which call the program the "holy grail" for wildlife. The 20-year-old program provides more habitat for birds and other species than all of the national wildlife refuges combined (Land Letter, Feb. 15).  Johanns announcement came as a "relief," said Jennifer Moch Schaefer of the Association of Fish and Wildlife Agencies. But she said the relief might be temporary since Johanns said he still reserved the right to reverse the decision later.  Schaefer said she "questions the reasoning" behind providing any early withdrawals, since much of the land in CRP is highly erodible with marginal
production.  USDA has estimated farmers with expiring contracts will withdraw 4.6 million CRP acres in the next three years.

The 90 million acre estimate from USDAs Prospective Plantings report is 4 percent higher than the departments economists had predicted earlier this month.  The USDA farm survey shows corn acreage up in nearly every state. Overall, farmers are expected to plant 15 percent more corn this year, with record-high acreage in Illinois, Minnesota, North Dakota, California and Idaho.  Farmers are planting corn wherever possible to meet rising demand for the crop from the ethanol industry. Corn is selling for nearly twice as much per bushel as it did last year.

The report was welcome news for advocates of biofuels.  Senate Agriculture Committee Chairman Tom Harkin (D-Iowa), who wants to bolster support for renewable fuels in the next farm bill and push for a more ambitious renewable fuels standard, said the report shows farmers will respond to market signals and should help "address concerns about corn supplies."  "The new data further confirms the potential for biofuels production," Harkin said.

Livestock producers, slammed by high prices for feed, have pushed back against ethanol supports, lobbying for a slow-down on the use of corn for fuel.  House Agriculture Committee Chairman Collin Peterson (D-Minn.) has repeatedly assured livestock producers that the market will take care of them as farmers plant more corn. "If there is one thing farmers know how to do, it is to overproduce when prices are high," Peterson said last week.

The increase in corn acreage may be offset by lower soybean plantings in the corn belt and Great Plains, as well as a drop in acres of cotton and rice in the Delta and Southeast, according to the report. Soybean acreage will be its lowest in the past decade and cotton is expected to go down 20 percent from last year.  For the past several months, USDA economists have been increasing corn estimates with every prediction. In February, the departments chief economist, Keith Collins, said farmers could plant 86 million acres this year, then upped that to 87 million acres earlier this month.

The report from the National Agriculture Statistics Service serves as the first official USDA estimate, based on surveys of 86,000 farms during the first two weeks of March.