MODERATOR: I'm Larry Quinn speaking to you from the Broadcast Center at the U.S. Department of Agriculture. Welcome to today's news conference with Secretary of Agriculture Ed Schafer to discuss a new initiative for the Conservation Reserve Program. Joining the Secretary in the studio today is Floyd Gabler who is deputy under secretary for Farm and Foreign Agricultural Services; and John Johnson, Farm Service Agency deputy administrator for Farm Programs.
Reporters, I'd remind you if you wish to ask a question, please let us know that by pressing *1 on your telephone touchpad.
Now it is my pleasure to introduce Secretary of Agriculture Ed Schafer.
SEC. ED SCHAFER: Thank you, Larry. Good afternoon, everyone. Thank you all for taking part in this media call this afternoon. Recently we've seen increased demand for commodities like corn and wheat, and that has contributed to record feed prices. The livestock industry in particular has felt the effects of tightened supplies.
To help ease the situation, USDA will now allow producers to use selected acreage enrolled in Conservation Reserve Program for haying or foraging after the primary nesting season ends this year. Producers enrolled in CRP contracts ranging from 10 to 15 years in which they agree to plant vegetation like grasses and trees to protect water quality, soil quality and wildlife habitats.
This authorization does not constitute an early opt-out of CRP contracts. However, it does allow producers nationwide to either hay CRP acres once or allow livestock grazing, either for their own use or to help their neighbors.
I also want to distinguish this critical use of CRP acreage from emergency haying and grazing provisions that we've allowed before. These programs are limited to producers in counties that have been severely impacted by drought or natural disasters. This critical use of CRP however is being extended to all eligible producers across the nation. More than 24 million acres of land is eligible to be enrolled in this voluntary program. That translates to about 18 million tons of forage, worth $1.2 billion.
It will significantly increase the amount of feed available to the livestock industry while still maintaining CRP's environmental benefits. In fact there are many circumstances where removing some of the grass cover will actually help increase wildlife diversity. It will also provide long-term benefits for wildlife in the area.
The most environmentally sensitive lands enrolled in CRP will not be eligible for this program. Wetlands and filter strips, for example, cannot be enrolled. Additionally, eligible land will not be available for haying and livestock grazing until after the primary nesting season for grass nesting birds has finished. Most nesting seasons end in late July or early August, and the critical use for haying and grazing must end by November 10 of this year.
Producers that choose to take part in this program must reserve at least one-quarter of their CRP acres for wildlife habitat, and all participants must have an approved conservation plan in place. These measures will help preserve the many environmental gains we've achieved through CRP. Interested producers can sign up at their local Farm Service Agency offices beginning on June 2, and there is a $75 administration fee for modifying existing CRP contracts.
I hope that producers take advantage of this program to help meet the critical need for livestock feed and forage supplies, and I hope it lightens the load our livestock producers are bearing.
These are the end of my prepared comments, and now we're glad to answer your questions with John and Floyd as well.
MODERATOR: And reporters, we remind you as we prepare to receive your questions you do need to touch *1 on your telephone touchpad to indicate that you have a question to ask. And our first question comes from Alan Bjerga from Bloomberg News. Alan, go ahead.
REPORTER: Yes, Mr. Secretary, just a quick question. If you could restate how many acres are eligible for this grazing ability? And the second question is, how much of this is tied to the recent run-up we've seen in corn prices?
SEC. SCHAFER: It's about 24 million acres of CRP-enrolled land, about 330,000 CRP contracts, Alan. And this is an effort, as we visit with the industry and talking about their high feed prices in general, as you know food prices are being driven up by energy costs, by increased corn usage, by yields that are out there, bad weather in parts of the country and parts of the world. You know. So these feed costs are going up. We talked to livestock producers, and they are concerned. We think this is a way that we can provide some feed and forage for the livestock industry through the use of CRP acreage.
REPORTER: Thank you.
MODERATOR: Next question comes from Missy Ryan of Reuters. And standing by should be Roger Bernard. Missy?
REPORTER: Hi. I actually have the same question as Alan. Just I wanted to repeat the number of acres. So you said it will open up 24 million acres to possibly, to this haying and grazing. And again that was 18 million tons of forage?
SEC. SCHAFER: We estimate 18 million tons of forage on those acres worth about $1.2 billion.
REPORTER: Thank you.
MODERATOR: Roger Bernard of Pro Farmer and Farm Journal is next, and standing by should be Luke Engan. Roger?
REPORTER: Thank you, Mr. Secretary. You said there's a $75 administrative fee under managed haying and grazing and emergency haying and grazing, those utilizing the CRP acres do give up some of their rental payments. Is that the case with this, or not?
SEC. SCHAFER: This is not, Roger. We will not have a rental payment penalty. This will be a $75 fee for a change in the contract, and that will be the total cost.
REPORTER: Okay. Thank you.
SEC. SCHAFER: Um-hum.
MODERATOR: Luke Engan from Inside U.S. Trade is next. Standing by is Phil Brasher. Luke, go ahead.
REPORTER: Mr. Secretary, I wanted to ask you actually about Korea beef. How do you react to yesterday's announcement from Korea that they will again delay opening their market to U.S. beef?
SEC. SCHAFER: Well, you know, as we checked on that this morning, I think the delay involves after the site visits by the Korean officials which all turned out well. They had some concern about in the pipeline beef versus beef after this point in time. We're working that out. But I am positive after several conversations this morning that we will see beef flowing to Korea very shortly.
REPORTER: What concerns about the pipeline beef?
SEC. SCHAFER: They had a concern of the beef in the pipeline whether that should be shipped to Korea or not. We're working that out, and that would be a short period of time anyway. But as I mentioned, as of the time I walked down here to the studio just a few minutes ago we expect beef to be flowing to South Korea soon.
MODERATOR: Next question comes from Philip Brasher of Des Moines Register. Standing by should be Steven Kay. Philip?
REPORTER: Yes, Mr. Secretary. What is the rationale for not doing a reduction in the rental rate? And what, have you all tried to project how much of the acreage, the 24 million acres, you think it would actually be paid? And finally, what impact – do you all have, of the 18 million tons, can you say what that represents of the total feed supplies?
SEC. SCHAFER: Phil, as far as the rationalization or the rationale for not deducting rental payments, we looked at this as a proactive program where we are asking farmers and ranchers to be involved in this program to provide better and more stocks of hay and forage out there. In the past and certainly in emergency situations where farmers have been allowed to hay, we've reduced that rental payment because they have created economic value. And it's been in response to disasters. In this case we're asking these folks to do this, to enroll in this new program which will provide hay and forage out there. So we felt it appropriate not to reduce their income for helping us out on there and providing more feedstocks across the country.
As far as the projection on acres, I'm going to turn to John, and hopefully he has some numbers.
MR. JOHNSON: Philip, what was your question again about the projection?
REPORTER: Well, if you all tried to project how many acres of the 24 million acres, how much you think will actually, based on where it is and the other economic –
SEC. SCHAFER: Well, it's a little bit –
REPORTER: How much do you think will actually be used?
MR. JOHNSON: We don't have a precedent. This is the first time we've taken this approach to allowing forage to be harvested from CRP. As the Secretary pointed out, this is different than emergency haying and grazing; this is different than managed haying and grazing. We're using a separate authority the Secretary has for contract modification to do this. And so we've never run a program like this where there wasn't a rental reduction and you simply had the $75 administrative cost to pay.
And so we expect to see much higher participation under this program than what has been previously experienced under either emergency haying and grazing or managed haying and grazing. But it's a little bit hard for us to project exactly how many people take advantage of it. We hope by giving advanced notice -- well in advance of the end of the nesting season -- that people can prepare to take best advantage of this. They can, if they want, install fencing; if they need to install watering troughs, if they need to make arrangements with a neighbor or someone who wants to utilize the forage -- because we are allowing them to sell or lease this right.
We're hoping that we'll get much better utilization of this by giving advanced notice and by taking this different approach under the Secretary's authority for contract modification with only a $75 administrative fee.
MODERATOR: Next question comes from Steve Kay of Cattle Buyers Weekly. And standing by is Sue Kirchhoff from USA Today. Go ahead, Steve.
REPORTER: Steve Kay, Mr. Secretary. Finishes of cattle, hogs and chickens whose rations as you know are primarily corn would say that this measure does absolutely nothing to alleviate their very high feed costs that you know only so well have escalated in the past 12 months. What's your message to those producers?
SEC. SCHAFER: Well, the message is we're working on things that we can do from USDA to help out there with livestock feeding issues. We recognize the cost of feed have gone up, especially in the poultry area as well, and in hogs. And the thing that we've noted here is, we're going to do everything we can to help. This is something we can do.
But I would also point out that as we look at history that the poultry and hog producers have been masters at being able to figure out feed rations with other feeds, to change things around, you know, to keep in control of their costs.
I would also point out that in the hog industry specifically we've purchased $50 million worth of hogs and whole hog products from them as they have started to reduce their sow herds, provide a better economic balance with the herds that are out there. And we've purchased that meat so that we can pull it through. This will also, as we look at this hay and forage coming into the feed supply, should reduce the use of grain for further livestock actual use.
So I think all the way around this program will help. It's going to obviously have the biggest impact in the livestock industry, but we think it's what we want to do right now to help in any way we can.
REPORTER: A quick follow-up: How much might grain be used?
MODERATOR: Our next question is from Sue Kirchhoff of USA Today followed by Jackie Fatka. Sue, go ahead, please. Sue? Operator, can you pull up Sue Kirchhoff, please? Sue, go ahead with your question, please.
REPORTER: Yeah. One question. Do you have any estimates what this could do in terms of beef production, how it would affect those numbers? And, two, could you run through some of the benefits it might have to do haying and grazing on some of the CRP land in terms of environmental benefits you cited?
SEC. SCHAFER: We don't have an estimate as to what it will do there at all, but we hope it will do a lot. I think as I mentioned as far as the effort on the benefits, it is as we've said we're going to not allow sensitive land enrolled to be eligible—the wetlands, the buffers, the filter strips, those kind of things. We are making sure that the acreages devoted to this project, there's going to be a set-aside of 25 percent, or one quarter, of the land for wildlife uses. And we also point out the fact that often grass on CRP acreage gets too high and that makes it difficult for nesting. And to give it a haircut once in awhile actually improves the nesting opportunities for upland game. And so I think those are some of the quick efforts to improve actually the wildlife habitat and the soil quality.
MODERATOR: Next question comes from Jackie Fatka of Feedstuffs Magazine, and she'll be followed by Steve Kay again. Jackie, please go ahead.
REPORTER: Hi. First, can you run through the deadline dates for signing up for this program? And also, you said this was not an early out for CRP acres, but would this $75 fee be similar to what USDA could potentially do if there was a decision to allow for an early out in CRP contracts?
SEC. SCHAFER: It has no similarities whatsoever to any kind of an early out or early out without penalty project. As you know, we've made that decision for the '08 crop and will not be allowing an early out without penalty. We're still considering the issues for the '09 crop, but that decision won't come until late this summer. So the dates and durations of this program, starting next week June 2nd people can go to their FSA office and start signing up for this program. It will run through November 10th. But it starts after the nesting season.
Now the nesting seasons are different in the regions of the country in almost every state. We have a map; I hope we're going to have it up on our web page. We have a map that shows the dates of the duration of the nesting season. And when you sign up on a local basis you have to have a conservation program in place or a plan in place. And as they look at that then the decisions will be made as to when that actual haying or grazing can start.
MODERATOR: And before our next question, I'd just remind reporters, if you do have a question please press *1 on your telephone touchpad to indicate that. Next question from Steve Kay and Cattle Buyers Weekly. Steve?
REPORTER: Mr. Secretary, you mentioned that you hoped this measure might lead to decreased corn usage. Do you have any estimate of how much decline there might be and what price effect that might have on corn?
SEC. SCHAFER: We do not.
REPORTER: Not at all? Okay. Thanks.
SEC. SCHAFER: Um-hum.
MODERATOR: Mr. Secretary, no more questions today. But would you have any final comment?
SEC. SCHAFER: Well, thank you all for joining us. As I mentioned we'll get this information up on our web page as best we can. We have a packet here too if you'd like to receive it that way by fax or mail. And we urge you to get the word out because we think this is an important program. As I said, it's 24 million acres, up to 1.2 billion worth of hay and forage out there. We think it's an important project, and we're excited. This is the first time we've been able to use the Secretary's authority to promote a program like this, and we look forward to broad participation.
And we appreciate your efforts out there to inform your readers and listeners for that effort. Thank you.
MODERATOR: Secretary of Agriculture Ed Schafer.
I'm Larry Quinn bidding you a good afternoon from Washington.
