MODERATOR: Good afternoon from Washington. I'm Larry Quinn speaking to you from the Broadcast Center of the U.S. Department of Agriculture. Welcome to today's news conference with Secretary of Agriculture Mike Johanns to announce new provisions of the Conservation Reserve Program.

Joining the Secretary is Floyd Gaibler, deputy undersecretary for Farm and Foreign Agricultural Services.

A reminder for reporters, if you have questions for the Secretary please press "1" on your telephone touchpad to alert us.

And now it's my pleasure to introduce Agriculture Secretary Mike Johanns.

SEC. MIKE JOHANNS: "Thank you very much, Larry. I am pleased to announce that we are ready to roll up our sleeves and begin reenrolling and extending the contracts for the Conservation Reserve Program, or CRP, acres. Last year President Bush highlighted this administration's continuing commitment to improving the environment by announcing several new conservation initiatives.

"He also pledged his continuing support for CRP and directed the USDA to work cooperatively with producers, sportsmen, wildlife groups and other stakeholders to develop a plan for maintaining the benefits of CRP up to 39 million acres.

"Our goal is to protect our water and air, wildlife habitat and other natural resources. We want to build on a strong conservation ethic of America's farmers, ranchers, landowners and sportsmen. The President is well-aware, as am I, that farmers are among the best stewards of the land. So it only makes sense to continue our partnership working with them.

"CRP has helped to safeguard environmentally sensitive land for nearly 20 years by enrolling acres on a voluntary basis and offering rental payments to the producers. Since the President signed the 2002 Farm Bill, CRP enrollment has increased by more than 2.5 million acres. That means we are now conserving nearly 35 million acres with environmentally sensitive land for wildlife habitat, buffers and soil erosion prevention.

"Of those 35 million acres under CRP contract, 16 million are scheduled to expire in 2007. Then another 6 million acres will expire in 2008, 4 million in 2009, and 2 million in 2010. So put another way, more than 21 million CRP protected acres are scheduled to expire between 2007 and 2010.

"Many have expressed concern about this fact, and I might add rightfully so. CRP has helped reduce soil erosion by more than 40 percent, and it's restored nearly 2 million acres of critical wetlands. That's significant.

"On Earth Day 2004 President Bush set out an aggressive goal to go beyond preventing the loss of wetlands to restoring, improving and protecting at least 3 million additional acres of wetlands over five years. Now it's 2005, and we're two-thirds of the way there. That's important because wetlands protect vital wildlife habitat for ducks and pheasants, sand hill cranes and other species. It provides safe drinking water thanks to filter runoff, helps to recharge our groundwater, and reduce downstream flooding.

"The Non-Floodplain Wetland Restoration Initiative is another CRP program announced by the President, which will enroll 250,000 acres. This initiative is especially important to pheasants and ducks that make their homes in what is commonly referred to as the prairie pothole region.

"In addition to the wetlands benefits, the CRP program has contributed to population increases among birds, fish and other species. Pheasant populations are at or near-record-high levels in many Midwestern states, and the duck population has increased annually by about 2.1 million in recent years.

"The Northern Bobwhite Quail Initiative is another CRP initiative that we think will lead to dramatic increases in bobwhite quail populations by enrolling an additional 250,000 acres of grass buffers on farms.

"President Bush has proclaimed CRP as one of the most successful conservation programs in history, and history is proving him right.

"I began to lay the framework for implementing the President's CRP directive at the recent White House Conference on Cooperative Conservation. That sparked tremendous interest, and today I'm pleased to announce that we are fulfilling the President's commitment to a fully enrolled CRP program. We are moving quickly to protect those 28 million acres of CRP land set to expire by 2010.

"Working cooperatively with farmers and ranchers, sportsmen and wildlife groups, USDA has initiated a plan for maintaining and expanding the benefits of the CRP. We will offer reenrollments for those contracts that provide the highest level of environmental benefits and extensions for the vast majority of other contracts.

"USDA will use something called the Environmental Benefits Index to determine reenrollments and extensions, which is basically a point system to rank our CRP land.

"We will look at things like wildlife habitat, water quality, erosion reduction and air quality. We will also take into account certain national priority areas. The contracts will be offered in five groups. The top 20 percent of contracts providing the greatest environmental benefit will be eligible for a 10 to 15-year reenrollment. The next 20 percent of contracts will be eligible for a five-year extension. Then we'll offer four, three and two year extensions as we move down to the lower end of rating for environmental benefits.

"With nearly two-thirds of the existing CRP acreage in the program scheduled to expire in 2007 and 2008, we are eager to roll up our sleeves and to get to work reenrolling and expanding contracts. I would like to thank the many farm, commodity, livestock, conservation and wildlife groups that have worked with us to develop a good plan. Their cooperation and their input has been important to the development of a workable plan as it is to the CR Program itself.

"Americans have a long tradition of conservation and stewardship of our nation's land and our natural resources. We have made remarkable progress over the last several decades by working together. The rewards are tremendous, from the quality of our air and our water to the wildlife reappearing across America's landscape.

"The CRP program deserves some credit for those rewards, and that's why I'm so pleased to make this announcement today. I will be happy to answer any questions you may have, and again Floyd Gaibler the deputy under secretary for our Farm Service Agency is here with me also. So between Floyd and myself we should be able to answer the questions that are posed.

"Larry, thank you very much."

MODERATOR: Thank you, Mr. Secretary.

Reporters, remember to push "1" on your telephone touchpad to indicate that you do wish to ask a question.

And our first question today comes from Chris Clayton from Omaha World Herald. Chris, go ahead, please.

REPORTER: Why do I always have to be first? Secretary, could you just address whether anything coming from budget concerns could possibly affect your ability to have a full enrollment? Has anybody in Congress indicated that CRP may be something that might be looked at, or has that just not really been an issue?

SEC. JOHANNS: "You know, here's what I would offer. The budget issues are now before Congress, and they're working on them. I'm not exactly certain where that plays out, but you know our goal is to accomplish what I set out today and what the President has committed to, and that's reenrollment of these acres.

"We believe very strongly there's a lot of benefit here, so that's the direction we're taking."

MODERATOR: Our next question comes from Tom Steever has the next question from Brownfield Network. And standing by should be Chuck Abbott. Tom, go ahead, please.

REPORTER: Thank you, Larry. And thank you, Mr. Secretary. What would you say is the biggest fundamental change from what has been going on in CRP?

SEC. JOHANNS: "Tom, thanks for the question. What I'm going to do is ask Floyd to offer a little thought. He's got the history here, and he can kind of draw a comparison between prior program and this program. So take it away, Floyd.

SEC. FLOYD GAIBLER: "Okay, thank you, Mr. Secretary. As you know, this program has been in existence for 20 years. In fact we're celebrating the 20th year anniversary of CRP this year. And the program has evolved over time. There's been significant improvement in determination of the environmental quality factors that we need to consider. We've added a lot of new initiatives that involves CRP-- the continuous sign-up that's allowed for end-of-field strips; the CREP that we have with our states involve a lot of CRP ground and acreage as well.

"So it's a combination of more and new initiatives that-- you know the Secretary mentioned the bobwhite quail, for example, where we're trying to not only deal with water quality, air quality, but also looking at wildlife habitat.

"So we continually-- every sign-up that we have we are continually trying to get better environmental benefits for the taxpayers' dollar and help improve the natural resources, you know, around the country."

MODERATOR: Our next question comes from Chuck Abbott from Reuters. And standing by should be Peter Shinn. Chuck, go ahead.

REPORTER: Good afternoon. I have three inter-related questions. The first question is, with this sort of extension you're outlining, does this flatten out the bulge in the enrollment pattern where every 10 years it seems like a huge amount of land changes, expires.

And secondly, what is this decision today going to mean as far as the regional share of land in the CRP? At the moment the Plains seem to dominate enrollment.

And of course finally, by deciding to extend contracts on land that's already in reserve, what is that going to do as far as the possibility of making improvements in CRP in the 2007 Farm Bill, and all this talk about maybe the government ought to be spending more money on working land incentives rather than locking up land, taking it out of production?

SEC. JOHANNS: "I'll take -- Chuck, if I could I'll take your last question, offer some thoughts on that. And then I'll ask Floyd to visit with you about the first two issues you've raised.

"In terms of the last question, I believe there's still plenty of room to talk about what conservation should look like as we head into the 2007 Farm Bill. One of the things I've been seeing quite a lot lately is that as I've gotten around the country there really is good support for the conservation program-- maybe not 100 percent, maybe not unanimous, but very definitely strong support.

"There has been a growing discussion about whether conservation goals should play a stronger role because as you know there's a lot of benefits to that. There's environmental benefits; there's benefits to the farmer, wildlife, and there's also trade benefits. So I do believe there's plenty of room for that discussion to continue even with this reenrollment.

"With that, Floyd, go ahead and offer some thoughts on the first two issues."

SEC. GAIBLER: "Okay. With respect to the high amount of enrollment that occurred, that's expiring in '07 and '08, we've made a conscious effort in our administration of the CRP to do more frequent sign-ups and try and limit the amount of the sign-ups in the 1 to 2 million acre area so that we don't have this bunching up that's occurred.

"And because we've had this huge amount that comes out in '07 and '08, we had to figure out a way to manage that effectively, and that weighed into how we came up with our final determinations of what is reenrolled versus what is extended.

"With respect to regionality, we tried to look at this across the board in terms of making this available equitably. That's why we utilized the existing environmental benefits index that each producer offered and was ranked against so that we can make our determination of what percentage of each of those sign-ups then will manifest itself in terms of getting a reenrollment versus a two- to five-year extension.

"And then the other factor is, is that we did take into account these national conservation priority areas which are designated by the Farm Bill as well as the -- the prairie pothole, for example, that we had designated administratively that takes into account areas where there's water quality and wildlife habitat concerns."

MODERATOR: Our next question comes from Peter Shinn with the National Association of Farm Broadcasters. And standing by should be Bill Tomson. Peter, go ahead, please.

REPORTER: Thank you very much, Larry. Thank you, Mr. Secretary for taking this question. And it involves the FSA Tomorrow Plan. It sounds like this new reenrollment will require a lot of work on behalf of FSA personnel. And I'm wondering how this new additional workload is going to be integrated with the plans to close Farm Service Agency offices.

SEC. JOHANNS: "Thanks for the question. I offer a couple of thoughts about maybe just the general overall content of your question because I think you asked something that's very important here. One of the things that really drives this question of FSA and what we're looking at in terms of the future of those offices is, the issue of how do we best approach delivering the technology and services that I feel so very, very strongly that farmers and ranchers across the United States really deserve from our offices?

"Those who have been around Washington long enough or whether you've worked around state budgets know that it's always hard to find money for personnel and technology and that sort of thing. So what we're trying to do with FSA Tomorrow is start a process -- and I emphasize that what we're really doing is starting a process -- try to look at how we can get technology into offices, how we can provide better training for our employees, how we can really take these offices and make them state-of-the-art.

"The computer system, for example, that we have in our offices predates the Internet. So web-based applications aren't possible. And that's a very difficult situation. We have farmers out there that are getting used to working on the Internet, accessing the Internet, and here we are. They're way ahead of us.

"And so our goal is to try to figure out how best to provide the services that I believe farmers and ranchers deserve, not only in 2005 but as we look out there to 2010 and 2015.

"In terms of this reenrollment issue, we are absolutely committed to getting the job done here. We're very confident we can. We're all going to be working hard. I stressed a couple of times in my comments that we're ready to roll up our sleeves, and we will get the job done.

"But I envision a day where farmers have the ability to access all we have to offer via the Internet and can do many of these things by working with us through that capability. And I also envision a day where they will continue to have the services that we've historically provided where they can go to an office and access a person to help them.

"You see, and this is my last thought here, we have offices that, dating many, many years, that it's not current to this administration or even the last administration, where in order to find savings were down to one-person offices, we're down to two-person offices, and so what we're really trying to do is improve what we have to offer through those offices.

"And again, I'll kind of use your question to say what we're really doing here is starting the dialog. We're going to work with the House and the Senate, we're going to do everything we can to gather their input, but today we have more than 400 of our offices that now have two or fewer full-time employees. We have 500 offices that are about 20 miles from the next office. So if we can improve services and get the training and technology, I think we owe it to our farmers and ranchers across the country to look at that.

"But in terms of this reenrollment, we'll get the job done. We're very, very committed, and very anxious to go about the extensions and the reenrollment."

MODERATOR: Our next question comes from Bill Tomson of Dow Jones. Standing by is Philip Brasher. Bill, go ahead.

REPORTER: Mr. Secretary and Mr. Gaibler, are the -- first of all, are the two to five-year extensions, are those new measures in the CRP program? And you mentioned that there's concern that these 21 million acres will be coming out of the CRP program. Is that concern, whether it's yours or other people's, if those acres are not reenrolled you'll see production skyrocket, those acres will go back into production?

SEC. JOHANNS: "Here's what I heard, and this has come up at a couple of Farm Bill Forums that I had out there. The concern expressed is a little bit different than that, Bill. The concern is more along the lines that in some of our states, the state where I was governor would be a good example, there's often a need for grasslands for grazing purposes-- cow-calf operations. And I did hear at a couple of forums from people who were concerned that our conservation programs create a higher price tag for them, if you will, when they go to rent these grasslands.

"And so we definitely note that concern, and I've mentioned it a couple of times, but that's what I was referring to.

"But I'll let Floyd talk to you a little bit about the other issue you raised."

SEC. GAIBLER: "Yes, Bill. You know, the process that we came up with was to meet the President's mandate of being able to offer producers with expiring acres through the 2007 and 2010 period the offer of an extension or a reenrollment. So the initiative includes the measures that the Secretary announced today where we have designated the top 20 percent of each of the sign-ups that will be eligible for the reenrollment. And then again based on the weighting of the EBI, the next highest group would be eligible for five, and then the next four, the next three, and then the remaining 20 percent are going to be eligible for a two-year extension.

"So it's the process that we have come up with, and it's new in the sense that, yes, it's part of the initiative that we're undertaking."

MODERATOR: Our next question comes from Philip Brasher with Des Moines Register. And standing by should be Matt Kaye. Philip?

REPORTER: Yes. Mr. Secretary, Mr. Gaibler, following up on Chuck's question earlier, what kind of regional shift do you all expect from this? I assume you have done some kind of analysis.

And also, would you not expect a number of acres to drop out of this program, lower tiers where they don't get the automatic reenrollment, they get the short extension? How many acres do you expect to drop out?

And finally, do I understand you're using EBI from when they signed up, or you're revising an EBI to score these contracts on?

SEC. GAIBLER: "To try and answer your last question first, we looked at various options in terms of what environmental factors to come up with. But in the end we felt that it was most equitable and fair to use the existing EBI that occurred during each sign-up. So everybody is going to be rated based on the lands that they enter at the time and the EBI that was in place during that sign-up.

"With respect to drop-out, historically there has been a level of drop-out when producers are offered to either extend or enroll those acres. It varies significantly, but it could be potentially up to 20 percent of those acres. But we'll have to wait and see here.

"With respect to regional shift, again we don't see these acres shifting in terms of any movement. What will happen is, that the areas with the national conservation priority areas will likely have more acres that fall in the reenrollment versus the extension category. But again, everybody that has a contract wherever it's located will be allowed to extend it for a certain period of time.

MODERATOR: Our next question comes from Matt Kaye of the Burns Bureau. And standing by should be Ed Maixner. Matt, go ahead.

REPORTER: Yes. Thank you, Secretary. And thank you, Mr. Gaibler. If I could, is there any impact on either individual or total rental payments because of the tiering of the EBI or the nature of the way the EBI is structured?

And secondly, going back to the issue of Farm Service Agency consolidation -- for the Secretary, if, as you know the Senate has passed an amendment to its ag appropriations bill concerning this asking for cost benefit analysis of these consolidations, albeit we may not have an appropriations bill passed by the start of the new fiscal year. Do you intend to at least heed the Senate's message that there needs to be consultation on these closings the way of cost benefit analysis before you go forward?

SEC. JOHANNS: "I'll address that last question, and then we'll shift over here and address the first part of that.

"As you know the cost benefit analysis was initiated by Senator Talent, and I've had a conversation with him, and I know folks here at the USDA have also. And I indicated to him without reservation very clearly that we are anxious to work with him. I've indicated to both the chairman of the House Ag Committee and the chairman of the Senate Ag Committee the same thing.

"If it's cost benefit they're looking for, that's fine. We feel very, very strongly that we should be able to approach this in a very cost benefit sort of way, and if they desire that information we will be happy to provide it.

"Again, if I were to emphasize anything here it's that we really are starting a process. We anticipate that this process is going to extend for probably the next three years. If you look at this situation, we really are at a point where we've got a lot of offices out there just kind of barely open. We've got a staff person inside the office, and to their credit they're doing everything they can.

"But our technology is very, very dated. We've got offices that are literally in a situation where there just isn't anyone besides a single person or in some cases two persons in that office.

"The programs have become very definitely more complicated in terms of the delivery of services. The cost of delivering services varies so widely-- it ranges from $0.01 for the delivery of $1.00 of program benefits to more than $2.00 in expenses for every dollar of benefits delivered. It's just such a combination of things that we need to look at.

"Now having said that, as I have indicated there may be an office out there where you look at the dynamics of the region and area and you say to yourself, it just makes sense that that office remain open. And our whole goal here is to work through this over the next three years, and make adjustments and fine-tuning.

"Every process has to start somewhere, and what tends to happen with these is you put some initial ideas out there, and then you get a reaction. But really if there was a message I would send to Capitol Hill, We're anxious to work with people. This really is about trying to offer our farmers and ranchers the technology and everything that really reflects 2005 and beyond.

"Go ahead, and we'll answer that first issue."

SEC. GAIBLER: "Okay. With respect to rental payments, historically what the department has done when we have had reenrollments of contracts for the 10-year period we have provided updated rental rates. And when extensions have been offered in prior years and we've typically not provided any update of the rental rates. We had extensive comments with respect to the issue of rental rates, and particularly with respect to whether they were competitive with local cropland rental rates. And some comments said they were not competitive, and some they said they exceed the local rate.

"So part of the process here is we're going to update those rental rates to try to clear up those anomalies, and then for the reenrollments we will apply the updated rental rates and for the extensions we'll keep their current rates in place."

MODERATOR: And we have time for one brief question. If you have one, Ed Maixner of Kiplinger.

REPORTER: Hi. Thank you for taking my question. This is Ed Maixner. Really a double question, but just this. Do your budget experts at USDA, looking down the line several years now with the renewal of a majority at least of the contracts, expect an overall dollar increase, decrease, or about even on the next few years in terms of total spending for the program?

And secondly, just along with that is, the continuous CRP and CREP dollars or commitment, is that going to still be a commitment to a certain like six or however million acres that you're going to try to keep in that category? How does that play into the total program?

SEC. GAIBLER: "Okay, with respect to the first question relating to the budget, we don't believe this will have any relative impacts in terms of the budget. Our baseline assumptions, that we work on long-term, assume that we're going to fully enroll the Conservation Reserve Program. And we believe that in reviewing what we've proposed we'll have no problems of meeting that issue of maintaining our budget baseline.

"And we do have the reserve in our program and our planning, room for the continuous CRP. It's a very good program, it's well-received, and again with the various states vying for CREPs, CRP is always an integral part of it. So we have built in enough room for allowance of that-- as well as these other initiatives."

MODERATOR: Any final thoughts, Mr. Secretary?

SEC. JOHANNS: "Well, it is the result of a lot of effort and hard work, people at the USDA, that we're here today. We're very, very pleased to kick this program off, and as I said earlier in response to the question, we've got our sleeves rolled up, and we're ready to go to work, and we're ready to get the job done on this program."

MODERATOR: Secretary of Agriculture, Mike Johanns. I'm Larry Quinn bidding you a good afternoon from Washington.