The US Department of Agriculture (USDA) spends upwards of $20 million dollars each year in an effort to support and grow the organic agricultural industry. One thing that makes obtaining organic certification difficult and risky for producers is what’s known as the “transition period”. During this three-year period, producers must adopt and adhere to USDA organic production standards but, importantly, are unable to label their output as organic and receive the accompanying organic price premium. This can be a significant deterrent to organic uptake because during the transition period producers are incurring the costs of switching to organic production, including learning costs and lower yields, but are not able to access any of the financial rewards.
In a recently published paper, my coauthors (Hannah Wing and Kate Binzen Fuller) and I examine the role that the USDA’s Conservation Reserve Program (CRP) might play in reducing the transition period barrier. The CRP temporarily takes cropland out of production, normally for a 10- or 15-year contract period, in exchange for adopting a conservation cover/practice that mitigates soil erosion, increases wildlife habitat, or promotes other environmental goals. CRP participation is voluntary, where producers either apply for the program through a competitive bidding process (the General sign-up) or can enroll automatically if they fit one or more specific initiatives (the Continuous sign-up). Once enrolled, participating producers receive an annual rental payment for the duration of their contract and normally have the opportunity to re-enroll at the end of the contract period.
What’s the connection between CRP and organic transition? Intuitively, while land is enrolled in the CRP, it is by definition not being used for conventional crop production. Furthermore, most CRP practices comply with organic standards involving pesticide and herbicide use. Therefore, land coming out of the CRP (i.e., land that isn’t re-enrolled at the end of the contract period) usually satisfies the transition period requirement incidentally. This allows former CRP enrollees to obtain organic certification immediately and benefit from the accompanying price premium in their first post-CRP growing season.
Using county-level data on organic certifications and CRP contracts between 2011 and 2020, our study finds that there is a detectable causal relationship between the amount of land coming out of the CRP and the number of new organic certifications. Specifically, we find that a 1% increase in net-exiting CRP contracts leads to a 0.029% increase in organic certification. While this is relatively small compared to the area of land in the CRP (22 million acres in 2022), the results suggest that 780 additional organic certifications resulted directly from exiting CRP contracts, or approximately 6% of the 13,198 organic crop farm certifications in our dataset. As a very rough estimate of its potential implications in dollar terms, the organic industry was worth $10 billion in 2019, 6% of which is $600 million.
Where does Oregon fit into the picture? Oregon ranks sixth in the US in organic acreage, with 228 thousand acres of certified organic farmland, based on a 2021 USDA survey. Most certified organic operations are located in the Willamette Valley and southern Oregon, but counties in other parts of the state, such as Umatilla County, have a significant organic presence as well. In terms of land enrolled in the CRP, Oregon ranks 15th. CRP contracts in Oregon are concentrated in the northern part of the state east of the Cascades. If we re-estimate the primary model used in the paper and allow for Oregon to have its own separate effects, we find that they are not statistically significant, meaning they aren’t measurably different compared to what we estimate for the US as a whole.
Overall, our paper contributes to the growing body of work looking at the “fate” of land coming out of the CRP. The idea of CRP being a means to increase organic transition is something that has been discussed in farm policy circles. Our paper provides the first concrete evidence of this connection being borne out in the data. This avenue for organic transition was actually highlighted in a recent USDA press release about a CRP policy change that allowed producers to exit the program early to bolster crop output in response to the ongoing war in Ukraine. To the extent that organic farms retain more of the CRP-related soil health and environmental benefits than conventional farms, which, to be clear, is not something we take a stance on in our paper, our findings also highlight the potential for these benefits to endure beyond the contract period.
An ungated version of the paper can be found here. Full paper reference:
Wing, H., D.P. Bigelow, and K.B. Fuller. 2024. “Does temporary land retirement promote organic adoption? Evidence from the Conservation Reserve Program.” American Journal of Agricultural Economics, in press. DOI: https://doi.org/10.1111/ajae.12465