When Lyle Perman was younger, in a different era in farm policy, he and his father converted some of their grassland into crops.
Perman, now a Walworth County rancher and crop insurance agent, recalls government agencies assisting them with designing drainage ditches and blowing holes in wetlands.
“You have to understand that this is the environment that a lot of us were raised in,” Perman said. “We were raised draining wetlands. Farming and erosion were just part of the business. You didn’t like it, but it was just part of what you did.”
That grassland conversion is part of what made South Dakota what it is today. But researchers, ranchers and conservation organizations have found that high commodity prices are driving today’s farmers to plow land that yesterday’s farmers deemed unsuitable for planting.
These marginal, highly erodible lands – home to many of the state’s pheasants, ducks and other wildlife – are vanishing largely because planting crops on poor land and collecting insurance when the harvest fails is more profitable than keeping native grassland.
In Walworth County, Perman said, an acre of farmland will rent for more than an acre of grassland will gross. That’s not necessarily because the land is less valuable as grassland, and on fragile lands, leaving it in grass may be the wiser move financially if the producer takes the long view of keeping the operation profitable for years to come. But crop insurance complicates matters by taking the risk out of a decision to convert fragile land to crops.
“You’re going to find that to be true in most of the state. That’s where you’re going to make the most money short-term,” Perman said. “Crop insurance guarantees do not create a level playing field.”
Farming the program
Those who are close to the industry say farmers who are converting grassland back into cropland are simply making sound economic decisions – at least based on the short-term view.
“What’s driving this conversion of grassland to cropland are high commodity prices,” said Jamie Huizenga, Pierre crop insurance agent. “If you’re in business and something you’re doing is making money, you’re probably going to do more of it.”
Simple mathematics means the return from having grassland enrolled in the Conservation Reserve Program, for example, is nowhere near as profitable as plowing and planting that land, especially if the producer carries crop insurance.
Paul Lepisto, regional conservation coordinator with the Izaak Walton League, one of America’s oldest conservation groups, said it isn’t just high commodity prices that are encouraging landowners to painstakingly remove rocks from hilltops and plant crops on pasture.
Lepisto said financial incentives in farm policy – crop insurance being the main one – are motivating some landowners to not only convert CRP lands back into cropland, but in some cases to drain wetlands or break native prairie. Crop insurance has made risk-taking on fragile lands economical. The more unsuccessful the plot, the larger the insurance check.
“They go in, break native prairie and put corn or soybeans in, knowing full well that area – with its poor soils and lack of precipitation – probably is not going to yield a crop,” Lepisto said. “Some of those producers are in it to simply to farm the program, not farm the land.”
And while that may be the case in some instances, landowners such as Keith Krull know that converting land is sometimes the only way to keep an operation economically viable.
Krull’s family has ranched in the area since 1907. He and his brother bought the Krull Ranch in the early 1990s, and in 2002 the two brothers and their wives opened the Krull Lodge. Instead of farming all 11,000 acres, about 70 percent of the land is dedicated to hunting.
But Krull said when it comes to paying the bills, conversion is becoming more and more lucrative.
“We’ve seen a tremendous amount (of conversion) – CRP coming out and native grassland being farmed,” Krull said. “We’ve done some of that ourselves. I don’t blame anybody for doing it, because they’re trying to make a living out here.”
Krull added that as he and his family age, making a living by managing cattle becomes less appealing.
“Historically, one cow will generate about the same amount of income as one acre. Would you sooner have 1,000 acres or 1,000 cows?” Perman said. “It’s all economic, and until the taxpayers or the lawmakers figure that out, this is going to continue.”
Subsidized by taxpayers
Tim Kizer, an Arkansas-based agriculture consultant for the Theodore Roosevelt Conservation Partnership, said that taxpayers often have no idea that the money they are paying to subsidize farmers could be helping to destroy natural resources. There has already been a lobbying effort to cut the link between taxpayer subsidies and conservation practices, driven in part by some commodity groups, Kizer said, and he said no one knows how strong that effort to decouple subsidies from conservation practices will be in upcoming farm bill debates this fall.
“We don’t want government money, taxpayer money, to inadvertently cause bad conservation practices such as the conversion of grassland to mediocre cropland or the draining of wetlands,” Kizer said.
Kizer said there has always been a requirement that producers follow good conservation practices in order to get federal farm subsidies, and the requirement hasn’t been burdensome to producers. Also, Kizer said, farmers who don’t want to comply have an easy solution – don’t accept the federal cash and they can farm any way they please.
“These are not major regulations. These have never gotten in the way of someone using their land in a responsible manner,” Kizer said. “We have always had a compliance requirement. It’s kind of interesting that it’s been on the chopping block so easily.”
For example, Kizer said, because taxpayer-subsidized crop insurance takes the gamble out of converting grassland to “mediocre farmland,” that program could be helping farmers make up their minds to plow up their grass.
Congress increased subsidies for farmers from less than $2 billion in 2001 to $7.4 billion in 2011, according to data from the Environmental Working Group. Today, the U.S. Department of Agriculture pays, on average, 62 percent of farmers’ premium subsidies.
That means taxpayers are, whether they know it or not, subsidizing the conversion of grassland to cropland – paying 62 cents of every $1 in crop insurance premiums.
“I don’t think the average citizen in South Dakota – or across the country – has any idea that nearly two-thirds of the premium is paid for by tax dollars,” Lepisto said.
The Izaak Walton League is pushing for crop insurance subsidies to be re-coupled with conservation compliance in the next Farm Bill – a measure Lepisto said would ensure that U.S. taxpayers get some environmental benefit from the money they have invested in crop insurance programs.
“If landowners wanted to enroll in crop insurance and qualify for that premium subsidy, they would have to promise not to drain wetlands or convert native prairie to cropland,” he said. “For that insurance premium subsidy, the U.S. taxpayer should expect something in return, and right now, we’re not getting it.”
Perman added that if farmers don’t comply with a conservation plan, crop insurance can still be purchased.
“The personal choice of how to farm your land has not been diminished,” Perman said. “The only thing that’s happening is your decision to not ask the taxpayers to fund your operation if you’re draining wetlands and farming highly erodible land in a matter that doesn’t maintain crop residue.”
Leveling the field
The bottom line, according to Perman, is that without a level playing field, converting grassland to fields of corn and soybeans will continue to be more profitable than raising livestock in South Dakota. It’s the same old friction between Cain and Abel, and Cain wins again.
“I cannot compete running livestock on my grasslands with somebody that wants to break it and farm it. I just can’t,” Perman said. “Those of us that have grasslands do not have the protections that we need, and until there’s some semblance of equality, grassland doesn’t stand a chance.”
Perman said the first step toward equality could be conservation funding that encourages farmers and ranchers to keep native grassland intact.
In Krull’s opinion, changes to CRP regulations could also help attract more landowners in the long run. For Krull, one deterring contract change was only being allowed to graze CRP land twice every fifth year rather than haying and grazing a third of the land every few years, as previous contracts allowed.
“We did have land in CRP, and still do have some, but I haven’t put most of mine back, mainly because of the contracts,” Krull said. “They weren’t keeping up with rental rates, and some of the stipulations they put in the contracts just weren’t what we wanted to do.”
Perman said it seems that most people are beginning to understand the extent of grassland conversion and the motives behind it, but awareness is progressing slowly compared to the aggressive lobbying of businesses benefiting from conversions.
“Businesses benefiting from selling crop inputs have a vested interest in keeping land in crops and adding to that,” he said. “You don’t sell a lot of Roundup to somebody who has cows, but you do to somebody with a corn planter. So how do you think Monsanto feels about conversions?”
For those concerned about grassland conversion, Perman said the best course of action is to make your voice heard by investing in landowners who care about saving South Dakota’s native prairies.
“The people marketing crop inputs are either in denial that conversions are happening, don’t want to talk about them, or are opposed to anything that could slow them,” Perman said. “And they have the ear of our elected representatives.”
Perman said those who care about conservation need to make a similar effort to make their case with policy makers for changes that can help protect grassland.
Perman adds that while taxpayer-subsidized crop insurance may be one of the factors driving conversion of grassland, there are other factors at work, including the Renewable Fuels Standard that sets targets for using renewable fuels such as ethanol. Perversely, the very policy that is supposed to be good for the environment may actually be leading to the conversion of grassland by helping to increase the demand for corn, he said.
The Renewable Fuels Standard requires that in the current year, 2013, 13.9 billion gallons of corn-based ethanol be blended into gasoline. That equates to about 4.9 billion bushels of corn, or about 40 percent of the nation’s crop, according to the National Cattlemen’s Beef Association. Perman – who agrees with the NCBA that there should be a waiver to the biofuels standard – said that’s a factor driving price; and another influence on producers’ decisions to convert grassland into cropland so that they can grow more corn.
“It’s the one of the factors moving price. It’s a big deal,” Perman said.
Lance Nixon contributed to this report.