An efficiency approach to managing Mississippi's marginal land based on the conservation reserve program (CRP)

The US Congress established the Conservation Reserve Program (CRP) in Title XII of the Food Security Act of 1985. The program, administered by the US Department of Agriculture (USDA), is a voluntary long-term cropland retirement program. USDA pays farm owners an annual per-acre rent and reimburses them for one-half of the cost of establishing a permanent land cover in exchange for retiring highly erodible cropland for 10 years. The program is meant to boost net farm income and improve environmental quality over the life of the program (1986-1999). The paper presented here is a linear programming application to the economic modeling of Mississippi's marginal agricultural land conversion to timber use. Under the adopted crop and timber prices, costs and yields, the optimal solution to maximize net returns to land was realized by placing all cropland into timber use. However, results from this analysis indicate that from an economic standpoint, the optimal solution is highly sensitive to changes in crop and timber prices. Returns from timber production will not be realized until well into the future as compared to annual returns from crops. A farmer's personal time horizon may indeed impact on his land-use decision. Perhaps other criteria such as the 10 years stability of CRP rent payments or externalities associated with crop retirement such as a desire for wildlife habitat will affect farmers land-use decisions. Results from CRP sign-ups indicate that Mississippi's farmers have utilized the CRP by converting almost 514800 acres of marginal cropland into trees. Published by Elsevier Science B.V.