Over the last 3 centuries, about half of this presettlement, or “native,”  grassland was converted to other uses, and almost all the native grassland  has been converted in some states, such as Iowa and Minnesota. While there is no  comprehensive and current source of information on the extent of native  grassland conversions to cropland or the amount of farm program  payments made in relation to this newly converted cropland, available  sources provide some information on conversions and related costs. Nationwide, total private grassland declined by almost 25 million acres  from 1982 through 2003. Specifically:  NRCS’s National Resources Inventory (NRI). For example, some of the  decline in rangeland was due to conversions to non-cropland uses, such as  developed land. Table 3 shows the net crop insurance payments received by  producers in the 16 South Dakota counties with the highest rates of  conversions in 2005 and 2006 in comparison with the net payments  received by producers in the state’s other counties. According to USDA officials, a possible reason for the relatively high crop  insurance and disaster assistance payments in South Dakota counties with  the highest conversion rates is that these counties are in areas that are  more prone to drought and crop losses than other major crop-producing  counties. Farm Program Payments, Rising Crop Prices, and the Adoption of New Farming Technologies Provide Incentives to Expand Crop Production on Native Grasslands

Federal farm program payments are an important factor in producers’  decisions to convert native grassland to cropland, but rising crop prices  and advances in crop production technology are also important factors in  these conversions. For example, a study by USDA’s  Economic Research Service (ERS) found that increased crop insurance  subsidies in the mid-1990s encouraged producers to expand crop  production in the contiguous 48 states by an estimated 2.5 million acres,  with most of the land coming from pastureland and other grassland. From 1982  through 1997, 1.69 million acres of cropland in South Dakota were enrolled  in CRP—with almost all of this acreage planted in grasses—at a total  government cost of about $633 million. However, during the same period,  1.82 million acres of grassland in South Dakota were converted to  cropland. Sodbuster Has Had Little Impact on Native Grassland Conversions

Sodbuster has had little impact in limiting the conversion of native  grassland to cropland, in part because much of the native grassland  converted in recent years is not highly erodible and therefore not subject  to Sodbuster. Existing policy—referring to the current conservation compliance  provisions, including Sodbuster—is effectively controlling soil erosion on  highly erodible land. Available data suggest that USDA’s programs that  increase the profitability of cropping and its programs that encourage  conservation of rural land may be working at cross purposes with one  another. In addition, USDA said certain types of coverage, such as  prevented planting coverage, are not available for any written agreement  approved for newly converted land. Specifically, we determined (1) the extent of grassland conversions to  cropland and the cost of farm program payments related to these newly  converted cropland acres, (2) the relative importance of farm program  payments versus other factors in producers’ decisions to convert grassland  to cropland, and (3) any impact the Sodbuster provision has had on  limiting grassland conversions. To determine the relative importance of the availability of farm program  payments in producers’ decisions to convert grassland to cropland, we  identified and reviewed studies that directly examined the economic  incentives of farm program payments on a producer’s decision to convert  grasslands to cropland, as well as related studies that examine the effects  of farm program payments on farm profitability and risk.
Why GAO Did This Study

The nation's remaining grassland has several important benefits, such as providing land for grazing and wildlife habitat for many at-risk species. However, over the past 3 centuries about half of the grassland has been converted to other uses, principally cropland. In addition to losing important grassland values, such conversions may result in increased spending on federal farm programs, such as crop insurance, especially in marginal areas. GAO examined (1) the extent of grassland conversions to cropland and the cost of farm program payments for these newly converted cropland acres; (2) the relative importance of farm program payments versus other factors in producers' decisions to convert grassland to cropland; and (3) any impact the Sodbuster conservation provision--which places soil erosion standards on certain converted land--has had on limiting grassland conversions.

What GAO Found

No comprehensive and current source of information exists on the conversion of grassland to cropland or on the resulting farm program payments for newly converted land. However, the data that are available show a decline in private grassland nationwide, continuing conversion of native grassland to cropland in some areas of the country, and that certain farm program payments made to producers in South Dakota counties with relatively high rates of conversion were significantly higher than payments in other counties. According to USDA's National Resources Inventory, the nation's privately owned grassland decreased by almost 25 million acres between 1982 and 2003. While some conversions are attributable to development and other land uses, the leading type of conversion has been to cropland. Our analysis of South Dakota counties found that between 1997 and 2006, the average annual net crop insurance payment per acre for the 16 counties with the highest rates of conversion was nearly twice as high as the average payment for all other counties in the state. Farm program payments are an important factor in producers' decisions on whether to convert grassland to cropland. Certainly other factors, including rising crop prices--largely spurred by increased ethanol demand--and the emergence of genetically modified crops and new farming techniques that make cropping on heretofore unsuitable land possible are also important in producers' decisions. Specifically, our analysis found that farm program payments are an important factor in conversions. Several economic studies have reached the same conclusion. For example, a 2006 USDA study found that increases in crop insurance subsidies motivated producers to expand cropland in the contiguous 48 states by an estimated 2.5 million acres in the mid-1990s. Moreover, farm program payments and conservation programs may be working at cross purposes with one another. For example, from 1982 to 1997, 1.69 million acres of cropland in South Dakota were enrolled in the Conservation Reserve Program, while during the same period, 1.82 million acres of grassland in South Dakota were converted to cropland. The Sodbuster conservation provision has had little impact on conversions. For certain cropland converted from native grassland and classified as highly erodible, Sodbuster requires that producers apply a soil conservation system that does not allow a substantial increase in erosion as a condition to receiving certain farm program payments. However, much of the native grassland converted in recent years is not highly erodible and therefore is not subject to Sodbuster. In addition, according to county-level USDA officials, the cost of controlling soil erosion relative to potential profits from cultivating the land provides little disincentive to conversion. USDA has proposed legislation to make newly converted native grassland ineligible for program benefits.