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Intensive Forest Management:
1. Shifting Rowcrop and Pasture Land to Tree Crops
    in Georgia: Marginal Crop and Pasture Acres
    Examined

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David J. Moorhead - Professor of Forestry, The University of Georgia,
Coleman W. Dangerfield - Associate Professor, The University of Georgia.

Warnell School of Forest Resources,The University of Georgia Extension Forest Resources Unit - FOR. 98-014, April 1998.

Purpose

The purposes of this study are three-fold:

  1. examine the marginal crop and pasture land in Georgia through the Conservation Reserve Program (CRP) tree planting enrollments by land capability classifications;
  2. determine yield and costs of production and returns of likely annual cropping practices on CRP marginal land sites; and
  3. determine the impacts to the state economy from diverting marginal rowcrop and pasture acres into tree crops, on total agricultural and personal income, and resulting employment in Georgia.

Introduction

Georgia is one of the largest agricultural states in the U.S. Southeast with 37,140,514 acres of land (Bachtel and Boatright 1995, GASS 1996).

In 1988, in Georgia, there were 23.535 million acres of timberland, 6.568 million acres of cropland, and 2.977 million acres of pasture land, Figure 1. Of the total 9.545 million acres of agricultural land, 1.864 million acres, 19.5 percent, were classified as marginal cropland and pasture (Soil Conservation Service in Land Capability classes 3e, 4e, 6, and 7), including 659 thousand acres of highly erodible cropland, that could yield higher rates of return in pine plantations than in crop or pasture use (USDA-FS 1988, p. 251-257), Figure 2.

While much land in Georgia may be best suited for timber and forest production, many landowners perceive converting rowcrop and pasture lands to tree crops, as a decline in productivity. On the other hand, substantial areas of forest cover have been periodically removed and converted to marginal agricultural uses or harvested with no provision for regeneration of the land to suitable forest cover. This loss of potential forest productivity has continually caused concern among foresters and policy makers because of the broad economic impacts that could occur from diminished timber production.

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Situation

The most important recent program designed to increase forest planting activity was the 1986-1992 Conservation Reserve Program (CRP) which enrolled 36.423 million acres of marginal agricultural land nationwide, with 706,459 total acres signed up in Georgia. This CRP enrollment includes converting 2.488 million acres of marginal agricultural land to forest production nationwide, with 2.218 million acres of this afforestation located in the South, including 645,931 acres in Georgia (Glaser 1986, USDA-ERS 1994, USDA-ASCS 1993).

Of the 1.864 million marginal cropland and pasture acres identified in Georgia in 1988 (including 659 thousand acres of highly erodible cropland (USDA-FS 1988, p. 251-257)), only 706,459 acres were entered into the CRP, with 645,931 acres planted to trees.

Consequently, there remains, by conservative estimate, approximately 1.218 million acres of marginal crop and pasture land in Georgia that could yield higher rates of return in pine plantations.

Methods

Enrollment records for the twelve CRP sign up periods were obtained from the Georgia state office of the Consolidated Farm Services Agency (FSA). Acres were examined by Land Capability Classification to predict a soil's suitability for crop and timber production. Soils are placed in suitably groups or classifications based on inherent limitations they pose to production of a crop. In Georgia, there is a two-level, land classification system, using capability class and capability subclass (Smith 1991).

Capability classes, are broad soil groupings designated by Roman numerals I to VIII. Increasing crop production limitations are denoted by increasing numerals. These are:

  • Class I - soils with few limitations restricting use.

  • Class II - moderate soil limitations that restrict crop choices or require moderate conservation management practices, or both.

  • Class III - those soils with severe limitations that reduce crop choice or require special conservation practices, or both.

  • Class IV - severe soil limitations that restrict crops choice or require very careful management, or both.

  • Class V - soil limitations other than erosion that limit crop production use.

  • Class VI - severe limitations rendering soils generally unsuitable for crop production.

Capability subclasses, are groups of soils within a class used to designate specific production limitations. A lowercase letter is added to the capability class numeral indicating the type of limitation or restriction. The letter e indicates an erosion hazard unless a close-growing plant cover is maintained; s denotes droughty soils; and w soils are limited by surface or subsurface wetness.

Statewide crop production estimates and site index values were weighted by the proportion of acres within land capability classes. These crop production and site index bases were refined using 1986 to 1993 soybean and wheat production records from Cooperative Extension Service records in selected agricultural counties.

The economic impact of the CRP program was evaluated using a three stage ordinary least squares (OLS) model (Dangerfield and Miller 1991). The first stage equation models county sales from agriculture and forestry as a function of county production levels. The results from this equation are then used along with agricultural sales, number of wholesale firms, and the number of manufacturing and government employees, to predict total county employment in the second equation. The third equation uses total county employment to predict total personal income.

Results of these studies can then be projected across the 1.218 million acres of Georgia marginal crop and pasture land if converted to tree crops (Moorhead and Dangerfield 1996, Dangerfield and Moorhead 1997).

Results:

Analysis of the CRP sign ups indicates that land capability classes IIe, IIe, IVe, IIs, and IIIs, all with moderate to severe crop production limitations, were enrolled (Table 1). The greatest percentage was in class II at 60.1 percent. Soils in this class are characterized as having moderate limitations that restrict the choice of crops and require moderate conservation practices. Class II soils are subject to erosion unless a close-growing ground cover plant is maintained.

Overall crop yields and site index averages, weighted by land class and adjusted for actual county yields, are presented in Table 2. Information provided by the Laurens County Extension Director indicated that a double-crop of soybeans and wheat were commonly grown on these soils prior to CRP enrollment. On these soils, soybean yields averaged 18 bushels and wheat 34 bushels per acre. This is compared to class I soils in the county with soybean yields of 45 bushels and wheat yields of 56 bushels per acre.

Table 1. Georgia's 12 Conservation Reserve Program sign ups by land class

Conservation Reserve Program Acres

Land Class Percent Total
I 0.07 366
II 60.1 316,959
III 26.3 138,711
IV 17.4 91,837
V 0.22 1,287
VI 2.9 16,682
VII 1.2 6,876
VIII 0.001 8
Total 100 572,726

Table 2. Weighted site index and crop yields for Georgia Conservation Reserve Program sign ups.

Site Index Weighted Average Yields
50 / 25 Yrs. Soybeans
bu/ac
Wheat
bu/ac
Cotton
lbs/ac
83 / 62 18 34 596

Using commodity prices, production costs, and yield data from 1986 to 1993 (Table 3), annual returns from a double-crop of soybeans and wheat on CRP sites were calculated for the eight-year period to determine the alternative to CRP participation. Soybeans produced a value of $67.7 million at a cost of $103.3 million. Wheat value was $63.2 million at a production cost of $88.5 million. The annual double-crop system of wheat and soybeans was valued at $130.9 million while costs of production were $191.8 million. Only in 1988, was a profit earned on these acres (Figure 3).

Break even cost for soybean production was $8.88 per bushel, and $4.03 per bushel for wheat. Average prices for soybeans and wheat from 1986 to 1993 were $5.82 and $2.88 per bushel, respectively (Table 3).

Table 3. Average yield, commodity prices and production cost for soybeans and wheat in Laurens County, Georgia 1986-1993. Georgia Agricultural Statistics Service, 1994. Laurens Co. Extension Service records.

Market Year Soybeans Wheat
Crop
Yield
Commodity
Price
Production
Costs
Crop
Yield
Commodity
Price
Production
Costs
Yield bu/ac Price $/bu Cost $/ac Yield bu/ac Price $/bu Cost $/ac
1986 12.7 4.75 155 22.5 2.48 131
1987 13.7 5.61 149 22.6 2.46 122
1988 23.5 7.30 156 40.8 3.21 126
1989 22.5 5.61 162 31.0 3.70 136
1990 8.5 5.74 164 35.0 3.02 139
1991 24.8 5.53 175 35.8 2.44 157
1992 28.3 5.49 161 38.5 3.11 142
1993 10.6 6.55 158 38.4 2.60 144
Average 18 5.82 160 34 2.88 137

Changes in agricultural and personal income, and resulting employment in Georgia were estimated following a modeled shift of 1.218 million marginal acres from intensive, annual crop production to tree crop forestry, Table 4. Continued production of the typical double-crop system of soybeans and wheat on marginal soils (Moorhead and Dangerfield 1996) are projected to result in a state-wide net annual loss of $114.836 million. Establishment of fully regulated, pine stands on these acres has projected annual wood-flow net returns of $70.712 million. Therefore, the real net increases in Georgia annual agricultural income is $185.548 million after marginal crop and pasture land use conversion to sustainable forestry production.

Modeled tree crop planting on marginal Georgia acres are projected to create 686 forestry-related jobs and increase total personal annual income $20.365 million across the state. This serves to partially offset the loss of 824 crop and pasture related jobs and $24.570 million lost in total personal income derived from the financially unprofitable and ecologically unsustainable annual crop production alternative on the 1.218 million marginal acres in Georgia.

Table 4. Annual impacts to the Georgia economy by converting 1.218 million marginal crop and pasture acres to tree crops.

Total net ag. income millions
Crop & pasture loses ($114.8)
Tree crop gains $70.7
Net ag. income change $185.5

Total employment #
Ag. job losses (824)
Forestry job gains 686
Net job change (138)

Total personal income million
Crop-related losses ($24.6)
Forest crop gains $20.4
Net total personal income changes ($4.2)

Conclusions

The CRP in Georgia effectively targeted erosion prone soils for conversion to conservation crops. All land capability classes enrolled had moderate to severe crop production limitations. Analysis of the typical crop production system on these soils revealed consistent and substantial annual losses, which ultimately lead to abandonment of these soils for crop production.

The CRP provided an attractive incentive for landowners to switch from intensive annual rowcrop production to timber production through the establishment of pine plantations. Landowners received income through program enrollment from initial cost-share payments to establish practices, and the subsequent ten years of annual payments. Pine plantations established on CRP acres produce positive economic returns while effectively conserving soil resources for the future.

While the dollars spent to support annual cropping of these marginal lands were important to county jobs and personal income, in effect, annual crop production on these CRP acres was being subsidized by profits gained from class I lands and/or, supported by equity based on land or other assets. Long term, annual crop production could not be profitability maintained on these acres, and in turn the related jobs and personal income. The County Extension Director felt that the majority of these lands would eventually be fallowed rather than continued to be cropped if not enrolled in the CRP.

Establishing tree plantations in the CRP had immediate impacts on the state. The annual losses generated from annual crop production were stemmed. One-time cost share payments of $22,090,840 million were received by landowners to establish pine plantations, and $27,813,789 million in annual payments for the 10-year contract.

Despite the marginal nature of the CRP soils to profitably produce annual crops, these sites were found to be highly productive for pine plantation management. Site index on the CRP land classes averaged 62 feet for dominant and co-dominant trees at 25 years (SI2562). However, residual nutrients applied to past crops and the lack of hardwood competition may increase siteproductivity above published soil survey values. To account for this potential variability in site productivity, wood-flow projections were examined at SI25 of 60, 65, and 70 feet.

Figure 3. Annual soybean and wheat double-crop production costs and crop revenues on Conservation Reserve Program land capability class acres.

Siegel and Johnson (1991) projected a similar response to enrollment in the CRP in Virginia. Declines in agricultural production, jobs and personal income loss were countered by CRP payments to farmers and the economic activity resulting from the establishment, maintenance, and subsequent harvest of tree crops.

Southeastern states in the U.S. like Georgia, have long term advantages from tree planting on

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marginal agricultural land and under the CRP because of the growing stumpage value with age. Grasslands in the Midwest and western states can be returned to grazing or hay production at expiration of contracts but the level of activity is not projected to recover to pre-program levels (Hyberg et al. 1991).

Broomhall and Johnson (1991) examined the potential CRP impact on an eight-county region in southeastern Georgia. The authors also projected job and income losses as agriculture shifted from intensive annual crop production to CRP pine plantations. However, they found, as our study indicated, crop production on these CRP eligible acres was substantially lower than the state average. They concluded that with the low returns to annual crop production, forestry offered a stable long-term economic opportunity. Additionally, reducing applications of fertilizers and pesticides used in annual crop production and using trees to stabilize soils, reduce erosion and sedimentation will enhance water quality throughout the region.

Implications for Marginal Crop and Pasture Landowners, Policy Makers, Educators, and Agricultural Credit Lenders

Landowners can earn attractive returns from continued land use in trees on marginal land currently in the CRP. This is consistent with results determined by Shideed et al. (1989) that pine plantations are more profitable on marginal row crop land in Georgia than either corn or soybeans except under the most optimistic price assumptions. Further, real prices of most agricultural crops are projected to decline whereas real tree product prices are expected to remain constant or increase slightly (Alig et al. 1988).

Converting marginal rowcrop and pasture acres to tree crops can have long-term impacts on communities. Since 1956, tree plantings from the original Soil Conservation Reserve Program (SCRP) have remained almost totally in production forest. CRP tree plantings from the 1985-1993 period are expected to remain likewise (Kammholz et al. 1995, Kurtz et al. 1993). Contracts for 599,377 acres (85% of the total) in the CRP in Georgia, will have expired by the end of 1998.

Acknowledgements: The authors thank the staff of the Georgia Farm Services Agency for providing CRP records and land classification summary information. A special thanks to Paul Riddle, University of Georgia Cooperative Extension Service Director in Laurens County for his cooperation and assistance in providing crop production records and information on cropping systems and practices on CRP acres.

Literature Cited

Alig, R.J, F.C. White, and B.C. Murray. 1988. Economic Factors Influencing Land Use Changes in the South-Central United States. USDA-FS, Southeastern Forest Experiment Station, Research Paper SE-272, 23 p.

Bachtel, D.C., and S.R. Boatright. 1995. The Georgia County Guide. University of Georgia College of Agricultural and Environmental Sciences. ISSN 1044-0976. 200 p.

Broomhall, D., and T.G. Johnson. 1991. Regional impacts of the conservation reserve program in the southeast with conversion to trees: an application of input-output analysis. The Review of Regional Studies 20(2):76-85.

Dangerfield Jr., C.W., and G. Miller. 1991. Laurens county agricultural strategies. The University of Georgia College of Agricultural and Environmental Sciences-CES. Ag Econ Bulletin 91-006. 86 p.

Dangerfield, C.W., Jr., and D.J. Moorhead. 1997. Revised modeling used to evaluate impacts of management and rotation on wood-flow and profitability from Conservation Reserve Program pine plantations in Georgia. In Proceedings 27th Southern Forest Economics Workshop, Little Rock, AR. In press.

GASS, Georgia Agricultural Statistics Service. 1996. Georgia farm report. 96(2). 8 p.

Glaser, L.K. 1986. Provisions of the Food Securities Act of 1985. Washington, DC: USDA Economic Research Service, Agricultural Information Bulletin No. 498, 105 p.

Hyberg, B.T., M.R. Dicks, and T. Hebert. 1991. Economic impacts of the conservation reserve program on rural economies. The Review of Regional Studies 21(1):91-105.

Kammholz, C.P., D.H. Newman, and C.W. Dangerfield, Jr. 1995. A small-scale survey of Conservation Reserve Program landowners in Georgia. Pp. 84-89. In J. Caulfield and S. Bullard, eds. Proceedings of the 25th Southern Forest Economic Workers Conference, New Orleans, LA. Dept. of Forestry, Mississippi State University.

Kurtz, W.B., G.T. Noweg and R.J. Moulton. 1993. "Retention and Condition of Public Cost-shared Conifer Plantings." Washington, DC: USDA-FS.

Moorhead, D.J., and C.W. Dangerfield, Jr. 1996. Shifting annual rowcrop production to Conservation Reserve Program tree planting: Impacts on agricultural and personal income, and employment in Georgia. Pp. 202. In Abstracts of papers presented at the Sixth International Symposium on Society and Resource Management, The Pennsylvania State University Dept. of Agricultural Economics & Rural Sociology and The School of Forest Resources. University Park, PA.

Siegel, P.B., and T.G. Johnson. 1991. Break-even analysis of the conservation reserve program: the Virginia case. Land Economics. 67(4):447-461.

Shideed, K.H., W.O. Mizelle, F.C. White, and C.W. Dangerfield, Jr. 1989. The Competitive Position of Pine Tree Production Relative to Corn and Soybean Production on Marginal Land in Georgia. Journal of the American Society of Farm Managers and Rural Appraisers 53(1):67-72.

Smith, E.H. 1991. Soil survey of Johnson and Laurens counties, Georgia. USDA Soil Conservation Service. 133 p.

USDA-ASCS. 1993. "Conservation Reserve Program." 16 p.

USDA-ERS. 1994. "RTD Updates: Conservation Reserve Program," Number 2 (January) 4 p.

USDA-FS. 1988. The South's Forth Forest: Alternatives for the Future. Washington, DC: Forest Resource Report No. 24. 512 p.


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