| The Conservation Reserve Program (CRP), as initially authorized by the Food Security Act of 1985, operated by removing land from agricultural production in order to generate environmental benefits, primarily erosion reduction. Policy, however, often generates unintended consequences. One potential unintended consequence in the CRP is slippage; if the upward pressure that the idling of cropland exerts on commodity prices results in the activation of new land, behavior that may partly offset the program's environmental benefits, then price-feedback slippage is said to have occurred. Examination of county-level wheat production data for the United States during the years 1980 to 1993 utilizes a two-stage least squares model in which the effect of land retirement under the program on the price of wheat is examined, and the correlation between wheat price and acres planted in wheat is in turn estimated. The model indicates a slippage rate for wheat ranging between 8.13 and 22.6 percent.; If the intended output of the policy was primarily its stated end of soil conservation, then the indicated slippage effect is highly relevant to efficacy. However, if the true intention of the policy was to provide economic relief to farmers through the application of program rental payments on retired land, then the issue of slippage is irrelevant to the policy's intendment. This study demonstrates that, based on the historical connection between soil conservation and agricultural commodity policies, economic conditions facing agriculture in the early 1980s, a number of studies demonstrating a distributive rather than regulatory effect of the policy on farm operations, and outspoken support for the creation of a program like the CRP on the part of the farm lobby at Congressional hearings during the formulation of the 1985 Farm Bill, the substantive intendment of the policy as passed in 1985 was to provide income relief to farmers, while its stated conservation goals were largely symbolic. |
