I wrote a couple of weeks ago about the 2008 farm bill, and how there’s now an income cap on farmers who can receive payments through the Conservation Reserve Program. Critics of the program deride it as paying farmers not to farm, but the ecologically minded farmers out there know that the program simply provides an incentive to take land which is environmentally fragile out of production. CRP land protects soil and groundwater and provides wildlife refuge that helps keep rural areas ecologically healthy – and even economically productive, since CRP land and the wildlife it attracts makes things like hunting leases more attractive.

Unfortunately it looks like a lot of farmers may be making the decision to pull their acreage out of the CRP. The rates paid for CRP haven’t adjusted much over the years, and even though the government paid $1.7 billion in 2005, the cash rents on land are so high now that some farmers report they could be earning twice as much on their CRP land. 3.8 million acres will be up for renewal next year, and 4.4 million acres in 2010. Some farmers will pull their land out because they won’t be eligible any longer under the new income cap provisions of the 2008 farm bill; others because the economics simply don’t make sense for them anymore. A third group may pull out because the program has become less flexible; for years, farmers have been able to participate in CRP but request occasional waivers from the Department of Agriculture to use the acreage for animal feed. A recent lawsuit by the National Wildlife Federation put a stop to that, and so USDA’s hands are tied.

In addition to existing participants opting out, fewer new farmers may be opting in. Enrollments declined 21 percent from 2006 to 2007, with many farmers stating that the subsidies for ethanol production just made it impossible for them to leave the land out of production. Overall, it’s a shame – this is a good program that has improved the land quality of the US farming base, and if it falls apart because of conflicting subsidies and ill-advised restrictions, we’re all going to be worse off for it.

I read an interesting story about a hypothetical agricultural management question: could the city of San Francisco feed itself using only crops grown within 100 miles of the city? The answer, perhaps surprisingly, is that yes, they probably could – and in fact, they’d still be exporting most of what’s grown locally.

Farms and ranches within a hundred miles of San Francisco produce about 20 million tons of food each year – while the entire Bay Area consumes only 5.9 million tons. There is one problem with this thought experiment: while there are more than 80 different crops and animal products produced locally, a number of San Francisco’s favorite foods aren’t produced in adequate quantities, or at all, in the local “foodshed”. Eggs, citrus fruit, wheat, corn, pork and potatoes are the big missing links. -So local farmers would have to change some priorities in order to feed San Francisco locally. Still, it’s somewhat reassuring to know that at least for one major US city, the local farm market is adequate to meet nutritional needs for the population.

Interest in local food has grown with increasing awareness of the environmental impact of transporting food from one place to another, and the market is weighing in on the practice - $4 a gallon gasoline has a way of making people ask, “is this trip necessary?” The local food movement is in its infancy, however – less than three percent of US retail food sales can be called “local” in terms of where the food was produced. However, local food is growing rapidly as producers see the wisdom in selling to local buyers when they can.

There are limits to the localization of food. San Francisco would be a great candidate for a local food push, but that is because it is located within an amazingly productive agricultural zone. Denver isn’t going to feed itself locally anytime soon, or anytime at all, for that matter. Still, as food prices rise and people begin to have a stronger desire to eat food produced nearby, farmers can look for significant marketing opportunities by selling their products into local markets where possible.

Anybody following the recent news in the financial markets could perhaps be forgiven for a bit of panic – between bailouts and bankruptcies, it’s a troubling time for our financial sector. However, farmers should recall that farming is the one occupation guaranteed to be in demand no matter what happens in the rest of the economy. The world needs food, feed and fuel, and always will, regardless of how crazy things might get on Wall Street.

Folks who have been in the agriculture business for a while will remember that back in the 1980s farmers learned the lessons that Wall Street is being taught: a little bit of leverage is a good thing, but too much leverage leads to disaster. That lesson was brought home hard for farmers (and I have to tell you, I don’t seem to remember any huge government bailouts of farmers who couldn’t make their mortgage payments) – keep your debt to equity ratio low enough that you can pay off your loans even if everything else goes south.

The USDA’s Economic Research Service backs up my gut feeling that farmers learned this lesson well – farmers have been reducing their effective level of debt almost every year for the last twenty years. Now, that doesn’t mean that farmers don’t carry debt – they do, it’s just part of farming. The nominal amount of debt has gone up tremendously over the same period – but the equity that the farmers have in reserve against that debt has gone up much faster. There’s nothing wrong with having a million-dollar loan outstanding – if you have a ten-million dollar farm. It’s when your loan is worth 105% of your assets that you’ve got a problem!

The Street could learn a lesson from the farmers of today, who have steadily decreased their debt-to-equity ratios and established some financial stability for the agriculture industry’s land holdings. Whether they actually learn that lesson is something we’ll all have to observe in the next few months.

Fall is upon us, and this is the time of year to consider soil tests and the fertility of your cropland.

To maximize yield of corn and soybeans, your soil has to have the proper pH level and adequate levels of P and K. For corn and soybean growth to reach optimum levels, agronomists recommend a soil pH between 6.0 and 6.5. Soil pH declines when basic compounds are removed by crops, leaching, and acid residues left from nitrogen fertilizing. Low pH can lead to reduced availability of calcium, magnesium, and molybdenum in the soil, and can increase the risk that imidazolinone-based herbicides will carry over between seasons. Low pH also reduces the rate of nitrogen fixation. Fortunately, low pH is relatively easy to fix – just add lime.

If your soil pH is too high, there’s not really much you can do to lower it in an economical fashion, but knowing the level allows you to manage the problems created by high pH. High pH reduces bioavailability of iron, manganese, copper, boron, and zinc, and increases the risk of herbicide carryover for sulfonylurea-based herbicides.

P and K are removed from the soil each year by your crop. Each bushel per acre of corn harvested removes about 0.43 pounds of P2O5, and 0.28 pounds of K2O. It’s important to track your yield across fields so that you know how much maintenance fertilizer each field will need to replace this intrinsic loss. Remember that the loss will be much higher on acreage that was cut for silage – the above figures assume that the crop residue is staying on the field for reabsorption!

Agronomists recommend soil tests at least every four years – and more often if there is a concern about fertility. Sample fields at the same time of year each year, so that seasonal variations don’t throw off your results. The best time to test is after harvest but before the ground freezes. Soil cores should be taken in the top six or seven inches of soil. If you are using no-till or reduced tillage, be aware that nutrients can become stratified, and run a separate test on the top two inches of your soil cores.

Remember that almost any soil deficit can be remedied – but you have to know about the problem to be able to implement a solution. Don’t be afraid to test – it’s a lot better to find out about a soil issue before you plant than after you harvest.