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US Farm Bill: A User's Guide to the Environmental Quality Incentives Program
By Roy Frederick, Department of Agricultural Economics, University of Nebraska-Lincoln. - For many livestock producers, the Environmental Quality Incentives Program (EQIP) could be the single most important part of the Farm Security and Rural Investment Act of 2002 (the new farm bill). This article summarises the important facts producers need to know.EQIP carries over from the 1996 law, albeit with many changes. Perhaps the most significant is that annual funding gradually increases from $200 million annually under the old law to $1.3 billion under the new farm bill. Interim funding levels will be as follows:
- $400 million in fiscal year 2002;
- $700 million if fiscal year 2003;
- $1 billion in fiscal year 2004;
- $1.2 billion in fiscal years 2005 and 2006; and
- $1.3 billion in fiscal year 2007.
EQIP's purposes are to promote agricultural production and environmental quality as compatible goals and to optimize environmental benefits. It proposes to do this, in part, by assisting producers in "complying with local, state, and national regulatory requirements concerning soil, water, and air quality; wildlife habitat; and surface and ground water conservation." Equally important, by providing appropriate assistance to agricultural producers, legislative sponsors hope to avoid regulatory programs to the "maximum extent practicable."
Operating details of the new EQIP will depend, in part, on forthcoming regulations. These regulations are to be published within 90 days of the bill's enactment, which was May 13, 2002. However, much can be foretold by the law itself, which has these important provisions:
- The 1996 legislation included the designation of priority areas. However, this requirement has been eliminated in the new farm bill. The significance of priority areas was that funding was directed to producers in one region to the exclusion of other producers. EQIP in the new farm bill is intended for all producers.
- Cost-share payments and incentive payments will be offered to producers who enter into 1 to 10-year contracts.
Cost-share payments will be applicable to structural practices, such as animal-waste management facilities. Up to 75 percent of the cost of the practice may be assumed by the federal government. However, an exception is made for limited-resource or beginning producers, where the cost-share may be up to 90 percent of the cost.
Incentive payments will be offered for the purpose of encouraging a producer to perform one or more land management practices. The amount will be at a rate determined to be necessary to encourage the producer to engage in the practice.
- Priority will be given to applications that (1) encourage the use of cost-effective conservation practices and (2) address national conservation priorities.
- Producers must submit an EQIP plan that describes the conservation and environmental purposes to be achieved through one or more approved practices. In addition, all livestock producers that receive funding for animal waste manure systems must prepare a comprehensive nutrient management plan.
- A producer may receive, directly or indirectly, up to $450,000 in any combination of EQIP contracts over the 2002-07 life of the farm bill.
- A new provision within EQIP provides cost-share, low-interest loans and incentive payments to encourage ground and surface water conservation. Included activities are lining of ditches and installation of piping, tail water return systems, low-energy precision irrigation systems, low - flow irrigation systems, off-stream and groundwater storage, and conversion from gravity or flood irrigation to higher efficiency systems.
Funding for this program, beginning at $25 million in fiscal year 2002 and rising to $60 million in fiscal year 2004, is separate from overall EQIP funding. The Secretary of Agriculture is encouraged to give producers in the High Plains Aquifer the highest priority for funding under this program.
- The Secretary of Agriculture may provide competitive grants (not to exceed 50 percent of the cost of the project) that are intended to stimulate innovative approaches to environmental enhancement through EQIP.
- Technical assistance with the EQIP program is to be offered not only by the federal government but third-party providers. The latter could be a state agency, land-grant university or non-governmental agency.
