Agricultural Sector Briefing Implementation Committee for the Chesapeake Bay Program April 19, 2007 The significance of agriculture to the economic, environmental, and social well being of the Chesapeake Bay and its human population has been critical throughout history, and will remain so into the foreseeable future. The restoration of the Chesapeake Bay is explicitly tied to the vitality and sustainability of agriculture within and around its watershed boundary. The efforts of the Chesapeake Bay Program and its partners to restore the Bay to its former health will only be achieved through a comprehensive understanding of agricultural production and a collaborative relationship with the agrarian community. I. Description of Agriculture in the Chesapeake Bay Watershed The agricultural heritage of the Chesapeake Bay region is rich and multifaceted. Farms provide food and fiber, as well as significant open space and aesthetic and environmental benefits to us all. Agricultural lands account for 22 percent of the watershed, making them one of the largest land uses in the area, second only to forests (58%). Within the Bay watershed, there are more than 87,000 farm operations and 6.5 million acres of cropland. Farms in the Chesapeake Bay watershed are very diverse. They vary greatly in size, ranging from small to large operations, and they produce a large variety of farm products. Today, more than 50 named commodities are produced in this region. The area's primary crops include pasture, hay, corn, wheat, soybeans, vegetables, and fruits. The eastern part of the region is also home to a rapidly expanding nursery and greenhouse industry. In addition to crop production, animal operations make up a significant portion of the Bay's agricultural industry. Livestock products account for over 60 percent of the region's annual farm product sales. In the watershed, there are six major types of animal operations: dairy cows, beef cattle, pigs, egg production, broilers, and turkeys. At any one time, there are over 185 million livestock animals present in the area. The three major animal production regions in the watershed, based on livestock concentration, are the Lower Susquehanna River in Pennsylvania, the Shenandoah Valley in Virginia and West Virginia, and the Delmarva Peninsula in Delaware, Maryland and Virginia. The Bay states rank high nationally in poultry, dairy and nursery products. The Delmarva Peninsula is considered to be one of the country's top poultry producing regions and, according to the 2002 Census of Agriculture, three Bay counties are among the top twenty poultry producing counties in the nation (for either poultry/eggs, broilers, or layers): Sussex County, DE, Lancaster County, PA, and Wicomico County, MD. In addition, at least one Bay county is among the top twenty counties for production of the following farm commodities: turkeys; cattle and calves; milk and other cow dairy products; hogs and pigs; horses and ponies; corn for silage; snap beans; apples; short 1 ------- rotation woody crops; and nursery, greenhouse, floriculture, and sod. Agricultural operations in the Chesapeake Bay region are very productive. Although the Bay states account for only 3.2 percent of all U.S. farm acreage, they produce 5.7 percent of the U.S. farm cash receipts. Agriculture contributes significantly to the regional economy, accounting for approximately 13 percent of the region's Gross Domestic Product. In 2002, the sale of agricultural products in the Bay states totaled nearly $8 billion. It is interesting to note, however, that a large portion of these sales come from just a few of the region's farms. In 2002, 8% of the farms in the Bay states accounted for 75% of the region's total agricultural sales. Agricultural Lands in the Watershed Non-Tidal Water Forest 58<>/o II. Importance of Agriculture to the Restoration of the Chesapeake Bay According to the Chesapeake Bay Watershed Model, accounts for nearly a quarter of the watershed land area, but at the same time farmland is the single largest source of nutrients and sediments to the Bay. Based on 2004 model simulations, it is estimated that farmland contributes approximately 41 percent of the nitrogen, 47 percent of the phosphorus and 63 percent of the sediment loads to the Bay annually. Reducing these loads is an important component for restoring the Chesapeake Bay. Despite the figures, the ultimate protection and restoration of the Bay is synonymous with the viability of agriculture within the watershed. In addition to producing food and fiber, agriculture provides other significant economic, environmental and social benefits such as maintaining open space, preserving rural traditions and aesthetics, and imparting local products and services. 2 ------- The Chesapeake Bay Tributary Strategies developed by the watershed states are relying on significant agricultural nutrient and sediment reductions to achieve their restoration objectives due to several primary reasons. The land area occupied by agricultural production throughout the watershed is second only to forestry. Agricultural production methods can often create sources of nutrients and sediment pollution to the environment, even with conservation measures in place. Although the amount per acre may seem minimal, the total effect across the basin is significant. Another reason why agriculture is critical to achieving reductions is due to the cost effectiveness of agricultural conservation practices compared to other sectors such as wastewater treatment system upgrades or urban storm water control system retrofits. A 2004 report from the Chesapeake Bay Commission identified five agricultural practices out of the top six conservation measures that delivered the largest nutrient and sediment load reductions for the least cost. Municipal & Indus Wastewater 20% Atmospheric Deposition natural (lightning forest soils) Agricultural Nutrient and Sediment Loads to the Chesapeake Bay Phosphorus Agriculture = 41% Agpra-tKural Atmospheric >osition - livestock & fertilized soil emissions chemical fertilise Ś Agriculture = 46% Atmospheric Deposition - mobile + utilities + industries 22% Sediment Natural - wildlife, forest, Agriculture = 62% Agricultural Progress The agricultural sector of the Bay watershed has achieved substantial reductions for nitrogen, phosphorus and sediment between 1985 and 2005, according to progress reports provided to the Chesapeake Bay Watershed Model from federal agencies, state jurisdictions, and other non-governmental partners. Basin-wide, agricultural lands have reduced nitrogen losses by approximately 43 .5 million pounds per year, phosphorous losses by 3.2 million pounds per year and sediment losses by 1.1 million tons per year Compared to the benchmark 1985 nutrient and sediment load levels, these reductions accomplished over the past two decades equate to a 45 percent nitrogen achievement, a 3 ------- 49 percent phosphorus achievement and a 43 percent sediment achievement of the Chesapeake 2000 Agreement cap load allocations for agriculture. III. Tributary Strategy Commitments for Agriculture The Chesapeake Bay Tributary Strategies developed by each of the jurisdictions propose to implement nearly thirty different agricultural practices to address the nutrient and sediment goals of the Chesapeake 2000 Agreement. For Maryland, Pennsylvania and Virginia, these new Tributary Strategies were an improved version of former strategies developed over the past two decades, and for all the watershed states, agricultural nutrient and sediment reduction practices were relied upon to achieve a significant portion of the total nutrient and sediment goals. The Chesapeake Bay Commission's (CBC) report entitled Cost-Effective Strategies for the Bay (www.chesbav.state.va.us/Publications/cost%20effective.pdf) published in December of 2004, found that five out of the six smart investments for short term achievements in nutrient and sediment reductions for the Bay were agricultural practices (the fifth practice was wastewater treatment plant upgrades). The most effective agricultural practices identified were traditional and enhanced nutrient management, conservation tillage, and cover crops for cropland production; and diet and feed adjustments for animal production. The Tributary Strategies for cropland build off of the state voluntary and regulatory erosion and sediment control and nutrient management programs. In the Tributary Strategies, the jurisdictions have proposed to implement practices such as nutrient management and conservation tillage on nearly all of the available cropland. Most of the Strategies emphasize cover crops, proposing to implement this practice on anywhere from thirty to ninety percent of the available cropland acreage. In addition to traditional practices such as farm conservation plans and nutrient management plans, the Strategies promote new innovative systems which rely on increased levels of management, including enhanced nutrient management and precision agriculture. Similar to cropland, the Tributary Strategies for animal agriculture are based on the federal Concentrated Animal Feeding Operation (CAFO) regulations, as well as voluntary and regulatory state nutrient management programs. Standard control practices such as waste management and nutrient management plans are being supplemented with new management systems including dairy precision feeding and ammonia emission controls. The graphs below illustrate the reported implementation of agricultural practices across the Bay basin as of 2005 as compared to the levels of implementation forecasted by the combined Tributary Strategies for all jurisdictions. In all cases, the current level of reported practice implementation falls short of planned levels, and in a number of cases, no implementation has been reported to date. 4 ------- Agricultural Commitments Cost-Effective BMPs ~ 2005 Tributary Strategies Goal: almost 100% cropland i 3 1 Goal: almost 100% cropland Goal: 70-90% of cropland in MD, PA, VA Nutrient Management (acres) Conservation-Tillage & Continuous No-Till (acres) Cover & Commodity Cover Crops (acres) N Feed Management P Feed Management (million lb. reduction (million lb. reduction TN applicationsxlO-1) TP applicationsxlO-1) k Agricultural Commitments ~ 2005 I Tributary Strategies 0.8 >§ 0.6 0.4 0.2 Off-Stream Off-Stream Forest Buffers Watering w/ Watering w/o (acres) Fencing (acres) Fencing (acres) Land Retirement (acres) Grass Buffers Tree Planting (acres) (acres) Poultry Litter Transport (million tons xlO-6) Wetland Restoration (acres) 5 ------- Ammonia Emission Horse Pasture Reductions (million lb. Management (acres) reduction TN deposition xlO-1) Carbon Sequestration (acres) Precision Rotational Grazing (acres) Agricultural Implementation Programs The following programs are representative of the regulatory, financial and technical resources available to encourage agricultural producers to implement conservation practices to reduce nutrient and sediment losses for cropland and animal operations in the watershed: US-EPA Chesapeake Bay Implementation Grant Program: A federal grant program targeted for the restoration of the Chesapeake Bay through the signatory jurisdictional partners of Maryland, Pennsylvania, Virginia and the District of Columbia. Funds are primarily utilized for technical and financial assistance to administer and implement agricultural nutrient and sediment reduction programs and practices within the Bay watershed. The 2010 Implementation Plan encourages the jurisdictions to target specific practices for accelerated implementation. Program information can be obtained at (www.epa.gov/region3/chesapeake/grants/progress.htm#imp) US-EPA Concentrated Animal Feeding Operation (CAFO) Regulations: The federal Clean Water Act's (CWA) Concentrated Animal Feeding Operation regulations are designed to protect and improve water quality through the regulation of agricultural operations where animals are kept and raised in confined situations. Under the CWA, CAFOs are defined as point source dischargers, and must comply with the basic requirements to protect water quality through National Pollutant Discharge 6 ------- Elimination System (NPDES) permits. NPDES permits describe discharge limits, management practices, and record keeping for CAFO operations. The expansion of the number of CAFO permitted operations will cause increased oversight by federal and state regulatory agencies on a greater number of agricultural operations. In order to obtain permit compliance, operators may be required to implement additional conservation practices than are normally required by state regulations. See (www.epa.gov/guide/cafo/) for regulation information. USDA-NRCS Environmental Quality Incentives Program (EQIP): A voluntary conservation program for farmers and ranchers to promote agricultural production and environmental quality as compatible national goals. The program provides financial and technical assistance to eligible producers to install or implement structural and management practices on eligible agricultural land. The 2007 Farm Bill proposes to combine multiple incentive programs under the EQIP program, potentially increasing the available program funds and increasing flexibility to target key watersheds or practices. See (www.nrcs.usda.gov/programs/eqip/) for additional information USDA-NRCS Conservation Security Program (CSP): A voluntary financial and technical assistance program available in all 50 states to promote the conservation and improvement of soil, water, air, energy, plant and animal life, and other conservation purposes on private working lands. Working lands include cropland, grassland, prairie land, improved pasture, and range land, as well as forested land that is an incidental part of an agricultural operation. The 2007 Farm Bill is proposing the elimination of the targeted watershed method that has been utilized in the past, as well as substantially increasing the available acreage. See (www.nrcs.usda.gov/programs/csp/) for more information. USDA-NRCS Conservation Innovation Grants Program (CIG): A voluntary program intended to stimulate the development and adoption of innovative conservation approaches and technologies while leveraging federal investment in environmental enhancement and protection, in conjunction with agricultural production. CIG enables NRCS to work with other public and privates entities to accelerate technology transfer and adoption of promising technologies and approaches to address some of the Nation's most pressing natural resource concerns. Grants are available in a national competition under the categories of Natural Resource Concerns, Chesapeake Bay Watershed, and Technology; while individual states may elect to offer similar options locally. USDA-NRCS Offices in Maryland, Pennsylvania, and Virginia have elected to offer State CIG programs to increase targeting of EQIP funds. Increased collaboration with EPA and other Bay Program Partners will insure improved targeting of key projects affecting the Bay watershed. See (www.nrcs.usda.gov/programs/cig/) for details. 7 ------- USDA-NRCS Agricultural Management Assistance Program (AMA): A program that provides financial assistance to agricultural producers to voluntarily address conservation issues such as water management, water quality, and erosion control by incorporating conservation into their farming operations. Producers may construct or improve water management or irrigation structures, plant trees for windbreaks or to improve water quality; and mitigate risk through production diversification or resource conservation practices, including soil erosion control, integrated pest management, or transition to organic farming. Currently the 2007 Farm Bill is proposing to combine the AMA with EQIP to more effectively target specific areas or practices. See (www.nrcs.usda.gov/programs/AMA/) for detailed information. USDA-FSA Conservation Reserve Program (CRP): A program that provides financial and technical assistance to eligible farmers and ranchers to address soil, water and related natural resource concerns on their lands in an environmentally beneficial manner. It encourages farmers to convert highly erodible cropland or other environmentally sensitive acreage to vegetative cover, such as tame or native grasses, wildlife plantings, trees, filter-strips, or riparian buffers. Farmers receive an annual rental payment for the term of the multi-year contract and cost share on practice establishment. The CRP program has been a significant program in the development of riparian buffers throughout the watershed. State and NGO partners are collaborating with USDA-FSA to extend the original landowner contracts by offering long-term easements in Maryland, Pennsylvania, and Virginia. See (www.nrcs.usda.gov/programs/crp/) for more information. National Fish & Wildlife Foundation (NFWF) Chesapeake Bay Small Watershed Grants Program: The program provides grants to organizations and local governments working on a local level to protect and improve watersheds in the Bay basin, while building citizen-based resource stewardship. The purpose of the program is to support protection and restoration actions that contribute to restoring healthy waters, habitat and living resources of the Bay ecosystem based on the commitments of the Chesapeake 2000 Agreement and the state Tributary Strategies. These grants have been designed to encourage the development and sharing of innovative ideas among organizations involved in watershed restoration, conservation, and planning activities. Increased collaboration with traditional program partners and other grant programs, notably USDA's Conservation Innovation Grant (CIG) Program, could improve targeting of funded projects and the dissemination of project results for greater implementation. See (www.nfwf.org/programs/chesapeake/index.cfm) for grant information. NFWF Chesapeake Bay Targeted Watersheds Grant Program: This program supports innovative projects designed to foster nutrient reduction in the Bay watershed. The goal of the program is to expand the collective knowledge on the 8 ------- most innovative, sustainable and cost-effective strategies- including market-based approaches- for reducing excess nutrient loads within specific tributaries to the Bay. To achieve this goal, the program awards grants of up to $1 million on a competitive basis to projects that target and reflect the diverse conditions and sources of nutrients that exist through out the watershed. Increased collaboration with traditional program partners and other grant programs, notably USDA's Conservation Innovation Grant (CIG) Program, could improve targeting of funded projects and the dissemination of project results for greater implementation. See (www.nfwf.org/programs/tar getedwatershed/) for additional information. Nutrient Trading: Nutrient trading is a voluntary, market driven program which allows one source (point or nonpoint sources) to meet pollutant reduction goals by acquiring nutrient reduction credits from another source in their watershed. Credits are generated when a source reduces nutrient loadings to a greater extent than required by local and federal regulations, or by the associated Chesapeake Bay Tributary Strategy. Nutrient trading is currently being implemented by Pennsylvania and Virginia, and is proposed in the states of Delaware, Maryland and West Virginia. The credits generated for trades are considered offsets; however, significant reductions may be required of the nonpoint sources in order for them to qualify for trading. This may increase the adoption of conservation practices by participating agricultural operations under a market driven system. For Pennsylvania see (www.depweb.state.pa.us), keyword Nutrient Trading, and for Virginia see (www.deq.virginia.gov/info/nutrient.htmn. State Nutrient Management Programs (NMP): In addition to the federal CAFO regulations identified above, all of the Chesapeake Bay jurisdictions, excluding Washington D.C., implement varying forms of nutrient management planning and implementation regulations and/or incentive programs. The programs typically limit the application of animal manures on cropland based on soil phosphorus levels and annual plant uptake. In the past, nutrient management plans were based upon nitrogen limits which were less restrictive for manure application rates and at times lead to excessive levels of soil phosphorus. The development of certified NMP plans and the implementation of supporting agricultural practices such as animal waste storage facilities, conservation plans, and manure transport have a positive effect on reducing nutrient and sediment loading to the Bay. State Agricultural Incentive Programs: Each of the watershed state utilizes state public funds to provide financial incentives and technical assistance to the agricultural sector for the implementation of nutrient and sediment controlling practices. Financial assistance is provided in multiple forms, and may or may not be used in combination with federal incentive programs and/or private sources. State or local matching funds are required for the EPA Chesapeake Bay Implementation Grant Program and other federal programs such as the USDA-FSA 9 ------- Conservation Reserve Program (CRP). In some cases, the level of state and local funding may exceed that at the federal level for agricultural assistance. Manure Strategy Animal manure and poultry litter are contributing about half of the agricultural nutrient load that is entering the Chesapeake Bay, according to Phase 4.3 of the Chesapeake Bay Watershed Model. As animal operations become more concentrated and the acreage of cropland available for manure application is lost to development, the challenge of manure management will only intensify. Finding ways to deal with excess nutrients in manure is critical for ensuring the long-term viability of the agricultural industry and the restoration of the Chesapeake Bay. In November 2005, the Chesapeake Executive Council, the headwater states, and the U.S. Department of Agriculture endorsed the Strategy for Managing Surplus Nutrients from Agricultural Animal Manure and Poultry Litter in the Chesapeake Bay Watershed (Manure Strategy). The purpose of this strategy was to augment the existing successful nutrient management programs implemented by the Bay watershed states by focusing attention on the areas where experts believe that additional nutrient load reductions could be efficiently and effectively achieved. Four opportunities for better managing manure nutrients in the Chesapeake Bay watershed were identified in this strategy: (1) Reduce surplus animal manure and poultry litter nutrients by adjusting animal diets; (2) Foster alternative uses for animal manure and litter products that can be used for energy, fertilizers, soil amendments or compost on a variety of lands; (3) Develop a comprehensive inventory of manure and litter nutrient surpluses in the watershed; and (4) Coordinate manure management programs throughout the watershed to address the regional imbalances of manure and poultry litter surpluses. The top three initiatives that are currently underway to implement this strategy are the dairy feed and forage management initiative, the manure product procurement initiative, and the manure technology initiative. The dairy feed and forage management initiative is seeking to meet the Manure Strategy commitment of achieving a 20% reduction in phosphorus and nitrogen levels in manure in one-third of the Chesapeake Bay watershed dairy animals by 2010, and in one-half of the Chesapeake Bay watershed dairy animals by 2015. The Chesapeake Bay Program formed a Dairy Feed Management Technical Assistance, Education and Outreach Group to spearhead the implementation of this commitment. This group is comprised of dairy nutritionists and key experts from NRCS, state agricultural agencies, cooperative extension, Chesapeake Bay Foundation, and Environmental Defense. They are working on developing a methodology for how to best track nutrient reductions from the implementation of dairy feed and forage management programs and they are exploring the concept of creating a voluntary feed management certification program in the Bay watershed to help build the technical assistance expertise necessary for widespread implementation of this type of program. In addition, NRCS, through its Conservation Innovation Grant program, recently provided funding for dairy feed management projects in the Chesapeake Bay watershed. Funding was provided to dairy farms in Maryland, 10 ------- Virginia, Pennsylvania, and New York. NRCS is also working with each of the Chesapeake Bay states to adopt the National NRCS Feed Management (592) Standard and modify it, as appropriate, for each state. Once the standards are adopted, NRCS will be able to offer the producers financial assistance for feed management through programs such as the Environmental Quality Incentives Program, the Agricultural Management Assistance Program, and the Conservation Security Program. The manure product procurement initiative is intended to help build a market for manure- based products in the Chesapeake Bay watershed. The Manure Strategy commitment for this initiative is that by 2010, 20% of the total fertilizer, soil amendments, and compost used on state and federal lands will be comprised of poultry litter or animal manure nutrients derived from sources generated within the Chesapeake Bay watershed states. Currently, representatives from the watershed states and the federal government are developing inventories of the number of acres owned by government agencies in their jurisdiction, the percentage of these acres that are receiving fertilizer or manure, and the amount of fertilizer and manure that is being applied. Many of the jurisdictions are also working to identify the individual contacts that are in charge of ground management at specific government sites. For example, in March 2007, EPA met with representatives from Fort Meade to discuss how Fort Meade could use organic fertilizer, soil amendments, and compost on their land. Challenges that the jurisdictions have encountered so far include difficultly identifying the contacts at specific sites and a lack of information on where to obtain readily available commercial products comprised of watershed-generated manure. New York and West Virginia have also raised the point that procuring manure products for use on government lands in their portion of the watershed may not be necessary due to a lack of excess manure in those areas. The third Manure Strategy initiative that is currently underway is the manure technology initiative. Even with feed management and other nutrient management programs in place, there are likely to be regions within the Chesapeake Bay watershed that still suffer from manure or poultry litter nutrient surpluses. After feed management, developing alternative uses for manure and litter nutrients may be the best long-term sustainable solution for dealing with excess manure and litter nutrient surpluses. Because of this, one of the goals in the Manure Strategy is to identify and promote a range of economically viable and environmentally sustainable alternatives to applying raw manure and litter nutrients to agricultural lands. The Chesapeake Bay Program formed a Regional Manure and Litter Use Technology Task Force to help address this issue. The task force held its first meeting in May 2006. At this meeting, they developed a targeted list of potential technologies for turning manure and poultry litter surplus nutrients into marketable products. Energy production was identified as one potential use for excess manure and litter. Currently, Chesapeake Bay Program staff is developing a report to help determine the feasibility of using poultry litter for energy in the Chesapeake Bay watershed in order to improve water quality. 11 ------- IV. Priorities for Agricultural Nutrient and Sediment Reductions The Chesapeake Bay Tributary Strategies were developed by each of the jurisdictions within the Bay basin (New York State's is pending) to address the nutrient and sediment goals of the Chesapeake 2000 Agreement. Of the nearly thirty unique agricultural practices proposed by the combined strategies, the majority are planned to be implemented on an extremely high percentage of available acres or livestock and poultry operations, some even at 100 percent in selected states. Due to the high implementation levels of practices in the Tributary Strategies to reach the intended nutrient and sediment goals, most jurisdictions and EPA have since developed implementation plans to strategically target limited financial and technical resources for the greatest potential gains. Some of these plans have focused on a subset of agricultural practices, whereas others have focused on particular sectors within the agricultural community such as livestock or poultry producers. Strategic Implementation Plan The Chesapeake Bay Program Office (CBPO) has developed a 2010 Strategic Implementation Plan (SIP) based on the recommendations of the EPA and USD A Office of Inspector General report published in November of 2006 entitled Saving the Chesapeake Bay Watershed Required Better Coordination of Environmental and Agricultural Resources. The SIP includes a discussion on agricultural production within the basin, and the methods that each of the program partners is employing to address the implementation of nutrient and sediment reduction practices to reach their target goals. In collaboration with the current Chesapeake Bay Tributary Strategies developed by each of the jurisdictions, the 2010 Implementation Plan for the basin relies heavily on further reductions by agriculture as well. Agricultural land uses in the plan are forecasted to further reduce nitrogen losses by approximately 12.8 million pounds, phosphorus by 0.8 million pounds, and sediment by 0.4 million tons per year. Of the total nutrient reductions proposed, agricultural reductions would account for 51.7 percent of the total nitrogen decrease and 77.4 percent of the total phosphorus decrease. The reductions are expected to primarily come from a combination of cropland conservation practices and animal production management systems. The graphs below illustrate the reported levels of implementation for related groups of practices by the year 2005, the potential levels under the 2010 Implementation Plan, and the Tributary Strategy goal levels (cap load allocation). 12 ------- ~ 2005 ~ 2010 Implementation Plan ~ Tributary Strategies a Ł 4 Conservation Plans/SCWQP Traditional & Enhanced Nutrient Management Conservation-Tillage 8 Continuous No-Till Cover & Commodity Cover Pasture Grazing BMPs Crops (Early- & Late Planting) _ 0.30 i H | 0.25 | 0.20 ~ 2005 ~ 2010 Implementation Plan ~ Tributary Strategies Horse Pasture Forest Buffers Carbon Land Grass Buffers Tree Planting Poultry Litter Wetland Animal Waste Management Sequestration Retirement Transport Restoration Management (million tons) Systems 13 ------- ~ 2005 ~ 2010 Implementation Plan ~ Tributary Strategies 18.4 13.2 12.5 7.7 21 2.0 0.0 0.0 0.0 02 0.0 0.0 0.0 0.0 Dairy Precision Feeding Poultry Phytase (million lbs Ammonia Emissions Dairy Precision Feeding Swine Phytase (million lbs (million lbs TN) TP) Reductions (million lbs TN) (million lbs TP) TP) In addition to developing a water shed-wide SIP, the OIG report also recommended that each of the jurisdictions develop a state specific 2010 implementation plan to support their existing Tributary Strategies. EPA included these implementation plans as a special condition in the 2007 Chesapeake Bay Program grant guidance for jurisdictions that have not already submitted such plans to EPA. State Approaches for Focusing Efforts Pennsylvania: Pennsylvania has developed a focus in four main areas of the Chesapeake Bay Program. The agricultural incentive programs now focus on non-structural, or in other terms management practices, that are typically lower cost per landowner than structural component practices. This change in program direction from past practices enables the state to provide declining technical assistance resources to increased numbers of cooperators on an annual basis, since the work is less dependant on time consuming engineering designs. It also allows limited incentive program funds to be utilized on a greater number of projects, potentially realizing larger nutrient and sediment reductions than a fewer number of more expensive engineered animal waste facilities. Non- structural practices are typically more flexible to change than structural practices, allowing the practice to adapt over time with changes in the agricultural operation. Examples of priority practices include nutrient management planning, conservation tillage and no-till, cover crops, enhanced nutrient management or precision agriculture, and riparian buffers through livestock exclusion. In partnership with the USD A Farm Services Agency (FSA) under the Conservation Reserve Enhancement Program (CREP), the Commonwealth is targeting its practice incentive funds towards the establishment of riparian buffers versus upland habitat areas. The development of standards for new 14 ------- practices identified in the Pennsylvania Tributary Strategies for implementation is also a key focus. On the financial side of Pennsylvania's programs, additional state funds have been allocated to the Bay efforts through the Growing Greener Program (GG2), and the Governor's FY 2007-08 proposed budget to over-match the EPA Chesapeake Bay Implementation Grant. The Resource Enhancement and Protection (REAP) proposed legislation is currently being debated in the state legislature, which could provide up to $450 million in tax credits for operations implementing agricultural conservation practices. The commonwealth is focusing its agricultural outreach through the Agriculture, Communities and the Rural Environment (ACRE) Initiative to assist landowners in attaining compliance with existing commonwealth erosion/sedimentation and nutrient management requirements. The initiative is intended to assist participating county conservation districts with improving outreach to agricultural landowners to improve compliance levels with state erosion and sediment control (E&S) and nutrient management requirements. Twenty-six conservation districts are currently participating in the program state-wide. Rather than creating a specific agricultural sector focus, Pennsylvania is now balancing its resources between agronomic and animal production. Neither is the state focusing on specific watersheds across the basins, but a higher funding priority is given to agriculturally impaired sub-watersheds under competitive grant programs such as the GG2 and ACRE Initiative. Maryland: Nutrient reduction goals set for agriculture are extremely ambitious and will require implementation of the entire suite of BMPs at levels projected. The state department of agriculture promotes an entire suite of BMPs rather than focusing cost share and technical assistance to a short list of BMPs. They do not target specific BMPs because they believe it will compromise the state's ability to achieve agricultural goals, reduce program flexibility to address site conditions and limit farmer options. MDA, NRCS, and FSA cannot deny assistance to anyone interested in implementing eligible practices. Maryland Agricultural Water Quality Cost Share (MACS) program was established by State law in 1984 to help farmers control nutrient runoff and protect water quality and natural resources on their farms. MACS provides farmers with grants to cover up to 87.5% of the cost to install BMPs on their farms to control soil erosion, manage nutrients, and safeguard water quality. A maximum funding level of up to $35,000 per project and $75,000 per farm applies. Farmers receiving MACS funds for animal waste treatment and containment projects may receive up to $100,000 per project with a maximum of $150,000 per farm when combined with other BMPs. In many instances, MACS and U.S. Department of Agriculture (USDA) funds may be combined. 15 ------- The varied funding sources utilized by MACS do target certain practice to some degree. For example, the Cover Crop Program, Manure Transport Program and Nutrient Management Cost Share assistance all have defined funding streams which govern available annual support to these management options. The Cover Crop Program provides cost share assistance to farmers to implement this BMP. Cover crops absorb unused crop nutrients remaining in the soil following the fall harvest and act as a ground cover to keep the soil from eroding during the winter months. Maryland continues to refine the program, providing tiered incentives in 2006 to encourage early planting, which maximizes nutrient uptake. A Commodity Cover Crop Program was offered in 2006 for farmers who would like to harvest their cover crop. Cost-share support is administered through MACS. MDA had a record breaking sign-up for Maryland's cover crop program. In state fiscal year 2007, approximately 1,500 farmers, which included 500 farmers entering the program for the first time, applied to enroll 450,000 acres. Everyone who applied for the program was able to participate on a pro-rated basis. Funding limitations resulted in approval of 290,000 acres. Although funding for the program doubled from last year, $4 million to $8 million, requests totaled $17 million. The Chesapeake Bay Restoration Fund, one of the most important environmental initiatives of the past 30 years, provides approximately $5 million annually to fund this program. The growth in the program is remarkable and demonstrates that given a consistent program with predictable funding, farmers are more than willing to implement conservation practices. State funding was tripled this year for the Manure Transport Program which helps farmers transport excess manure and is especially timely as farmers' transition to phosphorus based nutrient management plans. MDA continues to look for opportunities, such as grant funds for staff dedicated to address a variety of issues including ammonia emission reduction, alternative manure management systems for dairy industry, innovative practices for management of agricultural drainage, animal dietary management to reduce nutrient outputs, Management Intensive Grazing Systems for dairy production designed to improve pastures and forage resources to support the majority of a herd's nutritional needs, and management of small horse operations of less than eight horses as a demonstration. Currently MDA manages 33 grants totaling $5.2 million for technical assistance and research. Virginia: Virginia has developed a practice focus by selecting five agricultural conservation practices from its Tributary Strategy to receive a priority in funding. The practices include the following: Nutrient Management plan preparation and implementation Conservation tillage Cover Crops 16 ------- Livestock exclusion from streams Riparian buffers (including those established under the Conservation Reserve Enhancement Program (CREP) Appling increased levels of financial assistance has also been a focus of Virginia's programs. Significant financial resources have been available in recent years compared to levels 10 years ago and prior years. In the current biennium, $9.5 million has been made available for nonpoint source abatement in the Chesapeake Bay watershed area of Virginia. Outreach efforts in the commonwealth have focused on expanding the poultry litter transport program to encourage more broker participation, and to encourage litter to be applied on fields which can better utilize the nutrients with less loss to the environment. The program is intended to work in harmony with a current USDA-NRCS EQIP Poultry Litter Transport program available in the state. The agricultural sector focus for Virginia has been with the livestock and poultry production arena. Increased emphasis has been placed on renewing the commitment of the poultry industry to reduce phosphorus in feed by using phytase additives. This has expanded recently into a project to reduce phosphorus levels in dairy manure by reducing phosphorus concentrations in the feed ration. The development and implementation of Nutrient Management Plans by certified planners in Virginia remain a requirement for permitted confined animal feeding operations (200 animal units for poultry, 300 animal units for all other species), since land where these nutrient sources are applied contribute a higher nitrogen and phosphorus load per acre than where only commercial fertilizer is used. Virginia does not implement a specific watershed focus on its programs, the closest being the poultry litter transport program targeted to sub-watersheds (counties) where excess poultry litter exists. Generally, the "priority practices" are being implemented across the Bay basin. Delaware: Delaware focuses practice efforts on reducing phosphorous levels in poultry feeds with phytase additives; poultry litter transport, developing alternative uses of manure and nutrient management planning. The state does not provide for a watershed focus due to the limited land area residing within the Bay watershed. Instead, all watersheds have been assessed and a TMDL plan developed to guide the implementation of conservation practices. The plan does focus on nutrient management, both livestock manure and chemical fertilizer applications within the agricultural sector. The poultry industry is a major source of manure due to its prevalence in the state. 17 ------- West Virginia: West Virginia includes nutrient management planning, cover crops, conservation tillage and poultry litter transport as focused practices for nutrient and sediment reductions. Due to the limited land area included within the Bay watershed, the state does not employ a watershed focus in its plan. The agricultural sector focus is balanced between agronomic and animal production. New York. New York will focus on nutrient management planning, riparian buffers and pasture management as primary practices under a voluntary, incentive based approach. The state will address the Bay watershed in its entirety without separate distinctions; however, they do not intend to implement programs or regulations significantly different from the remainder of the state. The agricultural sector focus will be on animal production systems and the improved utilization of animal manures to reduce losses to the environment. EPA/USD A Approach for Focusing Efforts On the November 20, 2006 the Environmental Protection Agency and the U.S. Department of Agriculture Offices of Inspector General (OIG) released an evaluation report entitled Saving the Chesapeake Bay Watershed Requires Better Coordination of Environmental and Agricultural Resources. In this report, the Offices of Inspector General recommended seven actions for EPA and USD A to take to better coordinate environmental and agricultural resources (http://www.epa.gov/oig/reports/2007/20061120-2007-P-00004_glance.pdf). EPA and USDA are addressing all of these recommendations. The following are a few highlights. Memorandum of Understanding between EPA and USDA and Agency Work Plans: The OIG recommended that EPA propose executing a Memorandum of Understanding with the USDA to assist the Bay partners in meeting their nutrient reduction goals. EPA and USDA drafted a Memorandum of Understanding in December 2006, which will be endorsed in April 2007 by the EPA Assistant Administrator of the Office of Water and the USDA Under-Secretary for Natural Resources and the Environment. EPA and USDA are developing agency-specific plans of work for addressing the action items in the Memorandum of Understanding. To start, EPA and NRCS have drafted a work plan that is currently under review by both agencies. One initiative in this work plan is for EPA, in cooperation with the Chesapeake Bay Program, to identify priority watersheds and conservation practices for focused nutrient reductions and to share these priorities with NRCS at its State Technical Committee meetings. NRCS will explore opportunities to direct resources to support these priority watersheds and practices. Next, USDA and EPA will develop plans of work with the Agricultural Research Service, Cooperative State Research, Education, and Extension Service, and the U.S. Forest Service. 18 ------- Tributary Strategy Implementation Plans: The OIG recommended including the development of implementation plans as a special condition in Chesapeake Bay Program grant agreements for States that have not submitted an implementation plan. The EPA included this requirement in the EPA CBPO 2007 grant guidance. EPA requires that any signatory jurisdiction or headwater state that does not have an approved Tributary Strategy implementation plan work directly with its Project Officer to assure that any missing elements of Tributary Strategy implementation plans are incorporated into its Work Plan. Agricultural Nutrient and Sediment Reduction Workgroup's Strategic Focus The Chesapeake Bay Program's Agricultural Nutrient and Sediment Reduction Workgroup coordinate and evaluate agricultural nutrient and sediment reduction measures throughout the program's participating jurisdictions. In January 2007, the workgroup adopted a new set of responsibilities (http://www.chesapeakebav.net/anrwg.htirp. These responsibilities include: encouraging communication between groups, identifying innovative practices, identifying research gaps, technically reviewing the watershed model, reviewing BMP definitions and efficiencies, and determining how to meet agricultural nutrient management needs in the future. As part of their new scope, the workgroup has also committed to developing a strategic approach for evaluating and overcoming implementation barriers. In order to do this, they will devote a majority of their time to one specific responsibility: providing recommendations and promoting the implementation of priority agricultural systems, approaches, and conservation practices that would significantly contribute to improving the water quality in the Chesapeake Bay. The first step in this process will be to identify a relatively short list of practices for the workgroup to focus on in the upcoming months. V. Resources for Implementing Agricultural Conservation Practices The cost of full implementation of the agricultural practices called for in the states' Tributary Strategies is estimated to be $700M per year. On average, farmers typically pay for 25% of practice costs, with the remainder of the costs divided equally between state and federal funds. Consequently, the expected federal funding need for agricultural conservation in the watershed is $262.5M per year, a four-fold increase from FY2004 federal funding levels. Federal Funding 2007 Farm Bill: Total Farm Bill expenditures are not expected to increase with the 2007 reauthorization. However, changes in conservation program allocation formulas that are more favorable to the Bay region look promising. Additionally, there is considerable discussion on how the 19 ------- Farm Bill as a whole can transition to programs that are more acceptable to the World Trade Organization, and conservation programs are widely accepted as trade-compliant. Besides funding, the delivery of technical assistance is often cited as a limiting factor to conservation practice implementation. Following the significant expansion of conservation programs in the 2002 Farm Bill, NRCS staff took on greater responsibilities for program delivery, leaving much of their traditional technical assistance role in the hands of local conservation districts or private Technical Service providers. During discussions of the 2007 Farm Bill, the roles of NRCS and its partners continues to be a source of debate. NRCS Resources: The 2002 Farm Bill contained unprecedented increases in funding for agricultural conservation programs. NRCS staff numbers increased concomitantly as the agency ramped up to carry out new and enhanced financial assistance programs. Funds for the increased staff came from technical assistance funding provided by the mandatory Farm Bill programs. At the same time, NRCS' discretionary Conservation Technical Assistance (CTA) program, and the agency's base program that provides funding for staff salaries and fixed costs (buildings, vehicles, equipment), saw significant decreases that continue to this day. In essence, there has been a trend toward more of NRCS' salary funds coming from mandatory programs rather than the discretionary CTA program. The Chesapeake Bay earmark for dedicated Natural Resources Conservation Service's (NRCS) technical staffing within the six-state region has been eliminated for FY 2007 and its future is uncertain. Each year between FY 2002 and 2006, the six Chesapeake Bay watershed states received an earmark in the CTA program. The earmark provided $6 million in CTA funds, parsed out proportionally to the six states. The removal of the Chesapeake Bay earmark in NRCS' FY 2007 appropriation has strained the salary budgets of the Bay watershed states. Reducing administrative overhead and increasing cooperative projects with other organizations, including state agricultural agencies and local conservation districts, will be an important focus for the future. The future of the Chesapeake Bay component of Conservation Innovation Grants (CIG) is also uncertain. For the past three years, up to $5 million has been available for projects in the Bay watershed. CIG was authorized under EQIP in the 2002 Farm Bill, so the program's future, and with it the future of the Bay component, is uncertain. The Administration's Farm Bill proposal recommends reauthorizing CIG and increasing its annual funding to $100 million. Technical Assistance Demands The majority of government conservation initiatives rely upon competent technical staff to effectively develop programs, to support landowners and producers with plans and contracts, and to implement practices or systems with technical and financial assistance. The general trend over the past twenty years has been to increase funding for financial 20 ------- assistance to landowners while maintaining or decreasing technical field staff. Even where program staff numbers were maintained, the increasing administrative program demands upon them have typically reduced their field presence. As a result, the backlog of technical assistance requests waiting for service has gradually risen in many counties and states. Requests for basic conservation assistance such as contour and strip-cropping, grass waterways, planned crop rotations, and soil quality management; all part of farm conservation planning; will in some cases wait for years before assistance can be obtained. Actions have been taken in specific areas to address the backlog for technical assistance, but as agricultural production changes with the influx of new regulations, technology, and market influences, the objective may be increasingly harder to obtain. Some programs, notably most state nutrient management programs, rely on certified private consultants to expand their ability to offer technical assistance to producers. This practice of controlled out-sourcing to qualified consultants has allowed the state agencies to maintain staffing levels while enlarging their programs. As the Chesapeake Bay Program partners continue to search for new and innovative conservation methods to achieve their nutrient and sediment objectives from agriculture, it is probable that greater reliance will be placed on improved management systems such as dairy precision feeding and precision agriculture. To effectively implement these management practices will require increased levels of technical assistance to landowners and producers on an annual basis. The options can include diverting incentive budgets to increase technical staffing levels, placing greater reliance on contracted technical service providers, and developing cooperative relationships with the agri-business and service sectors. Without future decisive actions, existing backlogs of requested assistance will likely grow as the program partners expand their programs to restore the Bay. Funding Options There are multiple ways in which the Bay Program partners can increase the adoption of conservation practices and systems by the agricultural community. One "traditional" method is to increase financial support to agencies and programs providing financial and technical assistance to agricultural landowners and operators. There is little question that additional financial support could gain increased implementation across the watershed, however, this action alone will most likely prove insufficient to achieve the levels called for by the Chesapeake Bay Tributary Strategies. If additional funds were available, agricultural conservation program administrators could elect to increase the cost-share payments from the typical rates of 50 to 80 percent, to a rate of 100 percent or greater. There is little question those programs within the Bay which have implemented cost-share rates at 100 percent or greater above the costs of implementing the practice did create an increased adoption by the agricultural community. This in effect allowed the landowner to implement the practice and receive a profit besides. Even with the higher incentives, these programs have typically not met their expected implementation goals, or that of the jurisdiction's Tributary Strategy. 21 ------- Another negative effect of increasing cost-share rates for a program is that it can play havoc with other similar incentive programs in neighboring watersheds or jurisdictions. If program coordination is absent between partners, a successful program in one area may be compromised by the actions of another. The result can lead to dissatisfaction amongst the agricultural community split by watersheds or political boundaries, as well as by affected program partners. Increasing incentive payments to at or above implementation costs is one way to garner additional implementation, and it could be adopted by nearly all of the conservation programs operating with the basin, but should they? Another option could be to design incentive programs to better fit into the crop or animal production system, balancing financial resources with expected nutrient and sediment reductions. One example is the development of commodity cover crop programs which allow landowners to harvest the cover crop the following year and apply reduced rates of nutrients to the cover during the growing cycle. These programs can provide a minimal incentive payment while achieving increased levels of adoption over cereal cover crop programs that typically require the crop to be terminated. A second possible option is to create market-driven incentive programs to increase practice adoption, which is again based on agricultural production systems. If the industry that is buying the agricultural products implements standards from its contracted producers and pays a premium price, the landowners may more readily adopt the practices voluntarily without a direct government incentive program payment. "Corporate responsibility" could offer a new opportunity for the Bay Program partners to cooperate with the agricultural and food industry to effect change. The Perdue Clean Bays Environment Management Initiative, the milk urea testing program with the milk cooperatives in Maryland, and the Scotts Miracle-Gro/Lebanon Seaboard Corporation agreement are all examples of this type of system change. A third potential option is to assist landowners and the agricultural industry with "fine- tuning" their existing production systems so that they maximize yields while reducing input costs. Providing technical assistance so that producers meet or exceed their production goals while utilizing the minimum amount of nutrient inputs required, can balance the needs of the agricultural producer with the environmental needs of the Bay. An example includes the implementation of enhanced nutrient management or precision agriculture practices to increase yields while reducing nutrient input costs to the producer. These management systems can also reduce the potential loss of nutrients and sediment to the watershed, creating a win-win situation that works in harmony with agricultural production and the agricultural community. VI. Challenges of Reducing Nutrients and Sediments from the Agricultural Sector Consistent with the most recent Chesapeake Bay Tributary Strategies developed by each of the watershed states, the 2010 Implementation Plan for the basin relies heavily on further reductions by agriculture. Even though agricultural acreage is declining, agricultural land uses in the plan are forecasted to further reduce nitrogen losses by 22 ------- approximately 12.8 million pounds, phosphorus by 0.8 million pounds, and sediment by 0.4 million tons per year. Of the total nutrient reductions proposed, agricultural reductions would account for 51.7 percent of the total nitrogen decrease and 77.4 percent of the total phosphorus decrease. The reductions are expected to primarily come from a combination of cropland conservation practices and animal production management systems. Due to the significant level of reductions expected from agriculture, it is necessary to include the majority of agricultural operations in the strategies and the 2010 Implementation Plan. Multiple Approaches The Chesapeake Bay Program partnership has developed multiple approaches for achieving agricultural pollution reductions, as diverse as the jurisdictions are themselves. Even with such diversity, there are similarities as well. In most cases, the partners are advocating approaches from a comprehensive list of close to 30 conservation practices; those practices defined in the latest Chesapeake Bay Tributary Strategies. Utilizing this list as a beginning point, many partners have elected to strategically focus on implementing key conservation practices that are considered most cost effective and result in the most significant nutrient and/or sediment reductions. Examples of these practices include nutrient management planning, conservation tillage and no-till, cover crops, riparian forest buffers, manure transport, dairy and poultry feed management, and alternative uses of manure. Voluntary Implementation With the exception of a limited number of permitted agricultural operations regulated under the EPA Concentrated Animal Feeding Operation (CAFO) regulations, the majority of farms operate under a diversity of state regulations and/or local government ordnances/zoning restrictions. The enforcement of state regulations are by designated state regulatory agencies, who may in turn delegate these responsibilities to local government entities, such as county conservation districts. The diversity of laws and regulations, in tandrum with a mixture of enforcement entities, can at times result in inconsistent compliance and enforcement actions. These actions are typically limited to operations causing severe and measurable environmental impacts, and/or public complaints. As a result, the agricultural community other than permitted operations can be uncertain of their legal responsibilities. The implementation of conservation practices is typically voluntary on behalf of the landowner and operator outside what is required to meet varying levels of federal, state, and local restrictions. The ability of federal, state and other program partners to influence an operator's decision making is primarily limited to offering incentive programs and providing technical assistance. Federal assistance programs are implemented through agency employees or contracted certified Technical Service Providers (TSPs), whereas state programs may be implemented by state employees or through self-governing local government organizations such as county conservation districts, or through independent non-governmental organizations (NGOs). Despite the complexity of service providers, 23 ------- each with their own motivations and perspectives, the agricultural community routinely views these distinct entities as one organization. Economic market forces and the agri-business sector may have a greater influence on producer decision making for the short and long terms. The value of agricultural commodities and the ability of the operator to produce and market his products have a direct impact upon the operation's economic viability. If economic returns are minimal, there may not be an incentive to implement conservation measures based on long term investment and sustainability, or an improvement to the environment. It is also far more likely for an operator to receive financial and technical advice from a private agri- business consultant with whom they may interact with on a regular basis, than from a federal, state, or local conservationist. The primary challenge to achieve substantial nutrient and sediment reductions by obtaining voluntary implementation of unprecedented levels of conservation practices, has never before been witnessed in any watershed. By streamlining at times rigid financial and technical assistance programs, instituting improved communications and cooperation between programs and agencies, exerting positive influences on market forces, and involving greater participation by the private agri-business sector, the goals may yet be achieved. Agricultural BMP Tracking The Bay Program states are responsible for tracking, compiling, and reporting agricultural BMP implementation so that their records best reflect what has occurred over a year or is on-the-ground at the end of an annual period. It is each jurisdictions prerogative to choose how to track and assimilate BMP implementation data as the states, are in the best position to meet the objective. It is the states' prerogative to choose how to track and assimilate BMP implementation data to meet the objective of reported BMP implementation that best reflects what has occurred over a year or is on-the-ground at the end of an annual period. Tracking mechanisms are unique to jurisdictions. Generally, agricultural BMP implementation can be tracked through funds expended, i.e., cost-share. It is each state's responsibility to work with agencies that manage the agricultural BMP data to address issues of double- counting where implementation funds were derived from several sources such as federal, state, county, local, and/or landowners. In many cases, jurisdictions choose to use their cost-share databases rather than NRCS data for a more comprehensive assessment of implementation and to improve accuracy by reducing the potential of double-counting BMPs. NRCS is currently working with the state agricultural agencies to ensure that all conservation practices implemented in the watershed by NRCS are captured in data submitted to the Chesapeake Bay Program Office. Some states do not use NRCS data for fear of double counting and NRCS data are often difficult to access given confidentiality issues. 24 ------- To further improve the accuracy and completeness of BMP tracking, the National Environmental Information Exchange Network (NEIEN) Grant Program has been in development for more than two years. The nonpoint source BMP data exchange using EPA's NEIEN will provide inputs for the Watershed Model and various Information Technology tools developed for regional use. The scheme will eventually replace the existing system where BMPs are accounted for through disparate funding sources and implementation under many organizations. Use of the network meets both Bay Program office and jurisdictional needs such as 1) rapid access to high-quality, timely environmental information to support management activity; 2) consistent and comparable data across jurisdictions to inform management activity; and 3) a removal of the burden on the states to submit uniquely formatted data to the Chesapeake Bay Program office and EPA. Quantifying the Effectiveness of Agricultural BMPs The definitions and proposed nutrient/sediment reduction effectiveness of most agricultural BMPs used in the Chesapeake Bay Watershed Model is currently undergoing a formal review through a two-year project headed by the University of Maryland and the Mid-Atlantic Regional Water Program (MARWP). The project involves developing and refining BMP definitions and recommending methods of quantifying BMP implementation. The assessment includes scientific literature searches, data analyses, expert interviews and surveys, and selected demonstrations and field tours. States are permitted to propose new BMPs and efficiencies for review by the Chesapeake Bay Program, in accordance with the Nutrient Subcommittee's BMP protocol. Agricultural Inputs and the Watershed Model Simulation The CBP has devoted more time on improving Watershed Model agricultural inputs and the agricultural simulation than any other land type or sector. This is primarily due the disproportionate degree of fundamental nutrient inputs to agricultural lands (i.e., manure, chemical fertilizers, and atmospheric deposition of nitrogen) and the relative complexity of nutrient transport and transformations in agriculture among all source sectors. Although most of the nutrient inputs to all lands are attenuated through uptake by vegetation, soil storage, and (in the case of nitrogen) denitrification, agricultural lands yield the greatest nutrient and sediment loads to the Chesapeake Bay and are planned to be managed to achieve the greatest reductions among all source sectors. The Phase 5.0 of the Watershed Model currently undergoing calibration is much improved from the earlier version used for environmental management. Overall upgrades include finer spatial resolution with over 2,000 hydrologic segments and more than 1,000 individual reaches; more land use types; time-varying land use areas; better atmospheric deposition inputs; and time-varying BMPs through the simulation period. An automated calibration ensures even treatment across jurisdictions; is repeatable; and makes calibration feasible. The calibration strategy is fully documented and enables uncertainty 25 ------- analysis. The latest version of the model has a longer simulation period (or two decades of meteorology and watershed condition and management data) and generally operates on a 1-hour time-step. In addition to these significant improvements, developments specific to the Watershed Model's agricultural inputs, simulation, and methods of quantifying the benefits of BMP implementation also include the following: Sixteen land use types (of the total 26 land use categories) that vary by tillage, crop type, fertilizer type, fertilizer rate, and the presence of livestock More animal classes A continuous soil nutrient budget simulation through a yield-based algorithm Time-varying land applications based on crop, fertilizer type, and climatic zone A nitrogen and phosphorus link in manure applications Nitrogen and phosphorus nutrient management A crop uptake calibration that's sensitive to rainfall (mimicking actual annual trends) Capabilities for seasonally-variable BMP efficiencies reacting to hydrologic variation Although an upgrade to the Watershed Model's input data and simulation are extensive, it should not be expected that model outputs, such as loads, are relevant at the scale of farming operations. Even if computing capabilities and development resources were available, data for most environmental conditions and model parameters are not available at this fine scale across the domain of the Chesapeake Bay watershed and through the longest simulation time period. The minimum resolution for directing management would, more likely, be at a scale of clusters of counties - with accuracy of the outputs increasing with increasing area. VII. Future of Agriculture in the Chesapeake Bay The future of agriculture within the Chesapeake Bay watershed is as uncertain as the fate of the bay it surrounds. The close proximity of major population centers, the bisecting of the basin by national commerce routes and the increasing influence of economic and social forces for development, continue to exact its toll on an agrarian way of life. Change has been relatively constant for the agricultural community since the beginning of conservation efforts to restore the Bay in the 1980's, however, new economic factors such as expanding corn ethanol production, rising grain commodity prices and a replacement of traditional corn based animal feed stocks with dried distillers grains (DDG), may effect a more rapid change in agriculture than witnessed over the past two decades. Agricultural Biofuels The increasing national demand to replace imported foreign petroleum with agriculturally based biofuels, especially corn ethanol, could herald significant changes to agriculture 26 ------- and conservation programs in the Bay watershed. Rising demand has increased corn commodity prices from above $2.00 a bushel to over $4.00 a bushel, encouraging producers to convert additional acreage from other row crops, hay, pasture and idle lands into corn acreage. The March of 2007 Prospective Plantings report from the USD A National Agricultural Statistics Service (NASS) predicts an increase of 15 percent in the number of acres planted to corn nationally, and a decrease of 11 percent in the acres of soybeans. If true, corn acreage would increase from approximately 78.4 million acres in 2006 to over 90.5 million acres in 2007, the highest level since 1944. See (www.usda.gov/nass/PUBS/TODAYRPT/pspl0307.pdf) for more detailed information. Table 2. Long-run equilibrium in U.S. corn and ethanol markets CARD International Ethanol Estimated Baseline Long-Run Percentage (2015)a Solution Change Com Price ($/bushel) 2,56 4,05 5S° o Com Area [million acres) 79,4 95,6 2i°o Com Production (million bushels) 15.040 15.656 20° o Com Use in Ethauol (million bushels) 3.251 11.103 242° o Ethanol Consumption {Million gallons) 9.476 31.479 232° o :For more detail* on the l\i;eline numbers. we Elobeid and Tokgoz. "'Removal of U.S. rtfcano; Domestic and Trade Distortion1.: Impact on U.S. and Brazilian Erhanol Markets." CARD Working Paper Oo-WP 427. October 2006. Within the Chesapeake Bay basin, current estimates conservatively place the increased corn acreage over the next several years at one million acres. Holding other potential market influences constant, the conversion rate to corn production will vary across the basin over the next two years. According to the recent figures from USDA-NASS, the coastal plain areas should experience relatively small conversions in 2007 due to the limited acreage in hay, pasture, and idle lands. The majority of available cropland is presently in either corn or small grain/soybean production. It is difficult for producers to convert small grain fields (to be doubled cropped with soybeans) to corn due to the economic investment in the existing small grain stand. Instead, producers are more likely to convert these fields into corn in 2008, while maintaining continuous corn rotations in other production fields. Full-season soybean fields will stand a greater chance than double-cropped soybeans for being converted to corn production in the present year. In the piedmont, as well as the ridge and valley areas, a significant conversion to corn production is forecasted to begin in 2007, according to recent USDA-NASS reports. This increased conversion rate may be due to the greater availability of hay, pasture, and idle lands to convert into corn production, all of which may be rotated into corn in a shorter period time with less loss of economic investment than small grains. The majority of conversion will likely occur on hay and idle lands, with a limited amount of pasture being 27 ------- converted. This trend may continue in 2008, but will probably be at a lower rate compared to the present year, as well as the coastal plains in 2008. Idle lands being converted to corn production consist primarily of low fertility cropland idled due to low productivity, farmland owned by absentee owners for investment and/or future development, and retired lands under federal and state conservation programs. Higher corn commodity prices can provide improved opportunities for economic gains on low productivity soils, as well as one-year rental agreements on farmland destined for eventual development. Landowners may also be provided an economic incentive to buy- out governmental contracts and reclaim cropland previously retired by conservation programs, such as the Conservation Reserve Program (CRP) and the Conservation Reserve Enhancement Program (CREP), both under the USDA-Farm Services Agency (FSA). As another effect of higher commodity prices, a fifteen percent increase in nitrogen application rates on corn is expected by leading national agricultural economists. Although commercial fertilizer prices have increased by over 20 percent from 2006, the increase of corn prices by double has pushed up the economic threshold of profitability. This could increase nitrogen losses from corn production dramatically nationally and within the Bay basin. The World Resources Institute (WRI) projects nitrogen loading from agriculture could rise over five percent nationally with the additional corn production. This could equate to a conservative estimate of 16 million pounds of additional nitrogen lost to the environment within the basin alone if an additional one million acres of corn are raised. 1 5- , s- 4- 2 1 Cm Ferrtter-N Applied, kg/lia Grain Production vs. Nitrogen Efficiency Dried distillers grains (DDG) are a byproduct of corn ethanol production, which are typically feed to livestock. Due to the distilling process for converting carbohydrates to sugars, DDGs are higher in content than corn in other elements such as proteins, fats, and phosphorus. The altered composition of the feed does not allow it to be utilized 28 ------- effectively by mono-gastric such as poultry and swine. Limited amounts can be fed to multi-gastric animals such as dairy and beef cattle (20-30 percent respectively) as a partial supplement to corn as an energy source, and soybean meal as a protein source. Higher levels of phosphorus are excreted in the manure, which flies in the face of recent initiatives to reduce soil phosphorus levels through improved feed management practices. As a greater amount of the nation's corn harvest is utilized by the ethanol industry, DDGs will become more readily available for cattle feeds, providing a more profitable alternative to more expensive grains. Increased feedlot beef cattle production may become a commercial necessity to consume the DDGs, while at the same time, poultry and swine production may begin to decline due to higher corn grain feed costs. Distillers Grains M arketing Year Production (Dry Equivalent) A Price Iowa Sixte UNIVERSITY Other examples of potential agricultural biofuels include bio-diesel from soybean oils and cellulose-based ethanol from crop residues, forestry slash and bi-products, and cool or warm season grasses. An increase in soybean production might have only minimally positive effects on water quality over corn due to the reduced crop residue and the loss of residual nitrogen. Some forms of cellulose-based ethanol may pose increased water quality risks as well, including the removal of crop residues and forestry cover which would increase nutrient and soil loading to the Bay. Bi-products (i.e. sawdust, wood chips), cool season grasses (i.e. orchardgrass, timothy) or warm season grasses (i.e. switchgrass, big bluestem) may offer the best alternatives for maintaining or increasing nutrient and sediment reductions in agriculture. Unfortunately, the technologies to commercially produce large volumes of cellulose-based ethanol are currently not available. Significant government assistance will be required before cellulosic ethanol is commercially profitable. For more information on the future of biofuels, see Volume 17, Number 2 of the Alliance for the Chesapeake Bay Journal (www.baviournal.com). 29 ------- Estimated Biofuel Feed-Stock Production Year ~ Soybeans ~ Corn Grain Ś Wood Residue ~ Straw ~ Stover Ś Ded. Energy Crops Source: U. of Tennessee, "25% Renewable Energy for the U.S. by 2025", Report, November 2006 Agricultural Land Conversion According to model projections based on federal Census data, agricultural lands within the Chesapeake watershed have steadily been converted to other land uses, primarily into developed land uses. Between 1985 and 2000, approximately 10 percent of agricultural lands were converted out of production. This trend continued from 2000 to 2005 at nearly 3 percent, and is forecasted at the same rate for the 2010 Implementation Plan. With the estimated loss of over 52,700 acres of farmland per year, the increasing reliance on agriculture to assume additional nutrient and sediment load responsibilities seems at odds to meeting the Tributary Strategy goals. Chesapeake Bay Watershed Estimated Land Jses: 985-201 D ACRES ACRES ACRES ACRES ACRES ACRES ACRES ACRES ACRES ACRES s01ref No-BMPs Change Percent No-BMPs Change Percent No-BMPs Change Percent 1985 2000 1985-2000 Change 2005 2000-2005 Change 2010 2005-2010 Change Row Crop 4,851,854 4,358,543 -493,311 -10.2% 4,234,568 -123,975 -2.8% 4,110,595 -123,973 -2.9% Hay 2,165,865 2,202,873 37,008 1.7% 2,266,684 63,811 2.9% 2,330,495 63,811 2.8% Pasture 3,599,763 2,954,301 -645,462 -17.9% 2,750,654 -203,647 -6.9% 2,547,007 -203,647 -7.4% Manure 9,317 8,529 -788 -8.5% 8,515 -14 -0.2% 8,537 22 0.3% Agriculture 10,626,800 9,524,245 -1,102,555 -10.4% 9,260,420 -263,825 -2.8% 8,996,635 -263,785 -2.8% 30 ------- T3 0) ŚC S2 a> 13 5 m o c T3 C re O) re X- O 1985 2000 2005 Improved market economics for grain commodity prices may provide only a minimal effect on slowing the conversion of farmland to developed land uses. The increased cost of corn grains and forages for animal feeds, low milk prices, high land values and a strong development real estate market will potentially overcome any gains from a favorable commodity market. Corporate Responsibility The development of a global agricultural products market, and the subsequent rise in the influence of national and international corporations in the market place, may provide new opportunities for obtaining additional reductions of nutrients and sediments. Recent public food security concerns stemming from agricultural production practices (i.e. green onions and spinach recalls in 2006), has had long-term financial repercussions on select areas of the industry. The expansion of markets for organic, animal welfare or sustainability produced certified products is an increasing trend in the industry. Termed "corporate responsibility", large corporations are increasingly sensitive to the public perception of agricultural production methods. The opportunity now exists as never before for the Chesapeake Bay Program (CBP) partners to engage with corporate America in defining how agricultural products are produced; backed up with third party verification and economic consequences for the producer. Several examples of corporate responsibility have been realized within the Bay watershed already. The recent agreement between Perdue Farms, Incorporated and EPA under the Perdue Cleans Bays Environment Management Initiative is one example. Perdue Farms will offer education, training and joint environmental assessments with federal and state inspectors to its contracted producers for enhancing compliance with environmental regulations, as well as receive federal assistance in creating new markets for poultry litter. See (www.epa.gov/region03/pdf/Perdue MOA.pdf) for specific information. 31 ------- A second example of corporate responsibility is the agreement signed between the CBP and the Lebanon Seaboard Corporation and the Scotts Miracle-Gro Ž Company to reduce or eliminate phosphorus in do-it-yourself turf-grass fertilizer products distributed within the basin. See (www.chesapeakebav.net/info/pressreleases/ec2006/Lawn%20Care%20MQU%20verl% 20color.pdf) for additional information. Conclusions The importance of agriculture to the health of the Chesapeake Bay can not be overstated, as has been amply demonstrated by this report. The impact economically and environmentally of over 87,000 privately owned and operated farms, in combination with a large, complex, and at times integrated support system of diversified agri-businesses and corporations, is one that can not be ignored. The continued aging of the farm population, the increasing level of business administration and financial capital required of operators, and the growing pressures of rising land prices, absentee landowners and encroaching development, all contribute to an ever rapidly changing agricultural sector. Although it may appear from this report that the Chesapeake Bay Program's knowledge of agriculture and its future is extensive, the opposite is the reality. Traditional sources of agricultural statistics remain available for the most part, such as the national Agricultural Census data and agricultural reporting by USDA-NASS, however, these sources may not capture the full picture of agriculture within the basin. Former sources of information may no longer be available to the program, such as the crop residue surveys from the National Conservation Technology Center (NCTC). The rapid change in agricultural markets may have made past reports on agricultural conservation methods obsolete, such as the Chesapeake Bay Commission's report entitled the Cost-Effective Strategies for the Bay published in 2004. Other critical information may not have ever been collected, such as the ratio of operator owned versus rented farmland, which can dictate the ability and interest of a producer to implement long-term conservation practices. The resulting data gaps may prevent the program and its partners from adequately forecasting and addressing the needs of agricultural production with water quality goals. It is important for the Chesapeake Bay Program and its partners to investigate new opportunities to obtain sound agricultural data on an annual basis. Traditional sources should continue to be utilized with improved electronic and GIS based reporting tools, but in combination with new sources such as program partner sponsored crop residue surveys, commodity market forecasting reports, and agricultural trend reporting from agri-business. The results of an improved network of data collection could be collected into an annual or biannual "Chesapeake Bay Agricultural Report" for use by the Chesapeake Bay Program and its partners for an important decision making tool. In order for a "Chesapeake Bay Agricultural Report" to become a reality, the program and its partners will need to prioritize this effort as a long-term commitment. The dedication of financial and technical resources to leverage existing resources, the 32 ------- development and implementation of program sponsored or validated data collection tools, and the cooperation of the private agricultural industry will likely be required. Any new commitment for the program and its partners can be viewed as burdensome at best, but the alternative of not anticipating the changes in agriculture and how it will affect meeting our nutrient reduction goals could hurt the Bay restoration. An agricultural sector that has experienced slow to moderate change in the past two decades may now be poised for a period of instability as the new market influences forever change the face of agriculture within the basin. 33 ------- |