The variability on returns from the different agreements reflect the differences in risk, normally the more risk assumed the higher the expected return. It should be noted that the annual CRP rental payment corresponds closely to a cash rent equivalent with respect to risk. One estimate reflects actual income foregone and the other identifies the return associated with a similar level of risk. The projections on establishment cost when amortized over the CRP contract period added to the projected net returns form crop production over the cash lease alternative will provide the range for constructing a CRP offer. In addition to these costs, another factor to consider is the likely appreciation in land values associated with returning CRP land to crop production.
Several factors influence the decision to go into grass or crop production.
First, how does the CRP parcel fit into the overall farming operation. In some cases, the grass variety grown on the CRP land may help complete a grazing system. In other cases, returning the CRP ground to crop production may provide a vital link to completing a planned cropping system. A second consideration is the resource base associated with the land. Depending on the resource base, conversion to livestock production can be costly.