1 / 18

Cover Crop Economics

Ray Massey Commercial Ag Program Crops Economist. Cover Crop Economics. Presentation Objective. I cannot give an answer of whether or not growing cover crops are a good economic decision! What I can give Discussion of valuation of benefits Discussion of costs to consider

toya
Download Presentation

Cover Crop Economics

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Ray Massey Commercial Ag Program Crops Economist Cover Crop Economics

  2. Presentation Objective • I cannot give an answer of whether or not growing cover crops are a good economic decision! • What I can give • Discussion of valuation of benefits • Discussion of costs to consider • A few interesting anecdotes on growing cover crops.

  3. Cover Crop Functions • reduce soil erosion, • increase water infiltration, • decrease water runoff, • conserve soil water, • increase soil organic matter, • reduce soil compaction, • reduce nitrate leaching, • supply nitrogen to subsequent crops, • suppress weeds, • attract beneficial insects, and • other functions

  4. Valuation of Benefits • How much does a ton of soil not eroded contribute to my net income? • How much does an acre-inch of rainwater saved contribute to my net income? • How much does 1000 lady bugs attracted to my field contribute to my net income? • How much does a pound of nitrogen supplied to subsequent crops contribute to my net income?

  5. Easy Incomes to Consider • Nitrogen saved or fixed from a cover crop that reduces my fertilizer bill on the next crop. • Any harvestable material such as silage or grazing. • Process: quantify the benefit and multiply it times the market price of the item.

  6. Difficult Incomes to Consider • Soil not lost eventually prevents my ground from losing crop productivity. • Increased water infiltration helps me in most years – maybe not 2009. • Increased organic matter may improve crop yields or lower input costs. • Process – • No market prices exist to use • incorporate risk analysis and discount future contributions to today

  7. Benefits that don’t affect income • Attract beneficial insects that I later kill with my insecticide. • Reduce nitrate leaching (considering leaching for leaching sake as opposed to saving N for subsequent crop) • Process: ignore or seek an incentive that makes the benefit worthwhile.

  8. Internal vs. External Benefits • An internal benefit is something that benefits the person making the decision. • Reducing soil erosion is good because it makes my land more productive and valuable. • An external benefit is something that does not directly benefit the decision maker. • Reducing soil erosion is good because it improves fish habitat and reduces municipal water treatment costs.

  9. Economic Externality • Negative Externality – when the decision maker imposes a cost on someone else • Positive Externality – when a decision maker bestows a benefit on someone else. • External benefits (reducing soil erosion) are considered negative externalities by society (pollute the stream with soil).

  10. Dealing with Externalities • Regulation – force the decision maker to manage in such a way that the cost is not imposed on society. • Subsidy – incentivize the decision maker so that he voluntarily chooses to manage in such a way that the cost is not imposed on society.

  11. USDA Environmental Quality Incentive Program (EQIP) • Practice 340: Cover Crop • USDA specifies • what cover crops to plant • The cover crop plant planting window • The cover crop growing period • Incentive: $38/acre

  12. EQIP Quick Budget Calculation • Seed - Rye Grass: 9 lb/ac * $79/cwt = $7.11/ac • Planting cost = $13.00/ac • Subtotal $20.11/ac • Burndown (needed anyway) = $0.00 • Burndown (cover crop specific) = $15.00 • The $38/acre EQIP subsidy may completely pay for the cover crop

  13. Costs to Consider • Definite costs: • Seed purchase • Planting expense • Possible costs • Fertilizer? • Herbicide burn down or disking? • Delays in planting due to cover crop? • Other?

  14. Manure slurry-enriched seeding of cover crops Tim HarriganMichigan State University

  15. Suitable for several crops Slurry No-till Slurry No-till Oil seed radish Annual rye grass Tim HarriganMichigan State University

  16. Tim HarriganMichigan State University

  17. Cover Crop and Manure Results, 2006-2007 Source: J.W. Singer, J.L. Kovar, C.A. Cambardella, M.D. Tomer and T.B. Moorman. USDA National Soil Tilth Lab.

  18. Ray Massey Commercial Ag Program Crops Economist Cover Crop Economics

More Related