Economic Evaluation of Cover Crops in Midwest Row Crop Farming

View the project final report

• 2016 annual report

Commodities

• Agronomic: annual ryegrass, corn, soybeans, cereal rye, other cover crop species

Practices

• Crop Production: cover crops
• Farm Business Management: budgets/cost and returns

This proposal, entitled “Economic Evaluation of Cover Crops in Midwest Row Crop Farming,” addresses two problems. First, science-based information on the potential return on investment at the farm-level associated with the use of cover crops by Cornbelt farmers is very limited. By creating and disseminating partial budgets in consultation with early adopters of this practice, we will provide Midwest farmers with a unique tool that will reduce the uncertainty associated with the decision to adopt cover crops and likely result in an expansion of cover crop acres.

Second, row crop farming in the Midwest has been increasingly singled out as a major non-point source of nitrate pollution in waterways. For example, high concentration of nitrate pollutants in water sources increases the treatment cost of drinking water. Des Moines Water Works (DMWW) in Iowa claims that “record high nitrate concentrations will require future capital investments of $76-183 million to remove the pollutant and provide safe drinking water to a growing central Iowa.” Preliminary results from simulations based on a long-term cover crop study in Iowa suggest that nitrate concentration in tile drainage can be reduced by 54% when a winter rye cover crop is added to corn-soybean acres (Miguez, Basche and Archontoulis, 2013). If aggregate cost savings in drinking water treatment plants stemming from reduced nitrate levels and soil erosion are greater than the sum of potential net losses across cover crop adopters, then economic theory suggests that a reallocation of resources from water treatment plants to cover crop users might improve social welfare.

Besides a farm-level cost-benefit analysis of cover crop adoption, we will provide a societal economic evaluation of cover crops accounting for their impact on drinking water treatment costs stemming from reduced nitrate concentration and soil erosion. Our societal economic evaluation will be based on the analysis of existing long-term field trial data collected by Practical Farmers of Iowa and simulations of farm-specific yield and soil erosion estimates using the Agricultural Production System Simulator (APSIM – www.apsim.info). Due to the costs associated with generating data from numerous field research sites, simulations are used to develop best estimates of the impact of cover crops on farm-level profitability, nitrate leaching and soil erosion. The outcomes of the societal economic evaluation will inform the policy debate on how to improve water quality for the Midwestern population while providing guidelines on possible rural-rural and rural-urban collaborations to promote the adoption of cover crops.

Science-based information on the potential return on investment for cover crops in the Cornbelt is very limited. The first goal of this project is to develop and promote the use of partial budgets for cover crops in Midwest row crop farming. The marginal benefits and the marginal costs of cover crops will be compared against a control scenario of leaving the land fallow during winter to assess the annual net benefit of adopting cover crops.

Since row crop farming has been increasingly singled out as a major non-point source of nitrate pollution in waterways, the second goal of this project is to develop a societal economic evaluation of cover crops accounting for their impact on drinking water treatment costs stemming from reduced nitrate concentration and soil erosion.