Economics

Cover crop economics are difficult to quantify because many of the potential benefits of cover crops can vary depending on conditions.  For example, increases in soil organic matter can be achieved using cover crops but the change will take place over an extended period of time and the rate of increase will be dependent on soil type, cover crop type and growth and environmental conditions.  Thus, it is hard to say that x amount of years of using a cover crop will result in a y increase in organic matter.

There are some cover crop costs that are quantifiable and those are things like seed, planting costs and the value of nitrogen credits from a cover crop.  Below are some guidelines for calculating the straightforward economics of using cover crops and some ideas for thinking about the less straightforward economics.

Seed costs

Cover crop seed can be highly variable in price depending on where the seed is acquired.  Some Wisconsin farmers have started raising their own bin run cover crop seed in order to hold down their over-all costs.  This can be a risky practice from a disease and herbicide resistant weed standpoint but it is an understandable move by farmers that want to minimize their financial investment in cover crops.  Minimally, farmers using bin run should be monitoring things closely to make sure they are not moving herbicide resistant weed seeds between fields.

For farmers that need to optimize growth of their cover crops in the short season that they have available after cash crops come off, they may want to really consider their cover crop variety selection.  For example, forage oat varieties can put on up to 40% more growth than other oat varieties.  This can make a big difference in the amount of spring cover crop residue and can help reduce erosion more effectively.  Growers may want to select a more vigorous variety and reduce their planting rate.

In general,  seed costs should be a major factor for farmers selecting cover crops.  There will be year to year variability in seed prices and availability so farmers have to remain a bit flexible with their cover crop species and variety selection.  But going with the cheapest may compromise cover crop benefits so variety and species difference should be weighed in the decision.

Planting costs

Planting costs are also highly variable from farm to farm depending on planting method and equipment availability.

Drill – the latest custom rate guide for Wisconsin (2013) puts average custom drilling rate at $18.00/acre

Airplane seeding – Aerial seeding costs will vary between applicators but average cost will be around $20/acre.  The costs are dependent on distance to the airport and seeding rate.  Rates could also be negotiated if there are a large number of acres to be seeded.  If several farmers in an area can coordinate seeding over a larger area, rates could become more affordable.

Vertical tillage tool with air seeder – An equipment dealer in southern Wisconsin was renting this out for $18.50/acre.  We don’t have any statewide averages.  This just gives a ballpark rental rate rent for this type of equipment.

Erosion control

Farmers can estimate the reduction in soil lost to erosion from using cover crops by using the Wisconsin software program, SNAP-Plus.  This will tell them how many tons of soil they have kept in the field by changing their management practices.  So what is a ton of soil worth?

Soil does many things, including holding the two vital things for plants to survive and thrive, water and nutrients.  As you reduce the storage space for water and nutrients, yield potential reduces over time.   A reduction in yield potential reduces the profitability of the land for the farmer and it reduces the value of the land for the landowner.  The rate with which erosion impacts profitability or value is going to be dependent on the soils in an area and land values.

Soil Organic matter

As stated in the above introduction, increases in organic matter over time are going to be very dependent on soil type, crop rotation, tillage and cover cropping history.  But as an idea, research suggests that organic matter could be increased by as much as 0.5-1% over a 10 year period in non-sandy soils, minimizing tillage, rotating crops and optimizing cover crop growth.

We can provide a value to organic matter.  Organic matter creates a slow release of nutrients of time so it has a value from a crop nutrient standpoint.

Water Holding Capacity

 

Other resources – NRCS Cover Crop Economics Tool

If you would like to conduct an economic assessment of cover crops on your farm, then check out the NRCS Cover Crop Economics tool. For help with using the spreadsheet-based tool, there is a link to a video demonstration.

Meta-economics of cover crops

 

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