cover crop economics: estimating a return on investment liz juchems and jamie benning

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Cover crop economics: estimating a return on investment Liz Juchems and Jamie Benning

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Page 1: Cover crop economics: estimating a return on investment Liz Juchems and Jamie Benning

Cover crop economics:estimating a return on

investment

Liz Juchems and Jamie Benning

Page 2: Cover crop economics: estimating a return on investment Liz Juchems and Jamie Benning

Iowa Nutrient Reduction Strategy• Voluntary, science-based • State goal of 45% reduction of Nitrogen (N)

and Phosphorous (P)• Point sources achieve maximum biological

removal rate: 4% N and 16% P• Non-point source goal 41% N and 29% P

Page 3: Cover crop economics: estimating a return on investment Liz Juchems and Jamie Benning

Cover Crops in the NRS

Page 4: Cover crop economics: estimating a return on investment Liz Juchems and Jamie Benning

Nutrient Reduction Potential

31% reduction in nitrate

29% reduction in phosphorus

Page 5: Cover crop economics: estimating a return on investment Liz Juchems and Jamie Benning

Example: Combination Scenarios that Achieve N and P Goal From Non-Point Sources

From Iowa Nutrient Reduction Strategy: Goals for Nonpoint Sources is 41% reduction on Nitrogen and 29% reduction on Phosphorus

 

Nitrate-N Reduction

Phosphorus Reduction

Initial Investment

Total Equal Annualized

Cost

Statewide Average EAC

Costs

Practice/Scenario% (from

baseline)% (from

baseline)(million $) (million $/yr) ($/acre)

MRTN Rate, 60% Acreage with Cover Crop, 27% of ag land treated with wetland and 60% of drained land has bioreactor

42 30 3,218 756 36

MRTN Rate, 95% of acreage in Cover Crops, 34% of ag land in heavily tile drained land treated with wetland, and 5% land retirement

42 50 1,222 1,214 58

Page 6: Cover crop economics: estimating a return on investment Liz Juchems and Jamie Benning

Cost of Cover Crops

• Approximately $30+ per acre for seed, planting, and termination

• Costs offset by cost-share initially

• Can we estimate the value cover crops bring to the land?

Page 7: Cover crop economics: estimating a return on investment Liz Juchems and Jamie Benning

How do you account for cover crop value in your operation?

Page 8: Cover crop economics: estimating a return on investment Liz Juchems and Jamie Benning

Estimating the Value of Cover Crops

• Estimates of soil loss reductions

• On-farm research sites comparing cover and no-cover treatments

Page 9: Cover crop economics: estimating a return on investment Liz Juchems and Jamie Benning

RUSLE2

• Input field management practices and compare cover vs. no cover treatments

• Obtain soil loss in tons/acre/year

Page 10: Cover crop economics: estimating a return on investment Liz Juchems and Jamie Benning

Soil Erosion

• Most sites in this study are no-till corn-soybean rotations

• Initial calculations range from 20-40% erosion reductions for the cover crop sites

Page 11: Cover crop economics: estimating a return on investment Liz Juchems and Jamie Benning

Value Estimates

• Estimating change in land value and lost nutrients

• Based on protecting the soil from erosion

Page 12: Cover crop economics: estimating a return on investment Liz Juchems and Jamie Benning

Soil Comparison

• Tama County– Tama 120C – Tama 120C2

• Loss of 4” to change erosion phase

• 616 tons of soil per acre

Page 13: Cover crop economics: estimating a return on investment Liz Juchems and Jamie Benning

Nutrient Value

• Topsoil is the most nutrient rich horizon

• Higher OM=higher nutrient content and value

Page 14: Cover crop economics: estimating a return on investment Liz Juchems and Jamie Benning

Assumptions

• Nutrient value of soil just in the OM fraction ranges from $2-$10 per ton of soil

• In land value change calculations, cost of soil erosion averages $0.49 per ton

Tim Smith

Page 15: Cover crop economics: estimating a return on investment Liz Juchems and Jamie Benning

Cover Crop Scenarios

Scenario No cover erosion rate

Cover crop erosion rate

Difference Value of retained soil by cover crop use

1 2 tons/acre 1 ton/acre 1 ton/acre $6.06/acre

2 3 tons/acre 1.5 tons/acre 1.5 tons/acre $9.09/acre

3 5 tons/acre 2.5 tons/acre 2.5 tons/acre $15.15/acre

Page 16: Cover crop economics: estimating a return on investment Liz Juchems and Jamie Benning

How long does it take to observe a return on investment in terms of soil quality, erosion reduction, or other factors?

Page 17: Cover crop economics: estimating a return on investment Liz Juchems and Jamie Benning

Project Funding and Partners

• State Soil Conservation Committee• Partners

– USDA-ARS National Lab for Agriculture and the Environment

– Practical Farmers of Iowa