Conservation Tillage Systems in the Southeast

Cover Crop Economics

Overview

This section provides an economic perspective on planting and managing cover crops. Production costs, equipment, management requirements, cover crop choices, termination practices and termination timing are discussed. In addition, the observed and perceived benefits of cover crops to yield and cost saving for the following cash crop are examined.

Production Costs

Production costs for cover crops vary based on the cover crop variety and the management approach. The costs are farm specific, as is their impact on farm profitability. Table 15.5 provides production costs for four alternative cover crop options. Hairy vetch and crimson clover are legumes that fix nitrogen, so fertilizer is not applied. Rye and oats are cereal grains that can produce more aboveground biomass than legumes [37].

Seed Costs

Seed cost to establish a cover crop is highly variable depending on the cover crop chosen and the seeding rate used. Year-to-year variability of seed costs necessitates careful annual evaluation of cover crop selection. Thus, while one type of cover crop may prove to be more beneficial in terms of biomass production, nitrogen fixing or erosion control, the profitability of the practice will be impacted by seed cost, cover crop management and income-generating uses for the cover crop. For example, winter peas and hairy vetch both provide high levels of nitrogen, but winter peas are preferred by many producers because they are easier to kill and offer grazing opportunities [10].

Planting Costs

Cover crop planting requires the same basic equipment as a no-till cropping system, with minor additions. High-residue planting environments may require row cleaners, additional down pressure springs and/or spike closing wheels. These add-ons are used to penetrate thick residue, ensure proper seed-to-soil contact and minimize hair-pinning [37]. Costs of these investments can range $350–$700 per row [4]. The total add-on cost is based on the number of rows the equipment plants in one pass.

Other planting options include broadcast or aerial seeding. With broadcast seeding, germination and stands are inferior to planting or drilling. As a result, seeding rates are increased by 25–50 percent over the rates for planting or drilling [31, 34]. This impacts the profitability. Another broadcast seeding method, aerial seeding, is the only large-scale method to inter-seed cover crops into standing cash crops without damaging the cash crop [20]. The process can be done with a spinner-spreader attached to a tractor and driven through the field, or with an airplane. The drawback is that the germination rate is low and depends heavily on receiving late-summer rains. As a result, substantially higher seeding rates are required for aerial seeding as compared to planting or drilling [20].

Fertilization Costs

Fertilizer is used with non-legume cover crops to improve biomass production. Maximizing grain and small-grain cover crop biomass, such as with cereal rye, may provide benefits to the following cash crop [24, 32]. A one-time or split application of fertilizer is used to establish the cover crop and improve the likelihood it will suppress weeds [5].

Termination Costs

Cover crops are terminated prior to planting the cash crop. There are two primary methods for termination: spraying herbicides and using a roller/crimper. Winter-kill is a possibility with less-hardy cover crops in harsher environments [20], but this is not likely in the Southeast. For a no-till operator, the pass to terminate a cover crop is unlikely to require an additional pass since one pass is normally done to kill weeds anyway [5]. Mechanical termination involves the use of a roller/crimper, which does not disturb the soil and can be used alone or in conjunction with reduced rates of non-selective herbicides [16]. A roller/crimper uses blunt blades attached to a rolling drum to crack the cover crop stems, killing the plant and preventing regrowth. It leaves a residue mat on the soil surface [3]. The purchase cost of a roller/crimper is much less than that of a sprayer, and the roller/crimper requires less energy than termination by tillage, lowering fuel costs [9]. Mechanical termination can be the least expensive alternative when compared to herbicides or tillage. It can also be the most labor and time intensive, as roller/crimpers are usually operated at speeds from 2–10 mph, slower than the operating speed of a sprayer [16]. Roller/crimpers and cover crop termination are discussed in depth in Chapter 9.

Opportunity Costs of Cover Crop Adoption

The opportunity costs of cover crop adoption represent the foregone opportunities that producers could have invested their time and money into rather than a cover crop.

Foregone Cash Crop

Most producers find the idea of planting, fertilizing and paying to terminate a cover crop counterintuitive since potential revenue is left in the field. Some cover crops may be managed as a cash crop, with the grain being harvested and sold. Wheat is an example. Another alternative may be utilizing cover crop residues as a cellulosic biofuel feedstock for ethanol production. Rye and wheat straw can be used in this way [1]. In certain circumstances it may be more profitable to treat a cover crop as a cash crop enterprise. However, leaving residue in the field can provide important conservation benefits that may also lead to an economic return.

Foregone Forage Opportunities

Grazing land is a valuable asset, and the need for forage requires some producers to winter-graze their herds. Many cover crops are highly palatable to livestock, and it is tempting to either graze or bale the cover crop. For example, oats are not only a popular cover crop but also a common and valuable feed crop [15]. While grazing or baling does not negate all cover crop benefits, repeated removal of biomass can substantially decrease the cash crop yield benefits that result from leaving the residue in the field [32]. Another issue to consider is the compaction caused by cattle. The force exerted per square inch by a mature cow is equivalent to that of a heavy tractor [7]. Chapter 8 discusses the aspects of including livestock grazing in a conservation tillage rotation.

Potential Cost Savings to the Cash Crop

While cover crops come with their own production cost, some or all of that cost can be offset by savings they generate in the form of reduced cash crop production costs.

Herbicide Savings

High-residue cover crops leave behind a “residue mat” that provides a significant benefit. Teasdale and Mohler [35] found that increasing levels of biomass exponentially decrease weed emergence rates. Residue mats are responsible for nearly complete light blockage that plays a large part in eliminating weed emergence. A potential savings to the following cash crop is the elimination of one or more herbicide passes due to weed suppression provided by the cover crop’s residue mat [19]. Reddy [28] found that a rye cover crop in Mississippi reduced total weed density by 9–27 percent and total weed biomass by 19–38 percent across different tillage systems. This decrease may not eliminate the need for an herbicide application but could result in production input savings through reduced application rates. Herbicide savings will depend on the type of cover crop, the type of cash crop following it and how the cover crop’s biomass is managed.

Fertilizer Savings from Legumes

Legume cover crops fix atmospheric nitrogen that may be available for the following crop. The range of available nitrogen in the soil from legumes varies [19]. Some legume cover crops, such as sunn hemp, can fix more than 100 pounds of nitrogen per acre, with up to 50 percent being available to the following cash crop [21]. However, studies have shown that legume cover crops may be too costly to use as a replacement for all applied commercial fertilizer. Legume cover crops become noticeably more profitable when commercial fertilizer prices are high [26, 33]. The fertilizer application rate is reduced in accordance with available legume-fixed nitrogen. If not, the fertilizer benefit of the legume is wasted [12, 17]. Simply stated, if a producer does not “credit” fixed nitrogen to the total amount available for the cash crop, then no fertilizer savings are realized.

Cash Crop Yield Benefits, Returns and Risk

A potential benefit from the use of cover crops over time is improvement in soil productivity. This can improve cash crop yields and increase crop revenue. Using average yearly spot prices from 2001–2003 for crops in Alabama, Bergtold et al. [6] found net returns from cotton production using conservation tillage with a high-residue and high-cost cover crop mixture exceeded those of conventional tillage with no cover crop by $45–$70 per acre. This analysis takes into account a $40 per acre government cost share for maintaining 50 percent or greater soil coverage for a three-year period through the Environmental Quality Incentives Program (EQIP). Cotton yields were 5–25 percent higher in the conservation tillage system. In the same study, net returns for corn under the conservation system only exceeded the conventional system during a drought year, 2002. Without the EQIP payment, the 2002 results would have favored the conventional cropping system by nearly $22 per acre. Without EQIP payments, beneficial but costly cover crops may not provide a yield boost sufficient to cover production costs, even when cost savings for the cash crop are considered [19].

A study in Tennessee found that no-till corn yields over five nitrogen fertilizer application rates, from 0–200 pounds per acre, were higher with a hairy vetch cover crop as opposed to no cover at each application level [17]. Average yield increases were as much as 45 bushels per acre at 0 pounds of applied nitrogen and as small as 9 bushels per acre at 150 pounds of applied nitrogen [17]. These results primarily stem from the use of legume cover crops, which are among the most profitable cover crops [19, 33]. Additionally, cover crops have been shown to stabilize yields over time, which is a benefit to risk-wary producers [6, 33].

There is nothing more vital to success in farming than managing risk. A study of cotton production systems with various cover crops and tillage practices in western Tennessee found that a legume cover crop, such as hairy vetch or crimson clover, was less risky than a small-grain cover crop [11]. No cover was observed to be the riskiest option. Corn production systems in western Tennessee that incorporated legume cover crops in no-till systems tended to be the least risky when compared to a small-grain cover crop.

On-Farm Economics of Cover Crops

Evaluate the economics when considering whether or not to adopt a cover crop variety. The economics include the direct costs of planting and managing the cover crop, such as seed cost, planting costs, fertilization costs and termination costs; any potential cost savings for the cash crop; opportunity costs; expected future cash crop yield benefits; and government program support. Partial budgeting can be a useful tool when estimating the potential economic return from adopting a cover crop, but keep in mind that partial budgeting does not include the social, environmental and soil costs and benefits that may not be quantifiable. That is, it is difficult to place a dollar value on all the benefits provided, but they need to be considered.

Download the tables from Chapter 15.

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