cover crops
ROI POTENTIAL: Cover crops offer many benefits, but most are long term and may not offer an immediate return on investment.

Figuring cost vs. return for cover crops

Timely Tips panel also addresses a son who shirks his farm duties.

Each month in Wallaces Farmer magazine, the Timely Tips panel answers questions sent by readers. Members of the Timely Tips panel are Alejandro Plastina and Wendong Zhang, Extension economists, Iowa State University; Leslie Miller, Iowa State Savings Bank, Knoxville; and Rob Stout, Master Farmer, Washington, Iowa. Following are the questions they are answering this month.

What is the return on investment for a farmer who plants cover crops? Farmers who have cattle and can graze the cover crop may be able to help make it pay. And the government cost-share program can help cover the cost of establishment. But as a cash grain farmer who rents most of the land I farm, cover crops look like a loser for me — all cost and no return.

Plastina: There is substantial science explaining the long-term benefits of cover crops in terms of soil health, water quality and environmental benefits. However, those benefits are very hard to quantify in dollar terms. In the current economic environment, making a profit from crop production on rented land might be challenging, so your question is very relevant.

The most recent large-scale attempt at figuring out the return on investment in cover crops was implemented jointly by Iowa State University and Practical Farmers of Iowa. Using field data collected through a state-wide survey in Iowa, researchers developed partial budgets for cover crops and concluded that typical annual costs add about $30 to $35 per acre in mostly seed and planting costs, since termination costs with herbicides are small.

For those farmers who receive payments from cost-share programs, revenues increase by about $15 to $20 per acre. If there is no yield drag on the following cash crop (corn or soybeans in Iowa), then the average gap between additional costs and revenues from cover crops amounts to $10 to $20.

One way to cover the gap is to graze cattle or harvest the biomass from cover crops for forage and save feed costs. Although only a few farmers reported saving feed costs in the survey, the typical savings more than offset the negative annual return to cover crops. So, having livestock in the mix increases the chances of making an annual profit out of cover crops, particularly in combination with cost-share payments.

Without feed cost savings and cost-share payments, yields of the following cash crop would have to go up by enough bushels to compensate for the seed, planting and termination costs. If yields following cover crops are not high enough, then the cumulative net losses from cover crop use over the long term to build the desired level of soil health or improve water quality can be significant for some farmers. Therefore, if current cover crop practices are not improved, continuous cost-share support for this practice will be critical for its long-term sustainability.

Stout: There are many advantages to planting cover crops, but most are long term and may not pay an immediate ROI. If you have sloping land, an immediate return is that a good cover crop such as cereal rye will reduce erosion. I’m biased in favor of cover crops because of their soil health benefits, so I will share some of the benefits, and you can try to put a dollar value to them.

One of them is the increase of soil organic matter over time. Having living roots in the soil between your cash crop is beneficial in that the nitrogen is scavenged and less likely to be leached into the tile water. Earthworm populations have shown a measured increase after a cover crop, which is another advantage in that they turn residue into fertilizer and increase water infiltration.

Early-season weed control is another positive observation. I would recommend that you try them out on your owned land first and get comfortable before you plant them on all of your cash-rented land. Try to attend a field day to learn more as you may need to make some management changes.

Miller: We can all recognize and applaud the water and soil conservation benefits of cover crops. However, it’s getting harder to spend the money for them, especially on rented ground. The costs of planting and killing cover crops can be as high as $40 to $50 per acre, if you account for all costs and have to hire the spraying.

For some farmers, this additional outlay may be the difference between profit and loss on high-cost ground. On ground that is owned by the farmer, cover crops may make more sense because the benefits are longer term rather than short term. Especially since the heavy clay soils of southern Iowa need all the help they can get in terms of improving organic matter and soil composition. However, those clay soils also bind more tightly with water, which has caused us some germination problems on these fall seeded crops.

Cow-calf producers who still have fences around their fields seem to get better returns for the dollars spent on cover crops. They can gain some additional fall grazing, and the manure left behind does truly benefit the soil.

Working with the boss’s son

I’m one of three employees on a family-owned crop and hog farm. One of my co-workers routinely shows up late and tries to get me and the other worker to do his work for him. I’d report him to the boss, except he’s the boss’s son. What should I do?

Stout: I don’t think there is anything to be gained by reporting to the boss that his son is a slacker. Chances are that he is already aware of it, anyway. Just work hard and show the boss that you are a hardworking, dependable employee. Take opportunities to improve your skills and be willing to take on extra responsibility. Maybe your conscientious work ethic will rub off on the boss’s son. If nothing else, hopefully, it will pay off with a good referral for a different position down the road.

Miller: This is one of the most difficult work environments to manage. It does not matter how the son performs his duties, you are not related to the boss so you still have to show up, work hard and be a good employee. To do otherwise would jeopardize your current job as well as future recommendations. You might ask yourself if this is the type of job you plan to do forever. If it is not, and the work environment does not change, you may want to move along your career path sooner rather than later.

Zhang: In general, it might work well for an employee to report on another employee, especially in this situation. In part, your boss might also wonder whether you collect information on himself as well, and you are wasting recording things like that rather than working. I am guessing that given the size of the farm, your boss likely is fully aware of the issue.

My personal preference is to pretend this did not happen and just work hard. If you feel obliged to do something, there is a behavioral nudge you could try. If there is a weekly or monthly meeting, maybe suggest some individual reporting of what you have done last week, which will in some ways reveal that the son did not do much.

TAGS: Cover Crops
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