Business Case: Dwight Dial
INTRODUCTION
Dwight Dial farms with his family in Iowa where they grow corn and soybeans and raise hogs and sheep. The data shared below were collected as part of a 2021 report, Conservation's Impact on the Farm Bottom Line.
Farmer Profile
- Owner: Dwight Dial
- Farm size: 640 acres
- Crops grown: corn, soybeans
- Conservation practices: no-till, strip-till, cover crops
- Conservation goals: implement cover crops in a way that is profitable
Dwight Dial achieves a profitable conservation system by implementing reduced tillage and leveraging conservation program funding while he adopts new practices and identifies the most economical approach for his farm.
About the Conservation System
- Uses no-till to reduce passes and challenges with rains before planting
- Began cover crops on fields that were eligible for conservation funding support – has now increased to cover cropping over 300 acres
- Continually improves his cover crop seed mix by testing what will work with his management system and also meet NRCS and other program requirements – primarily uses cereal rye and rapeseed due to cost-effectiveness, but has also used turnips and oats in the past
- Cost factors heavily into cover crop choice – Dwight uses “the cheapest cover crop that will do the job and meet requirements” of NRCS and Iowa Soybean programs
- Has started planting the cash crop directly into the cover crop (i.e., planting green) and then terminates the cereal rye at a time when he is already spraying for weeds in order to keep cover crop management costs down
profitability impacts
Dwight Dial operates one of the lowest cost operations in our study, while maintaining comparable yields. As Table 1 shows, Dwight’s direct costs for corn fields with cover crops range between $320/acre and $345/acre, almost $100 below the average cover cropper in our study. Dwight has achieved such low costs for a few different reasons. First, his no-till system has very low fuel and equipment costs compared to the rest of the sample. Second, his herbicide costs are much lower than his peers at $13/acre for corn and $17/acre for soybeans. This low herbicide cost may be due to his practice of planting green (although, in some cases, this may also reduce yields).
Table 1. Dwight Dial's 2019 corn crop budgets
| Metrics | No-Till + Cover Crops + Manure Application | No-Till + Cover Crops (Field 1) | No-Till + Cover Crops (Field 2) | |
|---|---|---|---|---|
| Acres | 78.25 | 22.2 | 35.7 | |
| Yield (bu/acre) | 196 | 205 | 233 | |
| Price | $3.55 | $3.55 | $3.55 | |
| Gross Income/Acre | $695.80 | $727.75 | $827.15 | |
| Seed | $64.22 | $64.22 | ||
| Cover crop seed | $13.90 | $13.90 | ||
| Seed treatment/tech fees | $31.93 | $31.93 | ||
| Lime | $0.00 | $0.00 | ||
| Fertilizer – N | $34.00 | $68.00 | ||
| Fertilizer – P&K | $0.00 | $33.17 | ||
| Fertilizer – Other | $92.83 | $0.00 | ||
| Burndown | $27.88 | $27.88 | ||
| Herbicide | $13.10 | $13.10 | ||
| Additives/Other | $3.48 | $3.48 | ||
| Fuel | $0.59 | $0.59 | ||
| Labor | $0.00 | $0.00 | ||
| Repairs | $25.00 | $25.00 | ||
| Machine hire/application | $13.50 | $13.50 | ||
| Equipment | $12.60 | $12.60 | ||
| Direct costs per acre | $345.78 | $320.12 | ||
| Net returns per acre | $350.02 | $407.63 | $507.03 | |
Dwight took a stepwise approach to adopting cover crops based on availability of funding to support new adoption. He has tapped into additional revenue for cover crops by tailoring his approach to meet conservation program requirements (e.g., planting dates, termination timing). He started out using cover crops on a small number of acres to help manage costs and, over time, expanded cover crops to acres that were eligible for specific programs once he better understood the most cost-effective approaches to seed and termination expenses.
Table 2. Dwight Dial's 2019 cover crop costs
CONSERVATION PROGRAMS HELP MITIGATE RISKS
Dwight participates in four different programs that provide payments for implementing specific cover crops or cover crop mixes. Two of these programs – the USDA Natural Resources Conservation Service Environmental Quality Incentive Program (EQIP) and Conservation Stewardship Program (CSP) – are administered at the federal level. Although both of these programs are run through NRCS, they differ in that EQIP is designed for acres that have not previously had a cover crop implemented, and CSP is designed to keep acres cover cropped that had previously been cover cropped by encouraging farmers to “enhance” their existing practices.
In addition to federal programs, Dwight also participates in the North Raccoon Farm to River Partnership, a state program targeted at improving water quality through cover crops and other practices, and receives a $5/acre crop insurance premium discount for cover cropping. Aside from the $5/acre crop insurance premium discount, Dwight can’t receive two conservation payments on the same acre – so different portions of his operation are enrolled in EQIP, CSP, and the Farm to River Partnership.
Collectively, these programs mean that, on a number of acres, Dwight receives approximately $25/acre in financial assistance for cover cropping. While this doesn’t fully cover the costs of implementing the cover crop, Dwight notes a number of other benefits from his soil health management system and sees participating in these programs as one way to partially offset the costs of implementing the practice.
Table 3. Conservation programs that Dwight Dial participates in to offset costs of implementing cover crops/be compensated for his cover crop practices
Even with these expenses, Dwight estimates that his no-till and cover crop system has provided important cost savings compared to the conventional system he used in the past. Table 2 describes the savings he estimates are due to his conservation practices.
Table 4. Dwight Dial's estimated cost savings from conservation tillage and cover crops (negative numbers represent a negative cost savings (i.e., an expense) associated with conservation practices for the crop)
Want to learn more about conservation practices and farm finances?
Dig into our report Conservation's Impact on the Farm Bottom Line!
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