Balancing On-Farm Conservation and Economic Priorities

Agricultural conservation practices are pivotal to addressing some of agriculture’s most important natural resources concerns. At the same time, it is critical that farmers run profitable businesses and that environmental stewardship priorities support farm profitability. 

To expand on growing information around the profitability of conservation agriculture, Soil Health Partnership (SHP), Environmental Defense Fund (EDF) and K·Coe Isom collaborated to evaluate the financial impact of conservation tillage and cover crop usage among Midwest corn and soybean farmers.

The goals of this project were to:

Compare crop budgets for fields using conventional vs. conservation practices

Identify benefits, opportunities and limiting factors associated with common conservation approaches

Help farmers and their business partners better understand the financial dynamics of conservation practice adoption

Throughout 2020, the project team collected information about farm operations, management practices, and financial data, which was then analyzed to identify the impact on each farmer’s bottom line.

Findings At a Glance

Based on the information collected, we identified three key financial impacts of implementing conservation practices among our participating farmers.

Click on the arrow to expand or close the section.

In the face of a challenging farm economy, reducing costs of production can be one way for farmers to improve profitability. By reducing or eliminating tillage, growers were able to reduce operating costs. In our study, growers practicing conservation tillage had higher net returns and lower per-acre costs than fields under conventional tillage for both corn and soybeans. Cost savings largely resulted from fuel and oil, machinery, equipment and repair expenses.

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About the Farmers

Ken Rosenow – Wisconsin

  • Crops: corn, soybeans and wheat
  • Acreage: 1,100 acres
  • Tillage Practices: no-till, conventional till
  • Cover Crop Practices (204 acres): aerial-seeded cereal rye

Peter Rost – Missouri

  • Crops: corn and soybeans
  • Acreage: 3,500 acres
  • Tillage Practices: reduced tillage
  • Cover Crop Practices (1,362 acres)

Ryberg Farms – Minnesota

  • Crops: corn, soybeans and sugar beets
  • Acreage: 4,800 acres
  • Tillage Practices: strip-till, no-till
  • Cover Crop Practices (2,900 acres): interseeded annual ryegrass, hairy vetch, turnips and rapeseed by broadcast with incorporation

Brian Ryberg of Ryberg Farms saw substantial savings by implementing conservation tillage. Learn more about his experience >>

Minnesota Farmer

  • Crops: corn and soybeans
  • Acreage: 914 acres
  • Tillage Practices: no-till, reduced tillage, conventional tillage
  • Cover Crop Practices (107 acres): drilled cereal rye

 

Dwight Dial – Iowa

  • Crops: corn and soybeans
  • Acreage: 640 acres
  • Tillage Practices: no-till
  • Cover Crop Practices (317 acres): aerial-seeded cereal rye and rapeseed

Dwight is an experienced adopter of cover crops. Learn more about the role experience plays in cover crop profitability >>

Gaesser Farms – Iowa

  • Crops: corn and soybeans
  • Acreage: 5,000 acres
  • Tillage Practices: no-till
  • Cover Crop Practices (4,855 acres): drilled cereal rye

Chris Gaesser of Gaesser Farms is an experienced adopter of cover crops. Learn more about the role experience plays in cover crop profitability >>

Indiana Farmer:

  • Crops: corn and soybeans
  • Acreage: 5,800 acres
  • Tillage Practices: strip-till, no-till, conventional tillage
  • Cover Crop Practices (188 acres): aerial-seeded oats, crimson clover, radish and rapeseed

Indiana Farmer is an early adopter of cover crops. Learn more about the role experience plays in cover crop profitability >>

Participating farmers were offered the option to remain anonymous. Farmers who requested to be anonymous (2/7) are referred to based on the state in which they reside and described by their farming practices and the financial and management data they provided through the project.

Why Digging Into Farm Financial Data is Important

Conservation practices can be profitable, but do not pay for themselves in all situations. The business case for adopting these practices is complex and variables that differ across farms – including soil type, precipitation, geography and crop rotation – can alter the optimal financial conservation system. However, as this and other studies have shown, adopting conservation systems can be profitable and can provide solutions for natural resource and management challenges. It is therefore important to provide more and increasingly refined financial information about conservation practices to farmers from different geographies, farm sizes, and crop productions.

Financial information on conservation practices is especially important for stakeholders to gather and communicate, since groups across the agriculture sector are raising their sustainability ambitions and looking to invest in environmental solutions. But, like any other investment, financial support for adopting agricultural conservation practices must be informed by the underlying costs and benefits that occur over time. Gathering financial and management data to better understand the financial impacts of conservation practices can help develop solutions that effectively provide the financial support farmers need to achieve profitable conservation management systems.

With that in mind, we encourage stakeholders across the agriculture sector – including federal and state agencies, farmer associations, agricultural lenders, food and grain supply chain companies, and conservation organizations – to integrate financial data gathering within their programs to inform their conservation solutions and to support farmers in establishing profitable conservation systems.

Our Project Team

SHP-logo

Soil Health Partnership

SHP is a program of the National Corn Growers Association, dedicated to promoting the adoption of soil health practices among farmers. By building a peer-to-peer network – which, to date, spans more than 16 states and includes more than 200 growers – we collaborate with farmers to conduct on-farm research exploring the economic and environmental benefits and risks of soil health practices.

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EDF-logo

Environmental Defense Fund

EDF is a leading international nonprofit organization on a mission to create transformational solutions to the most serious environmental challenges. EDF links science, economics, law, and innovative private-sector partnerships in order to maximize the impact of our efforts. EDF’s agricultural finance work includes farm budget analyses, financial solutions, and agricultural finance policy.

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Project Team Members:

Vincent Gauthier

KCOE-logo

K·Coe Isom

K·Coe Isom is the nation’s leading agricultural business advisory firm serving the food and agricultural sector. To develop a deeper understanding of the financial impact of conservation on the farm businesses in this report, K·Coe Isom’s AgKnowledge professionals worked with farmers to make accrual adjustments to determine the relevant cost/benefit analysis. AgKnowledge is a managerial accounting and advisory service that serves farms and ranches.

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Our Data Collection Process

The project team took a multistep approach to gather, analyze and report on the data and findings, which we have outlined below. You can also visit EDF’s report “A practitioner’s guide to conducting budget analyses for conservation agriculture,” which covers best practices in collecting economic data and informs our work.

Farmer-process-chart-SVG

Click on the arrow to expand or close each section and learn more about our data collection process.

Farmers were recruited through SHP’s grower network and K·Coe Isom’s client base based on the following criteria:

  1. Located in the Midwest
  2. Grow corn, soybeans, and/or wheat
  3. Have at least three years of experience with conservation practices
  4. Willing to share information from detailed management and financial records, including those dating back to before the adoption of conservation practices
  5. Attend one virtual workshop session introducing the data-gathering process
  6. Available and willing to work with SHP Field Managers and K·Coe Isom staff to complete questionnaire and discuss answers

Summary of Participating Farmers

*Participating farmers were offered the option to remain anonymous. Farmers who requested to be anonymous (2/7) are referred to based on the state in which they reside and described by their farming practices and the financial and management data they provided through the project.