Net returns on cover crop fields are affected by years of experience with the practice
Farmers in our study used a variety of cover crop species and planting methods. Table 1 below describes each farmer’s management goal, years of experience and management strategy for cover crops. On average, per-acre cover crop seed costs for our farmers were $14.86 plus $9.12/acre to apply (though these costs varied widely). This is consistent with a 2019 survey of more than 80 SHP farmers across 11 states who reported median seed and application costs of $15/acre and $12/acre, respectively.
Table 1: Cover crop goals and systems used by participating farmers from Soil Health Partnership
|Farmer Name||Issue they were trying to solve/management goal||Years of experience||Cover crop acres||Cover crop type||Seeding method|
|Ken Rosenow – Wisconsin||Erosion control and community goals of improved water quality||5||204||Cereal rye ($25/acre)||Aerial, contracted ($20/acre)|
|Peter Rost – Missouri||Not provided||5||1,362||Not provided||($15/acre)|
|Ryberg Farms – Minnesota||Soil health and cost savings||7||2,900||Annual ryegrass, hairy vetch, turnip, and rapeseed mix ($4/acre)||Interseeded by broadcast with incorporations, self-applied ($15/acre)|
|Minnesota Farmer||Increase water holding capacity and improve water quality||4||107||Cereal rye ($16/acre)||Drilled, self-applied ($16/acre)|
|Dwight Dial – Iowa||Improve soil health while reducing costs||8||317||Cereal rye and rapeseed mix ($13.90/acre)||Aerial, contracted ($12.75/acre)|
|Gaesser Farms – Iowa||Erosion control||10||4,855||Cereal rye ($7/acre)||Drilled, self-applied ($20/acre)|
|Indiana Farmer||Improve soil structure and reduce erosion||3||188||Oats, crimson clover, radish and rapeseed mix ($25.07/acre)||Aerial, contracted ($10/acre)|
We separated the experienced and recent cover crop adopters (>5 and up to 5 years of experience, respectively) to demonstrate differences in costs that may occur as farmers gain more experience with integrating cover crops into their management systems.
Figure 1 shows a graph of total revenues (tallest, light green part of the bar), production costs (negative, brown part of the bar), and net revenues (total revenues minus costs, indicated by the dark green portion of the bar). Said differently, the dark green bars are the difference between the top number on the graph (the total revenues) and the costs (indicated by the negative bar). This graph and the following one (Figure 2) show that decreased costs – not increased revenues – are driving profitability for experienced cover crop adopters.
When we look at Figure 1, we see that corn fields with cover crops had lower net returns ($307/acre) than fields without ($377/acre) when all farmers are grouped together. Experienced cover croppers had higher net returns ($363/acre) than recent adopters ($267/acre). The experienced cover croppers had higher net returns than fields with conventional tillage and no cover crops ($324/acre).
Figure 1: Net returns for corn, by tillage and cover crop groups
Soybean fields with cover crops also had lower returns ($173/acre) than conservation tillage ($251/acre) and conventional fields without cover crops ($216/acre), but experienced cover crop adopters show substantially higher net revenue ($251/acre) than recent adopters ($123/acre). For soybeans, experienced adopters of cover crops had some of the highest net returns in our study (Figure 2).
Figure 2: Net returns for soybeans, by tillage type and cover crop groups
A note on yield:
In this study, differences in profitability related to cover crops appear to be largely dependent on reducing input costs, since yield differences were not significant in most cases (regardless of whether the comparison was among cover crop users vs. non-users or experienced vs. recent adopters). SHP is conducting cover crop strip trials on several of the farms participating in this study, results of which are included in Figures 3. While these results indicate the potential for a yield boost with cover crops in SHP research trials, any yield differences at the farm scale were not large enough to drive profitability results in this study.
Figure 3: 2019 yield comparison for participating farmers with cover crop trials
The reality of up-front investments in cover crops can’t be ignored
The financial dynamics of adopting cover crops are less straightforward than for conservation tillage. Unlike the immediate equipment, fuel and repair savings found with conservation tillage, working with cover crops often means increased annual costs in the form of seed, labor and machinery – and it takes time to discover the right combination of practices for your farm.
In the short term, cover crop costs often outweigh the readily available benefits (as evidenced by one of the farmers in this study, Indiana Farmer, who is still in the early phase of cover crop adoption). However, when approached as a long-term investment that can provide sustained benefits from soil health and soil function over time, there is evidence1 that the profitability dynamics of cover crops begin to look more favorable.
Even though the long-term benefits of cover cropping are well established2, it is important to measure the short-term costs incurred, understand how these may prevent farmers from adopting this practice, and identify ways to support farmers through the short-term costs in order to realize the long-term savings and benefits. Some key things to keep in mind when it comes to cover crop transitions include:
Although management recommendations for cover crops are improving, there is no “recipe” to follow. Most farmers working with cover crops spend several years experimenting with species mixes, seeding rates, seeding methods, and termination strategies to find what works. Programs like SHP help farmers through this transition period by providing management recommendations, and working together to evaluate how cover crop management decisions are working on their farm.
1See “Cover Crop Economics”, a Sustainable Agriculture Research and Education technical bulletin.
2See “Managing Cover Crops Profitably”, a Sustainable Agriculture Research and Education handbook, for a summary of the research on cover crop benefits.
3Conway, L.S., Yost, M.A., Kitchen, N.R., Sudduth, K.A., Massey, R.E., Sadler, E.J. 2020. Cropping system and landscape characteristics influence long-term grain crop profitability. Agrosystems. 3:e20099.
Farmers With Many Years of Cover Crop Experience Make Cost-Saving Adjustments
Farmers who integrated cover crops and reduced tillage on their operations for more than five years seemed to have fine-tuned their systems and achieved cost savings. They had some of the lowest costs and highest profitability per acre, when compared to other combinations of practices, and had lower costs compared to recent cover crop adopters (Figure 4 and 5).
Figure 4: Per-acre costs by tillage and cover crop groups, corn
Figure 5: Per-acre costs by tillage and cover crop groups, soybeans
Differences in savings between experienced cover croppers and recent adopters came from cover crop seed, total fertilizer, fuel, machinery, and equipment costs. Experienced cover crop adopters saved $9.19/acre on cover crop seed on corn acres compared to recent adopters, $25/acre on fertilizer, and $25/acre on equipment. Experienced adopters had similar cost savings on soybeans, including $5.90/acre on cover crop seed, $48/acre on fertilizer and $28/acre on equipment. Table 2 and 3 present the cost differences associated with cover crop systems, broken up by experienced and recent cover crop adopters.
Table 2: Select input cost categories for experienced and recent cover crop adopters, corn
|Category||Conventional tillage||Conservation tillage||Recent cover crop adopters||Experienced cover crop adopters|
|Cover crop seed||$21.16||$11.97|
|Cover crop planting||$8.79||$6.58|
|Burndown + Herbicide||$33.09||$35.97||$37.35||$51.33|
|Total per-acre input costs||$447.93||$404.40||$461.25||$394.07|
Table 3: Select input cost categories for experienced and recent cover crop adopters, soybeans
|Category||Conventional tillage||Conservation tillage||Recent cover crop adopters||Experienced cover crop adopters|
|Cover crop seed||$15.03||$ 9.13|
|Cover crop planting||$11.50||$8.92|
|Burndown + Herbicide||$33.71||$39.47||$42.69||$39.09|
|Total per-acre input costs||$311.57||$217.07||$356.10||$236.77|
The cost savings experienced adopters see often comes from changes they’ve made over time in their seed mix, application, and equipment as they learned to adjust their systems, as well as potential input savings through cover crop impacts on weed pressure and other factors. Based upon the experiences of more than 100 farmers working with SHP to implement cover crops over a 3-5 year period, these types of adjustments can reduce costs over time through several pathways:
Experienced adopters can find cost savings by changing suppliers or sources, growing cover crop seed on the operation, using a less costly mix that achieves management goals, or reducing seeding rates to a level that provides good coverage without excess seed cost. This choice is related to seeding method and several years of experience, which can both lead to joint cost savings. This is reflected in the $5-10/acre difference in cover crop seed costs between recent adopters and more experienced adopters.
Although cover crop planting costs do not differ between recent and more experienced cover crop adopters in this study, on average, SHP farmers typically experiment with different species and seeding methods in their first 3-5 years of cover crops. Some find that saving time and labor by broadcasting cover crop seed or contracting the aerial seeding of the cover crop is the best fit for their operation; others find that drilling the seed provides the biggest bang for the buck given their geography, soils and labor constraints. These decisions over time could be related to the reduced equipment costs we see in Tables 8 and 9. For example, a decision to contract out cover crop seeding or application can save wear-and-tear on equipment, as well as expenses associated with maintenance. One common method to reduce cover crop planting costs is to combine cover crop seeding with other field operations, such as broadcasting seed with a fall fertilizer application and incorporating with a fall tillage pass that was already occurring.
Fertilizer costs can be reduced through attention to nutrient management or through improved nutrient cycling. Although most farmers in this study were not using legumes as part of their cover crop mix, which provide nitrogen through fixation, cover crops can contribute to keeping soil (and nutrients) in place, as well as to improve nutrient cycling through improved soil health. In addition to these factors, it is common that farmers in the Soil Health Partnership are adjusting soil health practices and nutrient management practices over time – which can contribute to improved nutrient use efficiency as farmers move away from fall applications of fertilizer and toward in-season applications that can be used more efficiently by the growing crop.
Conservation funding programs help farmers make cover crop investments
Farmers in our study used federal, state, and local conservation program funding to support their cover crop systems. These programs include the USDA NRCS Environmental Quality Incentive Program (EQIP) and Conservation Stewardship Program (CSP), the Iowa Cover Crop Crop Insurance Demonstration Project, and state and local watershed programs. EQIP provides per acre cost-share funding for conservation practices, while CSP provides lump-sum cost-share amounts for a total number of conservation acres. The Iowa Cover Crop Crop Insurance Demonstration Project is a collaboration between the Iowa Department of Agriculture and Land Stewardship (IDALS) and the USDA Risk Management Agency. IDALS provides $5/acre for cover crops through a crop insurance premium discount applied by RMA. The table below shows approximate value per acre from these programs received by farmers in our study.
Conservation funding provided by these programs helps reduce risk for recent cover crop adopters as they navigate the process of establishing the best cover crop recipe for their operation. One of our farmer participants, Dwight Dial, demonstrates the important role conservation program funding can play in helping cover crop adopters manage new costs and risks.
Table 4: Conservation Funding Sources
|Funding source||Approximate value/acre||Description of program|
|Environmental Quality Incentives Program (EQIP)||$18-20/acre||USDA’s EQIP program provides cost-share payments (based on state practice rates) to farmers that undertake conservation practices.|
|Conservation Stewardship Program (CSP)||$4-$27/acre||USDA’s CSP program provides five-year contracts for the adoption of new conservation practices and supplemental payments for extended crop rotations.|
|Iowa Cover Crop Crop Insurance Demonstration Project||$5/acre||Provides a $5/acre discount on crop insurance premiums for acres not already receiving a payment for cover crops from some other source. https://apply.cleanwateriowa.org/|
|State or local watershed programs||$20/acre||Watershed-level programs provide cost-share payments for conservation practices that improve water quality.|