<p>For agricultural
soils to be perpetually productive, farmers must maintain and improve the
physical, chemical, and biological properties of the soil. The loss of soil to erosion is a major challenge
to soil health, contributing to farmland loss and declines in productivity. This
is a long-term problem for agriculture because there is a limited amount of
topsoil available. Another costly loss happens when<em> residual nitrogen is lost to leaching or
carried away in runoff. This is a particular problem in the fall and winter
months when fields lie fallow, and there are no plants to take up excess
nitrogen. Losing nitrogen is a problem for both the nutrient content of the
soil as well as a serious concern in terms of water contamination.</em><em> </em>Cover crops provide a
way to at least partially address each of these and many other agronomic and
soil health issues. Although there has
been a steady increase in cover crop use, adoption has been relatively slow. This
is likely due to a lack of economic information and understanding of the
associated risk. To address this problem, field level data was gathered from farmers
across central and northeastern Indiana. The data included information on cash
crop yield, cover crops grown, fertilizer use, among many other variables. The
sample was trimmed based on the estimated propensity to cover crop, in order to
reduce selection bias. Using this data, the effect of cover crops on the mean
and variation of the subsequent cash crop yield was estimated using regression
analysis. This information was combined in a stochastic analysis of a farm enterprise
budget. The effects of cover crops on farm finance and risk were evaluated. These
final analyses provide agricultural producers with more information to make informed
decisions regarding the adoption of cover crops. The information may also
provide insight to policy makers, who may wish to understand more completely
the private economics of cover crops. The results indicated
that cover crops have the ability to provide economic benefits when grown prior
to corn in our study region. These include increased yield, reduced need for
nitrogen fertilizer, and increased temporal yield stability. These benefits
translate into higher revenue from the sale of the grain, lower input costs,
and lower risk and uncertainty. However, the results for soybeans showed cover
crops had a negative, albeit statistically insignificant, effect on desirable
measures. This led to lower projected revenue, higher projected costs, and
increased expected risk. Even so, the average corn-soybean contribution margin
with cover crops was nearly equal to the baseline scenario. Furthermore, the
analysis of risk showed that the corn-soybean two-year average would be
preferred by farmers with moderate to high risk aversion. The difference
between the effect of cover crops in corn and soybeans may be due to
differences in the crop’s inherent nitrogen needs and the difficulty of cover
crop establishment after corn in the region.<br></p>
| Identifer | oai:union.ndltd.org:purdue.edu/oai:figshare.com:article/9037517 |
| Date | 02 August 2019 |
| Creators | Andrew Anderson (7038185) |
| Source Sets | Purdue University |
| Detected Language | English |
| Type | Text, Thesis |
| Rights | CC BY 4.0 |
| Relation | https://figshare.com/articles/The_impact_of_cover_crops_on_farm_finance_and_risk_insights_from_Indiana_farm_data_using_econometric_and_stochastic_methods/9037517 |
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