THE ECONOMICS OF CONSERVATION & CONSERVATION TILLAGE
Larry D. Sanders[1]
INTRODUCTION
At first glance, any conservation measure such as conservation tillage[2] can be viewed as simply another production decision for the producer: “Will it improve my profits?” However, the purposes of changes in agricultural production practices generally fall into at least one of three categories: (1) to achieve improved profitability, a private economic decision for the individual producer and landowner; (2) to satisfy a lifestyle of the producer, a private non-economic decision for the individual producer; (3) and/or to improve or preserve ecosystem characteristics, a public decision with possible benefits to society, and benefits or costs or both to the individual producer and landowner. Depending on the situation, conservation tillage may fall into all three of these categories. This paper will briefly review the concept of conservation tillage as practiced in the United States in recent years, provide background on the cultural and political economy of soil conservation and tillage practices, summarize selected studies regarding the economics of adopting such practices, and suggest areas for further study.
BACKGROUND
The value of and need for soil conservation practices has been an important part of the agricultural history in the United States. As settlers moved west and south, they often found through bitter trial and error that many soils were too fragile for intensive production practices. Following on the heels of the Dust Bowl of the early 20th Century, research by public institutions and private producers resulted in the development of a variety of conservation practices. Over the past few decades, refinements have been made in conservation tillage practices. One researcher has suggested that changes in tillage systems resulted from changes in machinery and the development of chemical herbicides.[3]
The bottom line for the producer, however, remains the bottom line—profits. If conservation is profitable, there is a likelihood the practice will be adopted. The producer reduces or eliminates cultivation while increasing the use of chemicals such as herbicides, and yields typically suffer. The hope is the net gain will be positive. When the market provides the profit incentive, so much the better. Often, however, the market does not value such a practice and it is up to society through public programs to provide incentives. This has occurred in various forms in the United States over time. Research, demonstration plots and extension education are examples of free public services provided as incentives. Cost-share programs through state and federal agencies have also provided incentives.
Public programs such as the Conservation Reserve Program (CRP) of the federal 1986 farm act provided subsidies to actually take land out of production for 10-15 years. As such contracts have com to their end, producers have been faced with options of requalifying for new CRP contracts, returning the land to crop production, or finding alternative uses for the land. When producers consider returning the land to crop production, there is the obvious opportunity to move directly into conservation practices such as conservation tillage. In some cases, this may even be a necessity because of conservation compliance requirements for participation in all government programs[4]. It is critical that the producer evaluate the economic alternatives and consequences.
From anecdotal evidence, the decision to implement new practices such as conservation tillage is not purely an economic decision. Often, there are psychological and cultural barriers such as “the way its always been done”, or peer pressure of how to farm and how a clean field should look. Another term used for conservation tillage is “trash farming”, suggesting a negative, unappealing practice. Even when economic evaluation seems to support conservation tillage, consideration about the assumptions related to prices, markets, weather, new equipment purchases, soil condition and types, and skill building are critical. [5]
ECONOMIC FACTORS
A sampling of studies has been reviewed and are summarized here. Most research has shown that costs such as fuel (perhaps 50%) and labor (perhaps 40%) can be lowered, while some costs may increase at least initially such as chemical and equipment and management costs. The primary trade-off comes with yield reduction. Studies on conservation tillage applied to cotton production in the southeastern US generally suggest little difference in yield or net revenue in the early years of establishment, but higher net revenue for conservation tillage over the long term (Bryant, 1998). In Arkansas, when yield varied, so did net revenue. Where labor saving were realized with conservation tillage in Tennessee, it was more economical than conventional tillage. A two-year study of cotton fields in Texas showed net returns for conservation tillage even when yields were lower (Smart et al. 1999).
Survey analysis in Oklahoma suggested that producers would lose money if adopting no-till as they returned to wheat or sorghum crop production upon completion of a CRP contract of 10 years (Sanders, Hobbs, Hutson; 1997). Government subsidies would be necessary to make the decision pay. Another Oklahoma study over a 10 year period (Epplin et al. 1994) indicated that alternative tillage methods were less economical than moldboard plow clean tillage. In fact, the no-till system was the least economical. This study did note a limitation of the findings was that external benefits and costs were not evaluated. Continuous monoculture winter wheat for grain with no rotation has not been found to be economical for conservation tillage, primarily because of the cost of herbicides. Some researchers do suggest that technological innovations, especially with genetically-enhanced seed, may allow significant reductions in the cost conservation tillage practices.
A Missouri sustainability study showed alternative tillage practices using ridge till to be more economical than conventional farming (Ikerd et al, 1996). The study did note additional non-valued benefits of decline in topsoil loss and supportive of a larger community economy with the ridge till. Another study in Missouri suggests that where conservation tillage does not work well, profits can be maintained by shifting out of crop production and into livestock grazing (Monson and Ikerd, 1993). An Indiana study of corn and soybean production concludes that switching to no-till increases profits (Doster et al, 1996). This study also noted that, while leasing arrangements may complicate the conservation tillage decision, skilled producers can still benefit.
Often noted but seldom economically evaluated are the physical environmental impacts such as topsoil protection, water conservation, increased and decreased chemical use, and energy conservation. One study indicates that CO2 loss declined as more conservation tillage takes place (Reicosky, 1997; Veseth, 1998). Carbon sequestration may enhance environmental quality. National data suggest that residue remaining after planting has continued to increase over the past decade as more acres are submitted to conservation tillage practices (USDA-NRCS, 1999).
SUMMARY AND CONCLUSIONS
Conservation tillage practices are increasing in the United States, and for good reasons. The majority of economic studies in recent years suggest that such practices are more profitable, especially over a longer period of time. The federal government continues to provide incentives to increase adoption. And, while little economic evaluation of environmental benefits have been conducted, studies suggest there are net benefits, at least to society. The government subsidies may be a pecuniary proxy for shadow pricing such benefits.
The mixed results of some studies does also suggest, however, that conservation tillage success varies by location, commodity, producer skills and other factors. The message seems to be that producers will need to continue to evaluate the alternatives and consequences with varying assumptions, and the government will need to decide whether and how quickly it wants adoption to take place and environmental benefits, if any, to be captured.
It is especially important to note that consideration of widespread adoption of conservation tillage in other geographic zones (such as Mexico) will require further research in such areas as the following:
(1)the suitability of various tillage techniques;
(2)adoption in various soil types, weather conditions and producer skill levels;
(3)availability of special tillage equipment, appropriate chemicals, and genetically-enhanced seed;
(4)the potential for government programs to subsidize adoption and education; and,
(5)varying economic conditions such as markets, input and output prices, and macroeconomic conditions.
REFERENCES
Bryant, K.J. “Economic Results of Conservation Tillage in Cotton”, University of
Arkansas, Cooperative Extension Service Fact Sheet, 1998.
Doster, D.H., S.D. Parsons, D.R. Griffith, E.P Christmas. “Tillage Economics,
One-Planter Versus Two-Planter Systems: A Comparison of Conventional
And No-Till Tillage for Two Farm Sizes”, Purdue Cooperative Extension
Service, ID-211, 1998.
Epplin, F.M., G. A. Sakkaf, T. F. Peeper. “Impacts of alternative tillage methods
For continuous wheat on grain yield and economics: Implications for con-
Servation compliance”, Journal of Soil and Water Conservation, 49(4),
394-399, July-August 1994.
Ikerd, J., G. Devino, S. Traiyongwanich. “Evaluating the sustainability of alterna-
Tive farming systems: A Case study”, American Journal of Alternative
Agriculture, 11:25-29, 1996.
Massey, R.E. “No-Tillage and Conservation Tillage: Economic Considerations”.
Commercial Agriculture Program and Department of Agricultural
Economics, University of Missouri, Cooperative Extension Service,
Agricultural Publication G355, December 1997.
Monson, S. and J. Ikerd. “Assessment of Changes in Missouri Farming Systems
Needed to Reach T by 2000,” Special Research Project Report to
Missouri Soil and Water Conservation Districts Commission, Missouri
Department of Natural Resources. 1993.
Reicosky, D. “Conservation Tillage and Carbon Cycling: Soil as a source or
Sink for Carbon”, USDA-Agricultural Research Service, North Central
Soil Conservation Research Laboratory, Morris, Minnesota, 1997.
Sanders, L.D., J.C. Hobbs, A.L. Hutson. “The Conservation Reserve Program:
The Economic Alternatives and Consequences for Northwest and
Southwest Oklahoma”, Department of Agricultural Economics, Oklahoma
State University, and Oklahoma Cooperative Extension Service,
Unpublished monograph for extension presentation, 1997.
Smart, J.R., J.M. Bradford, T. Lockamy, E. Perez. “Economic Analysis of
Conservation Tillage on Producer Fields”, USDA-Agricultural Research
Service, March 1999.
United States Department of Agriculture- Natural Resource Conservation
Service.
--see website for definition:
--“Conservation Tillage Systems”, Job Sheet JS 329 01, October 1996.
--“Residue Remaining After Planting”, Conservation Technology
Information Center, National Crop Residue Management Surveys.
University of Guelph. See website:
Veseth, R. “Farming Practices Conserve and Improve Soil”, PNW Conservation
Tillage Handbook Series, Chapter 2-Systems and Equipment, No. 10,
Spring 1998.
1
[1]Author is Professor and Extension Economist, Department of Agricultural Economics, Oklahoma State University, Stillwater, Oklahoma. Paper prepared for presentation at International Symposium on Conservation Tillage, Mazatlan, Mexico, 25-26 January 2000.
[2]The Natural Resource Conservation Service, US Department of Agriculture, defines conservation tillage as “any tillage and planting system in which at least 30 percent of the soil surface is covered by plant residue after planting to reduce soil erosion by water, or where soil erosion by wind is the primary concern of at least 1,000 pounds per acre of flat small grain residue equivalent are on the surface during the critical erosion period.” In common usage, conservation tillage refers to to little or no tilling of the soil, keeping residue on or in the soil to hold it to the land. Specific types of conservation tillage include no-till, minimum-till, stubble mulch, strip till and ridge till.
[3]Correspondence with Dr. Francis Epplin, Oklahoma State University, suggests this finding from a review of the literature.
[4] Conservation compliance has been required as part federal government program participation since 1990. Compliance requires the producer to have a conservation plan approved by USDA-NRCS if engaging in crop production and participating in government programs.
[5] Doubts about such assumptions suggest caution by producers and may necessitate sensitivity analysis by the analyst.