Reasons for using cover crops

Most farmers first started using cover crops because of their potential benefits, such as soil health improvement and soil erosion abatement, and due to the availability of outside resources, e.g., education events, conferences and cost-share programs (Fig. 2). Two farmers also mentioned the family tradition of ‘leaving the farm better than the way you found it’. Farmers had expectations that cover crops would lead to fertilizer savings from nutrient recycling and herbicide savings from weed control. One Minnesota farmer, who faced increasing competition from neighboring farmers attempting to outbid him for the farmland he had been leasing for several years, was the first one in the area to use cover crops on rented land as a way to differentiate himself from his neighbors and deter competition based solely on cash rents. One farmer from Minnesota mentioned improvement of water quality as one of the reasons.

Fig. 2. Count of farmers in focus groups citing alternative motivations to use cover crops for the first time (by state).

The most common reason for continued cover crop use was the perceived reduction in soil erosion (Fig. 3). Six out of the eight farmers who had planted cover crops for more than 7 yr stated having seen considerably less soil erosion over the years, especially during excessive rainfall. Farmers also emphasized soil health improvement as an important factor: higher organic matter leading to the higher water holding capacity, increased biodiversity on the field and better soil quality in general. These improvements have the potential of translating into higher cash crop yields in the future. One farmer in Iowa described cover cropping as a risk management tool to protect their main asset, land, from extreme weather events. Another farmer from Illinois perceived cover crops as a legal risk management tool, in the sense that a history of documented conservation practices may considerably reduce the risk of being involved in an environmental lawsuit. The discussion took place while the lawsuit filed by Des Moines Water Works against ten Iowa drainage districts was open (Center for Agricultural Law and Taxation, 2017). A farmer from Iowa also expressed concerns over environmental lawsuits, but citing the algae bloom in Lake Erie, Ohio: ‘I do not understand why there was not a massive lawsuit involved in that. … a friend … said it's just a matter of time until the massive lawsuits start …. They'll take a watershed and they will check every farmer in there and if you've got good documentation on what your practice is, you may avoid being placed in the lawsuit. They may just go down the road to the next one.’

Fig. 3. Count of farmers in focus groups citing alternative motivations to continue using cover crops (by state).

Cost savings were also among the reasons for continued use of cover crops. Three farmers from Illinois expressed a hope of lowering fertilizer costs from nutrient recycling through cover crops. Two of them also reported seeing the effect of cover crops as a weed control mechanism, lowering their herbicide costs. Another reported source of cost savings for a farmer in Iowa producing on hilly ground came from the ability of cereal rye to hold the hog manure in the soil during rain events in the fall. The focus group conducted in Minnesota was not able to discuss the reasons for continued cover crop use because of time constraints.

Changes in crop management practices

Incorporating a new plant species into the rotation system entails new decisions. First, the choice of cover crop species, the approaches for planting and termination depend on the existing rotations, field conditions, weather and costs. Farmers across the three states switched to earlier varieties of soybeans or shorter season corn in order to plant cover crops earlier, and some moved the soybean planting date to an earlier date to accommodate an earlier harvest and therefore an earlier planting date for cover crops.

Farmers from Iowa reported experimenting with different varieties of cereal rye before selecting one with higher growth potential during the winter and a higher cost per bag than the typical bag of cereal rye available in the market. Farmers from Illinois described switching varieties of annual ryegrass after experiencing a failure to winter kill one variety, and the challenge to plant the following cash crop into growing ryegrass in a wet spring. Illinois farmers reported having tried more species and mixes than farmers from the other two states, probably due to the slightly warmer fall and winter temperatures in their area. Farmers in Minnesota have a shorter planting window, and they generally aerial seed cover crops into soybeans and cornstalks. When asked whether they would plant cover crops on all their hectares, a farmer said ‘…if the opportunity presents itself. It's always weather’.

Cover crop adoption also heightened competition for resources such as farm labor and custom-hired services. For example, some farmers custom hire the planting and harvesting of the cash crop so that they can focus on planting and terminating the cover crops themselves. Four out of five farmers from Minnesota mentioned the difficulty of hiring aerial seeding in the early fall, especially when the demand for insecticide application was high; and, as a result, some of them had been moving cover crop planting a few days earlier every year.

Several farmers reported experiencing changes in costs related to cover crop use (Fig. 4). Changes in cash crop seed expenses were associated with changes in planting populations: one farmer in Iowa decreased the cash crop seeding rate with the expectation that the extra nutrients made available through cover cropping would more than offset the negative effect of a lower seeding rate on cash crop yields; another farmer in Iowa increased the cash crop seeding rate because of the potential for slow soil warming in the presence of substantial biomass; and another farmer in Minnesota increased the seeding rate to compensate for a relatively late planting time.

Fig. 4. Direct and indirect effects of cover crops on costs observed by farmers in focus groups since first use of cover crops (count by category and state).

One Iowa farmer had to buy new attachments for the soybean planter because of cover crop residue; other farmers bought tractors or drills for cover crop planting.

Some farmers experienced lower weed pressure and were able to lower their herbicide use. Conversely, one farmer increased the spraying rate and added an extra pass upon hearing rumors about voluntary cereal rye growing after termination.

One Iowa and two Minnesota farmers experienced an outbreak of armyworms in their fields, resulting in higher demand for scouting and insecticide use.

Various changes in fertilizer use, in terms of application time, method and amount, were reported. Changes in fertilizer use had different effects on costs across farmers. For example, three farmers from Minnesota lowered fertilizer costs because of the nitrogen credit, while some Iowa farmers applied extra nitrogen for corn at planting because they believed nitrogen would be tied up in the cover crop residue or increased the amount of phosphorous and potassium. Some farmers moved the anhydrous ammonia application from fall to spring; others applied less in the spring, holding the total amount unchanged.

A major added cost to the operation stemmed from the opportunity cost of time associated with extra management of the cropping system. Farmers reportedly needed to pay constant attention to the cover crops to prevent unexpected situations, or pay more attention to weather around planting and termination times.

Other reported changes in costs were less straightforward. A few farmers started to review their nitrogen programs and conduct soil testing to gather more information about nitrogen usage because of the potential of cover crops to sequester nitrogen. One farmer said: ‘it's not a direct result of the cover crops but … it was the cover crops that instigated the investigation of the soil health and the soil mechanisms.’ Some farmers extended practices that they found to be more efficient into hectares without cover crops as an ‘adaptation to cover crops’. For example, based on his investigation into soil health that started with cover crops, one farmer stopped using hog manure and started using soil samples to determine nutrient needs later delivered through side-dressing applications. These findings suggest that cover crops are associated with more research and experimentation toward integrated management and soil health improvement.

Cover crops also had implications for the tillage system. Four farmers from Minnesota and Illinois stated that they switched from conventional to no-till farming when they adopted cover crops, resulting in considerable savings in cost. Farmers agreed that the adoption of cover crops and the move toward no-till were both parts of the same effort to conserve soil: ‘It could be because of the cover crop. Or it could be that no-till and cover crops go together.’ All participants from Iowa were long-time no-till farmers before starting to use cover crops. The improvement in soil condition led to other cost savings: three farmers eliminated the need to repair soil erosion, while the farmer from Minnesota that faced a competitive farmland rental market successfully used cover crops to negotiate an extension of their farm leasing contract maintaining the rental rate unchanged. Another farmer from Minnesota stated that they were able to renew their farmland leasing agreement because of promises to use cover crops to take better care of the soil, even though the benefit is hard to quantify.

Several farmers reported experiencing changes in revenues associated with cover crop use (Fig. 5). The only source of reduced revenue mentioned by farmers was yield losses in corn and soybeans. All losses occurred following the first or the second time farmers planted cover crops when they were least knowledgeable about this practice. However, some farmers reported higher yields in corn and soybeans after several years of using cover crops, stemming from planting different hybrids or varieties, or from improved soil conditions. One farmer from Illinois believed that they had more consistent stands in the field where they had been planting cover crops for years.

Fig. 5. Direct and indirect effects of cover crops on revenues observed by farmers in focus groups since first use of cover crops (count by category and state).

Other sources of increased revenues were cost-share payments received by farmers and savings in livestock feed costs because of grazing or harvesting cover crops for forage.

A farmer in Illinois who grew wheat as a lower income cash crop to improve soil health reported obtaining similar results in terms of soil health by replacing wheat with cover crops (cereal rye and other grasses) in some acres. Despite losing revenue from the wheat enterprise, he expected an improvement in corn and soybean yields in the fields where cover crops were planted. Farmers in Iowa and Illinois reported seeing improvements in soil health, organic matter content and soil moisture stemming from cover crops use, and they believed that those effects would eventually translate into higher revenues.

Finally, a farmer in Iowa was able to expand his operation by outbidding other farmers competing for the same parcel of land after offering the landowner to plant cover crops on the rented ground as part of the leasing agreement.

Survey questionnaire

An online survey questionnaire to collect information on the changes in costs and revenues associated with the use of cover crops in row crop agriculture was developed based on the focus group discussions. We sent a follow-up online survey to all farmers in the focus groups in order to construct a partial budget for each of them for 2014/15 crop year, and to serve as a pilot survey for a larger project involving a regional survey. Partial budgets capture the net annual economic benefit or loss associated with the use of cover crops by identifying and monetizing the differences in management practices across production systems with and without cover crops (Kay et al., Reference Kay, Edwards and Duffy1994). Partial budgets are designed to answer the question of how profits change when a modification is introduced to a baseline system of production. Since enterprise budgets are used to calculate the profitability of an enterprise, partial budgets capture, in essence, the differences between two enterprise budgets: one for a baseline enterprise (e.g., corn production), and one for another enterprise consisting of the baseline enterprise with some modification (e.g., corn production preceded by cover crops).

Instead of asking directly about changes in costs and revenues, the survey first asked farmers about revenues and expenses in their cropping system with cover crops, and second whether those values were different in their cropping system without cover crops. Finally, if a farmer indicated that a difference existed, the survey then asked for the typical values in their cropping system without cover crops. We designed the display of questions to be conditional upon previous answers to minimize the number of questions presented to farmers.

The first section of the survey collected basic information, such as a number of years of experience with cover crops, total hectares of cover crops planted since starting using cover crops, and whether cover crops were used for grazing or as a forage. The survey instrument then asked which cover crop mix was most extensively planted in the fall of 2014 and the number of hectares planted (as opposed to farmers’ experience with all cover crops discussed in the focus groups). The next section focused on the added costs associated with seed and planting of the cover crop chosen, followed by a question concerning termination. The second part of the survey asked which cash crop was most extensively planted in the spring of 2015 following the cover crop, the number of hectares planted, and the observed differences in yield and other sources of revenues, compared with the typical values without cover crops. The questionnaire then focused on sources of changes in costs, such as planting, fertilizer use, herbicide use and tillage. The last section asked about the cash crop harvested in 2014, preceding the reported cover crop mix.

Some of the questions regarding cash revenues and costs in the survey asked for dollar values, including those about cost-share payment received, seed costs, fertilizer costs, herbicide costs or custom-hired work. For non-cash costs, such as the costs of own machinery, the survey asked about the type of machinery used and the number of field passes. The associated costs were derived from a partial budget tool developed specifically for cover crop budgeting by the Natural Resource Conservation Service (Cartwright and Kirwan, Reference Cartwright and Kirwan2014). The partial budget tool is an Excel^® spreadsheet that asks the user to input information on farm management practices and calculates the net change in profit associated with the incorporation of cover crops into the user-defined cropping system. The partial budget tool includes costs for a list of machineries that served as the basis for our pilot survey.

Our pilot survey also asked for labor hours involved in the activity along with the machinery used. The opportunity cost of added management was calculated as the product of the number of additional management hours from cover crop use for the field under analysis and a US$13.80 h⁻¹ wage rate, divided by the number of hectares managed. The wage rate used for management work is higher than the wage rate for non-management work (US$12 h⁻¹) used in Cartwright and Kirwan (Reference Cartwright and Kirwan2014) to reflect the higher opportunity cost of the former.

To calculate changes in revenue stemming from yield differences, 2015 marketing year average prices for corn [US$138.58 metric ton (mt)⁻¹] and soybeans (US$327.39 mt⁻¹) from the National Agricultural Statistics Service (2017) were used.

Survey results

After two rounds of reminders, 15 out of the 16 focus groups participants completed the survey. On average, respondents had 9 yr of experience with cover crops and had planted 994 hectare (ha) to cover crops over the years by summer 2015 (Table 1). The average number of acres planted to cover crops per respondent in fall 2014 was 186 ha, accounting for 19% of the average total area planted to cover crops over the years. This finding reflects the fact that participating farmers started using cover crops in small test plots, and, as they developed adjustments to their crop management practices, the area planted to cover crops tended to increase. Eleven farmers planted cereal rye and the rest planted annual ryegrass or mixes including radish (Table 2). In 2015, two Iowa farmers and all Minnesota farmers planted corn following cover crops, while all Illinois farmers planted soybeans. During the focus group discussions, one farmer from Illinois mentioned that they had experienced yield losses in corn following annual ryegrass because the field was too muddy. Most farmers terminated their cover crops by herbicide applications, except for two Minnesota farmers who relied on tillage or winter kill.

Table 1. Farmers’ experience with cover crops and planted acres by summer 2015

Table 2. Count of survey respondents by cover crop species, following cash crop and termination method by state

^a Other included annual ryegrass; cereal rye, crimson clover and radish; and oats, radish and hairy vetch.

We calculated the net change in profits associated with cover crops use for each respondent by manually entering the values from the online survey into the digital partial budget tool (Cartwright and Kirwan, Reference Cartwright and Kirwan2014) (Table 3). The use of cover crops in 2014 entailed, on average, an economic loss of US$53.72 ha⁻¹. Calculated net changes in profits ranged from a reduction of US$166.4 ha⁻¹ to an increase of US$163.3, with a median net decrease in profits of US$64.06 ha⁻¹.

Table 3. Changes in revenues, costs and net returns for survey participants, in US$ ha⁻¹

^a Most farmers applied herbicides to all their acres in spring and therefore incurred in little to no extra herbicide costs to terminate cover crops. One farmer relied on winterkill to terminate cover crops, so no extra termination cost was assigned to that farmer. Another farmer used tillage to terminate cover crops, but since this farmer used rotational tillage in all his hectares, the extra termination costs were null.

The main drivers of added costs were cover crop seed and planting expenses. The costs for cover crop termination were relatively low, on average. However, termination costs varied substantially across farms, depending on the termination method and the typical pre-plant spring management practices. Thirteen farmers used herbicides to terminate cover crops, but 11 of them typically apply a pre-plant burn down to all their fields irrespectively of the use of cover crops. Consequently, little to no additional herbicide costs were associated with cover crops for those 11 farmers. The other two farmers incurred termination costs ranging from US$34.2 to 42.5 ha⁻¹. The termination costs for farmers that relied on winter kill or used tillage to terminate cover crops were null. In the latter case, the farmer used rotational till on all his acres (with and without cover crops), and tillage was an expense that would have been incurred irrespectively of cover crops use.

Nitrogen use, herbicide use and tillage contribute to increased costs for some farms and reduced costs for some other farms (see the range of values reported for those variables in Table 3), in line with the conclusions reached in the focus group discussions. However, the median changes for those variables were zero.

Cost-share program payments and yield increases generated average increases in revenues of US$28.99 and 22.14 ha⁻¹, respectively. Only one farmer reported extra revenue from grazing cover crops, at a rate of US$24.7 ha⁻¹ in 2015. However, the median changes in revenues due to yield increase or grazing across survey respondents were zero. No farmer reported decreases in revenue in 2015 due to cover crops.

The net returns to cover crop use were positive only for one farmer in Iowa and two farmers in Minnesota (Fig. 5). They all reported yield increases and modest cover crop seed costs, two received cost-share payments and one of them is the only farmer who reported added revenues from grazing. Eleven out of 15 farmers reported increases in management hours, although the calculated extra costs per hectare (calculated as extra management hours per year multiplied by a wage rate of US$13.8 h⁻¹, and divided by the number of hectares planted to the following cash crop) were relatively low. Only three farmers reported saving costs from soil erosion repairs in 2015 due to cover crops use, with an average of US$17.90 ha⁻¹. Cost-share payments received by eight farmers averaged US$54.40 ha⁻¹. The four farmers with larger than average cover crop seed expenses (US$50.41 ha⁻¹) were the ones who experienced the largest reductions in profits per hectare due to cover crop use. However, no distinct cost patterns were observed across cover crop species or states due to the small sample size.

We attempted an analysis of net changes in profits for different configurations of costs and revenues (Table 4). Interestingly, the net changes in profits for three out of the four farms that experienced cash crop yield increases in 2015 due to cover crop use were positive, and the average increase in profits across the four farms amounted to US$35.20 ha⁻¹. No other configuration of changes in costs and revenues resulted in average increases in profits for the farmers in the sample.

Table 4. Net change in profits for alternative costs and revenues configurations