But can it be profitable? An initial economic summary of an aspirational cropping system

But can it be profitable? An initial economic summary of an aspirational cropping system

Opening the financial books on the first two years of the Kellogg Biological Station Long-Term Agroecosystem Research.

Introduction

At the Kellogg Biological Station’s (KBS) Long-Term Agroecosystem Research (LTAR) site, current field crop practices, or business-as-usual (BAU) practices, are compared to aspirational (ASP) practices in a system codesigned by scientists and stakeholders (Photo 1). While many production and environmental factors are compared between these systems, a central question being researched is whether a system like the ASP is profitable when compared to conventional management.

The BAU system is based on prevailing practices in Michigan field crops according to producer surveys and United States Department of Agriculture data. This system includes a conventionally tilled and fertilized corn/soybean rotation without cover crops. The ASP system includes a five-crop rotation (corn, soy, wheat, canola and forages), manure application, cover crops, continuous no-till and variable rate fertilizers based on yield stability mapping. Below, we share the initial financial status of the ASP and BAU systems after two years, highlighting both challenges and successes in implementing these management options.

Comparing corn and soy in 2022

Table 1 presents a summary of how corn and soy in the ASP system compared financially to the BAU system in 2022, the first full cropping year of this study. In 2021, all fields were preceded by corn without any cover crops. Key practice differences that affected profitability (Table 1) include:

• In both corn and soy, there were two tillage passes in the BAU system while no tillage passes were made in the ASP system.
• The ASP system included manure as a part of the fertilizer program before corn. Costs of manure include estimated hauling/spreading costs and manure value, proportionally allocated over three years using a 50/30/20% split. Since manure is applied only before corn, it is not included in the 2022 expense for soybeans.
• For corn planting, the ASP system had a lower per acre cost. By using variable rate planting in the ASP system, there was a slightly lower average seeding rate compared to the BAU (an average of 28,000 per acre versus 30,000 per acre).
• In the ASP system, there was an added expense of inter-seeding cover crops when corn was at V6.
• Planting costs were lower in ASP soybeans because seed treatments were not used.
• Handling and drying costs for both corn and soy were slightly different due to yield differences in the BAU and ASP systems.
• Wheat was planted after soy, and there was no cover crop planted or manure applied before soy during the transition year of 2021-2022, so no cover crop or manure costs were incurred in ASP soybean.
• The costs of lime are split over several years. In ASP, one ton per acre of lime is estimated every six years and in BAU, one ton/acre is estimated every three years.
• Soil sampling in the ASP is more expensive than the BAU because ASP fields are grid sampled every three years whereas BAU fields are field/zone sampled every three years.

Overall, the 2022 ASP cost of production for corn was $637 per acre and the BAU cost of production for corn was $773 per acre. For soybeans, the ASP cost of production was $303 per acre and the BAU cost of production was $431 per acre (Table 1).

Comparing systems in 2023

Management choices for corn and soybeans were similar in 2023 compared to 2022. In 2023, herbicide costs were greater in the ASP system for both corn and soybeans. In this system, more tools for weed control were needed to control cover crops and herbicide resistant weeds, whereas tillage in the BAU system addressed these pressures. Overall, the 2023 ASP cost of production for corn was $639 per acre and the BAU cost of production for corn was $779 per acre. In soybeans, the ASP cost of production was $380 per acre and the BAU cost of production was $372 per acre (Table 3).

Comparing profitability so far

In 2023, when comparing the annual per acre profitability of the ASP and BAU rotations, we found that the ASP system’s full rotation profitability was lower than that of the BAU system (Table 4). Maintaining profitability across rotations poses a significant challenge for diversified systems. As management complexity increases and new challenges emerge, balancing various factors and adapting to the situation can be difficult. Overcoming obstacles in implementing new conservation practices or adding crops to rotations may initially decrease overall farm profitability in the early years. This aligns with some trends seen during the initial adoption of conservation practices. The expectation is that the ASP system’s profitability will increase over time, but identifying this tipping point and understanding the associated challenges is a key goal of LTAR research.

In time, we expect that including crops like canola and perennial forages in a more diverse rotation will boost the profitability of subsequent cash crops in future years and that the crops themselves will be more profitable as the system’s challenges stabilize. This is why the long-term nature of this experiment is so important. While we continue to share the current challenges and successes of the system, the long-term nature of this experiment will ultimately provide a holistic and realistic comparison of these management approaches that can’t be observed in shorter timescales.

Financial sustainability is one of the most impactful ways to assess how the ASP system works in practice. Though we haven’t reached the end of a full five-year rotation, we will continue taking the financial “pulse” of the ASP system each year. With each checkup, we’ll continue to evaluate profitability during this transition to innovative, conservation-based crop system management.

Source: canr.msu.edu