- Richard Haack, Deloitte Haskins & Sells, Guelph, Ontario
Evaluation Summary(Tech. Transfer Report Summaries)
View / Download Final Report [128 KB pdf]
Associated SWEEP/LSP Research
Completed: August, 1989
conventional tillage, conservation tillage, costs, returns, economics,
corn, soybeans, winter wheat, barley, reduced tillage, minimum tillage,
yields, no-till, fuel, labour, risk, model, Tillage 2000, revenue
Deloitte Haskins & Sells undertook an evaluation of the costs and returns
associated with a range of conventional and conservational tillage practices
incorporated in the Tillage 2000 program.
The analysis incorporated results from 1986 to 1988 for corn, soybeans,
winter wheat and barley.
Key findings are that:
Reduced (minimum) tillage practices produced generally higher yields
and higher net returns per acre in corn, barley and winter wheat than
No-till practices typically resulted in lower yields and higher direct
input costs per acre for all crops. At the same time, significant machinery
and labour savings resulted in higher net returns to no-till than conventional
or reduced tillage in winter wheat and equivalent net returns to conventional
practices in corn.
No-till and reduced till practices also had the same or a higher level
of probability of achieving the same level of net returns in corn as conventional
practices. That is, there was no greater level of financial risk in using
reduced or no-till practices relative to conventional practices.
High returns to labour for the no-till and reduced tillage practices
are evident and could well prompt farmers with high "opportunity costs"
to labour to beneficially switch to these practices. That is, farms with,
labour shortage or difficulties at key work times;
higher returns to labour inputs in other enterprises e.g. dairy;
high returns from expanding the crop enterprise or the total farming
(From Technology Transfer Report Summaries - A. Hayes, L. Cruickshank,
The main objective of this study was to test the data management system,
and economic evaluation models Deloitte Haskins & Sells developed for the
SWEEP program. The Tillage 2000 data was used for the test. The test would
allow evaluation of ease of operation, accuracy of results and the need
for refinements to the model. The other objective of the project was to
provide stakeholders with preliminary economic evaluation results of Tillage
2000 in a manner that will be consistent with the results to be generated
for the rest of the SWEEP program.
The Tillage 2000 data from 1986-1988 was analyzed for corn, soybeans,
winter wheat, and barley. The range of tillage systems used in T-2000 were
grouped into three classifications: conventional tillage (CT), reduced tillage
(RT) and no-till (NT). The data for corn was analyzed two ways: (1) paired,
where side-by-side treatments of CT-RT, CT-NT, RT-NT were kept together
and (2) aggregate, the data was put into one of the classifications and
analyzed across all fields. The other crops were analyzed by method 2 due
to the lack of data on those crops. The machinery costs for corn were also
calculated two different ways: (1) purchase price - based on purchase price,
age, interest rate and annual usage and (2) trade-in value. The trade-in
value approach lowered the machinery cost component somewhat and narrowed
the range of cost variability between farms.
The data management system performed well and provided necessary calculations
for the financial simulation.
The study found that the adoption of reduced tillage practices produced
generally higher yields and higher net return per acre in corn, barley,
and winter wheat. In soybeans, yields and net returns were marginally lower
than conventional practices. No-till practices typically resulted in marginally
lower yields and higher input costs per acre. At the same time significant
machinery and labour savings resulted in significantly higher net returns
per acre compared to conventional and reduced tillage practices in winter
wheat and equivalent net returns to conventional practices in corn.
The returns to labour for no-till and reduced tillage practices tended
to generate equivalent results particularly for corn. However, in winter
wheat returns to labour with no-till exceeded reduced and conventional tillage
practices. The financial risk analysis for alternative tillage practices
on corn indicates that reduced tillage is the least risky and that conventional
and no-till practices are equivalent, with respect to net returns per acre.
However, with respect to returns to labour, no-till is least risky compared
to reduced and conventional tillage practices.
For soybeans only, it appears that conventional tillage practices generate
higher net returns per acre compared to current reduced or no-till practices,
however, the difference between conventional and reduced is marginal and
likely not significant. Using the returns to labour criteria for soybeans,
reduced tillage provided higher returns compared to conventional tillage
practices. The use of "paired" or "unpaired" Tillage 2000 data for corn
provided similar results, and did not affect the general conclusions of
the economic analysis.
The authors concluded that there appears to be no ideal way of incorporating
a calculation of machinery costs into an evaluation of net returns, particularly
when comparing field-based demonstration plots.
The report provides a reasonable overview of the economics of tillage
systems. However, the shortage of data for all crops particularly for no-till
result in numbers that are somewhat different than U.S. studies. Concerning
data analysis method 2: aggregating observations into groups of no-till,
reduced till and conventional till has the advantage of increasing the sample
size but has the disadvantage of masking the effect of soil type and other
site and management factors. The paired results were similar to the unpaired
results but normally that would not be expected. There were difficulties
in determining realistic machinery costs.
The winter wheat data appears to have a slight interpretation problem
as cost of spring operations is higher in the spring than fall for reduced
till and no-till. This does not affect the final outcome just those individual
costs. Also the fertilizer costs for winter wheat appear to be at least
double what one would expect.
It is interesting to note that no-till yields could be as much as 5 bu/ac.
lower than conventional tillage and still have similar or higher net returns.
Also the results show the high return to labour of no-till systems in particular.
This would be of interest to farmers who may wish to spend their limited
time farming more acres, running a livestock enterprise or working off-farm
etc. Generally the results are encouraging.
SWEEP Report #3 - An Economic Assessment of
the Distribution of Benefits Arising from Adoption of Conservation Tillage
Practices in Crop Production in Southwestern Ontario.
SWEEP Report #11 - An Economic Evaluation of
Tillage 2000 Demonstration Plot Data (1986-1989).
SWEEP Report #15 - An Annotated Bibliography
of Socio-Economic Soil and Water Conservation Research.
SWEEP Report #32 - Optimal Herbicide Use in
Conservation Tillage Systems
Future Research: ( ) indicates reviewers suggestion for
priority, A - high, C - low.
(B) The Tillage 2000 data from the five years of the study could be analyzed.
More studies need to be done into the economics of conservation, the risks
involved and the costs of switching systems. The analysis could be repeated
with a large group of farmers with several years of experience to give a
more realistic picture of the economics of conservation tillage systems.
Thursday, May 19, 2011 01:16:31 PM