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SWEEP Report #11

An Economic Evaluation Of The Tillage 2000 Program
In Ontario

Researchers:
Richard Haack, Deloitte & Touche, Guelph, Ontario

Executive Summary

Evaluation Summary (Tech. Transfer Report Summaries)

View / Download Final Report  [173 KB pdf]

Associated SWEEP/LSP Research

 

 

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Completed: August, 1990

Key Words:

conventional tillage, conservation tillage, costs, returns, economics, corn, soybeans, winter wheat, small grains, reduced tillage, minimum tillage, yields, no-till, fuel, labour, risk, model, Tillage 2000, revenue

Executive Summary

Deloitte & Touche 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 1989 for corn, soybeans, wheat and spring grains, on sandy, loamy, fine, silty and clay textured soils. Tillage 2000 has demonstrated a BOLD relationship between soil texture and the ease of adopting a conservation tillage system. Any analysis of the data should consider the effect that soil texture has on the success of conservation tillage systems. A detailed analysis of Tillage 2000 is available in the Tillage 2000 1989 Progress Report.

Key findings are that:

  1. No-till and reduced tillage practices incorporated in the Tillage 2000 program are competitive with conventional tillage practices in corn and winter wheat.

  2. No-till and reduced tillage practices incorporated in the T-2000 trials were less competitive than conventional practices in soybeans and spring grains.

  3. No-till provides producers with realistic potential for significant labour savings and equipment cost savings when used in corn. Moreover, no-till cropping operations would be more viable on farms with high opportunity costs to labour.

Specifically, farms with high opportunity costs to labour include the following examples:

  1. labour shortage or difficulties at key work times;

  2. higher returns to labour inputs in other enterprises, e.g. dairy; and

  3. high returns from expanding the crop enterprise or the total farming enterprise.

Evaluation Summary

(From Technology Transfer Report Summaries - A. Hayes, L. Cruickshank, Co-Chairs)

The objectives of this project were:

  1. To test the data management system and economic evaluation models developed by Deloitte & Touche for the farm level economic impact assessment of alternative soil conservation practices.

  2. 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.

A similar study was done on the 1986-1988 Tillage 2000 data and the results are found in SWEEP Report #10.

The Tillage 2000 data from 1986-1989 was analyzed for corn, soybeans, winter wheat, and spring grains. 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 study found that the adoption of no-till practices produced equivalent net returns per acre in corn to conventional tillage. The adoption of reduced tillage practices produced generally higher yields and higher net returns per acre in wheat. On soybeans and spring grains, yields and net returns were lower for conservation tillage practices than conventional practices. Overall, although no-till practices resulted in marginally lower yields and higher input costs per acre, a significant machinery and labour savings with no-till resulted in significantly higher net returns per hour compared to conventional practices in corn and wheat.

For soybeans and spring grains, conventional tillage practices generated higher net returns per acre compared to reduced or no-till practices, however, the difference between conventional and reduced was marginal and likely not significant given the small number of observations. 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 results of this analysis differ from the previous report as follows:

  1. no-till produced the equivalent net returns per acre for corn compared to conventional tillage practices;

  2. conventional tillage produced the highest net returns to labour for soybeans;

  3. conventional tillage produced the highest net returns per acre for spring grains; and

  4. reduced tillage produced the highest net returns per acre for wheat.

Comments:

The Tillage 2000 database is reliable but it is important to remember that most of the cooperators had little experience with conservation tillage before starting the project. This has a number of implications with respect to weed control. Higher herbicide rates, poor timing of herbicide application, poor choice of herbicide and rescue treatments often resulted in higher herbicide costs for conservation tillage particularly in no-till. These extra costs ranged from $2-5 for corn, $5-25 for soybeans, $5-17 for small grains, $0-2 for winter wheat. 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 if 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.

Weed control (particularly in soybeans) combined with poor planter set-up and other management problems can have a negative effect on yield. The results of the analysis probably provide a good idea of the economics during the transition period from conventional tillage to conservation tillage. Other studies and experienced conservation farmers report equal or better yields and net returns for conservation tillage compared to conventional. They also report that weed control costs are similar or lower after a few years.

Interestingly, 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.

The winter wheat data appears to have similar problems in this study as in the last study (spring operation costs higher than fall and high fertilizer costs).

Associated SWEEP/LSP Research:

  • 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 #10 - An Economic Evaluation of Tillage 2000 Demonstration Plot Data (1986-1988)

  • 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. Study tied into herbicide research.

 

 

 

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Created: 05-28-1996
Last Revised: Thursday, May 19, 2011 01:27:36 PM