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1999 STEEP III Progress ReportRESEARCH PROJECT TITLE: Managing the Economic Transition to No-Till Farming in the Pacific Northwest INVESTIGATORS: Douglas Young (Co-PI),
Hong Wang (Co-PI), Department of Agricultural Economics, WSU. Cooperators
are Herbert Hinman, Department of Agricultural Economics, WSU; Dennis
Roe, USDA-NRCS; Dave Bezdicek, Tim Fiez, Eric Gallandt, Robert Papendick,
William Schillinger, Department of Crop and Soil Sciences, WSU; Dave Huggins,
Keith Saxton, Frank Young, USDA-ARS, Pullman; Roger Veseth, STEEP Extension
Specialist, UI/WSU. INTERIM REPORT: OBJECTIVES:
KEY WORDS: No-till, transition, risk, economics STATEMENT OF PROBLEM: USDA reports that
the Pacific Region, including the Pacific Northwest (PNW), seriously lags
the rest of the country in adoption of no-till farming. Furthermore, many
early adopters of no-till in the PNW subsequently abandoned the practice
in part due to difficulties in managing the large up-front costs of purchasing
no-till drills and appropriate tractors. These large investment costs
and attendant financial risks have been a major barrier to nonadopters
of no-till. These barriers have been magnified by the extremely low crop
prices, declining farm program payments, and depressed markets for used
conventional farm machinery during the late 1990's. Indeed a recent series
of economic case studies of PNW no-till farmers by the investigators have
shown wide variation in their economic success depending on how the financial
transition to no-till was managed. The timing of machinery purchases,
purchase of new or used machinery, custom hiring of some operations, renting
or leasing machinery, management of repair and retooling costs, and combinations
of these approaches must be strategically tailored to the particular farm
business situation. A better understanding of the nature of the risks
and returns for different no-till transition strategies could lead to
public policies and programs which would accelerate adoption of no-till
where it is suitable, and thereby reduce the economic and environmental
losses from soil erosion in the PNW. ZONE OF INTEREST: PNW dryland agro-climatic zones with 8" to 22" av. ppt/yr. ABSTRACT OF RESEARCH FINDINGS: This is a new project
with actual funding arriving in mid-1999. A graduate student will not
be assigned to this project until year 2000. While no results have been
obtained to date, data collection and methodology development have started.
We have assembled information on the strategies used for transition to
no-till by 11 successful long term no-till farmers from Oregon, Washington,
and Idaho who were studied in a previous STEEP project. A wide variety
of transition strategies--all aimed at economizing machinery costs--were
observed among this group. Some sample strategies include doing custom
no-till planting to help pay for no-till drills, beginning no-till on
a limited part of the farm using custom drilling or rental drills, renting
larger tractors needed only for the drilling operation, buying used drills
and retrofitting them, constructing or assembling no-till drills in farm
shops, sharing no-till drills and tractors with relatives of neighbors,
minimizing drill and tractor repair costs by doing these on the farm,
timing purchases of drills and tractors during high cash flow years, and
shopping for low cost financing for drill and tractor purchases. Interestingly
only one of these successful no-till growers reported having disposed
of all his conventional tillage equipment. Most reported they had retained
this equipment as a hedge in case they needed to return to conventional
tillage. They also reported that the market for plows and other conventional
tillage implements was currently so depressed that it did not pay to sell
this machinery. We have also begun
reviewing the pertinent financial risk management literature and have
assembled some farm management software for measuring the long run profitability
of buy, lease, custom, or rent stategies for acquisition of farm machinery. RESULTS AND INTERPRETATION: Objective 1. To identify economic strategies for PNW farmers to successfully manage financial risk during the transition to no-till farming. See Abstract above. Objective 2. To disseminate results. None. INTERACTION (COOPERATION) WITH OTHER SCIENTISTS CONDUCTING RELATED ACTIVITY: We conferred with
WSU Crop and Soil Sciences faculty, USDA-ARS scientists, and NRCS personnel
listed as Cooperators in the selection of no-till farmers. We have also
conferred with other farm management economists on procedures for simulating
different machinery investment strategies over time with realistic yield
and price variation. PUBLICATIONS AND PRESENTATIONS: None. |
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