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2000 STEEP III Progress Report

RESEARCH PROJECT TITLE: Managing the Economic Transition to No-Till Farming in the Pacific Northwest

INVESTIGATORS:

Doug 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, Joe Yenish, 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:

PROJECT OBJECTIVES:

  1. To identify appropriate economic strategies for PNW farmers in different business and agro-climatic situations to successfully manage financial risk and to maintain acceptable economic returns during the transition to no-till farming.
  2. To disseminate the results on efficient strategies for managing no-till adoption risk to growers, policy makers and others through extension bulletins, other publications, talks at field days and other meetings, and through other media.

KEY WORDS: No-till, transition, risk, economics

STATEMENT OF PROBLEM:

The Pacific Northwest (PNW) lags the rest of the country in adoption of no-till. The financial risks of large up-front costs for purchasing no-till drills have been a barrier to adoption of no-till for many. These barriers have been magnified by low crop prices and by depressed markets for used conventional farm machinery. Recent economic case studies of PNW no-till farmers by the investigators showed 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, and management of repair and retooling costs must be strategically tailored to the farm situation. A better understanding of the nature of the risks and returns for different no-till transition strategies could lead to policies and educational programs which would accelerate adoption of no-till where it is suitable.

ZONE OF INTEREST:

PNW dryland agro-climatic zones with 8" to 22" av. ppt/yr.

ABSTRACT OF RESEARCH FINDINGS:

Analysis of survey data of 266 east-central Washington farmers showed that participation in an NRCS-Extension program which reviewed successful no-till technologies and highlighted the off-site costs of wind erosion significantly boosted the adoption of no-till among farmers. Other farm and personal characteristics were less influential in predicting no-till adoption.

A sample of 11 successful PNW case study growers used a wide variety of transition strategies aimed at economizing machinery costs in the no-till transition. Some farmers rented larger tractors needed only for drilling, some bought used drills and retrofitted them, some assembled no-till drills in farm shops. Others shared no-till drills and tractors with relatives or neighbors, minimized costs by doing repairs on the farm, timed purchases of drills and tractors during high cash flow years, and shopped for low cost financing for drill and tractor purchases. Some farmers did extensive custom no-till planting to help pay for drills. Most case study no-till farmers had retained their conventional equipment as a hedge in case they needed to return to conventional/minimum tillage.
On the negative side, the collapse of market prices for rotation crops like barley, peas, and lentils in the late 1990's has made shifting to desirable diverse rotations with no-till more difficult. Our followup analysis with recent prices of the results of a 1986-91 conservation farming systems experiment in the eastern Palouse showed that some minimum tillage wheat-barley-pea systems decreased in profitability relative to 1986-91 prices.
We have also reviewed pertinent software for simulating the performance of different no-till financial transition strategies under representative price and yield fluctuations. We are also developing procedures for adding the effect of risk and risk aversion to the breakeven acreage for profitable use of buy, lease, custom, or rent strategies for acquisition of no-till drills and power units.

RESULTS AND INTERPRETATION:

Objective 1. To identify economic strategies for PNW farmers to successfully manage financial risk during the transition to no-till farming.

This is the first year a graduate student has been assigned to this project. During this year we have focused on (1) examining data from a survey of 266 east-central Washington farmers to determine business and farm characteristics which permitted a successful adoption and transition to no-till and other conservation practices, (2) reviewing the no-till transition strategies of 11 successful Pacific Northwest case study no-till farmers, including second interviews as necessary, (3) examining the effect of recent decreases in market prices and farm program changes on the riskiness and profitability of different crop rotation, tillage, and weed management systems, and (4) developing methodology for simulating the risk of different no-till transition strategies.

Analysis of survey data from 266 east-central Washington farmers showed that participation in an NRCS-Extension educational program significantly boosted the adoption of no-till among farmers. The educational program provided research results on effective no-till technologies and highlighted the off-site costs of wind erosion. Other farm and personal characteristics such as farm size, operator's age and education were less influential in predicting no-till adoption. Subsequent statistical analysis has shown that the most innovative conservation farmers may try multiple conservation practices, rather than no-till alone.

A sample of 11 successful PNW case study growers used a wide variety of transition strategies aimed at economizing machinery costs in the no-till transition. Some farmers rented larger tractors needed only for no-till drilling, some bought used drills and retrofitted them, some assembled no-till drills in farm shops. Others shared no-till drills and tractors with relatives or neighbors, minimized repair costs by doing these on the farm, timed purchases of drills and tractors during high cash flow years, and shopped for low cost financing for drill and tractor purchases. Some farmers did custom no-till planting to help pay for drills. Most case study no-till farmers had retained their conventional equipment as a hedge in case they needed to return to conventional/minimum tillage. Depressed markets for used conventional tillage machinery also discouraged sale of this machinery.

On the negative side, the collapse of market prices for rotation crops like barley, peas, and lentils in the late 1990's has made shifting to desirable diverse rotations with no-till more difficult. A subsequent analysis with recent prices of the results of a 1986-91 conservation farming systems experiment in the eastern Palouse showed that some minimum tillage wheat-barley-pea systems decreased in profitability relative to results with 1986-91 prices. On the other hand, some winter wheat-spring wheat minimum tillage systems moved up in relative profitability using 1995-2000 prices instead of 1986-91 prices.

We have reviewed pertinent software, including EXCEL's AT RISK program, for simulating the performance of different no-till financial transition strategies under representative price and yield fluctuations. We have also reviewed procedures for adding the effect of risk and risk aversion to computing the breakeven acreage for profitable use of buy, lease, custom, or rent strategies for acquiring no-till drills and power units. This approach extends earlier work by Dr. G. Willett which computes the breakeven acreage for different drill acquisition methods when prices, yields, and equipment availabilities are assumed to be known with certainty.

Objective 2. To disseminate results.

Research results identifying factors associated with adoption of no-till were presented in a professional meeting and in annual research meetings to growers and scientists. Results were also published in one of the leading agricultural economics professional journals. We cooperated with production scientists in presentations at two international cropping systems meetings on the economic and agronomic performance of conservation tillage cropping systems (see Abstracts listed below). We also presented results on the economics of no-till at a grower meeting in Walla Walla County, WA. Finally, the PI's on this project are the sole social science participants in the multidisciplinary conservation farming systems group which meets at the Washington State University Crop and Soil Sciences Department at noon each Tuesday. We provide input as pertinent on economic factors affecting no-till farming systems.

INTERACTION (COOPERATION) WITH OTHER SCIENTISTS CONDUCTING RELATED ACTIVITY:

We sought advice from WSU Crop and Soil Sciences faculty, USDA-ARS scientists, and NRCS personnel listed as Cooperators above in the selection of no-till farmers for case studies. Cooperative Extension and NRCS staff assisted in the original survey of east-central Washington farmers. We have also conferred with Dr. van Tassel, U. Idaho, and Drs. Hinman and Willett, WSU on procedures for incorporating time and uncertainty into the profitable acquisition on no-till drills.

PUBLICATIONS AND PRESENTATIONS:

Wang, H. H., D. L. Young, and O. M. Camara. "The Role of Environmental Education in Predicting Adoption of Wind Erosion Control Practices." Journal of Agricultural and Resource Economics, Vol. 25, no. 2 (December 2000): 547?558.

Schillinger, W.F., R.J. Cook, D. L. Young, A.C. Kennedy, and K.E. Saxton. 2000. "Alternative No-Till Cropping Systems Research in the Semiarid Pacific Northwest USA." Abstract in Proceedings of the International Soil Conservation Organization Conference in Buenos Aires, Argentina, October 22-25.

Zentner, R.P., D.D. Wall, C.N. Nagy, E.G. Smith, D.L. Young, P.R. Miller, C.A. Campbell, B.G. McConkey, S.A. Brandt, G.P. Lafond, A.M. Johnston, and D.A. Derksen. 2000. "Economics of Crop Diversification and Soil Tillage Opportunities in the Canadian Prairies." Abstract in Agronomy Journal.

Young, D.L. "Economics of No-Till Wheat Production." Presentation at growers meeting on no-till wheat production. Cooperative Extension, Walla Walla, WA, November 16, 2000.

     
 

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Hans Kok, WSU/UI Extension Conservation Tillage Specialist, UI Ag Science 231, PO Box 442339, Moscow, ID 83844 USA
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