Pacific Northwest Conservation
Tillage Handbook Series No. 16
Chapter 10 - New Technology Access, Adaptation and Economics, February
Economics of Conservation
Tillage in a Wheat-Fallow Rotation
former WSU graduate student;
Doug Young, WSU Agricultural Economist, Pullman; and
William Schillinger, WSU Dryland Research Agronomist, Lind, WA
Wind erosion and
blowing dust on conventionally tilled winter wheat (Triticum aestivum
L.)-summer fallow cropland in eastern Washington, USA, reduces soil productivity
and can contribute to poor air quality. Conservation tillage during fallow
has long been known to curtail erosion and dust, but conventional tillage
is still practiced on over 80% of the cropland in the region. This paper
reports the economic results of a 5-year (1995-1999 harvest years) tillage
system study at Lind, Washington. The site averages 9.6 inches annual
precipitation and the soil is a Shano silt loam. Tillage systems were
i) conventional tillage (CT), ii) minimum tillage (MT, herbicides and
tillage), and iii) delayed minimum tillage (DMT, herbicides and delayed
tillage). Wheat grain yield across years ranged from 27 to 77 bushels
per acre, but there were no differences in grain yield among tillage systems
in any year or when analyzed across years. Tillage systems were economically
equivalent based on market returns over total production costs, but DMT
was slightly less profitable than CT based on market returns over variable
costs. Economic analysis indicates that no subsidies should be required
to entice producers to switch from CT to MT fallow because the systems
are equally profitable. Because there is no short or long-term economic
sacrifice for converting to the soil saving MT system, it represents a
"win-win" solution for farmers and the environment.
CT, conventional tillage; DMT, delayed minimum tillage; HRSW, hard red
spring wheat; MT, minimum tillage; SWWW, soft white winter wheat.
While the land area
under summer fallow in the USA has declined during the past three decades,
the winter wheat-fallow rotation remains the dominant cropping system
in areas receiving less than 14 inches annual precipitation (Dhuyvetter
et al., 1996; Smith and Young, 2000). In eastern Washington state and
north-central Oregon, winter wheat - summer fallow is the prevailing cropping
system on approximately four million acres. Farmers in the northern Great
Plains have markedly reduced wind erosion on fallow cropland by adopting
minimum tillage and no-tillage practices and recent evidence shows similar
reductions in windborne dust and wind erosion in the Pacific Northwest
Tillage Information Center (CTIC, 1998) reported that farmers in the western
Great Plains and Pacific states used minimum and no-tillage on 34% of
cropland. However, in Washington state, only 26% of cropland was in minimum
and no-tillage (CTIC, 1998). In east-central Washington, where annual
precipitation typically ranges from 6 to 12 inches, even minimum tillage
fallow is rare. For example, in Adams County, the heart of Washington's
wheat-fallow area, CT is still practiced on 88% of the cropland.
Most previous studies
of the economics of no-tillage and minimum-tillage in wheat-fallow systems
have been conducted in the U.S. Great Plains and the Canadian Prairies.
Reviews of this work have found that the relative profitability of these
reduced tillage systems in semiarid regions varied by location; however,
reduced tillage generally increased net returns when crop planting intensity
also increased (Dhuyvetter et al., 1996). While these systems offer recognized
soil and air quality benefits, some researchers have reported higher production
costs for no-till (Norwood and Currie, 1998; Zentner et al., 1996). Smith
et al. (1996) reported that the presence of difficult-to-control weeds
can greatly elevate herbicide and total production costs for no-till in
semiarid regions. However, recent case studies of experienced no-till
farmers in a semiarid region of eastern Washington revealed that their
production costs for spring sown crops were lower than with conventional
tillage (Camara et al., 1999).
practices during fallow are intensive and often leave the soil vulnerable
to erosion. A soil surface deficient in residue, clods, and roughness
can pose a serious wind erosion threat (Fryrear and Bilbro, 1994). Conservation
tillage systems in the inland Pacific Northwest generally employ non-inversion
implements such as wide-blade V-sweeps for primary spring tillage, combined
with use of herbicides in lieu of one or two tillage operations, and retain
higher levels of surface residue and soil roughness during fallow compared
with conventional tillage (Papendick, 1998). Lee (1998) predicted that
suspended dust particulates 10 micrograms (PM-10) and smaller in Spokane,
Washington, would be reduced by 31 to 54% if conservation tillage or no-tillage
replaced conventional summer fallow.
Both the Spokane
and Tri-Cities urban areas in eastern Washington have failed on several
occasions to meet the Federal Air Quality Standards for PM-10. One such
occasion was during a massive dust storm on September 25, 1999 when PM-10
reached 405 ug -3, nearly three times the national allowable standard
of 150. On that day, seven motorists were killed and 22 injured in a multi-vehicle
collision in near-zero visibility on Interstate 84 near Pendleton, Oregon.
Violations of federal air quality standards mandate that regional air
quality agencies develop plans to solve this problem.
Why don't most wheat-fallow
farmers in the inland Pacific Northwest practice conservation tillage?
Some farmers cite concerns of inadequate seed-zone water for winter wheat
stand establishment (Lindstrom et al., 1974), difficulty in controlling
downy brome (Bromus tectorum) and other grass weeds (Ogg, 1993), and plugging
of grain drills due to excessive residue as reasons for not adopting conservation
tillage fallow. Concerns about the financial risk from investing in conservation
tillage implements also appears to underlie the reluctance by some eastern
Washington farmers to adopt conservation tillage fallow systems (Juergens
et al., 2001). This paper reports on grain yield performance and profitability
of MT and DMT compared with CT for wheat-fallow farming in semiarid eastern
A wheat-fallow rotation tillage system experiment was conducted from August
1993 to July 1999 at the Washington State University Dryland Research
Station at Lind, Washington. Although the first fallow operations occurred
in 1993, the research is referred to as a 5-yr study as wheat harvests
occurred from 1995-1999 (Table 1). The Shano silt loam soil is more than
six feet deep with less than 2% slope. The experimental design was a randomized
complete block of three tillage systems replicated four times. Individual
plots were 60 by 150 feet, which allowed the use of commercial-size farm
equipment. Paired adjacent parcels of land were used so that data could
be collected from both crop and fallow phases of the study each year.
The three tillage management systems were: i) Conventional tillage (CT)
- standard frequency and timing of tillage operations using implements
commonly used by farmers; ii) Minimum tillage (MT) - standard frequency
and timing of tillage operations, but herbicides were substituted for
tillage when feasible and a non-inversion V-sweep implement with attached
rolling harrow was used for primary spring tillage, and; iii) Delayed
minimum tillage (DMT) - similar to minimum tillage except primary spring
tillage with a non-inversion V-sweep was delayed until at least mid-May.
The DMT system was included to test its impact on soil moisture retention
and wind erosion control as well as economic feasibility. A complete list
of field operations and timing for each tillage system throughout the
study are shown in Table 1. Detailed descriptions of tillage and other
field operations for all tillage systems are reported in Schillinger (2001).
Standard enterprise budgeting techniques were used to estimate average
fixed and variable costs of production for each tillage system (Janosky,
1999; Hinman and Esser, 1999). Fixed costs include depreciation, interest,
taxes, housing, and insurance on machinery and a farm overhead charge.
Land costs were based on the region's prevailing 2/3 tenant:1/3 landlord
crop share rent which varied by annual yields. Variable costs include
seed, fertilizer, herbicides, crop fire and hail insurance, fuel, repairs,
and labor. Production costs for each tillage system were based on the
actual sequence of operations conducted in the experiment (Table 1), but
assume typical farm-scale machinery for the region. The wide blade V-sweep
was the only additional implement required for switching from CT to MT
or DMT. Fertilizer, herbicide, and seed rates are those used in the Lind
experiment (Table 1). Grain yields are the 1995 to 1999 averages recorded
from the experiment (Table 2). All cost and revenue figures are presented
on a per rotational acre basis. For example, for winter wheat-summer fallow,
costs and revenues are computed for 0.5 acre of winter wheat and 0.5 acre
of fallow. This correctly portrays the average return per acre each year
of a farmer who has one half of the farm in fallow and one half in winter
wheat. For the economic analysis, it is assumed that farmers in this region
will incur the cost of replanting their winter wheat crop to spring wheat
one year in five due to inadequate winter wheat stands or winter kill.
This occurred in the Lind experiment for all tillage systems due to inadequate
seed-zone water for planting winter wheat in September 1994.
The wheat prices
used, $3.92 per bu. for soft white wheat (SWWW) and $5.10 per bu. for
hard red spring wheat (HRSW), are regional benchmark 1993-1997 marketing
year averages of farm gate prices in the study area. A sensitivity analysis
is included to show the effects of a broader range of wheat yields and
prices, including prices below $3.00 per bushel, as observed in 1998 and
1999. Net market returns are defined as market returns over production
costs. Government transition, supplemental, and loan deficiency payments,
which were substantial in 1998 and 1999, are not included. Adding government
payments would not influence the ranking of the tillage systems as the
decoupled transition and supplemental payments do not vary with the tillage
system. However, at the whole-farm level, these payments would affect
judgements about economic viability, regardless of tillage choice.
RESULTS AND DISCUSSION
and Water Storage
Winter wheat grain yield from 1995 to 1999 ranged from 27 to 77 bushels
per acre. There were no significant statistical differences in grain yield
among tillage systems within any year or in the 5-yr average (Table 2).
While not statistically significant, the yields for MT exceeded or equaled
those for CT every year. Retention of surface residue at the end of the
13-month fallow period averaged 690, 1240, and 1290 pounds per acre for
CT, MT, and DMT, respectively (Schillinger, 2001). Using CT, the minimum
quantity of surface residue required for highly erodible soils for government
farm program compliance (350 pounds per acre) was not achieved in one
year of the experiment and was only marginally met in another, whereas
ample residue was present in all years in the MT and DMT systems. In addition,
twice the amount of surface clod mass and a rougher surface was achieved
with MT and DMT compared with CT. Averaged over all fallow cycles, soil
water content in the 0 to 8 inch seed zone depth as well as in the entire
six foot soil profile was not affected by tillage system (Schillinger,
2001). Therefore, CT held no agronomic advantages over MT or DMT in this
experiment, but it did have distinct environmental disadvantages.
and Sensitivity Analysis
Variability in market net returns reflects different yields and production
costs over the 5-year experiment. As noted above, wheat prices were held
constant over time and tillage system. For the 5-year experiment, net
returns over total costs for the three tillage systems were not statistically
different at the 0.05 significance level (Table 3). The differences in
mean profitability among tillage systems was not significant. Measured
by net returns over variable costs, DMT was less profitable than the other
two tillage systems at the 0.05 significance level. Based on the average
prices and yields, market returns of all three tillage systems fell short
of covering total costs by $10.90 to $16.20 per acre. Total costs include
a wage for the operator, a land charge, machinery depreciation, interest
costs, as well as variable input costs. Negative market net returns over
total costs are fairly common in grain production when government payments
are not included. In part, this is because the value of government payments
are capitalized into land values thus increasing costs. In the absence
of government payments, land costs would decrease for owner operators
and market returns might more closely cover costs.
The results in Table 3 are based on average prices and yields; however,
market prices and farm yields vary widely over time. For example, a 5-year
average price of $3.92 per bu. for SWWW was used in this analysis, but
wheat prices in the region fell sharply to $2.40 and $3.00 per bu. during
1998 and 1999. Similarly, dryland wheat yields in this region vary substantially
from year to year as shown in Table 2. To illustrate the effect of price
and grain yield variation on market net returns, Table 4 shows net return
sensitivity to different price and grain yield combinations for DMT, MT,
and CT. Sensitivity results for MT, the most competitive conservation
tillage system, are discussed here to illustrate the effects of price
and yield variability. If MT wheat averages 60 bu. per acre and a price
of $4.00 per bu. is received, market returns over total costs equal $3.98
per acre. Prices of $3.50 per bu. or less are shown to generate losses
before government payments for all yields of 65 bu. or less (Table 4).
Given the experiment's 1996-99 average grain yield for MT of 58 bu. per
acre (this yield falls between the discrete values in Table 4), one can
compute that a price of $4.00 per bu. is required to cover the total cost
of $115.90 per rotational acre. Table 4 shows that if grain yield for
MT falls below 45 bu. per acre, as occurred in 1999 (Table 2), the farmer
will fail to meet total costs from market sales even with the relatively
high wheat price of $5.00 per bushel.
Results from this
5-year study show no statistical difference in grain yield among two minimum
tillage fallow systems and a conventional tillage fallow system. The three
tillage systems were economically equivalent based on market returns over
total production costs. The reduced tillage systems promise potentially
greater future productivity by controlling wind erosion. Furthermore,
the reduced tillage systems reduce the risk of government payment denial
due to inadequate residue for compliance. Economic analysis indicates
that no or minimal subsidies should be needed to entice producers to switch
from conventional to reduced tillage fallow because the systems are equally
profitable. This is especially true for the MT system which had statistically
equivalent profitability with CT for both net returns over variable and
total costs. Because there is no significant short or long-run economic
sacrifice for converting to soil saving MT fallow systems, they represent
best management practices for both farmers and down-wind urban dwellers.
Extension education programs should highlight both the economic and conservation
advantages of MT.
The authors thank
Harry Schafer, WSU agricultural research technician, and Bruce Sauer,
farm manager of the WSU Dryland Research Station at Lind, for their excellent
technical assistance. Funding for this study was provided by the Columbia
Plateau Wind Erosion/Air Quality Project and the Solutions to Environmental
and Economic Problems (STEEP) Project.
Camara, O.M., D.L.
Young and H.R. Hinman. 1999. Economic case studies of eastern Washington
no-till farmers growing wheat and barley in the 8-13 inch precipitation
zone. Washington State University Cooperative Extension Bull. EB1885,
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C.R. Thompson, C.A. Norwood, and A.D. Halvorson. 1996. Economics of dryland
cropping systems in the Great Plains: A review. J. Prod. Agr. 9:216-222.
Fryrear, D.W. and
J.D. Bilbro. 1994. Wind erosion control with residues and related practices.
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Boca Raton, FL.
Hinman, H.R. and
A.E. Esser. 1999. 1999 Enterprise budgets for summer fallow-winter wheat
rotations and hard red spring wheat annual cropping, Adams County, Washington
State. Washington State University Cooperative Extension Bull. EB1883,
Janosky, J.S. 1999.
An economic analysis of conservation tillage cropping systems in Eastern
Washington. M..A. thesis. Dep. of Agricultural Economics, Washington State
University, Pullman, WA.
Juergens, L.A., D.L.
Young, R.D. Roe, and H.H. Wang. 2001. Preliminary farmer survey results
on the economics of the transition to no-till. Technical Report 01-4.
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Regional air quality modeling of PM 10 due to windblown dust on the Columbia
Plateau. M.S. thesis. Dep. of Civil and Environmental Engineering, Washington
State University, Pullman, WA.
F.E. Koehler, and R.I. Papendick. 1974. Tillage effects on fallow water
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Norwood, C.A. and
R.S. Currie. 1998. An agronomic and economic comparison of wheat-corn-fallow
and wheat-sorghum-fallow rotations. J. Prod. Ag. 11: 67-73.
Ogg, A.J., Jr. 1993.
Control of downy brome (Bromus tectorum) and volunteer wheat (Triticum
aestivum) in fallow with tillage and pronomide. Weed Tech. 7:686-692.
Papendick, R.I. (ed.).
1998. Farming with the wind: Best management practices for controlling
wind erosion and air quality on Columbia Plateau croplands. Washington
State Univ. CAHE Misc. Publ. MISC0208., Pullman, WA.
2001. Minimum and delayed conservation tillage for wheat-fallow farming.
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Peters, R.E Blackshaw, C.W. Lindwall, and F.J. Larney. 1996. Economics
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Table 4. Market returns over total costs as affected by soft white winter
wheat price and grain yield for three fallow tillage systems (shaded areas
show negative net returns).
Wheat Price ($ per bushel)