By Donna Fleury
A recent research project at the University of Manitoba has identified crop rotation options that may help farmers improve their bottom line with added environmental benefits. “We were interested in farm profitability and the impacts of crop production costs,” explains Dr. Jared Carlberg, associate professor in the Department of Agribusiness and Agricultural Economics at the University of Manitoba. “This two-year project was a master’s thesis project completed by Ashleigh McLellan and started at the time when nitrogen prices were of economic concern to farmers. We wanted to help them find ways to reduce their production costs and explore ways to increase efficiency of use.”
The main objective of the project was to determine the profitability of including legumes in a non-legume rotation, taking various sources of risk into consideration, such as crop price, yield and nitrogen price variability. “Along with myself as project supervisor, McLellan’s research team also included advisors Dr. Martin Entz with the Department of Plant Science at University of Manitoba, a leading expert in cover crops and organics, and Dr. James Richardson from Texas A&M, one of the world’s leading risk analysts.”
There is a large number of potential rotations with different crops and legumes or cover crops appearing at different times in the rotation. “We tried to take four reasonable rotations that farmers could be expected to use and examine their risk or variability of returns,” says Carlberg. “We really wanted to answer the question of whether cover crops could fix enough N and reduce costs, given historical prices of inputs and crops, and would do well for farmers. We wanted to look for ways to help improve their bottom line.”
Past research has shown that legumes and cover crops can fix N for their own production and for use by subsequent crops, and improve soil health. Legumes can help reduce the application of nitrogen-based fertilizer, reducing input costs and providing environmental benefits. “Farmers in Manitoba often feel quite under the microscope with respect to politics regarding water quality issues in Lake Winnipeg that link livestock and grain production to some of the problems,” says Carlberg. “We wanted to determine the economics of implementing practices for reducing fertilizer application for financial reasons with the potential for extra environmental benefits.”
The project assessed which one of four rotation alternatives would likely be best given the most reasonable set of assumptions based on soil and growing conditions in southern Manitoba. The model was based on individual enterprise budgets for each individual crop. The information for production, variable and fixed costs and other variables were based on prices from the Canadian Wheat Board, Manitoba Agriculture, Food and Rural Initiatives (MAFRI) figures on costs of production, Manitoba Agricultural Services Corporation (MASC) agricultural risk area 12 and Statistics Canada.
The process of the research
McLellan ran a large number of model simulations to look at the historical behaviour of a number of variables and then computed 1000 iterations of the four alternative crop rotations to determine the most likely results. The Key Output Variable (KOV) for this model was the net return for a quarter section from a specified crop rotation. The mean average return of the four alternatives during the life of the crop rotation was $69,176 for the cereal-oilseed rotation, $103,229 for the black lentil cover crop, $11,947 for field pea without canola and $24,201 for field pea with canola (see Figure 1). In terms of ranking the rotation’s profitability, the results were unaltered by a change in total costs, the discount rate and synthetic nitrogen prices.
“I think what she found is right on the money. Ashleigh was very careful with her analysis and with the expert members on her advisory committee: we’re confident her findings are correct,” explains Carlberg. “What did not surprise us was that cover crops incorporating black lentils did very well and had the highest financial return and the lowest risk. The legume cover crop rotation is expected to generate on average $71 more net return per acre than a cereal-oilseed rotation. However, we were surprised to find that the field pea rotations were not as attractive from a financial standpoint.”
Field peas do reduce N expenditures because they fix some of their own nitrogen plus they leave residue for the next year’s new crop. However, a cover crop not harvested for seed adds significantly more nitrogen to the cropping systems compared to a legume crop harvested for seed. Previous research by Entz showed that a black lentil cover crop returns approximately 25 kg of N per hectare (22 lbs of N per acre) for every 1000 kg of biomass per hectare (879 lbs of biomass per acre) produced, whereas a harvested annual field pea crop returns only 12 kg of N per hectare (10.7 lbs per acre) for every 1000 kg of biomass per hectare produced.
Overall, the project showed that legumes do reduce N requirements and can help farmers financially, providing the returns are high enough.
Legumes can also help the environment by lowering application of synthetic fertilizers. Further research is needed to quantify the agronomic and environmental benefits, and to determine the benefits to other growing areas outside southern Manitoba. “If producers are looking for a way to get a bit ahead financially, then legumes and cover crops could be something that works for them,” says Carlberg. “Some people may not be comfortable with this strategy, which is a bit unconventional, but is something they might want to start thinking about. Producers should consider these results, talk to their business partners and local extension advisors and make a judgment on how this might or might not work on their own farm.”
Carlberg and Entz have started a new project looking at the returns to organic versus conventional cropping systems in Manitoba using similar methodologies.