First published in Farmtario: https://farmtario.com/crops/the-economics-of-cover-crops/
The impact of cover crops on profit margins is a long-contested subject, but new data from the University of Guelph shows some clear winners and losers.
Vegetable crop yields, specifically, benefit most – grains not so much, unless farmers get credit for carbon sequestration.
Studies showing the economic costs and benefits of cover crops exist, but not on a long-term scale, says Richard Vyn, associate professor of food, agriculture and resource economics at the University of Guelph’s Ridgetown campus.
With that in mind, Vyn and his colleague Laura Van Eerd, professor of environmental sciences, collaborated to analyze 13 years of data from Van Eerd’s cover crop trials. The trials themselves looked at the interaction of oats, winter cereal rye, radish, as well as a combination of radish and rye, in a grain and processing vegetable rotation (spring and winter wheat, grain corn, soybeans, sweet corn, tomatoes, and squash.)
“We look at the yield data for each year, and determine what the profit margins would be in each case. The advantage of using multiple sets of data means its more robust,” says Vyn.
Grains lose out
As described in the project summary, the economic analysis was first conducted based on aggregated data across all years of the experiment. First indications illustrated radish and a radish-rye mixture, on average, had positive impacts on profit margins for main crops. The other two cover crops had no statistically significant impacts.
But that was an overall average. The results looked quite different once grains and vegetables were analyzed separately.
These results showed “considerable variation,” with cereal rye and rye-radish mix suppressing grain profitability by 10 and seven per cent. The same covers, by contrast, brought increases of eight and 12 per cent in vegetables. On its own, radish brought a 16 per cent profitability increase in vegetables, though there was no visible impact on grains.
Vyn says the significant differences were surprising, though he cautions against extrapolating such findings across Ontario.
“A lot of factors can have an influence on yield and profit. Laura used the exact same management practices for the main crops across all treatments… the only differences are related to the cover crop treatments. For each cover crop there’s the cost of the seed and planting, and a burndown for some,” says Vyn.
“The caveat with all experiments is there have been differences with results in other studies. At least this provides a starting point.”
Making money from carbon sequestration
While long-term environmental impacts are still an important factor to consider, the project report says a clear lack of economic benefits indicates why cover crop adoption has been lagging in the grain sector.
Applying carbon pricing to cover crops, however, could change that.
A third element of Vyn and Van Eerd’s analysis measured the impact of cover crops on soil carbon levels. Soil carbon was measured after several years of cover crop use, and a price attached to that carbon. The associated profits were then applied to previously existing profitability data. This brought returns for grains to a neutral state, and even better returns for vegetables.
“Say there was a program whereby producers could be compensated for the additional carbon they’re storing in the soil,” says Vyn.
“By having that type of program in place, it helps offset the costs of cover crops. It doesn’t necessarily make you economically better off. It could provide incentive for greater cover crop usage by grain producers.”