Utilizing Cover Crops for Grazing: An Assessment on Economic Benefits

By : Tong Wang, SDSU Extension Advanced Production Specialist, Courtesy of extension.sdstate.edu

 

Cover crops are crops planted to protect the soil surface during fallow periods. As a conservation practice, cover crops build soil health and enhance system resilience in face of extreme weather conditions. The record level rainfall and flooding of 2019 has prevented farmers in the Western Corn Belt from planting millions of acres, especially those fields where topsoil was washed away due to erosion. Cover crops were encouraged for farms affected by 2019 spring flood to re-establish soil health.

Based on Agricultural Census of 2017, the share of acres with cover crops in most of South Dakota (SD) counties are between 1% and 3% (USDA, 2017). One of the reasons for the low adoption rate is due to the extra costs included. According to our 2018 farmer survey in East SD counties, high seed cost is listed as one of the top barriers faced by producers when making cover crops adoption decisions (Figure 1).

Partial Budget Analysis

Grazing cover crops by cattle provides an option to offset cover crop seed costs and increase farm revenue. To facilitate farmers’ decision making, this article will evaluate the economic profitability from grazing cattle on cover crops using a partial budgeting approach. Note that “partial” means that only changes due to implementing new practice need to be considered. Partial budgeting allows assessing the economic impact without knowing all the costs and returns information.

Effect From Utilizing Cover Crops for Grazing

POSITIVE EFFECT

Positive effect from utilizing cover crops for grazing could be from two sources: cash crop yield increase and reduced forage cost (Table 1). Regarding cover crop grazing in east SD, we assume a stocking rate of 0.75 animal unit (AU) (1 AU = 1000 lbs) per acre for 90 days. Assume the forage consumption rate is 26 pounds of dry forage per AU day, the reduced forage cost is $105 per acre based on the estimated forage cost of $120/ton. Added income is possible if the consequent cash crop yield increase after grazing cover crops. However, we assume no added income from additional cash crop in the short run.

Table 1. Partial budget: Utilizing cover crops for grazing on the cropland (1st year)
Positive effect Negative effect
Added income Reduced income
Cash crop yield increase 0.00 Cash crop yield decrease 0.00
Reduced cost Added cost
Reduced forage cost 105.00 Cover crop seed cost 24.84
  Cover crop planting cost 17.50
  Cover crop termination cost 11.70
  Fence wire and post 14.00
  Fence energizer 6.00
  Water tank cost 6.38
  Water hauling cost 7.35
Total positive effect 105.00 Total negative effect 87.77
Net effect 17.23  

Unit: $/acre. Source: Tobin et al. (2020)

NEGATIVE EFFECT

Negative effect includes reduced income and added costs. Differing portions of six types of seeds, namely radish, pea, lentil, cowpea, sorghum/sudan and oat, are included in high residue grass blend, low residue brassica/legume blend and the equal blend, with the prices of 1.75, 0.40, 1.15, 1.50, 0.53 and 0.26 respectively (unit: $/lb). Detailed seed composition information on those three blends provided in Table 2. On average, cover crop seed cost is $24.84 per acre.

Table 2. Quantity of seeds included in three cover crop blends.
Seed Low residue
legume blend
High residue
grass blend
Equal blend
Radish 3.3 0.5 2.0
Pea 10.5 3.5 7.0
Lentil 4.5 1.5 3.0
Cowpea 2.5 2.5 2.5
Sorghum/Sudan 2.5 5.0 3.5
Oat 7.0 42.0 26.0

Unit: lbs./acre

In addition, to facilitate grazing, fencing, water tank and water hauling cost need to be incurred. Fencing costs are composed of costs from poly-braided wire, step-in pig tail posts and a solar powered fence energizer. Depending on the shape of the field, fence wire and post generally cost $12 to $16 per acre, averaging $14 per acre. Fence energizer costs $300 each and is capable of charging 50 acres, thus its cost averaged at $6 per acre. The cost of a 600-gallon round poly stock tank is $255 each, or $6.38/acre since it can serve forty 750-lbs stockers on 40 acres of cover crop land. Over the entire 90-day grazing period, water hauling cost, comprised by pickup and labor cost, is estimated as $7.35/acre.

NET EFFECT

The difference between total positive effect and total negative effect is referred to as net effect, which shows the difference in profitability between the new ICLS practice and the existing practice. Table 1 indicates that utilizing cover crops for grazing will increase profit of the farm by $17.23 in the first year. As the fence wire, post, energizer and water tank costs could last for at least 10 years, therefore the reduction of cost on these items from the 2nd year will further boost the net revenue to $43.61 per acre. In the long term, we expect more room for net revenue to increase, as cover crops build up soil organic matter and water holding capacity, which will reduce the need for nitrogen application and yield risk during weather variabilities.

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