The Cover Crop Seed Industry: An Indiana Case Study

Winter cover crops are plants used to protect soils during the period between the harvest and establishment of cash crops such as corn and soybeans, effectively providing farm fields with perennial cover. The total cost of cover crops varies considerably from site to site and year to year, yet the single costliest aspect of using cover crops is the cost of seed. Seed cost also tends to be the most volatile component of the cost of cover crop use, subject to complex supply dynamics associated with producing viable seed, storage capacity, and unpredictable regional demand. We conducted a survey of seed dealers who sell cover crop seeds using the state of Indiana as a case study. The majority of the respondents believe that sales for cover crop seeds over the next five years in Indiana will increase. In response to this expected increased demand, seed dealers noted they intend to (in no particular order): increase contracted cover crop seed production and invest in seed handling and storage capacity; increase direct interaction with farmers; become more active with workshops and demonstration field days; and/or create marketing materials that specifically promote the soil health benefits of cover crops. The top three factors seed dealers believed would improve the Indiana cover crop seed market the most were: (1) financial incentives for cover crop use; (2) improved customer knowledge of cover crop management; and tied for (3) reduced seed production costs, and broader support of cover crop usage from commodity groups. The top three topics of publicly funded research most useful to the cover crop industry were: (1) understanding factors that influence farmer cover crop adoption; (2) cover crop impact on field profitability; and (3) understanding long-term soil benefits of cover crops. Seed dealers play a unique role in conservation practices such as cover crops, not just because they are often trusted facilitators of information and guidance, but also because their business actions strongly influence available conservation opportunities, management options, and direct cost to farmers. The respondents to the survey offered their opinions regarding a number of issues that would help their business viability in a sustainable way while promoting farmer adoption of cover crops and their long-term commitment to the practice

Cost-effective targeting of conservation investments to reduce the northern Gulf of Mexico hypoxic zone

A seasonally occurring summer hypoxic (low oxygen) zone in the northern Gulf of Mexico is the second largest in the world. Reductions in nutrients from agricultural cropland in its watershed are needed to reduce the hypoxic zone size to the national policy goal of 5,000 km2 (as a 5-y running average) set by the national Gulf of Mexico Task Force’s Action Plan. We develop an integrated assessment model linking the water quality effects of cropland conservation investment decisions on the more than 550 agricultural subwatersheds that deliver nutrients into the Gulf with a hypoxic zone model. We use this integrated assessment model to identify the most cost-effective subwatersheds to target for cropland conservation investments. We consider targeting of the location (which subwatersheds to treat) and the extent of conservation investment to undertake (how much cropland within a subwatershed to treat). We use process models to simulate the dynamics of the effects of cropland conservation investments on nutrient delivery to the Gulf and use an evolutionary algorithm to solve the optimization problem. Model results suggest that by targeting cropland conservation investments to the most cost-effective location and extent of coverage, the Action Plan goal of 5,000 km2 can be achieved at a cost of $2.7 billion annually. A large set of cost-hypoxia tradeoffs is developed, ranging from the baseline to the nontargeted adoption of the most aggressive cropland conservation investments in all subwatersheds (estimated to reduce the hypoxic zone to less than 3,000 km2 at a cost of$5.6 billion annually)

LUMINATE: linking agricultural land use, local water quality and Gulf of Mexico hypoxia

In this paper, we discuss the importance of developing integrated assessment models to support the design and implementation of policies to address water quality problems associated with agricultural pollution. We describe a new modelling system, LUMINATE, which links land use decisions made at the field scale in the Upper Mississippi, Ohio and Tennessee Basins through both environmental and hydrological components to downstream water quality effects and hypoxia in the Gulf of Mexico. This modelling system can be used to analyse detailed policy scenarios identifying the costs of the policies and their resulting benefits for improved local and regional water quality. We demonstrate the model\u27s capabilities with a simple scenario where cover crops are incentivised with green payments over a large expanse of the watershed

Estimating Adoption of Cover Crops Using Preferences Revealed by a Dynamic Crop Choice Model

In this paper, we propose a framework based on micro-level dynamic land use models to predict the adoption of cover crops in the Upper-Mississippi River Basin. We use preferences recovered using a dynamic discrete model of crop choice to build a dynamic optimization framework to evaluate a range of scenarios based on the cover crops’ effect on cash crop yields, costs of cover crop operations, and government support. We use a conditional choice probability method to estimate the dynamic crop choice model based on field-scale panel data and value function iteration method to assess counterfactual cover crop scenarios. The framework is expected to be applicable to modeling decisions to adopt conservation technologies in the absence of individual-level adoption data or for cases when conservation technology is new. The dynamic crop choice model yields expected results and reveals preferences for net revenues in line with previous literature. Simulation results predict baseline cover crop adoption rates which, although in line with some recent farmer surveys, are quite a bit higher than rates reported in 2012 Census of Agriculture. We attribute these results to substitution patterns implied by a dynamic logit model estimated, and suggest using aggregated Census of Agriculture data on state-wide adoption of cover crops to calibrate the constants in the the estimated dynamic logit model as a possible remedy under paucity of data related to individual decisions on cover crops adoption

Markov-Perfect rent dissipation in rights-based fisheries

We present a general, dynamic model of within-season harvesting competition in a fishery managed with individual transferable quotas. Markov-Perfect equilibrium harvesting and quota purchase strategies are derived using numerical collocation methods. We identify rent loss caused by a heterogeneous-in-value fish stock, congestion on the fishing ground, revenue competition and stock uncertainty. Our results show that biological, technological and market conditions under which rents will be dissipated in a standard individual transferable quota program are fairly special. These findings provide new insights for designing rights-based programs capable of generating resource rent in marine fisheries.</p

Markov-Perfect Rent Dissipation in Rights-Based Fisheries

We present a general dynamic model of within-season harvesting competition in a fishery managed with individual transferable quotas. Markov-perfect equilibrium (MPE) harvesting and quota purchase strategies are derived using numerical collocation methods. We identify rent loss caused by a heterogeneous-in-value fish stock, congestion on the fishing ground, revenue competition, and stock uncertainty. Our results show that biological, technological, and market conditions under which rents will be dissipated in a standard individual transferable quota program are fairly special. We offer new insights for designing rights-based programs capable of generating resource rent in marine fisheries.This article is from Marine Resource Economics 28 (2013): 111, doi: 10.5950/0738-1360-28.2.111. Posted with permission.</p

The Optimality of Using Marginal Land for Bioenergy Crops: Tradeoffs between Food, Fuel, and Environmental Services

We assess empirically how agricultural lands should be used to produce the highest valued outputs, which include food, energy, and environmental goods and services. We explore efficiency tradeoffs associated with allocating land between food and bioenergy and use a set of market prices and nonmarket environmental values to value the outputs produced by those crops. We also examine the degree to which using marginal land for energy crops is an approximately optimal rule. Our empirical results for an agricultural watershed in Iowa show that planting energy crops on marginal land is not likely to yield the highest valued output.This article is from Agricultural and Resource Economics Review 45 (2016): 217-245, doi:10.1017/age.2016.20. Posted with permission.</p