Dillivan, Kim D.

Duck, Bob N.

Larson, James A.

Roberts, Roland K.

Tyler, Donald D.

English

Research Papers in Economics

Economic Analysis of the Effects of Winter Cover Crops on
No-Tillage Corn Yield Response to Fertilizer Nitrogen
By
Roland K. Roberts
1
  James A. Larson
1
Donald D. Tyler
2
Bob N. Duck
3
and
Kim D. Dillivan
4
Manuscript submitted as a selected paper for the
Western Agricultural Economics Association Meeting
July 13-16, 1997
Reno, Nevada
1 Roberts is Professor and Larson is Assistant Professor of Agricultural Economics and
Rural Sociology, The University of Tennessee, Knoxville.
2 Tyler is Professor of Plant and Soil Science, The University of Tennessee, West
Tennessee Experiment Station, Jackson.
3 Duck is Professor of Plant and Soil Science, The University of Tennessee, Martin.
4 Dillivan is Graduate Research Assistant in Agricultural Economics and Rural Sociology,
The University of Tennessee, Knoxville.Economic Analysis of the Effects of Winter Cover Crops on
No-Tillage Corn Yield Response to Fertilizer Nitrogen
Abstract
Winter cover crops can substitute for fertilizer nitrogen in no-tillage corn production. 
Tennessee data for 1986-95 were analyzed for profit-maximizing nitrogen rates.  Vetch
was $6 per acre more profitable than no cover when rainfall was average, but became less
profitable than no cover when rainfall was 37.5 percent below average.Economic Analysis of the Effects of Winter Cover Crops on
No-Tillage Corn Yield Response to Fertilizer Nitrogen
Introduction
Corn production is an important source of income for farmers in West Tennessee
(Tennessee Department of Agriculture).  The corn plant uses fertilizer nitrogen  intensively
with high application rates relative to other crops required to maximize net revenue. 
However, the soils on which corn is row-cropped in West Tennessee are often highly
erodible and susceptible to nitrate and pesticide run-off  (Bradley and Tyler).  The
potential externalities of off-site pollution from agricultural production is a major concern
of the general public.  Farming is perceived as a major source of nitrate contamination in
ground water, primarily from the use of fertilizer nitrogen by farmers (Chowdhury and
Lacewell).  Nitrates in groundwater used for drinking water have become a public concern
because of the real or perceived risks to human health (Huang, Shank, and Hewitt). 
Economists have proposed standards and incentives, taxes based on ambient
concentrations, liability rules, and firm-specific taxes and standards based on emissions as
ways to reduce non-point pollutants such as nitrates (Chowdhury and Lacewell).  The
intended effect is to decrease fertilizer nitrogen usage by farmers in areas susceptible to
groundwater contamination.  Policy approaches, however, may be difficult to implement
and costly to regulate.
An alternative to policy is encouraging farmers to use legume winter cover crops to
provide part or all of the nitrogen requirements to the crop (Bradley and Tyler).  Research
indicates winter legume covers can provide 36 to 110 lb/ac of nitrogen to a crop (Decker2
et al.).  Combining legume winter cover crops with no-tillage production practices may
also reduce soil erosion, increase organic matter, conserve soil moisture, and decrease
runoff (Duck and Tyler).  Non-legume cover crops, such as winter wheat, may have
similar affects on soil. 
Economic considerations influence the fertilizer nitrogen rate farmers apply following
winter cover crops.  Lichtenberg et al. determined that the profit-maximizing fertilizer
nitrogen rate was reduced 5 percent for the hairy vetch cover and increased 2 percent for
the winter wheat cover when compared with the no-cover situation.  The objective of this
study was to evaluate how alternative winter cover crops affect profit-maximizing
fertilizer nitrogen rates, yields, and net revenues for no-tillage corn production in West
Tennessee.
Data and Methods
The data used were for 1986-95 from a cover crop study for no-tillage corn at the
Milan Experiment Station, Milan, TN.  No-tillage corn was planted after hairy vetch,
crimson clover, wheat, and no cover alternatives.  Equal rates of burndown herbicide were
used for each alternative.  The cover crops were reestablished each season after corn
harvest.   Broadcast ammonium nitrate was the nitrogen source applied around May 30 
about three weeks after planting.  The experimental design was a randomized complete
block with split-plots.  Nitrogen rates of 0, 50, 100, 150, and 200 lb/ac were the main
plots, while the winter cover crops were the split plots.  The same plots received the same3
treatments each year to evaluate the long-term effects of cover crops on soils.  After corn
plant emergence, plant populations were thinned to uniform adequate stands in all plots. 
Yields from four replications were averaged and used to estimate quadratic yield response
functions for each cover crop alternative.
Profit-maximizing nitrogen rates, yields, and net revenues over nitrogen, nitrogen
application, and cover crop establishment costs were calculated for corn prices averaging
$2.39 per bushel (range $1.65 to $3.20) and ammonium nitrate prices averaging $0.271
per pound of nitrogen (range $0.228 to $0.324) (Tennessee Department of Agriculture). 
Break-even cover crop seed prices and rainfall amounts were calculated to equate net
revenues from the cover crop alternatives with net revenue from the no cover alternative. 
Net revenues and nitrogen use required to achieve a target yield of 110 bushels per acre
were also estimated.
Results and Discussion
The estimated quadratic yield response functions for each cover crop alternative are
presented in Table 1.  All coefficients are significantly different from zero at the 10 percent
level, except the intercepts for no cover, wheat, and clover, and the quadratic coefficient
for the clover cover.  The intercepts for clover and vetch are significantly higher than the
intercepts for both no cover and wheat, indicating that when no additional nitrogen is
applied, the legume cover crops provide enough nitrogen to boost yields 37 and 30
bushels per acre compared to no cover and wheat, respectively.  Furthermore, the linear4
coefficients for clover and vetch are significantly different from the no cover alternative,
which indicates different marginal physical products of applied nitrogen.  The R
2s for the
legume cover crops are lower than those for no cover and wheat, indicating that less
variation in corn yield is explained by applied nitrogen for legume cover crops.
Figure 1A graphically depicts the estimated yield response functions and the
corresponding profit-maximizing levels of applied nitrogen and yields for average corn and
nitrogen prices.  For profit maximization, the vetch cover system uses 19 (12 percent) and
36 (20 percent) pounds per acre less applied nitrogen than the no cover and wheat
systems, respectively.  Yields for vetch are 9 (8 percent) and 12 (10 percent) bushels per
acre higher than no cover and wheat, respectively.  Clover, on the other hand, uses 7 (4
percent) pounds per acre more applied nitrogen than the no cover system and 10 (6
percent) pounds per acre less nitrogen than wheat.  Corn yields for the clover system are
only 2 (2 percent) and 5 (4 percent) higher than for no cover and wheat, respectively. 
Thus, the vetch cover reduces profit-maximizing applied nitrogen rates substantially more
than clover, compared to no cover or wheat.  A similar result is found for increases in
profit-maximizing corn yields.
Figure 1B shows the relationships among the value marginal products (VMP) for the
four cover alternatives.  Profit-maximizing levels of nitrogen use for average corn and
nitrogen prices are also shown (same levels as in Figure 1A).  These VMP curves indicate
that the vetch cover uses less applied nitrogen than the other three cover alternatives at5
any positive nitrogen price.   As the price of nitrogen falls, the vetch cover  increases the
use of nitrogen more rapidly than no cover and wheat.  This result indicates that the
advantage vetch has in using less nitrogen than no cover and wheat decreases as the price
of nitrogen falls.  A similar, but more pronounced, result holds for the clover cover. 
Within the range of nitrogen prices observed between 1986 and 1995, clover actually
requires more nitrogen to maximize profits than does the no cover alternative.  In fact, the
price of nitrogen would have to increase to $0.373 per pound (15 percent above the
highest price observed during the period) before the clover cover would require less
nitrogen than the no cover alternative.  Clover uses less applied nitrogen than the wheat
cover, except at nitrogen prices below $0.079 (65 percent below the lowest price
observed during the period).
Table 2 contains estimates of net revenues over nitrogen, nitrogen application, and
cover crop establishment cost for the range of nitrogen and corn prices.  Break-even cover
crop seed prices that equate net revenues from the cover crop alternatives to the no cover
system are also given.  For average corn and nitrogen prices, the vetch cover is $6 (3
percent) more profitable than the no cover alternative.  Wheat and clover are $33 (15
percent) and $17 (8 percent) less profitable than the no cover alternative.  Assuming a
farmer plans for average nitrogen and corn prices, rainfall during the 75 days after
fertilization would have to be 8.27 inches, or 2.32 (22 percent) inches below the average
of 10.59 for 1986 through 1995, for net revenues for the vetch and no cover alternatives6
to be equal.  For rainfall below 8.27 inches, the no cover system would be more profitable
than the vetch system.  The probability of receiving rainfall of 8.27 inches or less during
the 75 days after May 30 is 37.5 percent, based on rainfall data for 1951-90 at a nearby
weather station.
The low corn price ($1.65/bushel) is 48 percent below the high corn price
($3.20/bushel) causing profit-maximizing nitrogen use to decrease by 14 (8 percent), 18
(10 percent), 28 (16 percent), and 24 (16 percent) pounds per acre for the no cover,
wheat, clover, and vetch systems, respectively.  Lower nitrogen use causes yields to
decrease slightly by 2 (2 percent), 3 (3 percent), 4 (3 percent), and 3 (2 percent) bushels
per acre, respectively.  These results suggest that applied nitrogen use for the legume
cover crops is slightly more responsive than no cover and wheat to changes in the price of
corn, but that none of the cover alternative is greatly influenced by changes in the price of
corn.  Profit-maximizing yields are minimally responsive to changes in the price of corn.
Going from the low nitrogen price ($0.228/pound) to the high nitrogen price
($0.324/pound) increases the price by 42 percent causing profit-maximizing nitrogen use
to decrease by 8 (5 percent), 9 (5 percent), 14 (8 percent), and12 (8 percent) pounds per
acre for no cover, wheat, clover, and vetch covers, respectively.  Lower applied nitrogen 
reduces profit-maximizing yields minimally by 1 (1 percent), 1 (1 percent), 2 (2 percent),
and 2 (2 percent) bushels per acre, respectively.  Again, vetch and clover appear to be
more responsive to changes in the price of nitrogen than the no cover and wheat7
alternatives, but no alternative is greatly responsive, and yields are fairly unresponsive to
changes in the price of nitrogen.
Break-even cover crop seed prices (Table 2) for wheat and clover that make their net
revenues equal to net revenue for the no cover alternative are negative, except for average
corn and low nitrogen prices and average corn and high nitrogen prices, which had break-
even wheat seed prices of $0.07 and $0.00 per pound, respectively.  Thus, no reasonable
seed price for wheat or clover would compensate for the higher net revenue for the no
cover alternative.  Vetch, on the other hand, has high break-even seed prices.  The lowest
break-even vetch seed price is $0.80 per pound for low corn and average nitrogen prices,
and the highest is $1.45 for high corn and average nitrogen prices.  These prices are 23
percent and 223 percent above the price of $0.65 per pound used in calculating cover
establishment costs.
Table 3 presents the amounts of nitrogen required to reach a yield goal of 110
bushels per acre for the four cover alternatives.  Net revenues and differences in applied
nitrogen and net revenue from the no cover alternative are also presented.  Wheat requires
29 (22 percent) more applied nitrogen than no cover to achieve a yield of 110 bushels per
acre, while clover and vetch require 7 (5 percent) and 55 (42 percent) pounds per acre less
nitrogen to reach the yield goal.  The reduced nitrogen use for vetch compared to the no
cover alternative does not offset the cost of establishment, causing net revenue to be $2
per acre less for vetch than no cover.  The break-even nitrogen price that equates net8
revenues from vetch with no cover is $0.309 per pound.  This price is 14 percent higher
than the average nitrogen price for 1986 through 1995, but 5 percent lower than the high
price for the period.  Assuming a farmer plans for average nitrogen and corn prices,
rainfall during the 75 days after fertilization would have to be 11.36 inches, or 0.77 (7
percent) inches above the average of 10.59 inches for 1986 through 1995, for net revenues
for the vetch and no cover alternatives to be equal.  The probability of receiving rainfall of
11.36 inches or more during the 75 days after May 30 is 30 percent.
Conclusions
Legume winter cover crops, combined with no-tillage corn production practices, can
reduce the amount of fertilizer nitrogen required for profit maximization while protecting
the soil from erosion.  Our results suggest that for average corn and nitrogen prices the
hairy vetch cover system provided $6 per acre more revenue per acre than the no cover
alternative, while using 12 percent less nitrogen for profit maximization.  Crimson clover
and wheat, on the other hand, required 4 and 10 percent more nitrogen and provided $22
and $37 per acre less net revenue per acre than the no cover alternative.
If a farmer had a yield goal of 110 bushels per acre rather than a profit-maximization
goal, the no cover alternative would give higher net revenues than the other cover
alternatives.  Net revenue per acre would be $2 per acre less for the vetch alternative, but
would require 55 pounds per acre less applied nitrogen (42 percent). 10
References
Bradley, J. F., and D. D. Tyler.  “No-Till: Sparing the Plow to Save the Soil.”  Tennessee
Agri Science. 179(Summer 1996): 7-11.
Chowdhury, M. E. and R. D. Lacewell.  “Implications of Alternative Policies on Nitrate
Contamination of Groundwater.”  J. Agr. Res. Econ. 21(July 1993):82-95.
Decker, A. M., A. J. Clark, J. J. Meisinger, F. R. Mulford, and M. S. McIntosh.  “Legume
Cover Crop Contribution to No-Tillage Corn Production.”  Agron. J. 86(January-
February 1994): 126-135.
Duck, B. N., and D. D. Tyler. “No-Till Winter Cover Crops: Management and
Production.”  Tennessee Agri Science. 179(Summer 1996): 12-16.
Huang, W., D. Shank, and T. Hewitt.  On-Farm Costs of Reducing Residual Nitrogen on
Cropland Vulnerable to Nitrate Leaching.”  Forthcoming  Rev. Agr. Econ.
18(September 1996).
Lichtenberg, E., J. C.  Hanson, A. M. Decker, and A. J. Clark.  “Profitability of Legume
Cover Crops in the Mid Atlantic Region.”  J. Soil and Water Conserv.
49(November-December 1994): 582-85.
Tennessee Department of Agriculture. 1996.  Tennessee Agriculture, 1996. Tennessee
Agricultural Statistics Service., Nashville, TN.
Tyler, D. D., G. V. Wilson, J. Logan, G. W. Thomas, R. L. Blevins, W. E. Caldwell, and
M. Dravillis.  “Tillage and Cover Crop Effects on Nitrogen Leaching,” p. 1-5.  In
Proceedings of the 1992 Southern Conservation Tillage Conference, ed. M. D.
Mullen and B. N. Duck, Special Publ. 92-01, Tennessee Agr. Exp. Stn., The
University of Tennessee, Knoxville, July 1992.10
Table 1.  Estimated yield response functions for various no-tillage corn cover crops,
Milan, TN, 1986-95 
Variable         No Cover                Wheat                 Clover            Vetch
a
Intercept -11.08 -10.67 18.99 26.44
de cde
(-0.76) (-0.75) (1.17) (1.96)
b
N 1.00 0.90 0.60 0.59
c c cd cd
(5.73) (5.32) (3.10) (3.67)
N -0.0027 -0.0022 -0.0014 -0.0017
2c c c
(-3.28) (-2.71) (-1.55) (-2.16)
RAIN 3.49 3.13 3.67 4.58
cc c c
(2.93) (2.71) (2.78) (4.16)
R 0.69 0.70 0.48 0.54
2
Corn yield (bu/ac) is the dependent variable, N is applied ammonium nitrate (N lb/ac), and RAIN is
a
cumulative rainfall 75 days after fertilization (inches).  
The t-statistics are in parenthesis.
b
Significantly different from zero at the 10% level.  
c
Significantly different from no cover at the 10% level (test not shown).  
d
Significantly different from wheat cover at the 10% level (test not shown).  
e11
Table 2. Profit-maximizing levels of applied nitrogen, yields, total revenue, cover
establishment costs, and net revenue for various cover-crop systems and prices on
no-tillage corn, Milan, TN, 1986-95
Cover             N          Yield        Total                  Cost/ac of                 Net        Break-
system          lb/ac        bu/ac     revenue /                              Cover     revenue /    even
ae
 ac                       Cover    mach. &      ac         cover
                                                                                     
                                                                      N       seed       labor                        seed
bc d
                                                                                                                             price
f
Average corn ($2.39)  and N ($0.271) prices:
No cover 162 116 277 44 0 0 237 -
Wheat 179 113 270 49 17 4 200 -0.22
Clover 169 118 282 46 17 4 215 -0.33
Vetch 143 125 299 39 13 4 243 0.95
Low corn ($1.65) and average N ($0.271) prices:
No cover 153 115 190 41 0 0 149 -
Wheat 167 111 183 45 17 4 117 -0.17
Clover 151 115 190 41 17 4 128 -0.27
Vetch 127 123 203 34 13 4 152 0.80
High corn ($3.20) and average N ($0.271) prices:
No cover 167 117 374 45 0 0 329 -
Wheat 185 114 365 50 17 4 294 -0.20
Clover 179 119 381 49 17 4 311 -0.07
Vetch 151 126 403 41 13 4 345 1.45
Average corn ($2.39) and low N ($0.228) prices:
No cover 165 116 277 38 0 0 239 1
Wheat 183 113 270 42 17 4 207 -0.17
Clover 175 119 284 40 17 4 223 -0.07
Vetch 148 126 301 34 13 4 250 1.20
Average corn ($2.39) and high N ($0.324) prices:
No cover 157 115 275 51 0 0 224 -
Wheat 174 112 268 56 17 4 191 -0.18
Clover 161 117 280 52 17 4 207 0.00
Vetch 136 124 206 44 13 4 235 1.20
1986-95 average corn price ($2.39/bu) times profit-maximizing yield.
a
1986-95 avg. nitrogen price for ammonium nitrate ($0.271/lb nitrogen) times profit-max. applied nitrogen.
b
Wheat (90 lb/ac times $0.185/lb), clover (15 lb/ac times $1.10/lb), vetch (20 lb/ac times $0.65/lb).
c
Assumes 80-hp tractor & a 14 x 7" grain drill requiring 0.17 hrs/ac plus labor at $5.85/hr for 0.21 hrs/ac.
d
Total revenue minus costs of nitrogen and cover establishment.
e12
Table 3.  Amount of nitrogen required to achieve a no-tillage corn yield of 119 bu/ac
for various cover systems and prices, Milan, TN 1986-95
                                                                                                                                          Difference in
   Cover                  N           Difference           Total              Cost/ac of            Net         net revenue/
   system             lb/ac       from no cover      revenue/                     Cover     revenue/        ac from 
                                               N lb/ac                 ac              N         Estab.         ac              no cover
No cover 131 - 263 36 0 227 -
Wheat 160 29 263 43 21 199 -28
Clover 124 -7 263 34 21 208 -19
Vetch 76 -55 263 21 17 225 -21
0

Implications of Alternative Policies on

Legume Cover Crop Contribution to No-Tillage Corn Production.”

No-Till: Sparing the Plow to Save the Soil.” Tennessee Agri Science.

On-Farm Costs of Reducing Residual Nitrogen on Cropland Vulnerable to Nitrate Leaching.” Forthcoming Rev.

Profitability of Legume Cover Crops in the Mid Atlantic Region.” J. Soil and Water Conserv.

Tennessee Agricultural Statistics Service.,

Economic Analysis of the Effects of Winter Cover Crops on No-Tillage Corn Yield Response to Fertilizer Nitrogen

Economic Analysis of the Effects of Winter Cover Crops on No-Tillage Corn Yield Response to Fertilizer Nitrogen

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