The primary purpose of this research is to evaluate the economics of those production systems under study in the Ohio Buried Valley Aquifer Management Systems Evaluation Area study. All sources of receipts and costs arising from production will be included. Specific objectives include:
Once identified, a more sustainable farming system will benefit society only if it is broadly adopted by farmers. Farmer adoption of a new technology will hinge largely on farmers' perceptions of the profitability of the new system relative to that currently in use and limitations imposed by their farm resource endowment. SRA 1 was designed to provide estimates of farm profitability and investment requirement for the farming systems under study at the MSEA site. Such estimates will allow farmers to make more informed judgements about technology adoption. They also will be useful to policy makers as they weigh alternative approaches to meeting environmental goals.
The budgets provided in the attached tables are teneative and should be viewed as such. However, enough data is available from the MSEA study to do a comparative analysis of the alternative systems. The extreme cases of continuous corn and ridge-till are presented for discussion. The continuous corn provided a significantly higher return to management than the ridge-till system (return above total costs). The wheat/hairy vetch rotation proved to be very costly in terms of net returns. This cost must be weighed against the nutrient value of the hairy vetch crop. Straw from the wheat crop was not considered due to the difficulty of harvesting wheat straw on a ridge-till system.
While all variable costs are covered under these budgets, it is less clear about total costs. A necessary condition for economic feasibility is that both total variable costs and total fixed costs, including a return to management, must be covered. The benefit of this portion of the MSEA study is that it captures the private costs and returns of alternative productions systems. This information is necessary for designing policies that will influence the social and environmental impacts of production agriculture.
Enterprise budgets were developed for each commodity under each of the three MSEA cropping systems. Records, kept by field technicians during each stage of the production process, were analyzed to determine expenditure categories and amounts, yields, and machinery and labor requirements. Information was also used from the small replicate plots to validate yields. The expenditure categories were grouped by type into variable and fixed costs of production. Since multiple equipment items with similar functions and capacities have been used during field trails, it was necessary to develop a machinery complement based on the production requirements of each system. This simplification will reduce the variance in profitability within and between each system by reflecting a more representative equipment charge.
>The third objective will be approached using linear programming. Machinery complements, yields, input costs, and receipts have been identified by the enterprise budgets. The only resource that will be allowed to vary is farm size. Linear programming is a technique to select the optimal farm plan given a set of production and resource restrictions. In addition, the use of linear programming will allow for a careful examination of the tradeoffs between each system.
The results are limited to two years of production data. The 1991 crop year was very dry while the 1992 crop year had adequate rain. The budgets are based on the average of the two years (including replicate plot data to estimate yields). The ridge-till system had a much lower yield than the conventional tillage system for 1991 (101 bu. versus 140 bu.) but the yields were equivalent in 1992. The results of the wheat/hairy vetch rotation placed a substantial income penalty on the ridge-till system pulling the expected net income of the ridge-till system to $6.80/year versus $41.70 for the continuous corn system.