What is in this article?:
- Conventional, conservation-tillage costs compared for cotton
- Reduced-tillage analysis
- Budgeted operating costs
- The specter of herbicide-resistant weeds multiplying at astronomical rates has changed some growers’ thinking on the matter of conservation-tillage.
- Extension economists at the University of Georgia have completed an investment comparison of conventional- and conservation-tillage equipment using enterprise budgets.
For the reduced-tillage analysis, there is an additional spray for the burndown treatment in the spring, says Smith. “Then we have a rip, strip and plant operation all in one, with a pre-emergence herbicide at 200 horsepower, an eight-row post-emergence directed spray, nitrogen side-dress application, and the high-boy sprayer. There’s a reduction in operating costs because there’s a time-savings, fuel savings, and repair and maintenance savings since we’re not using as much equipment. It’s about $10 less than the conventional. For the fixed cost, we’re estimating about $8 per acre less than the conventional. The investment cost is $50,000 less than conventional for the conservation equipment.”
There is a savings from a machinery operation standpoint and fixed-cost standpoint to using reduced-tillage, says Smith. “However, with the increased weed pressure in Georgia, our budget emphasizes that we’re trying to prevent the spread of resistant Palmer amaranth pigweed, and we have very intensive sprays. So you’ll see that the variable costs or the operating expenses for conservation-tillage are actually higher. Where we previously saw the benefits of conservation-tillage with the savings in equipment, it is being outweighed by the higher chemical costs we have for reduced-tillage, specifically in Georgia.”
The economists also wanted to see how much cotton a farmer would need to grow to make an annual payment on the purchase of new equipment.
“We decided we’d have a five-year note, making annual payments at 8-percent interest, and we assumed a 15-percent down-payment, either with cash or a trade-in value of old equipment. We assume that cotton accounts for 50 percent use of all implements, except the directed sprayer and the nitrogen side-dress applicator, which account for about three-quarters use on the farm. We assumed irrigated yields at 1,100 pounds and dryland yields are 700 pounds. We assumed a price of 85 cents per pound paid to the farmer.”
As far as the principal note needed for the conventional equipment, the economists set the number at $115,000 with an annual payment of almost $29,000. With conservation-tillage, the principal is $90,000 with an annual payment of $22,000.
“As far as the yields needed to make the annual payments on the operating note, for conventional-tillage equipment, we’re looking at a range of $29 to $41 per acre. With a smaller number of acres, fixed costs will rise somewhat. For the pounds needed to pay for that, we’d need about 34 to 50 pounds. That equals 3 to 4.5 percent of irrigated yield to make the annual payment and 5 to 7 percent of dryland yield, and that assumes 85-cent cotton.”
For reduced tillage, a grower would need to make 2.5 to 3.5 percent of irrigated yield to make the payment and 4.5 to 5.5 percent of dryland yields.
“We still have to grow cotton in addition to making that annual payment, so we looked at how much it would cost to grow cotton with the annual payment and figure out break-even prices and yields for conventional- and conservation-tillage,” says Smith.