OVERDUE FINES: 25¢ per d” per item RETUMING LIBRARY MATERIALS: Place in book netum to ream charge from circulation recou { fl.l\\\\“ . \ :II"’I” .' E ' x t 300 A240 AN ANALYSIS OF ON-FARM IMPACTS FOR SOIL CONSERVATION AND NON—POINT SOURCE POLLUTION ABATEMENT PRACTICES AND POLICIES ON REPRESENTATIVE FARMS IN SOUTHEAST MINNESOTA By Merritt Merrill Padgitt A DISSERTATION Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Resource Development 1980 yu ‘ 5 ’J ABSTRACT AN ANALYSIS OF ON-FARM IMPACTS FOR SOIL CONSERVATION AND NON-POINT SOURCE POLLUTION ABATEMENT PRACTICES AND POLICIES ON REPRESENTATIVE FARMS IN SOUTHEAST MINNESOTA BY Merritt Merrill Padgitt A number of concerns have been expressed over the effectiveness of past soil conservation and non-point source pollution abatement policies in getting farmers to adopt needed control measures. Although a national soil and water conservation program has existed for forty- five years, nearly one-third of the nation's cropland with erosion hazards remain inadequately treated. The Resource Conservation Act of 1977 initiated an appraisal of the nation's soil and water resources and directed the Secretary of Agriculture to develop a program for furthering conservation and protection of these resources. Consid- eration in developing such a program is being given to voluntary as well as mandatory implementation strategies. The purpose of this study is to estimate on-farm impacts from alternative soil conservation technology and policy options and to assess impact differences among farms because of differences in their size, soil composition and enterprise combinations. Eight represen- tative farm models of southeast Minnesota are used to simulate net income, soil loss and applied soil conservation technology under ,Qon ‘. “no Vi ya» .w u» rm i. . lav .6 . .\ ‘\. . n v . r1 :. .n win 1. ”u .K. x.» n¥ ”l p. ‘ L «.1. J1. ‘.§ Ch”; ‘tl- P. 1713 1e h‘ x.' . l 1 « F Merritt Merrill Padgitt alternative policy options. The farm models include small and large farms, farms with moderate and severe erosion hazard soils and farms with and without roughage consuming livestock enterprises. The impact of seven policy options is estimated for each representative farm. Among the policy options are a replication of the current Agricultural Conservation Program, mandatory soil loss controls as proposed by the Minnesota legislature, and a minimum conservation farm plan as necessary under a cross compliance type of strategy. The results show that alternative soil conservation practices and policy options impact on farm incomes, soil loss and applied con- servation technology. The largest reduction in income occurs under mandatory policies which reduce soil loss rates of tolerance levels. The range of income reduction on the eight farms is from 4 to 17 per- cent. The change in applied technology needed to achieve soil loss tolerance includes a reduction in row crop acreage, increased use of conservation tillages and added practices of contouring and strip cropping. It was found that cost-sharing as under the current Agri- cultural Conservation Program did not change applied soil conservation technology and results in no change in income or soil loss on repre- sentative farms. The adoption of a minimum conservation plan results in an income reduction of as much as 7 percent. Mandatory policy options impact grain farms more than livestock farms. The income reduction on grain farms is from 7 to 17 percent while on livestock farms the reduction is 6 percent or less. Farms with severe erosion hazards have larger reductions in income under Merritt Merrill Padgitt mandatory options than farms with moderate erosion hazards. Also, the percentage reduction in income on small farms is greater than on large farms for the policy options analyzed. ACKNOWLEDGMENTS The author wishes to express his deep appreciation to Dr. Raleigh Barlowe for his helpful guidance as dissertation advisor and chairman of my guidance committee. Appreciation is also expressed to Dr. Milton Steinmueller, Dr. Anthony K00 and Dr. Donald Holecek for the assistance they provided as members of the dissertation and guidance committee. A debt of gratitude is extended to Dr. Anthony Grano, Dr. William Crosswhite and the administrators of the Natural Resource Economics Division of ESCS for providing technical and financial assistance for this study. Thanks are also due my colleagues of ESCS in East Lansing and in particular Priscilla Prophet for the data processing and programming she provided. Appreciation also goes to Mr. William Stokes, Mr. Jerome Hildebrandt, Mr. Edgar Drogemuller of the Soil Conservation Service in Minnesota for the assistance they provided. Thanks is also extended to Dr. Fred Benson, Dr. James Bauder, and Mr. Mervin Freeman of the Minnesota Cooperative Extension Service and to Marilyn Lundberg of the Minnesota Rivers Basin Board for their assistance. Finally for their encouragement, support and patience, I am deeply grateful to my wife Chloe Ann and daughter Andrea. ii TABLE OF CONTENTS Page LIST OF TABLES . . . . . . . . . . . . . . . . . . . . . . . . . . vi CHAPTER I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . 1 Setting . 1 Study Objectives . 4 Area of Study 6 Organization . 8 Definition of Terms 8 II. A CONCEPTUAL FRAMEWORK FOR ASSESSING SOIL LOSS AND NON-POINT SOURCE POLLUTION PROBLEMS ON AGRICULTURAL LAND . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Introduction . . . . . . . . . . . . . . . . . . . 12 Institutional Parameters . . . . . . . . . . . . . . . . 14 Property Rights in Land . . . . . . 14 Historic Development of Soil Conservation Policy . . 17 Recent Legislation for Program Planning and Implementation . . . . . . . . . 22 Major Soil and Water Conservation Programs . . . . . 26 Economic Parameters . . . . . . . . . . . . . . 29 Soil as a Factor of Production . . . . . . . . . 30 Economics of Soil Loss Control Practices . . . . . . 31 Physical Parameters . . . . . . . . . . . . . . . . . . 34 Soil Loss Tolerance . . . . . . . . . . . . . . . . 34 Soil Loss Measurements . . . . . . . . . 37 Naturally Occurring Factors Which Affect Soil Loss Rates . . . . . . . . . . . . . . . . . 38 Affects of Farm Production Systems . . . . . . . . . 40 Crop Yield Impacts From Tillage System . . . . . . . 44 III. ANALYTIC FRAMEWORK . . . . . . . . . . . . . . . . . . . . 46 Policy Simulation . . . . . . . . . . . . . . . . . . . 46 Representative Farms . . . . . . . . 47 The Mathematical Model of Representative Farms . . . . . 50 Policy Options . . . . . . . . . . . . . . . . . . . . . 54 iii CHAPTER IV. THE PHYSICAL DATA Representative Farms . Land Base . . Fayette and Associated Soils . Downs and Associated Soils . Crop Yields . . Soil Loss Estimation . Conservation Systems . . Contouring and Grassed Waterways . Contour Strip- Cropping . Steep Back— —Sloped Terraces . Crop Rotation and Tillage Systems V. ECONOMIC DATA SET FOR MEASURING NET INCOME EFFECTS FROM ADOPTION OF SOIL LOSS CONTROL PRACTICES ON REPRESENTATIVE FARMS . Activities . . Prices and Value of Production . Seed, Fertilizer, and Chemical Pesticide Inputs Farm Machinery Operation Cost Other Input Costs . Costs of Soil Loss Control Practices . VI. ON—FARM IMPACTS FROM POLICY OPTIONS Analysis of Policy Simulations . Baseline . . Cost- Share on Practice . Tillage Subsidy Soil Loss Maximum Soil Loss Tax Combined Policy . Minimum Conservative Plan . Empirical Results on Representative Farms Generalizations From Results . VII. SUMMARY AND CONCLUSIONS Summary and Conclusions . . Limitations and Needs for Future Study . APPENDIX A. MINIMUM LEVELS OF ALFALFA HAY AND CORN SILAGE PRODUCTION ON REPRESENTATIVE FARMS iv Page 57 57 62 64 67 7O 74 76 77 79 82 82 86 86 90 91 100 108 108 117 117 118 118 119 119 120 120 121 122 134 139 139 142 146 ‘N- h Aw. I APPENDIX Page B. SAMPLE BUDGETS FOR CROP ROTATION COMPONENTS BY TILLAGE SYSTEM . . ,,, . . . . . . . . . . . . . . . . . 147 C. EMPIRICAL RESULTS FROM MODEL RUNS OF POLICY OPTIONS ON REPRESENTATIVE FARMS . . . . . . . . . . . . . . . . 164 LIST OF REFERENCES . . . . . . . . . . . . . . . . . . . . . . . 221 L- J4. I TABLE 4—2. 4-3. 4-4. 4-5. 4-6. 4-7. 4-8. 4-9. 4-10. LIST OF TABLES Major land uses assumed for representative farms with Fayette and associated soils, southeast Minnesota study area Major land uses assumed for representative farms with Downs and associated soils, southeast Minnesota study area Soil acreage by soil mapping unit and land capability on representative farms with Fayette and associated soils, southeast Minnesota study area . Soil acreage by soil mapping unit and land capability on representative farms with Downs and associated soils, southeast Minnesota study area . . . . Selected crop yields by soil mapping unit assumed for the southeast Minnesota study area Soil erodibility factors assumed for the Universal Soil Loss Equation by soil mapping units, southeast Minnesota study area . . . . . . . . . . P factors by soil mapping units assumed for the Universal Soil Loss Equation when contouring is applied, southeast Minnesota study area . Assumed waterway length and land requirement by soil mapping unit to establish grassed waterways, southeast Minnesota study area P factors by soil mapping units assumed for the Universal Soil Loss Equation when strip-cropping is applied, southeast Minnesota study area . Slope length and gradient factors by soil mapping units assumed for the Universal Soil Loss Equation on fields without terracing and with grassed, back- sloped terracing, southeast Minnesota study area vi Page 63 63 65 68 72 77 79 80 81 83 TABLE 4—11. 5-2. 5-3. 5—4. 5-5. 5—6. 5-7. 5-8. 5-9. 5-10. 5-11. C factors for Universal Soil Loss Equation by crop rotation and tillage system, southeast Minnesota study area . . . . . . . . . . . . . . . . Assumed crop rotations on representative grain and livestock farms, southeast Minnesota study area Adjusted normalized prices for commodities grown on representative farms, southeast Minnesota study area I O O O I I O I O O O O O O I O O 0 Seed planting rates, prices and cost per acre by crop and tillage system, southeast Minnesota study area 0 I 0 O O O O I O O I O O O I O O O O I O Assumed nitrogen fertilizer application rates for rotation components and selected crop yields under alternative tillage systems, southeast Minnesota study area . . . . . . . . . . . . Assumed potassium fertilizer application rates for rotation components and selected crop yields under alternative tillage systems, southeast Minnesota study area . . . . . . . . . . . . . . . . . . . Assumed phosphorus fertilizer application rates for rotation components and selected crop yields under alternative tillage systems, southeast Minnesota study area . . . . . . . . . . . . . . Assumed lime application rates for rotation components under alternative tillage systems, southeast Minnesota study area . . . . . Herbicide costs for rotation components under alternative tillage systems, southeast Minnesota study area 0 O O I O O O O I O O O O O O O O O O Assumed farm machinery on representative farms, southeast Minnesota study area . . . . . . . . Machine operation use rate, power source, labor requirement and cost, southeast Minnesota study are a C I O O O O O O O O O O O O O O O O O O O O 0 Fuel type, fuel consumption and operation cost of power units, southeast Minnesota study area . vii Page 85 88 92 93 96 97 98 99 101 104 105 106 5-16. 5—17. 5-18. 6—1. 6-2. 6—3. 6—5. Machine operation by tillage system for corn, southeast Minnesota study area . Machine operation by tillage systems for soybeans, southeast Minnesota study area . Machine operation by tillage for oats and alfalfa hay establishment, southeast Minnesota study area Machine operations by tillage for establishment of alfalfa hay without oat cover crop, southeast Minnesota study area . Machine operation by tillage for established alfalfa hay, southeast Minnesota study area Estimated cost of soil loss control practices by soil type and slope gradient for Fayette and associated soils, southeast Minnesota study area . Estimated cost of soil loss control practices by soil type and slope gradient for Downs and associated soils, southeast Minnesota study area . Net income, subsidy, soil loss and applied con- servation technology on the 480 acre grain farm with Fayette and associated soils under alternative policies, southeast Minnesota study area . Net income, subsidy, soil loss and applied conser- vation technology on the 480 acre livestock farm with Fayette and associated soils under alternative policies, southeast Minnesota study area . Net income, subsidy, soil loss and applied conser- vation technology on the 160 acre grain farm with Fayette and associated soils under alternative policies, southeast Minnesota study area . Net income, subsidy, soil loss and applied conser- vation technology on the 160 acre livestock farm with Fayette and associated soils under alternative policies, southeast Minnesota study area . Net income, subsidy, soil loss and applied conser- vation technology on the 480 acre grain farm with Downs and associated soils under alternative policies, southeast Minnesota study area . viii Page 107 109 110 111 112 115 116 123 125 127 129 130 TABLE 6-6. 6-8. Net income, subsidy, soil loss, and applied conservation technology on the 480 acre livestock farm with Downs and associated soils under alter- native policies, southeast Minnesota study area Net income, subsidy, soil loss and applied conser- vation technology on 160 acre grain farm with Downs and associated soils under alternative policies, southeast Minnesota study area . Net income, subsidy, soil loss and applied conser- vation technology on 160 acre livestock farm with Downs and associated soils under alternative policies, southeast Minnesota study area ix Page 132 133 135 l 5 I \ .. . v. . ‘L‘ _- L r- ‘ b I: :77 "t CHAPTER I INTRODUCTION Setting Soil conservation is an established public policy and numerous programs have been implemented over the last forty-five years by the U.S. Department of Agriculture to achieve various objectives.1 Early objectives were to reduce soil loss and maintain long-term soil pro- ductivity as well as aiding farm incomes during periods of surplus production. Later, during the 19705 when there was a rising demand for a cleaner environment, water quality objectives were added.2 The ninth Environmental Quality report indicates that soil 3 It has been erosion continues to be a problem of great magnitude. reported that three-fourths of the nation's four billion tons of sediment delivered to watercourses come from agricultural lands.“ 1The Soil Erosion Service was created in the U.S. Department of Interior in 1933 out of concern for soil erosion on public lands. It was renamed Soil Conservation Service and transferred to the U.S. Department of Agriculture in 1936 out of concern for soil erosion on private lands. 2Section 208 of the Federal Water Pollution Control Act Amend— ment of 1972 (P.L. 92-500) identifies agricultural activities as causing non-point source pollution and requires planning for abatement. 3Council on Environmental Quality, Environmental Quality, 1978, Ninth Annual Report (Washington, D.C.: Government Printing Office, 1978), p. 274. l*David Pimentel et a1., "Land Degradation: Effects on Food and Energy Resources," Science 194 (October 1976): 149. In addition, since 1935, about 100 million acres have been depleted to the point they cannot be economically cultivated and on another 100 million acres, more than 50 percent of the topsoil has been eroded.1 National inventories in 1958 and 1967 showed only 31.2 percent and 30.1 percent, respectively, of the cropland with erosion hazards being treated adequately.2 A number of questions and concerns over the effectiveness of past policy has been expressed. In testimony before the U.S. Senate Subcommittee on Environment, Soil Conservation and Forestry, Marion Edley stated that "programs have not accomplished as much as we have "3 In a hoped; in fact, there is evidence of serious backsliding. survey, the General Accounting Office found that soil losses on farms participating in soil and water conservation programs were no less than those that did not participate.” Currently, policy makers are assessing soil and water conser- vation programs and strengthening financial incentives for adoption of practices. The Soil and Water Resources Conservation Act (P.L. 95-192) 1Council on Environmental Control. 2U.S. Department of Agriculture, Conservation Needs Inventory Committee, Basic Statistics of the National Inventory of Soil and Water Conservation Needs (Washington, D.C.: Statistical Bulletins 317 and 461, August 1962 and January 1971). 3Hearings before the Subcommittee on Environment, Soil Conservation and Forestry of the Committee on Agriculture, Nutrition, and Forestry, U.S. Senate, 95th Congress, on S. 1280, Washington, D.C., August 2 and 4, 1977, p. 64. I*General Accounting Office, Report to the Congress by the Comptroller General of the United States (Washington, D.C.: Government Printing Office, 20 December 1977). s . \ . . 1.» n .. . . \ ‘\ . . < i .s Q. . . . a.\ PH. 8 h s 2.4 T“ ‘5 D» AL C. Lu. n 1 NM. 1‘ Q . ‘K Y a EL \ .1 Av, M4» r1. «.9 a M-.. a. umim .Mu Mp.“ A A «9,. e “A r G . ask . a . . . T1 1 I: 14. Wk .8 . «mm ‘1». file a VI ‘hL Ru fiat »d A n be A.» Fu\ calls for a continuing appraisal of soil resources and for program planning to assist private land owners in furthering land and water conservation. The program is to include "an evaluation of the effectiveness of soil and water conservation ongoing prOgrams,"1 an "identification and evaluation of alternative methods for the conservation, protection, environmental improvement and enhancement of soil and water resources in the context of alternative time frames, and a recommendation of the preferred alternative and the extent to which they are being implemented"2 and an "analysis of costs and benefits of alternative soil and water conservation practices."3 The Rural Clean Water Program (P.L. 95-217) passed by Congress in 1977 amends the Federal Water Pollution Control Act to authorize the Secretary of Agriculture to allocate funds in addition to ongoing programs to land owners who adopt pollution abatement measures. As a result of these recent legislative actions, it is anticipated that a new soil and water conservation policy will emerge. As a part of the Resource Conservation Act planning process, the U.S. Department of Agriculture is developing alternative strategies to deliver soil and water conservation programs. These strategies are scheduled for executive, Congressional and public review in 1980. The strategies include voluntary incentives as well as mandatory 1U.S. Congress, Soil and Water Resources Conservation Act of 1977, P.L. 95-192, Sec. 6(a)-3 (Washington, D.C.: Government Printing Office, November 1977). 2Ibid., Sec. 6(a)-4. 31bid., Sec. 6(a)—7. a". . .. 4| , ,. . . . x {I v .. n..- a . :s v» , \ U .1 RAM \u Cy Fly ‘1‘ F. r I r . a. i 3 at u. ,.. . fit L H .‘ 1 w 1 hi Mu L» r1 2. r. . u u f a .. . .s. as a t v . _ a .\t 8L F1 at e $L rlc 0 fix a» 8L 0 .1 a Flt .\. n t. .1. e O T1 «\u S S ...l. t. R ~\u approaches. Whatever policy eventually develops, it will be the result of a complex political process considering many broad and narrow private and public interests. This study addresses some of the private interests of farmers in a soil conservation policy. Study Objectives Earlier studies have attempted not only to assess the magnitude of the soil loss and non—point source pollution problem, but also the impacts of alternative control practices and policies on aggregate agricultural production. River basin studies conducted by U.S. Department of Agriculture in Minnesota,~ Iowa, Wisconsin and other states have estimated soil loss rates under current conditions and under proposed comprehensive land treatment plans for the area. The regional impacts of these plans on the agricultural economies of the basins were estimated. A national economic assessment by Heady and Wade“ as well others has made estimates of the magnitude and potential impacts of lU.S. Department of Agriculture, The Southeast Minnesota Tributaries Basin Report (draft) prepared by the Soil Conservation Service (St. Paul, Minn.: Economics, Statistics and Cooperatives Service, and Forest Service, 1980). 20.8. Department of Agriculture, Southern Iowa River Basin Study Main Report (draft prepared by the Soil Conservation Service (Des Moines, 13.: Economics, Statistics, and Cooperatives Service and Forest Service, February 1979). 3U.S. Department of Agriculture, Water and Related Land Resources, Wisconsin River Basin (Madison, Wis.: Soil Conservation Service, 1979). 1'James C. Wade and E. O. Heady, ”Controlling Non-Point Sediment Sources with Cropland Management: A National Economic Assessment," American Journal of Agricultural Economics 59 (February 1977): 13-14. 5R. P. Beasley, Erosion and Sediment Pollution Control (Ames: Iowa State University Press, 1972). abatement measures. Osteen and Seitz1 measured economic impacts of some alternative policies in the corn belt region. Taylor and Frohberg2 estimated certain welfare impacts of public policies related to different levels of agricultural pollution control. Walker3 evaluated the economic impact of alternative policies at the river basin level. This study attempts to measure resource use implications at the farm level from alternative practices as well as different policies. The U.S. Department of Agriculture study of the Southeast Minnesota Tributaries Basin outlined a rather specific land treatment plan for reducing sheet and rill erosion. The plan calls for significant increases over the next twenty years in acres treated by different erosion control practices. The plan as proposed was shown to signi- ficantly reduce sheet and rill erosion with only slight changes in total crop production and aggregate income. The study treated the region as a farm unit and did not address the possible implications from shifts in production between soil types and the possible redis— tribution of income among landowners. The objective of this study is 1Craig Osteen and Wesley D. Seitz, "Regional Economic Impacts of Policies to Control Erosion and Sedimentation in Illinois and Other Cornbelt States," American Journal of Agricultural Economics 60 (August 1978): 510-517. 2C. Robert Taylor and Klaus Frohberg, "The Welfare Effects of Erosion Controls, Banning Pesticides, and Limiting Fertilizer Appli- cation in the Corn Belt," American Journal of Agricultural Economics 59 (February 1977): 25-36. 3David J. Walker, "An Analysis of Alternative Environmental and Resource Policies for Controlling Soil Loss and Sedimentation from Agriculture" (Ph.D. dissertation, Iowa State University, 1977). 10 3‘32 ‘11;~\ I'LALL. {/D to measure the probable impacts of alternative practices and different policy options on a farm production system. Drawing from the results of the Southeast Minnesota Tributaries Basin Study, it is hypothesized that acceptance of a conservation prac- tice has different economic impacts on individual farms because of variations in their size, soil composition and enterprise combination. It is also hypothesized that different implementation programs have different impacts on farms because of these same elements. The model used in this study will test these hypotheses. The specific objectives of the study are: 1. To determine net income on representative farms with and without erosion control systems. 2. To assess the net income and soil loss effects that occur under the current cost—share program. 3. To evaluate the impact of voluntary and mandatory policy options on increases in the adoption of erosion control systems. Area of Study The study area for this analysis is southeastern Minnesota. In the ten county area, over 70 percent of the cropland has erosion hazards associated with its use.1 Although many acres are adequately treated by rotations, contours, stripcropping or terracing, about 40 percent of this area has average annual soil loss in excess of 1Minnesota Conservation Needs Committee, Minnesota Soil and Water Conservation Needs Inventory, St. Paul, Minnesota, August 1971. til at south. ' ,l‘ H|| - ‘ L liq a.» nu w .0 I. e .\. Vb 01err \J long-term tolerance levels1 established by the Soil Conservation Service. Not all farmers have the same willingness to adopt soil conservation practices on their farms.2 In 1975, the District Conservationist estimated that Houston County had 73 percent of its land in tillage rotation adequately treated while Fillmore, a neighboring county, had only 34 percent adequately treated.3 The soils of southeastern Minnesota are classified as predominantly either Alfisols or Mollisols.“ The Alfisols are developed from loess parent material which is of variable thickness and underlain by glacial till. The native vegetation on these soils has been mostly hardwood forest. The Alfisol soils are most prevalent along the eastern border of the state and occur on the narrower ridge tops and steeper side slopes. The Mollisols are developed from glacial til and under native prairie grass vegetation. The Mollisols occur in southcentral Minnesota on gently rolling to nearly level plains. The study area is within the transition zone of eastern deciduous forest vegetation and prairie vegetation. It contains both Alfisols and Mollisols. 1Soil loss tolerance levels are defined in Chapters II and IV. 2Personal interviews with Kenneth Rose, Area Conservationist; Jerome Hildebrandt, District Conservationist; Harold Drogmueller, District Conservationist; and Mervin Freeman, Area Extension Specialist. 3U.S. Department of Agriculture, Soil Conservation Service, unpublished data to update the Minnesota Soil and Water Conservation Needs Inventory to reflect the 1975 status, St. Paul, Minnesota. ”U.S. Department of Agriculture, Soil Conservation Service, "Soil Taxonomy," Agricultural Handbook No. 436 (Washington, D.C.: Government Printing Office, December 1974), pp. 411-428. About 15 percent of the total area remains in hardwood forest while 62 percent is cropland.1 The remaining land area is in pasture, urban or other miscellaneous uses. Most of the land is in private ownership and used for agricultural production. Major crops grown in the area include corn, soybeans, oats, hay, silage and pasture. Organization In addition to the problem setting, study objectives and description of study area previously discussed, Chapter 1 includes a definition of terms. Chapter II provides a conceptual framework for assessing the problems and discusses the institutional, economic, and physical dimensions to the soil erosion and non-point source pollution problem. Chapter III outlines the analytic framework for analyzing on-farm impacts of soil erosion control systems and policy options. Chapters IV and V document the physical and economic data sets for the model. Chapter VI analyzes the results from the model and Chapter VII is a summary of the research and its findings. Definition of Terms The following definitions are presented to aid readers who are not familiar with terminology relating to soils and soil conser- vation management.2 These definitions are of a general nature. For 1USDA, scs, unpublished CNI data, 1975. 2Definitions of additional terms may be found in the Resource Conservation Glossary published by the Soil Conservation Society, Ankeny, Iowa in 1976 or in the Glossary of Soil Science Terms published by the Soil Science Society of America, Madison, Wisconsin, in 1978. 533:6 t «M.» u r. «d F \ .\. . \ IA n+1. 1 ‘§‘ ‘1‘ ‘IL AK II. some terms a more specific definition is given when discussed in other chapters. Alfisols: Alfisols are one of ten orders used to classify world soils. In the United States corn belt region, soils of this order are those which developed under native forest vegetation and on loess or glacial till parent material. Back-sloped terrace: A type of terrace used on erosive soils to direct runoff and reduce soil loss. The ridge of the terrace is constructed by pushing the dirt up the slope and leaving a steep slope on the downward side. The steep slope is placed in permanent vegetation. This type of construction leaves a rela- tively flat surface on the upward side which may be cultivated. Chiselgplowing: A soil tillage which breaks and loosens the top four to fifteen inches of soil without inversion. The practice leaves 50 to 90 percent of preceding crop residues on the surface to help control erosion. Conservation tillage: Any tillage system specifically used to reduce soil erosion. It includes chisel plowing, strip tillage and discing when used as a substitute for moldboard plowing. Contour farming: The practice of performing all tillage and planting operations across the slope or along contour lines of equal ele- vation. The direction of row crops is around the hillside rather than straight rows which may go up or down the hill. 10 Cost-share: An economic incentive program provided by federal, state or local governments to encourage certain activities such as the adoption of soil conservation systems. For specific soil con— servation practices, land owners are reimbursed for a certain percentage of the cost they incur in adopting the practice. Crop rotation: A planned sequence of crops growing in a regular recurring succession on the same field. For example, a C-O-M three-year rotation consists of corn the first year, oats the second year and meadow the third year and then the sequence repeats. Erosion phase: The mixture of A and B soil horizons which occur within the normal plow layer. Phase I consists of only A horizon soils, phase 11 consists of a mixture of A and B horizon soils and phase III consists of B horizon soil. Grassed waterway: A constructed outlet, shaped, graded and established with permanent vegetation for safe disposal of runoff. Their purpose is to provide an outlet for runoff and prevent gully formation. Moldboard plowing: A tillage technique which inverts the top four to twelve inches of soil. The technique incorporates all surface residues into the soil profile and exposes bare soil. Mollisols: Mollisols are one of the ten orders used to classify world soils. In the United States corn belt region, soils of this order are those developed under native prairie vegetation and from glacial till parent material. 11 Mulch tillage: A form of conservation tillage which leaves a part of the preceding crop residue on the surface. Chisel plowing is a common form of mulch tillage. No-till: Planting a crop in previously unprepared soil by opening a narrow slot or trench of only sufficient width and depth for proper seed placement. No other soil preparation is done to prepare the seedbed. Rill erosion: The removal of soil by runoff which causes small but well-defined channels. If these channels do not interfere with normal tillage, these channels are called rills. Runoff: That part of rainfall which flows over the ground surface and through channels to larger streams. Sheet erosion: The removal of a fairly uniform layer of soil from the land surface by runoff water. Slope gradient: A measure of the steepness of a land surface. It is expressed as the ratio or percentage of the vertical distance to the horizontal distance. For example, a 10 percent slope implies a 10 feet rise for every 100 feet of horizontal distance. Slope length: The distance from the point of origin of runoff to the point where runoff enters a well-defined channel. Strip cropping; Growing crops in a systematic arrangement of strips or bands to reduce soil erosion. The crops are arranged along a slope so that strips of soil conserving crops alternate with strips of row crops. ‘7‘ . CHAPTER II A CONCEPTUAL FRAMEWORK FOR ASSESSING SOIL LOSS AND NON-POINT SOURCE POLLUTION PROBLEMS ON AGRICULTURAL LAND Introduction A holistic perspective is necessary to adequately define the soil loss and non-point source pollution problem and to evaluate alter- native abatement measures. As with any natural resource problem, it consists of physical-biological, economic, and institutional dimen- sions. Neglecting any one of these dimensions would result in only a partial analysis of the total problem. The physical-biological dimension includes the many interacting elements which cause soil to erode and impact on the environment. The research in this dimension can be broadly divided into two areas of study. One area includes the on-site effects of weather, vegetation, t0pography, and the soil erosion and sedimentation control practices. This includes soil loss effects on soil fertility, water infiltration, internal drainage, soil microbial activity related to plant disease and pests as well as other factors that may affect crop productivity. The other broad area deals with sediment movement on the other land and into water courses. The off-site physical—biological effects include, inter alia, water quality, health, aesthetics, fish and wildlife habitats, and flooding. 12 13 The economic dimension to this problem consists of an assessment of benefits from control practices, the cost of applying control prac- tices, and the timing of these costs and benefits. It, likewise, can be divided into on-site and off-site effects. The on—site economic benefits basically include increased value of production through changes in crop yields or land use and potential reductions in cost of production inputs. The on-site costs of erosion control practices include investments for land treatments, reduction in value of produc- tion from reduced crop yields or change in land use and increase in production input cost. The off-site costs and benefits are much more numerous and difficult to identify and empirically measure. Economic values cannot be easily placed on non-market goods such as aesthetic and human health which may be affected. Its economic impacts on social costs for flood protection, water treatment, electric power generation, and navigation are among the major economic variables that are measurable in the market economy. The institutional dimension addresses the question of what is and what is not an acceptable land use. It performs an overall management function of allocating beneficial and adverse effects from land use activities not only between private and public sectors of the economy but also between present and future generations. Included in the institutional dimension is the role of governments in directing land use activities toward socially desired goals. The focus of this study is limited to on-site effects of soil loss and non-point source pollution abatement practices and the impact () (U 14 of different governmental activities to increase the adoption of practices on private lands. Further, the study is limited to a short—run analysis including only the life span of practices and the short-run economic goals of farmers. Consequently, this conceptual framework is also limited to on-site and short-run physical and economic impacts and governmental activities directed to abate the soil loss and non-point source pollution problem on private land. Institutional Parameters The institutional dimension to the soil loss and non-point source pollution problem involves many interacting elements from social, political, economic, and religious activities which dictate 1 This discussion will what are and what are not acceptable land uses. focus on governmental activities to implement programs and formulate policy to increase the farmer's adoption of control measures. Before discussing government's activities, it is important to introduce the concept of property rights in land and discuss the relationships of these rights to governmental activity. Property Rights in Land From a legal point of view, property consists of man's right to use and control the object.2 Property consists of interests or rights which an individual may acquire in an object but not the 1Raleigh Barlowe, Land Resource Economics, 2nd ed. (Englewood Cliffs, N.J.: Prentice Hall, Inc., 1972), p. 355. 2Ibid., p. 374. ’U 15 physical object itself. The concept usually implies an element of exclusion.1 A right gives one individual the opportunity to use and control but excludes someone else from having the opportunity to have the same use or control. Schmid has described property rights as "the relationship of one person to another with respect to a resource or any line of action."2 Any line of action can involve interpersonal relations and includes one's right to impose cost or inflict harm on another individual or group of individuals. For example, a smoker's right to impose discomfort on a non-smoker or vice versa. Schmid also states that "rights are the instrumentality by which any society controls and orders human interdependence and resolves the question of who gets what.”3 This implies that rights are synonymous with rules and that some sovereign power will recognize and enforce those rules. The rules evolve to resolve conflicts between two or more persons who feel they have some right to an object or line of action. Rights in land have been described as a bundle of rights which can be held separately or in combination. In the United States, the 1The element of exclusion depends on the nature of the object or good. The use of some goods by one person does not exclude someone else from making the same use of the good. An example of such a good is a TV signal. Another example is the aesthetics of landscape. Two or more persons can enjoy it simultaneously and neither can prevent the other from its enjoyment. 2A. Allen Schmid, Property, Power and Public Choice (New York: Praeger Publishing Co., 1978). 31bid., p. s. 16 most complete set of rights in land is when it is held in fee simple ownership. Barlowe lists the following rights often associated with fee simple ownership: The fee simple owner has the right to possess, use, and within reason to exploit, abuse, and even destroy his land resource. He can sell his land with or without deed restric- tions that affect its future use. He can give it away, trade it for other things, or devise it in any of a number of ways to his heirs. He can lease his use rights to others. He can mortgage his property or permit liens to be established against it. He can subdivide his land holding or grant easements for particular uses. He can enter into contractual arrangements involving the use of disposition of his resource holdings.1 As individuals make use of these rights, they impact on other individuals. The impact on other individuals, pollution for example, may prevent individuals from exercising certain rights and may conflict with societal goals. When an individual's use conflicts with society's goals, governments have certain reserved powers to control rights in property. These powers include spending, taxation, police, eminent domain and proprietory.2 These rights are shared by different levels of governments and their various activities to establish rules or implement programs use one or more of these powers. Soil loss and non-point source pollution from private lands used for agricultural production may affect the activities and costs of other persons. The residuals from the agricultural production systems may inflict cost on downstream water users or upon future generations who inherit a depleted soil resource. Property rights 1Barlowe, p. 378. 2Ibid., p. 575. O L» .\. v . \\~ .\ v \ 4 . ., k H . . .lvl 4 ‘\ r #447 \v w pd N.» T1 .T . x c \ v . vi U r4. r1 ‘1? PK and.“ ~6U Y...‘ [LL :4 .H 1 n r n : wfi T... W: .1 S a l 4 . L: I e x 14w... 17 address the question of who has the right to inflict cost on others. Does the farmer have a right to inflict costs on downstream water users or on future generations or do future generations and downstream water users have the right to impose specific production cost or land uses on the farmer? The implementation of soil loss and non-point source pollution abatement programs and policies establish whose rights in property prevail. Historic Development of Soil Conservation Policy Soil erosion was recognized in the early 19305 as a national problem requiring government intervention to protect the public interests. Although the need to preserve soil and its fertility for sustained agricultural production had been obvious to some reformers and leaders since colonial days,1 it was regarded as a problem for the individual farmer and not a problem of society. Hugh H. Bennett in 2 He emphasized 1928 pointed out the broader effects of soil erosion. how the continued loss of productivity on agricultural land would limit national growth and affect almost every aspect of American life. To achieve the public benefit from soil conservation, it would be necessary for government to become involved in land use decisions by exercising some of their reserved rights. Congressman James Buchanan 1Angus McDonald, "Early American Soil Conservationists,” U.S. Department of Agriculture, Soil Conservation Service, Misc. Pub. No. 449, October 1941. 2Hugh H. Bennett and W. R. Chapman, "Soil Erosion, A National Menace," U.S. Department of Agriculture, Circular No. 33, April 1928. .vufl‘ . ru. 1"! O “V 55 .1& .V 1 ‘II . 1 v .1.) VL NW. Wag Vb PA; \ b ‘4U .1“ 55 “I r 6 u 8 AIM. V. O Yul. e .1 1|. .\| 1|; 3 t .3 Au 18 in 1928 stated the need for national soil and water conservation policy before the House of Representatives Appropriation Committee. He said a policy is needed for the purpose of "keeping this water from running off, conserving it for the immediate benefit of the farmer, for the purpose of keeping it from washing away soil and depleting and ruining it forever, and thereby conserving it and having the effect of pre- venting the overflow into streams and rivers."1 Congress responded in 1929 by appropriating $160,000 in funds for soil erosion investigations and the establishment of soil erosion experiment stations.2 Although such a research and education program was a step toward conserving the nation's soil resources, it could never accomplish the level of control Bennett felt necessary. In 1933, the Soil Erosion Service was established in the Department of Interior with Bennett as director. Soon after its formation, Bennett found strong objection to the Department's policy of curtailing efforts to control erosion on private lands. He felt that it was private lands, not public, that provided the greatest threat to national welfare and that direct assistance to farmers was necessary.3 In 1934, Bennett began to 1Gladys Baker, Wayne Rasmussen, Vivian Wiser and Jane Porter, Century of Service, The First 100 Years of the U.S. Department of Agriculture, U.S. Department of Agriculture (Washington, D.C.: Government Printing Office, February 1963), p. 138. 2U.S. Department of Agriculture, Appraisal 1980, Soil and Water Resources Conservation Act (Review draft, Part 1) (Washington, D.C.: Government Printing Office, 1979), pp. ll-lS. 3Baker and others. 19 gather support for a transfer of the Soil Erosion Service from the Department of Interior to the Department of Agriculture. This transfer was made in 1935 and the agency was renamed the Soil Conservation Service. Bennett saw soil erosion as a widespread problem requiring comprehensive and cooperative action by many land owners. "Erosion and its accompanying evils do not stop at fence lines or farm bound- aries. Neither do they stop at state lines. They are, in general, watershed or regional problems and must be treated on that basis.”1 An effective conservation plan requires the participation of all farmers within a watershed. Realizing that 100 percent participation could not be achieved in any type of voluntary program, mandatory regulation would have to be enforced by some governmental unit. From the standpoint of national adequacy, effective soil conservation requires the intensive and coordinated treat- ment of all lands in every natural region of similar soil, slope, climatic, and type of farming characteristics in accordance with their needs and adaptabilities. This cannot be achieved, naturally, by intensive application of conservation measures to the land of a small group of farmers within boundaries of demonstration projects and camp areas.2 The New Deal Administration emphasized the need for strong national policy. Secretary of Agriculture Wallace, however, had a strong conviction that democracy could not succeed "unless the mass of the people participate in the affairs of government."3 In the 1Robert Parks, Soil Conservation Districts in Action (Ames: Iowa State University Press, 1952), p. 2. 2Ibid. 3Baker and others, p. 196. 20 long run, a soil conservation program could not succeed, he believed, unless farmers were responsible for its planning and management. Land use regulations to prevent soil from washing and blowing away could not be imposed from Washington. They must be adopted by the local people working together to meet a common problem. Given these views, two governmental units were conceptualized to implement soil conservation policies. A federal agency would pro- vide technical assistance in planning, organizing and carrying out national soil conservation policies. A local government unit would be responsible for deveoping a comprehensive conservation plan con- sistent with national policy. The local unit would also be responsible for enforcing any land use controls. It was envisioned that state governments would pass enabling legislation to create a new local government unit as set forth in the "Standard State Soil Conservation District Law."1 This new unit would be endowed with certain reserved powers according to this model act to achieve specified conservation goals. The model act proposed that districts be organized along watershed boundaries. An elected board consisting of mostly farmers in the district could conduct research and demonstrations, disseminate information and carry out other activities to further soil conservation. The board with technical assistance would formulate a conservation plan including tentative lThe U.S. Department of Agriculture prepared a model law which was presented to state legislatures by the President for enactment to authorize federal, state, and local cooperation in implementing soil conservation policies. "i (1) nor, \ 21 regulation of land use. Public hearings and referendums would be held on the plan. Upon acceptance of the plans, districts would have the power to make contracts with land owners which stipulated and required various practices. The districts would also have the power to buy and sell land and equipment, hire personnel, receive and administer state appropriations. As a part of the federal-local cooperative agreement, the Soil Conservation Service would provide professionally trained personnel and facilities to the local district. Their purpose would be to provide guidance in the development of district plans and technical assistance in designing and implementing practices on private land. The Soil Con- servation Service would also carry out certain education, research and monitoring activities in the district. In 1937, President Roosevelt sent copies of this model law to state governors with the recommendation that they adopt legislation reflecting its concepts. Twenty-two states passed enabling legislation for creation of soil conservation districts that same year and nineteen additional states had passed similar legislation by 1941. All states had passed some type of legislation allowing the creation of Soil Conservation Districts as a subunit of state government by 1950.1 Significant variations from the model law were made in most of the states' legislation. Many states did not provide land use regulation powers to districts and most made the adoption of mandatory activities difficult. In 1952, only six states allowed the adoption 1Parks, p. 8. 22 of land use regulations following a referendum in which 51 percent of the farmers favored the controls.1 Most states required at least a two-thirds majority with several states requiring an 80 percent or 90 percent majority. Sixteen states did not authorize districts to adopt any land use regulations. Because of the difficulty of obtaining enforcement powers, only 10 out of 3,000 districts in 1952 had land use regulations in effect. Another variation in the establishment of districts was their creation along political boundaries rather than watersheds. In 1949, nearly 60 percent of the districts coincided with county boundaries. A large part of the remaining were subdivisions of counties or combinations of counties. The soil conservation activities were conceptualized to create a blend of power and responsibility—-not wholly centralized or decentralized. This blend of powers and authority, however, did not develop as originally planned. Because no regulatory powers were provided to either the Soil Conservation Service or Soil Conservation Districts, it was necessary to shift emphasis from a compulsory to a voluntary program. The role of the Soil Conservation Service and Soil Conservation Districts became that of education and gaining voluntary support for conservation practices. Recent Legislation for Program Planning and Implementation Federal Water Pollution Control Act amendments. Until adoption of the Federal Water Pollution Control Act (FWPCA) amendments in 1972, llbid. 23 soil and water conservation policies did not specifically address water pollution aspects of soil erosion. The stated objective of the FWPCA is to "restore and maintain the chemical, physical, and "1 To achieve this biological integrity of the Nation's waters. objective, Section 208 of this act specifies that states in coop- eration with the Environmental Protection Agency do comprehensive area-wide planning which identify "agriculturally and silviculturally related non-point source of pollution including runoff from land used "2 It also states that the plans set forth pro- for crop production. cedures and methods to control such sources. The Act has no provisions for federal regulation of these pollution sources. The 208 planning activity in Minnesota has examined the non- point sources and their effects on water quality.3 Agricultural activity is one of the study topics of the 208 planning effort. They emphasize the state-of-the-arts in determining water quality as rudimentary and a number of limiting factors are inherent in their assessment. They, however, generally conclude that "many agricultural activities have the potential to generate and deliver potential pol- lutants to surface waters."“ They state that the magnitude of that 1U.S. Congress, Federal Water Pollution Control Act Amendments of 1972, P.L. 92-500, Sec. 101-a, Washington, D.C. 2Ibid., Sec. 208f. aMinnesota Pollution Control Agency, "Agriculture Package I of 208 Water Quality Management Plan," St. Paul, Minnesota, May 1979. ‘’Ibid., p. vi. 24 effect is largely unknown and "is probably insignificant in some waters and highly significant in others."1 Resource Conservation Act. The Resource Conservation Act of 1977 declares that the policy and purpose of the Act is "to further the conservation of soil, water and related resources" and that conservation programs of the U.S. Department of Agriculture "be responsive to the long—term needs of the Nation."2 The Act calls for an appraisal on quantity and quality of soil, water and related resources and a program setting forth directions for future soil and water conservation efforts to meet long- and short-run needs of the Nation. The appraisal is to include data on ”the cost and benefits of alternative soil and water conservation practices" and on "federal and state laws, policies, programs, rights, regulations, ownership and their trends relating to the use, development and conservation of soil, water and related resources." The program calls for an "evaluation of effectiveness of soil and water conservation ongoing programs and the overall progress being achieved by Federal, state and local programs." It also asks for an analysis of alternative methods for "conservation, protection, environmental improvement and enhancement" of soil and water resources and the "costs and benefits of alternative soil and water conservation practices." lIbid. 2U.S. Congress, Soil and Water Resources Conservation Act of 1977, P.L. 95-192, 18 November 1977. 25 State legislation. The first state-wide law passed to regulate agricultural activity to prevent soil erosion and control non—point source pollution was passed in Iowa in 1971. The Iowa law made it the duty of farmers to establish and maintain erosion control practices to maintain specified soil loss limits. The soil loss limit is established by soil conservation district commissioners at levels acceptable to meet the statute's erosion control and water quality goals. The com— missioners only specify the soil loss limits and may not specify how the landowner meets those limits. Failure to meet the soil loss limits are subject to a court injunction. However, before legal action may be taken, cost-share assistance must be available to cover 75 percent of the cost of installing any permanent practice. The Iowa Supreme Court recently upheld that those aspects of the law relating to soil loss limits were reasonable exercise of the police power. A bill patterned after the Iowa legislation was introduced in the Minnesota legislature in 1979.1 It provides power to the soil conservation district supervisor to establish soil loss limit as deemed necessary "to insure applications of wind and water erosion control systems, gully erosion control systems and sediment control systems to reduce soil losses to acceptable limits.” Like the Iowa legisla- tion, the proposed bill stipulates that 75 percent cost-share assis- tance must be made available before legal action can be taken against the landowner. 1Introduced by Redalen, Munger, Searle, Mann, and Valan, 15 April 1979 in the Minnesota House of Representatives, H.F. No. 1211. 26 Major Soil and Water Conservation Programs Agricultural Conservation Program. Financial assistance from the Federal government has been available to farmers who voluntarily adopt soil and water conservation practices through the Agricultural Conservation Program. This Program uses the spending power of the Federal government to provide economic incentives to landowners. For farmers who are willing to adopt certain practices, the program will either pay a certain percentage of its installation cost or make a fixed subsidy payment to the farmer. Cost share payments are made for enduring practices such as terraces and subsidy payments are made for other practices such as contouring and conservation tillage. In 1936, Congress passed the Soil Conservation and Domestic Allotment Program which offered farmers payments for shifting acreage from surplus, soil depleting crops to soil conserving crops of legumes and grasses.1 This program had both farm income and soil conservation objectives. The farm income objective of this program was dropped in 1943. In the following years of this program, the emphasis was on furnishing lime and fertilizer materials. These were provided to encourage the growing of soil conserving legume crops, while at the same time they improved soil productivity. Additional practices which reduce soil loss were made eligible for cost-sharing through the years. These have included such practices as establishment of permanent cover, drainage,stripcropping, terracing, grassed waterways, farm ponds, and conservation tillage. 1Baker and others, p. 166. 27 In 1971, and again in 1974, the Program was renamed and called the Rural Environmental Assistance Program and Rural Environmental Conservation Program, respectively. As these titles imply, the emphasis shifted to include broader environmental objectives. The list of eligible practices was changed to include pollution abatement measures such as sediment retention structures and livestock waste facilities. The production oriented practices of lime and fertilizer was provided under more restricted situations and drainage and weed control practices were deleted.1 Annual appropriations for the program are made by Congress and funds are distributed to states and counties according to admin- istrative and Congressional directives. Allocations are to be based on the most recent conservation needs data available. County com- mittees then determine the practices from a Federal and state list of authorized practices and set the cost-share or subsidy they will offer to farmers in their county. Current national guidelines specify that cost-share rates may not exceed 80 percent of the installation cost.2 The number of farmers participating in the program has ranged from 4.4 million in 1943 to 302,000 in 1977.3 Federal appropriations were 1U.S. Department of Agriculture, "Appraisal 1980, Soil and Water Resources Conservation Act," pp. 8-15. 20.8. Department of Agriculture, Agricultural Stabilization and Conservation Service, State Handbook on Minnesota Agricultural Conservation Program, l-Mn, ACP, 1979, St. Paul, Minnesota. 3U.S. Department of Agriculture, Agricultural Stabilization and Conservation Service, 1977 Agricultural Conservation Program Accomplishments (Washington, D.CT: Government Printing Office, August 1978), Table 15. 28 highest in 1939, when nearly $500 million of assistance was provided. From 1955 to 1972, the assistance was slightly over $200 million each year. Since 1972, total gross assistance provided under this program has been less than $200 million annually. Rural clean water program. Section 208 of the Federal Water Pollution Control Act was amended in 1977 to establish a rural clean 1 The program is authorized to provide financial and water program. technical assistance to rural land owners who install and maintain practices that abate non-point source water pollution. The Act authorizes the Secretary of Agriculture with the concurrence of the Environmental Protection Agency Administrator to make five to ten year contracts with landowners. The landowner must install practices con- sistent with the 208 area-wide treatment plan. Practices which control soil erosion and nutrient runoff are expected to be important aspects of the plan. Although $200 million was authorized for fiscal 1979, no appropriations were made.2 Minnesota cost-share program. Minnesota passed legislation in 1977 to authorize soil and water conservation districts to make contracts with landowners for cost-sharing on practices. Cost-sharing is available for "implementing any system or practice for erosion control and water quality improvement which are designed to protect 1Beatrice Homes, Institutional Bases for Control of Non-Point Source Pollution Under the Clean Water Act, U.S. Department of Agri- culture, Economics, Statistics, and Cooperatives Service and Envi- ronmental Protection Agency, WH-554, November 1979, p. 17. 2Ibid. 29 protect and improve the state's soil and water resources.1 The practice or system must be consistent with the soil and water con- servation district plan, meet the U.S. Department of Agriculture standards and specifications under their program and be properly maintained for ten years. To initiate the program, $3 million was appropriated for 1980 and 1981. Economic Parameters Soil erosion represents an additional constraint on the agricultural production system. It impairs the productivity of a major resource for future use in the system and, as a residual, it impairs the production and consumption of other natural resource systems. Only part of these undesirable side effects or costs are dealt with through prices in the market. Many of the cost accrue to widespread groups of individuals outside the market system and to future generations who are unable to make their bids known. To reduce the effects of these market failures, or externalities, rule changes emanating from the institutional dimension are made to reflect these social desires. These actions result in a redistribution of rights and consequently shift costs and benefits. Shifts occur not only between on-site producers and off-site water users but also between present and future generations. Although considerable research is needed and being conducted to evaluate off-site economic effects, no attempt will be made here lMinnesota Code of Agency Rules, "Soil and Water Conservation Board Cost Share Program," Chapter 40, Sec. 2 (St. Paul: Minnesota Soil and Water Conservation Board, 1978), p. 581. 30 to review or expand upon this information. This review will focus on the on-site benefits and cost associated with soil loss and application of control practices. Land is discussed as a factor of production and the effects of control practices are measured as changes in the economic return to land. Soil as a Factor of Production Soil resources have been described as a combination of fund and flow resources. Ciriacy-Wantrup views soil as a flow resource with the future rate of flow affected by man's use and subject to a critical zone or tolerance level.1 The flow character of soil refers to its availability as a factor in agricultural production year after year. The moisture supply, sunlight, nutrient content, microbial populations, and other properties needed for agricultural production are renewed each year. Although the availability of these properties may vary from year to year, their use in one year does not preclude their use in following years. The critical zone refers to a level of use which results in a diminished future rate of flow. Once that critical zone is reached, the reversal of a diminished rate of flow is not economically possible. Bennett viewed soil where erosion occurs as a fund resource. "Once this valuable asset leaves a field, it is as irretrievably lost as if consumed by fire, as far as that particular field is concerned."2 1S. V. Ciriacy-Wantrup, Resource Conservation Economics and Policies (Berkeley: University of California Press, 1963). 2Hugh Hammond Bennett, Soil Conservation (New York: McGraw- Hill Book Co., Inc., 1939), p. 8. 31 The economic return from the use which man makes of either the flow or fund resource is called land rent. Land rent is the return that accrues to land or should accrue to it for its use in production. Land rent is calculated as the residual of total value of production that remains after all labor and capital cost are subtracted.1 When land is viewed as a flow resource, perpetual land rents from a certain quality of land may be assumed. However, if the use exceeds the critial level, the land rents will diminish at some point in the future. Economics of Soil Loss Control Practices It has long been argued by conservationists that the loss of top soil will reduce crop yields and lead to substantial loss in income from reduced productivity. Yet, farmers are unwilling to adopt control measures. The need for immediate income and failure to see the economic need for erosion control have been identified as obstacles.2 According to one author,3 farmers are aware of potential yield reductions; how- ever, they have also observed substantial yield increases on their lands over the last fifteen years. Any yield impact from soil loss has been masked by effects of increased fertilizer and technology. 1Barlowe, p. 157. 2Melvin G. Blase and John Timmons, "Soil Erosion in Western Iowa: Progress and Problems," Research Bulletin 498 (Ames: Iowa State University Agricultural Experiment Station, October 1971). 3Paul Rosenberry and N. C. Moldenhauer, "Economic Implications of Soil Conservation," Journal of Soil and Water Conservation 26 (November-December 1971): 221. 32 Other objections have been timeliness of operation and uncertainty of profitable returns within their planning horizon.1 The nutrients lost through soil erosion represent a cost to the farmer. Beasley estimates that the loss of nutrients in one 3 have ton of eroded top soil had a value of $1.70 in 1972.2 Others estimated that the amount of nitrogen released for plants from one ton of top soil may be no more than 0.1 lb. each year which is an insignificant loss even at high rates of erosion. Beasley points out that soil loss affects many other variables than plant nutrients. It reduces infiltration rate and water holding capacity which may have far greater yield reduction impacts than the loss of nutrients. Studies” conducted in Iowa fifteen to twenty years ago showed farm incomes could be increased with the adoption of soil conservation systems. The increase in incomes, however, would not be immediate and losses would occur in the first years of the system. They also indi- cated a need to expand livestock enterprises to get the highest returns llbid., p. 221. 2R. P. Beasley, Erosion and Sediment Pollution Control (Ames: Iowa State University Press, 1972), p. 15. 3Rosenberry and Moldenhauer. I’Studies conducted by the Agricultural Experiment Station, Iowa State University, Ames, Iowa, include "Cost and Returns for Soil Conserving Systems of Farming on Ida-Monona Soils in Iowa," by Ross Baumann, E. O. Heady, and Andrew Aandahl (Research Bulletin 429, June 1955) and "Profit Maximizing Plan for Soil Conserving Farming in Spring Creek Watershed,” by Jay Anderson, E. O. Heady, and W. D. Shrader (Research Bulletin 519, July 1963). 33 from the conservation systems. Landgren and Anderson1 concluded in 1962 that annual soil loss of 5 ton per acre was consistent with a profit maximizing solution. Heady and Smith2 using recursive linear programming were unable to reach any conclusion as to the profitability of conservation systems. Carkner3 in 1972 found no significant cost difference in the use of conservation tillage over conventional tillage to control soil loss on an Illinois dairy farm. An erosion study in Southern Iowa considered increased energy use, higher fertilization rates, and reduced crop yields as variables associated with soil loss.“ The study estimated that current erosion rates cost farmers $4.75 per acre each year. Lower yields account for most of this loss. The study also investigated the least cost erosion control method. They found that use of crop rotation, contouring and residue tillage was least costly while relying on use of rotation and terracing was the most expensive. Other combinations of crop rotation, contouring, terracing and residue tillage were evaluated. lNorman Landgren and Jay Anderson, "A Method for Evaluating Erosion Control in Farm Planning," in Agricultural Economics Research USDA XIV(2) (Washington, D.C.: U.S. Department of Agriculture, April 1962). 2Wesley Smith and E. O. Heady, "Use of Dynamic Model on Programming Optimum Conservation Farm Plans on Ida-Monona Soils," Research Bulletin 475, Agricultural and Home Economics Experiment Station, Iowa State University, February 1960. 3Richard Carkner, "A Case Study of the Economic Impacts of Farm Soil Loss Controls" (Ph.D. dissertation, Michigan State University, 1974). l”Erosion Costs You More Than Soil," Wallaces Farmer, 24 February 1979. 34 Physical Parameters Soil erosion is a natural and continuous process. In a natural ecologic system there are forces resulting in soil formation as well as soil loss. Soil formation results from the weathering of parent materials and the breakdown of vegetation into soil constituents. Loss of soil constituents occur from wind and water erosion, and leaching. Without the influence of man's production and consumption activities, the soil formation has generally exceeded soil losses. Over eons of time and a thick mantle of soil has developed which constitutes the physical basis for today's agricultural production. Soil Loss Tolerance Soil conservationists have been concerned with cropping practices which maintain a long-run equilibrium between soil formation and soil loss. Based on sustained land rents, soil loss tolerance levels have been established for most soils. Soil loss tolerance is "the maximum level of soil erosion that will permit a high level of crop productivity to be sustained economically and indefinitely."1 Factors considered in the establishment of these limits included soil depth, physical properties and other characteristics affecting root development, gully prevention, field sediment problems, seeding losses, soil organic matter and plant nutrient losses. 1U.S. Department of Agriculture, Science and Education Adminis- tration, "Predicting Rainfall Erosion Losses," Agricultural Handbook 537, December 1978, p. 2. 35 These tolerance levels are designed for sustained cropland productivity and do not address water pollution aspects of soil loss.1 These limits may or may not be sufficient to meet the water quality objectives. Water pollutants include not only sediments and the nutrients or chemicals adhering to soil particles but also those materials which are water soluble and leave the land in water runoff. Although research is being conducted to relate soil erosion rates to water quality,2 no conclusive results were found in the studies reviewed. Soil loss tolerance levels range from two to five tons per acre per year for soils in the United States.3 These limits were established by a team of soil scientists, agronomists, geologists and soil conservationists at regional workshops in 1961 and 1962. A deep, medium textured soil that has a subsoil favorable for plant production has a greater tolerance level than shallow soils with unproductive subsoils. According to some authors, some soils are capable of sustained productivity with soil loss in excess of the five—ton maximum limit.“ llbid., p. 3. 2Studies are being conducted by the Science and Education Administration, Soil Research Laboratory in Morris, Minnesota by C. A. Onstadt, and by Economics, Statistics, and Cooperative Service and University of Iowa, by David Carvey. 3"Predicting Rainfall Erosion Losses,” p. 3. “Ibid., p. 3. 36 When average annual soil loss exceeds soil formation, a portion of top soil resource is lost as far as future agricultural production is concerned. Erosion phases have been used to describe soil conditions and their productivity.1 Erosion phases are defined by the mixture of A and B soil horizons which occur within the normal plow layer. Soils with a deep top soil which has little mixing of the B horizon in the plow layer are Phase 1. Phase 11 conditions exist on soils with a mixture of A and B horizons in the plow layer and Phase 111 includes those severely eroded conditions in which the plow layer consists mostly of B horizon soil constituents. The Soil Conservation Service and Economics, Statistics and Cooperatives Service conducted a soil depletion study in southern Iowa to predict changes in erosion phases. One objective was to predict a future date when specific soils would shift from one erosion phase to another under current practices. It was estimated in that study by year 2020, that 26 percent of land currently in Phase I will deplete to Phase II or Phase III and 20 percent currently in Phase II will deplete to Phase III.2 As a consequence, Phase III conditions will increase from 9 percent to 39 percent of the harvested cropland in the area unless changes in cropping practices or land treatments are made. 1Paul Rosenberry, Lacy Harmon and Russell Knutson, "Soil Depletion Study Reference Report, Southern Iowa Rivers Basin," U.S. Department of Agriculture, Soil Conservation Service and Economics, Statistics and Cooperatives Service, Des Moines, Iowa, February 1980. 2Ibid. 37 Soil Loss Measurements Since 1930, controlled studies on field plots and watersheds have been made to identify and measure the physical variables which cause soil to erode. Zingg, in 1940, published an equation relating 2 conducted studies soil loss to slope lengths and gradients.1 Others to relate soil loss rates to growing crops, conservation practices, soils, and rainfall events. In 1946, all of this information was assimilated by a national committee on soil loss to develop a formula for predicting soil loss. This formula became known as the Musgrave 3 With further studies and more refined measurements, a new equation. soil loss equation was developed in the late 19505 by a team of sci— entists led by W. H. Wischmeir. The equation has become known as the “ It is adaptable to uses by planners Universal Soil Loss Equation. and researchers and can incorporate improved measurements from on-going research. The impact of various factors and the specific formulation of this equation is discussed in Chapter IV. 1A. W. Zingg, "Degree and Length of Land Slope as It Affects Soil Loss and Runoff," Agricultural Engineeripg_21 (1940): 59-64. 2D. D. Smith, J. H. Neal, D. M. Witt, c. M. Woodruff, c. L. Parish and John Gloss also made significant contribution in identifying these relationships. 3G. W. Musgrave, "The Quantitative Evaluation of Factors in Water Erosion, A First Approximation," Journal of Soil and Water Conservation 2 (1947): 133-138. l'U.S. Department of Agriculture, Agricultural Research Service and Purdue Agricultural Experiment Station, "Predicting Rainfall-Erosion Losses from Cropland East of the Rocky Mountains," Agricultural Handbook 282, May 1965. 38 The initial purpose for the equation was to facilitate on-site planning for soil conservation practices. The simple equation, a product of six factors, was capable of providing farmers and conser- vationists with various combinations of crop rotation, tillage systems and land treatments that would be within soil loss tolerance levels. Site specific factors could easily be fitted into the equation and a farmer could select those alternatives best suited to his unique situation. The Universal Soil Loss Equation has also been used in a much broader application to estimate impacts of watershed projects, comprehensive river basin development plans, and commercial, industrial development activities. This equation was applied in the Southeast Minnesota Tributaries Basin to estimate soil loss from cropland.1 Over 13.5 million ton of soil loss was estimated from cropland under 1975 cropping practices and land treatments applied at that time. A land treatment plan for the basin which increased adequately treated cropland from 42.5 percent in 1975 to 70 percent in 2000 was estimated to reduce total soil loss in the basin to 8.4 million tons. Naturally Occurring Factors Which Affect Soil Loss Rates Climate and land are factors which affect soil loss rates over which man has little control. Rainfall and runoff provide the energy and transport mechanism for soil loss and non-point source pollution. The energy to dislodge and move soil particles varies 1U.S. Department of Agriculture, Soil Conservation Service, "Southeast Minnesota Rivers Basin Report" (draft), St. Paul, Minnesota, January 1980. according to rainfall intensity and amount of runoff. Rainfall intensity is a function of raindrop size, velocity of free falling 1 Runoff is not always directly related rain drops, and rainfall rate. to rainfall. Soils become dryer, vegetation lusher, temperatures higher and evaporation and transportation losses greater as summer progresses. These factors reduce runoff from storm events which means reduced soil loss and lower transport capabilities in later crop production stages. Land factors which affect soil loss include properties of the soil and its topography. Soil texture, structure, organic matter con- tent and water permeability are important factors affecting soil erodibility and quantity of runoff.2 Organic matter content increases the adhesiveness between soil particles and its resistance to dislodge. Soil textures high in clay also have strong adhesive forces. In gen- eral, soil tendencies to erode are directly related to percent of finer soil particles, except clay, and are inversely related to percent of organic matter content.3 Soils high in silt, low in organic matter and clay, are usually most erodible. Soil properties also affect runoff. Soil porosity and perme- ability affect infiltration and runoff rates and consequently soil 1U.S. Department of Agriculture, Science and Education Adminis— tration, ”Predicting Rainfall Erosion Losses," Agricultural Handbook 537, December 1978, p. 5. 2Ibid., p. 8. 3G. S. Johnson and J. A. Moore, "The Effects of Conservation Practices on Nutrient Loss," University of Minnesota, Agricultural Engineering Department, St. Paul, Minnesota, 1978. 40 erodibility. Soils with low runoff potential include deep silts of loess parent material.1 These soils have large soil aggregates and have less expansion when wet than soils higher in clay content or lower in organic matter. Shallow soils or soils with high clay content impede downward movement of water and consequently result in higher runoff rates.2 Slope steepness is an obvious factor affecting quantity and velocity of runoff. Velocities are generally proportional to slope grade. Because of the velocity occurring on steep grades, there is less opportunity for infiltration. Quantities of runoff increase also with slope length and consequently the greatest erosion hazards occur at the base of a slope. Affects of Farm Production Systems Crops, tillage systems, and conservation practices specifically adapted to control soil loss are interrelated with the natural factors and impact on soil loss rates and non-point source pollution. They affect the intensity of rainfall striking a soil surface; the resis- tance of soil components to detachment and the quantity and velocity of runoff. In addition, they introduce materials into the natural system which may enter waterways through runoff and sediment delivery. This section will identify some of the variables in a farm production system that affect soil loss and non-point source pollution. lMinnesota Pollution Control Agency, "Agriculture Package I of 208 Water Quality Management Plan," St. Paul, Minnesota, May 1979, p. 27. 2Ibid., p. 27. 41 The effect of individual crops on runoff and erosion is related to the canopy and the time of the year when the protective cover is present. Other affects of crops are related to the root system of the plant and the residues they produce. Susceptibility to erosion hazard is greatest for those crops which provide little or no protective canopy during high rainfall seasons. These crops include corn and soybeans which have no canopy to intercept rainfall for a significant time period before and after spring planting. Because corn has a fibrous root system, once established it can stabilize soil and control 1 Hay crops once established provide some erosion better than soybeans. continuous protective cover and erode much less than row crops. Per- manent establishment of grasses with fibrous roots and continuous canopy provide excellent protection and soil loss is nearly negligible.2 Soil loss from row crOps is affected by tillage systems and residue management. In general, soil loss is directly related to the time bare soil is exposed to rainfall and inversely related to the amount of crop residue remaining on the surface. Tillage systems using fall moldboard plow which incorporates all crop residues has the greatest hazard by leaving soil exposed for the longest time prior to planting. Crop residue left on the surface can decrease the energy 1J. V. Mannering and C. R. Fenster, "Vegetative Water Erosion Control for Agricultural Area," in Proceedings of the National Symposium on Soil Erosion and Sedimentation (St. Joseph, Mich.: American Society of Agricultural Engineers, 1977), pp. 91-106. 2Ibid. 3G. R. Foster and L. D. Meyer, "Soil Erosion and Sedimentation by Water," in Proceedings of the National Symposium on Soil Erosion and Sedimentation by Water (St. Joseph, Mich.: American Society of Agricul- tural Engineers, 1977), pp. 1-13. 42 intensity of rainfall as well as entrap soil particles. Secondary tillage following moldboard plowing smooths the surface. This removes micro depressions on the surface and reduces water infiltration. As a consequence such secondary tillage increase runoff and soil loss rates. It also needs to be mentioned that tillage practices affect plant growth. When left rough, fall moldboard plowing has high water infiltration which increases water availability to the crop in the 1 Secondary tillage provides better soil—seed following growing season. contact for good germination and early plant growth.2 Moldboard plowing also distributes applied fertilizer throughout the plow layer and does not allow them to accumulate at the surface where they may be lost through runoff or evaporation.3 A number of alternatives to moldboard plowing have resulted. In general, these systems are designed to leave crop residues on the surface for soil loss control and still provide good water infiltration and :1 seedbed fer good plant germination and growth. Crop residues left on the surface prevent raindrops from directly striking the soil and thus reduce its energy intensity. The residues also provide small depressions which increase water infiltration and entrap soil. Soil 1James Swan and John True, "Management Considerations in Primary Tillage for Corn and Soybeans," Sppcial Report 64 (St. Paul, Minn.: Agricultural Extension Service, University ofTMinnesota, 1977). 2Ibid. 3J. W. Bauder, C. F. Halsey and W. E. Jokela, "Tillage: Its Role in Controlling Soil Erosion by Water," Extension Folder 479 (St. Paul, Minn.: Agricultural Extension Service, University of Minnesota, 1979). 43 aggregates are not pulverized as much with conservation tillage systems which leaves them larger in size and less easily transported by runoff. Tillage practices also affect the loss of nutrients from fields into watercourses. Nitrogen and phosphorus are a major non—point source pollutants affected by tillage systems. Nitrogen is lost from fields either as sediment—associated nitrogen or soluble nitrogen in runoff.1 Conservation tillage which does not incorporate applied fertilizer in the soil is subject to a greater loss through runoff. One researcher found that soluble nitrogen losses on no-till corn roughly doubled when applied as a broadcast over that which was incorporated into the soil.2 However, this loss is more than offset according to Johnson and Moore3 from lower losses of sediment associated nitrogen. Because phosphorus attaches to soil particles, its loss to watercourse is directly related to sediment. There is some evidence that the lack of fertilizer incor- poration associated with conservation tillage increases the phosphorus concentration on the soil surface and on the soil that does erode. The reduction in quantity eroded more than offsets the increase in concentration.“ 1Minnesota Pollution Control Agency, "Agriculture Package of the 208 Water Quality Management Plan," St. Paul, Minnesota, May 1979, p. 89. 2F. D. Witaker, H. G. Heineman and R. E. Burwell, "Fertilizing Corn Adequately With Less Nitrogen," Journal of Soil and Water Conser- vation, January-February 1978, p. 32. 36. S. Johnson and J. A. Moore, "The Effects of Conservation Practices on Nutrient Loss," University of Minnesota, Agricultural Engineering Department, 1978. ”Ibid. 44 Crop Yield Impacts From Tillage System According to one farm management extension specialist,1 many farmers are reluctant to adopt conservation tillage systems. They are aware of the relationships of yield to soil moisture, spring soil tem- perature, fertilizer placement and weed and pest control from moldboard plowing. The unknowns related to crop yields with various conservation tillage systems is an added risk which the farmers are reluctant to assume. Farmers are interested in crop yield impacts from conservation tillage research and from farmers who have adopted these systems. A number of studies have been conducted throughout the cornbelt to measure corn and soybean yields using mulch tillage or no-till systems. Cosper2 surveyed recent site specific research in four corn- belt states to determine what crop yields could be expected from various conservation tillage systems. In general, he found lower corn yields were reported in Ohio, Indiana and Illinois when no-till systems were used on fine textured, poorly drained soils. The yield reduction, however, was less significant on better drained soils. There was little difference between mulch tillage and conventional tillage systems in Iowa. 1Personal interview with Mervin Freeman, Area Farm Management Specialist, University of Minnesota Extension Service, Rochester, Minnesota. 2Harold Cosper, "The Influence of Tillage Systems on Corn Yields and Soil Loss in Ohio, Indiana, Illinois and Iowa," Working Paper No. 54 (Washington, D.C.: Economic Research Service, Natural Resource Economics Division, July 1978). 45 The studies to measure effects of tillage systems on crop yields in Minnesota are inconclusive. In a four-year study on Webster soils in south central Minnesota, tillage practices significantly affected 1 The highest yields were obtained with moldboard plowing. corn yields. Average yields with chisel plow were significantly lower and no-till systems consistently resulted in the lowest average yield. The average yield for fall moldboard chisel plow and no-till systems for corn were 130, 117, and 108 bushel per acre, respectively. Studies jointly conducted by the University of Wisconsin and the University of Minnesota at Lancaster, Wisconsin2 do not show as significant yield reduction as those in south central Minnesota. In these studies, no difference was found between spring moldboard and chisel plowing. In two out of three years, corn yield using a no-till system was seven and fifteen bushels less.3 On the third year, however, it was nine bushels higher. 1J. W. Bauder et al., "Tillage Practices in South Central Minnesota," Extension Folder 492 (St. Paul, Minn.: Agricultural Extension Service, University of Minnesota, 1979). 2J. B. Swan and J. A. True, "Tillage for Corn and Soybeans," in Soils, Soil Management and Fertilizer Monogpephs, Special Report 24 (St. Paul, Minn.: Agricultural Extension Service, University of Minnesota, 1978), pp. 35-57. 3W. Paulson, A. E. Peterson, J. B. Swan and R. Hoggs, "Tillage Summary, 1976-78," in A Report on Field Research in Soils, Soil Series IQ§_(St. Paul, Minn.: Department of Soil Science, University of Minnesota, March 1979), pp. 179-181. CHAPTER III ANALYTIC FRAMEWORK Policy Simulation The analytic approach of this study is an application of a mathematical model to predict physical and economic effects of soil conservation practices and policies and to compare these effects between different production systems. A mathematical model is a technique which allows the researcher to build a representation of a real world system in which he can conduct controlled experiments and observe changes.1 The representation consists of a set of simplifying assumptions which capture sufficient essence of reality to predict real world outcomes from changes in the system. In this system the model represents the agricultural production systems on farms representative of southeastern Minnesota. The inde- pendent variables of this model are the alternative soil conservation practices and alternative policy options. The dependent variables include net farm income, soil loss, crop production and the farmer's choice of production technology applied on each representative farm. Since policy-makers can change the independent variables in the real world production system through use of government powers, their interest 1Daniel E. Chappelle, "Economic Model Building and Computers in Forestry Research," Journal of Forestry, May 1966, p. 329. 46 47 in such a model is its prediction of impacts measured by the dependent variable from a policy change. The validity of a model's prediction depends on limitations of the simplifying assumptions to reflect real world relationships and the precision of data measurements used in the model. This model assumes that representative farms have a profit maximization goal. It assumes that profit constraints are unique between farms because of their size, soil composition and enterprise combination and such constraints can be reflected in the representative farm definitions. It is further assumed that the physical and economic data sets can be estimated to reflect production processes, management, institutional effects and the technology applied on each of the farms. The remainder of this chapter as well as the next two chapters deal with the assumptions used to formulate this model and the estimated data inputs required for its application. Representative Farms This analysis is conducted using a representative farm concept. There has been a wide application of this concept to provide guidance 1 Plaxico and Tweeten2 suggested to farmers as well as policy makers. such an approach could be useful for programs which require incentive payments in order to achieve certain national interest objectives. A 1E. O. Heady et al., Agricultural Supply Functions (Ames: Iowa State University Press, 1961). 2James S. Plaxico and Luther Tweeten, Representative Farms for Policy and Projection Research," Journal of Farm Economics, December 1963, p. 1460. 48 representative farm approach has been used to measure economies of 1 scale for different farm sizes as well as variation from farm pro— 2 Iowa farms representative of the Ida-Monona grams due to farm types. soil association were used to measure economic impacts of conservation farm plans.3 Although representative farms may never be duplicated on individual real farms, they do provide a means of measuring relative effects from institutional changes. Within a general farm region, farms may be stratified according to different characteristics. Representative farms may be developed for several target populations such as dairy farms, cash grain farms, small farms, farms with high erosion hazard soils, etc. It was earlier hypothesized that soil conservation policies could have differential effects on farm income because of soils composition, enterprise com- bination and size. To test this hypothesis, the following target populations were selected: 0 Farms with roughage consuming livestock enterprise; 0 Farms without roughage consuming livestock enterprises; 1G. E. Frick, I. F. Fellows and S. B. Weeks, Economies of Scale in Dairying-—An Exploration in Farm Management Research Methodology, Research Bulletin 285 (Storrs: Connecticut Agricultural Experiment Station, 1952). 2Warren Bailey and Ronald Aines, How Wheat Farmers Would Adjust to Different Pregrams, Research Report No. 52 (Washington, D.C.: U.S. Department of Agriculture, 1961). 3Wesley G. Smith and E. O. Heady, Use of a Dynamic Model in Prpgrammingptimum Conservation Farm Plans on Ida-Monona Soils, Research Bulletin 475 (Ames, Iowa: Agricultural and Home Economics Experiment Station, February 1960). 49 0 Farms with high erosion hazard soils; 0 Farms with moderate erosion hazard soils; 0 Commercial size farms; and Small farms. The concept of representative farms was selected for this study as a method of analysis over other techniques such as per acre budgeting, case studies or average farm conditions. The representative farm approach has been criticized because of aggregation bias and its 1 While limitations exist they are not unique to this static nature. model but are common to alternative models. Per acre approaches do not allow for measurement of effects from a total conservation plan. The adverse effects of one practice may be partially offset by bene- ficial effects of another practice.2 Case studies involve unique production functions which cannot be generalized to a broader popu- lation. The average farm approach is biased by extreme observations. These weaknesses as well as the availability of data and personnel and time constraints of the study are reasons for selecting this approach. 1Jerry A. Sharples, "The Representative Farm Approach to Estimation of Supply Response," American Journal of Agricultural Economics 51 (May 1969). 2The Rural Clean Water Program authorized by the Culver Amendment to PL 95-500 stipulates that non-point pollution be implemented on a total farm basis. 50 The Mathematical Model of Reppesentative Farms The mathematical model for each representative farm consists of a set of crop enterprise budgets and selection of the most profitable combination of cropping systems (activities) with alternative soil conservation practices and policies. Budgets for each activity are developed for each field on representative farms and includes costs and returns for alternative crops, crop rotation, tillage systems and applied conservation practices. The budgets include quantity and cost of production input estimates and estimates of quantity and value of crop production. Also included in the budgets are soil conservation practice cost, subsidies for specific practices and an estimate of soil loss. The selection of the most profitable combination of activities on each farm is made by integer linear programming on livestock farms and a computerized sorting and ranking routine on grain farms. On livestock farms the selection of the maximum profit cropping system is constrained by minimum levels of hay and silage production in addition to the soil conservation policy options. To simultaneously consider these constraints and maximize profits, integer linear programming is used to select the optimum set of activities. on grain farms the selection of activities is constrained only by the soil conservation policy option. Consequently on grain farms, the sorting of activities by different policy options and ranking by profit is sufficient to determine the maximum profit combination of activities. 51 A budget generator is used to estimate a budget for each crop enterprise activity. This estimating procedure was developed by the U.S. Department of Agriculture's Economic, Statistics and Cooperatives 1 The budget generator has been Service for use in river basin studies. used in the north central region to develop budgets and matrices for linear programming and production simulation models. When data input are specified, the generator estimates capital input cost, interest on capital inputs, machine operation costs, fuel consumption, labor requirements, and other production costs. The advantage in using such a generator is that it facilitates the numerous calculations needed to reflect differences in inputs for alternative soil conditions, tillage systems, crop sequence in rotation and applied soil conservation practices. In this application, budgets were developed for five soil types on each farm, four tillage systems, five crops within fifteen rotations and three applied soil conservation practices. The input items for each budget include capital inputs, machine operations, labor, and other specified expenses. The capital inputs include seed, fertilizer and chemical pesticides which change by expected yields and tillage systems. The machine operation costs include all fuel, depreciation,interest, storage and maintenance cost for all tillage, planting and harvesting operations. The labor costs are based on time requirements to accomplish machine Operations given the equipment size, 1U.S. Department of Agriculture, Economic Research Service, Natual Resource Economics Division, "Multiple Objective Resource Evaluation System," East Lansing, Michigan, January 1973. 52 speed and field efficiency. Representative farm capital and labor constraints were considered in specifying machine size and type. Other production input costs include amortized average annual cost of soil conservation practices, drying cost for corn and custom harvest cost on small farms. The specific data inputs used to generate budgets for this study are reported in Chapter V. Integer programming is an optimizing technique which selects from a set of feasible processes that process which maximizes a linear objective function. In this application, the objective function is to maximize net farm income from alternative crop production and soil and water conservation activities. The production activities include grain and forage crops produced according to specified cr0p rotations, tillage systems and applied conservation practices. The maximization procedure is subject to land and forage production constraints assumed for each of the representative farms. Various sets of activities are added to or deleted from the models to reflect adoption of soil conservation plans or to simulate alternative policy options. The mathematical formulation of the model can be presented in the following general form: n Maximize: Z = E C.X. (3.1) n Subject to: .2 alj J s (or 2) b1 j—l . . . (3.2) n X am.X s (or 2) bm j=1 J J 53 and: Xj = O or 1 (3.3) The objective function is expressed by equation 3.1 where Z represents net farm income, X3. is the level of crop production activity and appli- cation of soil conservation practice and Cj is the net profit associated with each activity. The technical coefficients and model constraints are represented by the inequalities in 3.2. The b1 to bm are the land resource constraints and minimum levels of roughage production. A less than or equal to inequality applies to the land constraint and a greater than or equal to inequality applies to the minimum levels of roughage production. The aij represent the resource requirement or roughage production for activity j. The final equation, 3.3, is the non-negative and integer constraint which requires the model to either include or exclude an activity. In this application, the production activities are defined as crops grown in a specific sequence in a rotation and using specific tillage system and conservation practice. For example, corn may be grown in a continuous corn rotation (c-c) or in rotation following an alfalfa hay crop (c-c-o-m-m-m). The crop activities are also defined according to the different tillage systems. For example, either con- ventional fall moldboard plowing or minimum tillage system may be used to grow corn. Likewise, the farming practice may be straight rows across the field, contour rows or contour strips. In addition to the crop activities, the model also includes activities to reflect the adoption of such enduring practices as terracing and grassed waterways. 54 The net return for each activity represents the annual return to land and labor. It is calculated as the total value of production less expenses for seed, fertilizer, herbicide, fuels, machinery depreciation, hired labor, custom work, etc. The cost of enduring conservation practices is amortized over the expected life span of the practice. In this application, no allowance for land taxes, mortgage payments, interest expense, or cash rent is made. The level of activity in this model is the farm field. Any alternative crop production activity is assumed to be applied on the entire field and not some portion of the field. In other words, a field is not considered a divisible unit in which different combina- tions of activities may occur. This assumption is not consistent with the infinitely divisibility assumption of non-integar programming.1 Integer programming restricts the level of any activity, Xj, to an integer and is consistent with the indivisibility assumption. In this application, the activity level is either zero or one. Policy Options The preceding chapter discussed policy options to reduce soil loss and abate non-point source pollution. Each option uses one or more of the reserved powers of government to increase the adoption of soil conservation practices. The policy options in this study involve financial subsidy through government spending power, regulation through the police power and a soil loss tax. The mathematical model 1William Baumol, Economic Theory and Operations Analysis (Englewood Cliffs, N.J.: Prentice-Hall, Inc., 1965), p. 149. 55 for each of the eight representative farms is used to simulate the impact of such policy options. The following policy options are addressed to this study: 1. Base line (no government programs); 2. Cost share subsidy for practices; 3. Subsidy for conservation tillage systems; 4. Combined cost-share subsidy for practices and use of mulch or zero tillage systems; 5. A maximum soil loss limit at the per acre tolerance level; 6. A soil loss tax on estimated tons of soil loss; and 7. A cross compliance minimum conservation plan. The base line option assumes no government programs exist to provide economic incentives for adopting practices nor regulation to control soil erosion rates. The model considers only conventional fall or spring moldboard tillage systems in selecting the most profitable cropping system on farms. No cropping system having erosion rates exceeding 50 tons per acre however were considered in any model applications. The cost-share subsidy for practices include full payment of all technical assistance and cost-share payments to farmers and operators who install practices. The subsidy for mulch or no-till is reflected in the model as a per acre payment for crops grown with these tillage systems. The soil loss maximum at the tolerance level assumes no cropping system is used which results in soil loss greater than five ton per acre per year. The soil loss tax policy option assumes the farmer must pay a tax on each ton of estimated soil loss 56 but is otherwise free to select the most profitable crOpping system. The cross compliance minimum conservation option assumes the adoption of a minimum conservation plan which includes contour farming with grassed waterways. I‘E‘SE well haw. HOn- 3011 farm is t] and 1 CHAPTER IV THE PHYSICAL DATA SET The physical relationships between crop production activities, soil loss and soil loss control practices, while extensively researched, are extremely complex and not well documented. The physical data set for this model relies on a number of information sources including research publication, soil surveys, technical handbooks and guides as well as personal discussions with researchers, farm managers, advisers and conservationists. Some of the physical relationships are well documented with substantial research while others are only assumptions and judgments. The purpose of this chapter is to document and quantify the most important independent variables of the model. Representative Farms Three elements were identified in Chapter I, as potentially having different economic effects from the adoption of soil loss and non-point source pollution control practices. These elements were: (1) soil composition, (2) enterprise combination, and (3) farm size. Soil composition compares farms with severe erosion hazard soils to farms with only moderate erosion hazard soils. Enterprise combination is the comparison between farms that grow primarily cash grain crops and those which also grow forage crops in support of roughage consuming livestock enterprises. Farm size compares farms that have different 57 58 land, labor and capital limitations. Using these three elements, eight representative farms are identified for this study. They are as follows: 160 Acre Farm Grain Farm<:::::::::: 480 Fayette and Acre Farm Assoc1ated So1ls . 160 Acre Farm Roughage Consum1ng LlVeStOCk Farm 480 Acre Farm 160 Acre Farm Grain Farm«<:::::::::: 480 Acre Farm , 160 Acre Farm Roughage Consum1ng‘<:::::: Livestock Farm 480 Acre Farm Downs and Associated Soils Soil composition varies widely among farms in southeast Minnesota. Farms in the thin loess and til uplands, consisting mostly of alfisols often have severe erosion hazards when used for crop production. Farms in the deeper loess uplands consisting of a mixture of mollisols and alfisols have moderate erosion hazards under row crop production. In the Southeast Minnesota Tributaries Basin, these hazard areas were identified and correlated with several soil associations.1 Fayette-Dubuque-Chaseburg was a prevalent soil association in areas of severe erosion hazards. Tama-Downs-Chaseburg was identified as a predominate soil association with moderate erosion hazards. 1U.S. Department of Agriculture, The Southeast Minnesota Tribu- taries Basin Report (draft) (St. Paul, Minn.: 8011 Conservation Service, Economics, Statistics, and Cooperative Service, 1980). 59 A wide variety of enterprise combinations occur in the area. The 1974 Agricultural Census reports some combination of crop, live- stock and poultry enterprises occur on 85 percent of the farms.1 Forty percent of the farms had beef cows and the average herd size was 40 head. Forty-four percent of the farms had milk cows with an average herd size of 32 head. Other confined livestock enterprises include fed beef, swine and poultry. For this study, minimum roughage requirements on livestock farms is an estimate of hay and silage needs for a beef cow-calf enterprise. This minimum requirement is estimated from feed rations for beef cows. The herd size is estimated from the number of cows which could be supported during the growing season by permanent pasture or grazed forest on representative farms. The farm sizes considered in this study are 160 acres and 480 acres. In 1977, the average farm size in the ten-county area of south- east Minnesota was 217 acres.2 The 1974 Agricultural Census reports that 48 percent of the farms in the area are less than 180 acres in size and only 8 percent are larger than 500 acres. The farms larger than 500 acres, however, account for over 30 percent of all farmland while those under 180 acres account for 19 percent. Small farms as applied in this model have limited capital while larger farms have limited labor, especially during critical spring planting. The 480 acre farms are assumed to have all machine lU.S. Department of Commerce, Bureau of Census, 1974 Agricul- tural Census, Minnesota State and County Data (Washington, D.C.: Government Printing Office, 1974). 2Ibid. 60 complements necessary for tillage, planting and harvesting activities while the 160 acre farms custom hire certain activities. The machinery on the 480 acre farms is of sufficient size to allow the operator to complete all operations with only limited hired labor. Machinery size on each representative farm was determined using a maximum of fifteen field operation days to complete spring planting operations1 and the acreage per hour covered by different sizes of farm machinery.2 The natural resource base, including topography, soils, and crop yield potential, are assumed identical between the grain farms and farms including roughage consuming livestock. Difference in use, however, are assumed between these two farm classes. The field layout on grain farms is designed to make the best use of all land suitable 3 Land unsuitable for tillage for cultivation and row crop production. is assumed to remain idle when it occurs as a small acreage within a field.‘ Larger acreages of land unsuited for cultivation are assumed to be in permanent pasture and cash rented to surrounding livestock farms. On farms with a roughage consuming livestock enterprise, marginal land for tillage is left in permanent pasture. Consequently, the representative farms with roughage consuming livestock have a 1Fifteen days of field operation days was suggested by Mervin Freeman, Area Extension Farm Management Specialist, University of Minnesota, Rochester, Minnesota. 2Fred Benson and Bruce Hatteberg, "Minnesota Farm Machinery Economic Cost Estimates," FM 609 (St. Paul, Minn.: University of Minnesota Agricultural Experiment Station, February 1979), Table 5. 3Land in capability class V1 is defined to have limitations that make them generally unsuited for cultivation and limit their use to pasture, woodland and wildlife food and cover. 61 larger acreage of pasture and smaller acreage of cropland than representative grain farms, even though they have an identical natural resource base. A maximum profit objective is assumed for all representative farms. The model selects that combination of activities on cropland subject to certain specified soil loss and control practice constraints. Production activities on representative farms with roughage consuming livestock are constrained to minimum levels of hay and silage production for winter livestock rations. Silage is produced only on roughage consuming livestock farms. Hay may be produced on representative grain farms when necessary to meet soil loss objectives. When hay is produced on a grain farm, however, it is assumed to be 50-50 share cropped with a surrounding livestock farm. The return includes only half the value of hay produced. The grain farmer establishes the hay crop and applies fertilizer while the share farmer provides all labor and machinery for harvesting. No difference between the grain pro- duction activities are specified between grain and roughage consuming livestock farms. On livestock farms a minimum level of hay and silage is assumed to be produced in support of the livestock enterprises. These minimum levels of hay and silage production are based on the winter roughage requirements for a beef cow-calf enterprise. The size of the enter- prise was estimated from the number of animal units which could be supported during the growing season from pasture. The roughage needs are estimated from winter feed fation for a beef cow and the size of 62 the enterprise on each representative farm. These roughage needs are reported in Appendix A.1 Land Base To measure crop production and soil loss, specific topographic and soils information is needed. This information for the representa- tive farms was constructed from county soil survey maps,2 farm plans3 and information and descriptions provided by the Soil Conservation Service district conservationists. Maps for each of the representative farms were constructed to indicate natural drainage patterns typical of the soil association and the location of specific soil mapping units relative to the constructed landscape. Farm fields were imposed on the maps with consideration given to topographic conditions, soils and potential uses by either the grain farms or the roughage-consuming livestock farms. The land in ditches, forest, fence rows and farm lanes was calculated and subtracted from the land base of each field. Each field was then planimetered to determine the acreage by soil available for crop production in each field. Tables 4-1 and 4-2 show major land use for representative farms in the Fayette and Downs Soil Associations, respectively. Land use in the Fayette soils consists of larger acreages of pasture and 1Sydney James, Midwest Farm Planning Manual, 3d ed. (Ames: Iowa State University Press, 1974), p. 60. 2Soil survey maps from Fillmore, Wabasha, Goodhue, Dodge and Rice Counties were used to construct typical drainage patterns and the general location of soil types relative to a drainage pattern. 3Farm plans were reviewed in the Soil Conservation Service District offices in Houston and Olmstead County, Minnesota. 63 Table 4-1. Major land uses assumed for representative farms with Fayette and associated.soils, southeast Minnesota study area 160 Acre Farms 480 Acre Farms Livestock Livestock Land Use Grain Farms Farms Grain Farms Farms ----------------------- Acres ----------------------- Cropland pasture 126.4 93.0 348.6 236.3 Pasture 7.0 42.3 55.8 177.8 Forest 14.8 14.8 51.2 5.2 Farm buildings and lots 4.0 4.0 4.0 4.0 Miscellaneous 7.8 5.9 20.4 10.7 Total 160.0 160.0 480.0 480.0 Table 4-2. Major land uses assumed for representative farms with Downs and associated soils, southeast Minnesota study area 160 Acre Farms 480 Acre Farms Livestock Livestock Land Use Grain Farms Farms Grain Farms Farms ----------------------- Acres —-------—-------------- Cropland 149.5 120.4 456.3 388.5 Pasture 0.0 32.0 0.0 72.0 Forest 0.0 0.0 0.0 0.0 Farm buildings and lots 3.0 3.0 4.0 4.0 Miscellaneous 7.5 4.6 19.7 15.5 Total 160.0 160.0 480.0 480.0 64 forest. Even on grain farms, the pasture, forest and miscellaneous acreage comprise over 20 percent of the farm. On the livestock farms, these uses are assumed to be 42 percent on the 160 acre farm and 51 percent on the 480 acre farm. In the Downs association, no forest land occurs and pasture is found only on the livestock farms. Representative farms in the Downs association consist of only cropland and miscellaneous uses. On the 160 acre grain farm, 93 percent is assumed in cropland and on the 480 acre grain farm, 95 percent is in cropland. Fayette and Associated Soils Fayette soils occur on upland areas and on a wide variety of slopes. They generally occur on ridge tops and side slopes with a slope gradient ranging from 2 to 24 percent. Fayette soils are devel- oped from deep silty loess parent material and under a native vegetation of mixed hardwood forest. Forested areas remain on the steeper slopes and along natural drainage ways. These silty loam textured soils have medium internal drainage and permeability. They are free of stones and easy to till. The soils are moderately acidic with moderately high natural fertility. Soil acreage on representative farms with Fayette and associated soils are shown in Table 4-3. Fayette silt loams with slopes gradients of 2 to 6 percent and slope lengths of 200 to 300 ft. are generally classified as IIe land capability. They currently have lost 2 to 6 inches of top soil and have a slight hazard for further erosion. The plow layer incorpo- rates some of the B soil horizon. This soil is highly productive under 65 Table 4-3. Soil acreage by soil mapping unit and land capability on representative farms with Fayette and associated soils, southeast Minnesota study area Land 160 480 Soil Mapping Unit Capability Acre Farm Acre Farm -------- Acres -------- Fayette silt loam, 4% slope moderately eroded IIe 26.6 65.3 Fayette silt loam, 9% slope moderately eroded IIIe 65.7 197.0 Fayette silt loam, 14% slope moderately eroded IVe 52.4 133.0 Dubuque silt loam, 14% slope Vle 6.5 53.1 Chaseburg silt loam, 17% slope 11w 8.8 17.8 Steep, stony and rock land form, 22% slope VIIe 0.0 13.8 good management and suited to growing corn, soybeans, small grains, and hay. On the 480 acre farm, this soil comprises 13.5 percent of the land base and on the 160 acre farm it comprises 16.6 percent. Fayette soils with slope gradient of 6 to 12 percent and slope length of 200 to 300 feet are the most prevalent soil on representative farms. This soil has a moderate erosion hazard and has lost up to eight inches of the surface layer. As a result, the plow layer is less friable and more difficult to keep in good tilth than the preceding soil. It is classified as IIIe land capability. The soil has less natural fertility and lower available water than Ile, Fayette soil. However, under good management, it is suitable for row crop production. 66 These soils comprise 41 percent of the land base on both the 480 acre and 160 acre farms. Fayette soils having slope gradients of 12 to 18 percent occur on side slopes of natural drainage systems. These soils have a much thinner soil layer and are subject to moderately severe erosion hazard. The organic content, natural fertility and available moisture capacity is low. With proper management, however, these soils can be used for growing row crops. Soybeans are not recommended for this soil. This soil has a IVe land capability. It comprises 28 percent and 33 percent of the land base on the 480 acre and 160 acre representative farms, respectively. Dubuque soils often occur in association with Fayette and are found on the steeper ridge tops and valley slopes. These soils are formed from a thin mantle of loess parent material and under hardwood .forest vegetation. The soils are acidic and moderate in natural fer- tility. The soils have a silt loam texture and are moderately perme- able; however, because of the steep slopes, they often have a hazard of drought. These soils on representative farms occur on slopes of 12 to 18 percent and have a land capability of Vle. Because of their erosion and drought hazard, these soils are not recommended for culti- vated crops. They are generally used for permanent pasture. They account for 11 percent of the land base on the 480 acre farms and 4 percent on the 160 acre farms. Chaseburg soils also occur in association with Fayette soils. These soils are formed along upland drainage ways in silty materials 67 that washed down from higher areas. They occur in narrow strips at the upper ends of deep narrow valleys in which no stream channel has developed. They usually have less than 2 percent slope and no erosion hazards. These soils are slightly acid and have moderately high natural fertility. The soils have moderate permeability and available water capacity but are often subject to flooding hazards. Also, because of the low area where these soils occur, late maturing crops may occa- sionally be damaged by frost. The soil is considered to be highly productive and suited to most all crops grown in southeastern Minnesota. With good management practices, corn and soybeans can be grown inten- sively on these soils, but with some hazard of flooding or frost damage. Lodging is a problem on these soils for oats. These soils are most often used for hay or pasture. Chaseburg soils account for only 5 percent of the land base. Downs and Associated Soils Representative farms with the less erosive conditions are assumed to have mostly Downs soils. Downs soils occupy a transitional zone between Fayette soils developed under forest vegetation and Tama soils developed under prairie grasses. Downs soils have a darker and thicker surface layer than Fayette but not as dark or thick as Tama. Like Fayette soils, they were developed from loess parent material and have a very silty texture. Downs soils generally occur on uplands but on more gentle slopes than Fayette soils. The soils are slightly to nwderately acidic, well drained and moderately permeable. Their water holding capacity is high and they have moderately high natural fertility. 68 Soil acreage on representative farms with Downs and associated soils are shown in Table 4-4. Upland Downs soils with 2 to 6 percent slope and approximate slope length of 200 feet have a capability classification of Ile. The surface soils are from 6 to 8 inches thick and very productive. These are excellent agricultural soils and used almost entirely for crops of corn and soybeans. The erosion hazard of these Ile Downs soils is slight and the practices necessary for control are easily applied. Table 4-4. Soil acreage by soil mapping unit and land capability on representative farms with Downs and associated soils, southeast Minnesota study area Land 160 480 Soil Mapping Unit Capability Acre Farm Acre Farm -------- Acres -----—-— Downs silt loam, 2% slope Ile 28.9 87.4 Downs silt loam, 4% slope moderately eroded Ile 49.5 188.2 Downs silt loam, 9% slope moderately IIIe 52.8 170.0 Downs silt loam, 14% slope moderately eroded IVe 10.7 10.4 Chaseburg silt loam, 1% slope IIw 18.1 24.0 69 The eroded phase of Downs soils with 2 to 6 percent slopes is also classified IIe. These soils differ from the previously described uneroded phase in having a thinner surface layer and greater sheet erosion hazard. In some places, tillage has mixed the subsoil with the surface layer. Because of erosion and the tillage practices on these soils, the organic matter, natural fertility and available moisture capacity have been reduced. With care taken to control erosion, however, these soils can be very productive for most crops grown in southeaster Minnesota. The Downs silt loam with 7 to 11 percent slope gradient and slope lengths of about 250 feet are classified as IIIe. This eroded phase has lost 5 to 9 inches of surface soil and a moderate hazard of further erosion exists. The plow layer often contains some subsoil making them less easy to work and more difficult to keep in good tilth. These steeper soils, however, with good management and conservation practices are generally suited to all crops grown locally. The Downs silt loam with slope gradient of 12 to 17 percent and slope lengths of 250 feet are classified as IVe. Much of the surface layer has been lost through erosion. Because of the strong slopes and past erosion, these soils are generally not recommended for corn or soy beans and are best suited for hay and pasture. Chaseburg soils also occur in association with Downs soils and are formed from the silty materials washed down from higher areas occupied by Downs soils. These are the same soils that also occur in association with Fayette. Chaseburg soils occupy narrow valleys and 70 drainageways and are subject to periodic flooding. Because they occur in long narrow strips adjacent to steep hills, their use is often limited to pasture and waterways. However, where it is feasible to grow crops and the flood and frost hazard is slight, Chaseburg soils are highly productive for corn or soybeans. In association with the steeper Fayette soils, are small areas of very steep, stoney and rocky land types. This land form generally occurs between ridge tops and the lower valley slope. Frequent outcrops of bedrock occur and only a thin layer of silt covers most of this land. Most of the areas are forested, however, some south and west facing slopes will not support good timber stands. Those soils have either a VIIe or VIIIe land capability classification and are not suited for crop cultivation. Crop Yields Crop yield is the result of the interaction on many natural environmental factors as well as many technology and management factors which man applies. Man has little control over crop productivity as it relates to soils, climate or topography. However, he can and does control many management factors which interact with the natural environment to affect crop yields. In the short-run, crop rotations, tillage practices, fertilizer application, hybrid seeds, chemical pesticides and many other factors have been shown to affect crop yield. In this model, however, yield differences occur only between soils with different slope and erosion phase and tillage system used to produce the crop. This model does 71 not address any long-run yield changes that might occur because of soil depletion or new technology. Crop yields used in this model were developed from the crop yield estimates reported in soil survey reports in southeast Minnesota. Yields for major crops are estimated for each soil by its slope range and erosion phase. The estimated yields are based on experimental plots within the county at or about the time the survey is published. To apply these yields, it was necessary to update the published data to present expectations from current types of management and technology. Yield data for the proposed Olmsted County Soil Survey scheduled for publication in 1980 provided yields for many soils on different slopes and erosion phases. For soil conditions not in Olmsted County, a crop equivalent rating guide1 was used to correlate soils between counties and to adjust crop yields to be consistent with those proposed for Olmsted County. The crop yields for soils, slopes and erosion condition are given in Table 4-5. The results of a number of cornbelt studies was reviewed to determine the yield variation caused by alternative tillage systems. The studies indicate that tillage practices need to be tailored to specific crop, soil, environmental and management conditions. Minnesota and Wisconsin studies2 have indicated that reduced tillage practices 1R. H. Rust and L. D. Hanson, ”Crop Equivalent Rating Guide for Soils of Minnesota," Miscellaneous Report (St. Paul, Minn.: University of Minnesota Agricultural Experiment Station, 1975). 2J. B. Swan and T. A. True, "Tillage for Corn and Soybeans," in Soils, Soil Management and Fertilizer Monographs, Special Report 2§_(St. Paul, Minn.: University of Minnesota_Agricultural Extension Service, 1978). 72 may m.p me am pH aa aaaym ay .Epay ayym wyaaamacu ma a.m ma pm py ma papaya .paE .aaaya apy .saay ayya mazaa aa N.p mm mm pa pay papaya .paE .aaaym aa .aaay ayya mazaa may y.m mp up as omy papaya .paE .aaaya av .eaay ayym mason may y.m aw Np am mmy aaaya am .eaay ayym mazaa "mHyOm poppyoommm paw mczoa may m.p me am a.py aa aaaym ay .saay ayym wyaaaaacu aa p.m pp AH a.w am papaya .paE .aaaym pay .Eaay yyym aaaaaaa aa a.m on an a.NH mm papaya .paE .aaaym apy .eaay ayym aaaayaa om w.m mm mm o.py ma papaya .paE .aaaya am .aaay ayym aaaaApa am p.p an mm a.my pay papaya .paE .aaaym a4 .apay ayym aaaayaa um~y0m poppyoommm can opuoxmm oyzummm xm: memo mcmonxom owmfiym :you was: wcyamwz Hyom mm~mm~< moym xpSpm daemoccyz ammogu30m asp yew poezmmm was: mcymmpe Myom x2 mpfioyx mayo pouoofiom .mup ofinmh can be applied to well-drained, medium textured, erosive soils such as those contained in this model. Soil scientists, however, warn that better than average management is essential for successful conservation tillage systems. The effect of conservation tillage on crop yields remains inconclusive. On test plots in southeastern Wisconsin on Fayette silt loam soils, corn yields on continuous no-till averaged about ten bushels below conventional tillage.2 Other tests in Minnesota show no conclusive evidence that no-till will result in reduced yields if the system is properly applied.2 Other tests in Minnesota show no conclusive evidence that no-till will result in reduced yields if the system is properly applied.3 Other tests in Minnesota show no difference between moldboard and chisel plowing.“ Conservation tillage systems has not had a significant effect on soybean yields.5 For purposes of this study, all crop yields except corn were set equal for the alternative tillage options considered. Corn yields for no-till systems were set 5 percent below alternative tillage systems. 11bid., p. 58. 2J. W. Bauder et al., "Tillage Practices in South Central Minnesota," Special Report 24 (St. Paul, Minn.: University of Minnesota Agricultural Extension Service, 1978). 31bid. l‘Swan and True. 51bid. 74 Soil Loss Estimation The universal Soil Loss Equation is used to calculate soil loss on representative farms with alternative practices for controlling soil loss and non-point source pollution. The equation is expressed as the product of the following six factors: A = R° K’ L' 5' C° P where: A = Tons of soil loss per acre per year; R = Rainfall factor; K = Soil erodability factor; L = Slope length factor; 8 = Slope gradient factor; C = Crop management factor; and P = Conservation practice factor. The first four factors reflect natural environmental relation- ships of rainfall intensity, soil erodibility, slope length and slope gradient. Crop management and control practices, except terracing, are reflected in the remaining factors. Because terracing divides drainage acres on natural occurring slopes, their effect on soil loss is reflected in the slope length and slope gradient factors. The equation predicts average annual soil loss from sheet and rill erosion. It does not predict soil loss from gully or stream bank erosion. Sheet and rill erosion is distinguished from sediment yield in that sheet and rill erosion refers to the gross movement of 75 soil off the slope segment under study. Much of this soil is deposited at the base of the slope from which it eroded or in grassed waterways, field depressions, sod strips from stripcropping and fence rows. Sediment yield refers to that portion of gross soil loss that enters water courses. The soil loss as predicted by the equation is the average annual loss expressed in tons per acre. It is the long-run average that would occur with typical rainfall and storm events for the area. The soil loss which occurs in any given year may deviate significantly from the average if storm events are abnormal. The R factor is an index of the erosive force of normal rainfall and storms for the study area. The erosion index considers the amount of rain, the rate at which it falls, the size of rain drops and its terminal velocity when it impacts the surface. The factor is based upon approximately thirty years of measurements. The R factor for southeastern Minnesota and applied in this study is 150.1 The K factor is an index of the erodibility of soils based on the physical properties of the soil itself. The index is experimentally determined for each soil and is the ratio of soil loss on a specific soil to the soil loss from a "unit"2 plot under otherwise identical conditions. The index is affected by such physical properties as soil 1U.S. Department of Agriculture, Science and Education Admin- istration, "Predicting Rainfall Erosion Losses, A Guide to Conservation Planning," Agricultural Handbook 537, December 1978, Figure l. 2The unit plot is defined as 72.6 feet long, with uniform lengthwise slope of 9 percent, in continuous fallow, tilled up and down the slope. 76 texture and organic matter content. The K factors as applied in this model were obtained from the Soil Conservation Service Technical Guide for Minnesota.1 The K values for soils on representative farms is given in Table 4-6. Both steepness and length of slopes are important factors in predicting soil loss from water. Long, steep slopes have greater soil loss than short, gentle slopes. The velocity of rainfall from steep slopes is greater. With greater velocity, there is less infiltration and a larger volume of runoff occurs. This in combination with longer slopes results in greater soil loss per unit of area, especially at the lower end of a slope. Like the K factor, the L and S factors are based on experimental data comparing soil loss from a sample plot to the "unit" plot. The L and 5 factors as used in this model were obtained from the Soil Conservation Service Technical Guide.2 The L and S factors are presented in a later section and shown relative to their values when terracing is applied. The crOp management (C factor) and erosion practice (P factor), values are presented in the following discussion of conservation systems. Conservation Systems The soil loss and non-point source pollution control practices considered in this study include sod in rotation, contouring and grassed waterways, contour strip cropping, steep back-slope terracing and con- servation tillage. These practices may be adopted singly or in 1Soil Conservation Service, Technical Guide, Section III—l-A, St. Paul, Minnesota, May 1976. 2Ibid., p. 8. 77 Table 4-6. Soil erodibility factors assumed for Fayette and associated soils and Downs and associated soils, southeast Minnesota study area Soil Erodibility Soil Mapping Unit Factor Fayette and associated soils: O '7 Fayette silt loam, a slope, moderately eroded . I Fayette silt loam, % slope, moderately eroded .37 Fayette silt loam, 14% SIOpe, moderately eroded .37 Dubuque silt loam, 14% slope, moderately eroded .37 Chaseburg silt loam, 1% 510pe .37 Downs and associated soils: Downs silt loam, % slope .32 Downs silt loam, 4% slope, moderately eroded .32 Downs silt loam, 9% slope, moderately eroded .32 Downs silt loam, 14% slope, moderately eroded .32 Chaseburg silt loam, % slope .37 Source: Soil Conservation Service Technical Guide for Minnesota, Section III-l-A, St. Paul, Minnesota, May 1976. combinations to achieve the soil loss constraints imposed on the model. Each practice affects soil loss as measured by the Universal Soil Loss Equation. These practices affect the value in the Universal Soil Loss Equation assigned to the L, S, C, and P factors. This section briefly describes each practice and gives the L° S, C and P factors used to calculate its affect on erosion. Contouring and Grassed Waterways In designing a farm conservation plan, the establishment of contouring and grassed waterways is the first basic step. All other practices considered in this study will be in addition to contour 78 farming with grassed waterways. Contouring is the practice of performing tillage and planting operations across the slope rather than straight rows which may go up and down the slope. Furrows, wheel tracks and crop rows, when on the contour, act as miniature terraces which detain water and direct runoff. As a consequence, the practice increases water infiltration and reduces runoff velocity. Grassed waterways are surface channels constructed at intervals down the slope where runoff concentrates. Their purpose is to replace gullies and prevent their formation. They are usually constructed in natural depressions where runoff occurs and have a design depth and width to carry peak runoff. Once constructed, permanent vegetative cover of grasses is established to provide soil protection. Contouring affects are measured in the Universal 5011 Loss Equation by the erosion control practice, P factor. Table 4-7 provides the P factors used in this model. The establishment of grassed waterways removes land from production. The width and length of waterways depend on the drainage area from which they receive runoff. Steeper and larger drainage areas require wider and more frequent waterways. Table 4-8 indicates the acreage requirements estimated to establish grassed waterways by soils. It was assumed that waterway widths of 30, 40 and 60 feet were needed on soils with land capabilities Ile, IIIe, and IVe, respectively. 79 Table 4-7. P factors by soil mapping units assumed for the Universal Soil Loss Equation when contouring is applied, southeast Minnesota study area Soil Mapping Unit P Factor Fayette and associated soils: Fayette silt loam, % slope, moderately eroded .50 Fayette silt loam, 9% slope, moderately eroded .60 Fayette silt loam, 14% slope, moderately eroded .80 Fayette silt loam, 14% slope, moderately eroded .80 Chaseburg silt loam, 1% slope 1.00 Downs and associated soils: Downs silt loam, 2% slope .60 Downs silt loam, 4% slope, moderately eroded .50 Downs silt loam, % slope, moderately eroded .60 Downs silt loam, 14% slope, moderately eroded .80 O Chaseburg silt loam, a slope 1.00 Source: Soil Conservation Service Technical Guide, Section III-l-A, St. Paul, Minnesota, December 1975, p. 6. Contour Strip—Cropping In this practice, row crops, oats and alfalfa hay crops are planted in alternate strips across the slope. Crop rotation also occurs on the strips. The runoff from the row crop is retarded by either the oat or hay crop down slope. It results in greater infiltration and reduces runoff velocity. This practice is more effective in control- ling erosion than contouring and may be used on highly erosive soils. Contour strip cropping effects are measured in the Universal Soil Loss Equation by both the erosion control practice and the crop management practice factors. In this application, row crops could 80 xuymyo>ycz .ooy>yam acymcouxm Hay3ufisoyyw< :.ao:p:ou:flmz paw cayuosyumcouiimxmzyoumz do .fiaaay .aaamaaayz ma u.::yz .Hsma .umu owe yovaom =o«m:ouxm mmmyo: .cwaom :xynumx paw zomfimz :oumMHU "ooysom o o macaw wfi .EmoH ufiym mysnommgu H.p oo powoyo xfioumyavos .omofim wpfl .EmoH yawn mazes w.m op povoyo xfioumyovoe .omon wm .EmoH ufiflm mnzoo ~.N om pmwoyo xfioumympoa .oQOMm we .EmoH ufifim mczoo o o macaw wm .Ewofi ufiflm mazoo nm~y0m woumyoommp pep mczoo o o omofim wH .EpoH “Ham myznommcu H.p oo papaya xfioumyovoe .omofim wpa .EmoH uflym oscznzo H.p oo popoyo xfioumyopos .omofim wpfi .EmoH tum oupoxmm w.m op popoyo xfiapmyopoe .oaofim wm .EpoH ufiym ouuoxmm H.N om papaya xfiopmyopoe .emofim pp .Emofi uafim ouuaxmm "mHfiom poumyoOmmm pew opuoxwm flamaaya< pyaya flaya<\.aav aye: mayaaaz Hyam mo ucooyomv summed acoEoyflscom can; moym Apaum m pomaccyz ammozusom .mxmzyoumz vommmym cmyfinppma ow uycs mcymmme Hyom >9 acoEoyyscoy vcmH ecu :pmcofi xmzyoumz vossmm< .wup ofinmp 81 account for either 44 percent or 33 percent of the field acreage. When 44 percent of the land is in row crop, the strip crop C factor is the same as a crop rotation of three years row crop, oats and three years of hay. When 33 percent of the land is in row crop, the C factor is the same as the above rotation except one year of row crop is dropped. A following section will provide these C factors under alternative tillage practices. The P factors associated with contour strip- cropping are given in Table 4-9. It was assumed the contour strip- cropping is not used on soils with less than 4 percent average slope. Table 4-9. P factors by soil mapping units assumed for the Universal Soil Loss Equation when strip-cropping is applied, southeast Minnesota study area Soil Mapping Unit P Factor Fayette and associated soils: Fayette silt loam, % slope, moderately eroded .25 Fayette silt loam, % slope, moderately eroded .30 Fayette silt loam, 14% slope, moderately eroded .40 Dubuque silt loam, 14% slope, moderately eroded .40 O Chaseburg silt loam, a slope 1.00 Downs and associated soils: Downs silt loam, % slope 1.00 Downs silt loam, 4% slope, moderately eroded .25 Downs silt loam, % slope, moderately eroded .30 Downs silt loam, 14% slope, moderately eroded .40 Chaseburg silt loam, % slope 1.00 Source: Soil Conservation Service Technical Guide, Section III-l-A, St. Paul, Minnesota, December 1975, p. 6. 82 Steep Back—Sloped Terraces Terraces can be an effective soil and water conservation practice on farms with intensive row crop production. Terraces reduce volume of runoff by dividing a field into separate drainage areas and reduce velocity of runoff by reductions in both slope length and gra- dient. As a consequence, they not only increase water infiltration and decrease soil loss, but they direct water off bottom lands which reduces flood and sediment damages. Their parallel construction avoids odd shaped areas which impose problems for operation of large machinery. The reduction in slope gradient between terraces also makes it easier and safer to operate farm machinery on steep slopes. Steep, back-sloped terraces affect soil loss estimates measured by the Universal Soil Loss Equation by the slope length and slope gradient. The slope length is decreased to the distance between terraces. Steep, back-sloped terraces also decrease slope gradient because the earth to build the ridge comes from the lower side of the terrace and the grade from the bottom of the upper terrace to the top of the lower terraces is slightly reduced. The following table indi- cates the length and slope factor for soils in the model with and without terracing. Crop Rotation and Tillage Systems All production activities in this model are associated with a specific crop rotation and tillage system. Reductions in soil loss may occur by either adoption of a rotation that includes additional oat or hay crops or by adopting a soil conserving tillage practice. 83 Table 4-10. Slope length and gradient factors by soil mapping units assumed for the Universal Soil Loss Equation on fields without terracing and with grassed, back-sloped terracing, southeast Minnesota study area L- 5 Factor Without With Soil Mapping Unit ‘ Terracing Terracing Fayette and associated soils: Fayette silt loam, % slope, moderately eroded .57 .43 Fayette silt loam, -% 510pe, moderately eroded 1.70 .99 Fayette silt loam, 14% slope, moderately eroded 2.80 1.80 Dubuque silt loam, 14% slope, moderately eroded 2.80 1.80 Chaseburg silt loam, % slope .15 .15 Downs and associated soils: Downs silt loam, % slope .32 .32 Downs silt loam, 4% slope, moderately eroded .53 .37 Downs silt loam, 9% slope, moderately eroded 1.30 .89 Downs silt loam, 14% slope, moderately eroded 2.80 1.80 Chaseburg silt loam, % slope .15 .15 Source: Soil Conservation Service Technical Guide, Section III-l-A, St. Paul, Minnesota, p. 8. 84 The interaction of crop rotation and tillage practices is reflected by the C factor in the Universal Soil Loss Equation. Table 4-11 identifies the C factors for each crop rotation and tillage practice option. Conventional tillage either with spring or fall moldboard plowing is the predominant practice currently employed in the basin. It includes moldboard plowing for corn, silage or soybean crops either in the fall following harvest or in the spring as soon as field operations can occur. These practices leave the ground without any vegetative or plant residue protective cover for certain periods of time. Often this exposure is during the spring of the year when the greatest number of storms occur. The mulch tillage makes use of a chisel plow which leaves approximately two-thirds of the preceding year's crop residue on the surface. The no-till planting assumes no tillage operations are performed prior to planting and that 90 percent of the previous year's residue remains on the surface following plant- ing. The effectiveness of these different tillage systems in control- ling soil loss is reflected in the C factors in Table 4-11. 85 Table 4-11. C factors for Universal Soil Loss Equation by crop rotation and tillage system, southeast Minnesota study area Fall Moldboard Spring Moldboard Mulch No-Till Plowing Plowing Tillage Planting C-C .39 .37 .19 .10 C-S .45 .43 .24 .19 C-Si .44 .41 .30 .26 C-C-C-O-M-M-M .17 .16 .ll .07 C-S-C-O-M—M—M .17 .16 .12 .08 C-Si-C-O-M-M-M .17 .16 .14 .11 C-C-C-M-M-M-M .16 .15 .11 .07 C-S-C-M-M-M-M .16 .15 .ll .07 C-Si-C—M-M-M-M .16 .15 .ll .07 C-C-O-M-M-M .13 .12 .09 .06 C-S—O-M-M-M .14 .13 .09 .06 C-Si-O-M-M-M .13 .12 .10 .08 C-C-M-M-M-M .12 .12 .09 .06 C-S-M-M-M-M .13 .13 .09 .07 C-Si-M-M-M-M .12 .12 .10 .07 Source: Soil Conservation Service Technical Guide, Section III-l-A, St. Paul, Minnesota, pp. 9-10. CHAPTER V ECONOMIC DATA SET FOR MEASURING NET INCOME EFFECTS FROM ADOPTION OF SOIL LOSS CONTROL PRACTICES ON REPRESENTATIVE FARMS The preceding chapter documents crop production alternatives that may be employed on representative farms. It included combinations of five crops, fifteen rotations, four tillages, and four soil loss control practices. The data requirements used to measure the effect of each production alternative on the land base, crop yield and soil loss was documented. This chapter provides the economic data used to estimate net returns for each of these activities. It includes the prices assumed to estimate the value of production and the procedure and data used to estimate cost of crop production inputs and instal- lation of soil loss control practices. Activities The crop production activities are defined in the model by a sequence of crops in a rotation and by a tillage system. The crops grown in the rotation include corn for grain (C), corn silage (Si), soybeans (S), oats (O), and alfalfa hay (H). Each crop, except alfalfa hay, represents one year in a rotation. Alfalfa is a perennial plant and once established, it is harvested for three or more years. 86 87 Some difference occurs between rotations on the grain farms and the farms with roughage consuming livestock. Rotations including corn silage do not occur on grain farms. Alfalfa hay crops, however, are considered on the grain farms. Even with the establishment of good conservation practices and tillage systems, continuous row crop culture would still have excessive erosion rates on Fayette and associated soils. Table 5—1 presents the crop rotations on representative grain farms and farms with roughage consuming livestock enterprises which are included in this model. Not all rotations, however, apply to all fields. Continuous row crops were not simulated to be grown on those fields with severe erosion hazard soils. Any rotations which would result in erosion rates exceeding 50 tons per acre were deleted from the model. Four alternative tillage practices are used with these rotations. They are: 0 conventional fall moldboard plowing; 0 conventional spring moldboard plowing; 0 mulch tillage with chisel plowing; and 0 no-till planting. For conventional fall moldboard plowing, the seedbed preparation for all row crops and oats consist of moldboard plowing in the fall. This practice incorporates all crop residue and leaves the soil totally exposed until the crop is established the following spring. The practice also includes several secondary tillage Operations which will be specifically defined in a later section on farm machinery operation cost. Table 5—1. Assumed crop rotations on representative grain and livestock farms, southeast Minnesota study area Grain Roughage Consuming Rotation Farms Livestock Farms Continuous corn (C'C) x x Corn-soybean (C-S) x x Corn-silage (C-Si) X Corn-corn-corn-oat-hay-hay-hay (C-C-C-O-H—H-H) x x Corn—soybean-corn-oat-hay-hay-hay (C-S-C-O-H-H-H) x x Corn-silage-corn-oat—hay-hay-hay (C-Si-C-O-H-H—H) x Corn-corn-oat-hay-hay-hay (C-C-O-H-H-H) x x Corn-soybean-oat-hay-hay-hay (C-S-O-H-H-H) x x Corn-silage-oat-hay-hay-hay (C-Si-O-H-H-H) x Corn—corn-corn-hay-hay-hay-hay (C-C-C-H-H-H-H) x x Corn-soybean-corn-hay-hay-hay-hay (C-S-C-H-H-H-H) x x Corn-silage-corn-hay-hay-hay-hay (C-Si-C-H-H-H-H) x Corn-corn-hay-hay-hay-hay (C-C-H-H-H-H) x x Corn-soybean-hay-hay-hay-hay (C-S-H-H-H-H) x x Corn-silage-hay-hay-hay-hay (C-Si-H-H-H-H) x 89 Conventional spring moldboard plowing as a tillage system delays all pre—plant tillage operations until a short time prior to planting the row crop. The bare soil is exposed for a shorter time period, especially during early spring when large runoffs causing erosion is most likely to occur. The spring moldboard tillage system as assumed in this model also involves fewer secondary tillage operations. Mulch tillage with chisel plowing incorporates only about one—third of the preceding crop residue. The practice loosens the soils with narrow points or sweepshovels leaving most of the residue at or near the surface. This residue acts as a protective cover for the soil by reducing energy intensity of rainfall and slowing runoff. The secondary tillage operations associated with chisel plowing are similar to spring moldboard plowing. The no-till system for row crops assumed for this study involves no tillage prior to planting. At planting time, the only soil manipulation is that required for good seed, fertilizer and herbicide placement. The practice leaves approximately 90 percent of preceding crop residue on the surface. Weed control is exclusively by chemical herbicides. In addition to the crop rotation-tillage system combinations, the activities are also defined according to the conservation practice applied to the field. When no conservation practices are applied, all tillage and planting operations are assumed to be straight rows without regard to field topography. Three alternative soil loss control 90 practices may be applied to the field with a technical assistance, installation and maintenance cost. These practices as defined in the preceding chapter are contour farming with grassed waterways, stripcropping and steep, back-sloped terracing. Prices and Value of Production Current normalized prices as developed by the National Water Resources Council are used in this study to evaluate production activities.1 These prices remove short-run fluctuations that occur because of abnormal supply or demand conditions. They are also developed to remove the influence of price control programs and government subsidies to agricultural producers. They represent a nationally consistent set of prices which the National Water Resources Council requires for evaluation of all federally funded land and water resource development projects.2 Such an evaluation allows policy makers to compare alternative projects without built—in distortions from government programs, abnormal supply and demand conditions, or regional price differences. 1U.S. Department of Agriculture, Economics, Statistics, and Cooperatives Service, Natural Resource Economics Division, "Current Normalized Prices" (draft), September 1979. 2"Water and Related Land Resources, Establishment of Principles and Standards for Planning," Federal Register 38 (10 September 1973). 91 The prices are developed using long-run trend analysis.1 They are weighted to reflect the recent price changes considered permanent. They are normalized from the standpoint that the relative differences between commodities is an average over time. Relationships between local, state and national prices are developed to reflect transporta- tion costs and other variables which cause regional price differences. The adjusted normalized prices for Minnesota which are used in this model are reported in Table 5-2. Seed, Fertilizer, and Chemical Pesticide Inputs Seed. All seeding rates are constant with regard to soil, tillage system or erosion control practice for all crops except corn. The specific application rates, price, and per acre cost for each rotation component is given in Table 5-3. Corn seeding rates are based on achieving a final plant popu- lation sufficient to produce the estimated yield for each field. To achieve a corn yield in the range of 90 to 130 bushels as occurs on most fields in this model, a target final population of 20,000 plants per acre is adequate. Under conventional tillage, a mortality rate of 15 percent is assumed and on mulch and no-till tillage systems, a mor- tality rate of 25 percent is assumed. Hybrid seedcorn is generally sold by the bag with a count ranging from 75,000 to 90,000 kernals. The price in Table 5-3 reflects that of an 80,000 count bag. 1Robert D. Niehaus, "Data and Procedures for Calculating 1975 Normalized Agricultural Prices for the U.S. Water Resources Council,” Working Paper No. 22, Economic Research Service, U.S. Department of Agriculture, January 1977. 92 Table 5-2. Adjusted normalized prices for commodities grown on representative farms, southeast Minnesota study area Adjusted Normalized Price Commodity Unit ($) Corn bushel 2.17 Silagea ton 15.00 Soybeans bushel 5.80 Oats bushel 1.21 Hay ton 46.84 Source: U.S. Department of Agriculture, Economics, Statistics, and Cooperatives Service, Natural Resource Economics Division, "Current Normalized Prices" (draft), September 1979. 8Because markets are not well established for silage, no price was reported. Based on judgments of its relative feed value, a market price of $15.00 per ton was derived. 93 .GNQH xymscmw .:0ypmum ucosyyomxm HwySufisoyym< .muomozcwz mo Auwmyo>yca .n.pr Zn acyumoyfinsd ooy>yom :Oymcouxm ucoaowmcme Eymm :wmpomeccwz ummocusom :y man :y zoyo H wfisonm um:3: :fl wouyomoy money wcwcoem paw moofiymm am.aN am.m .may my mamayHya yy< aaasamyaaayma ya: ao.a am.m .aa a.N mawpyyya yy< maao am.a am.a .aa a.a mamayyyy yy< maaaaaam ma.py aa.mp map mmm. yayy-a: ya says: awaaym om.mH oo.mp app om. Hype ya wayyaa .yaaaya:a>:au ampyym ma.pH ao.mp map mmm. yyya-a: ya says: :yau cm.mH oo.mp was om. fifiam yo mcyymm .m:o«u:o>:ou :you flay flaw aapm Eaaasm amayyyy mayo oyo< peyym mcypoom yam umou moym stum muomoccyz ammocpsom .Eopmxm oumfiayu pzm moyo x5 oyom yo; pmoo wcm mooyym .moumy mcfiucm~m vaow .mim ofinmh 94 Fertilizer. The fertilizer application rates for corn and silage vary with expected yields, tillage systems and sequence in crop rotation. The application rates for all other crops are constant. The application rates of nitrogen, phosphorous, potassium and lime on crops are presented in Tables 5-4, 5-5, 5—6, and 5-7, respectively. The nitrogen applications include different combinations of granular fertilizer applied as a broadcast or a starter and anhydrous ammonia applied only to corn as a side-dress. The phosphorus and potassium are applied as a combination of broadcast and starter fertilizers. Lime is applied prior to the establishment of alfalfa hay. If alfalfa hay does not occur in the rotation, then one appli- cation every eight to ten years is necessary to counteract the acidic build-up from nitrogen fertilizer. The following prices were used in the budget generator to estimate fertilizer input costs: 3;; Granular nitrogen . . . . 0.18/1b Anhydrous ammonia . . . . 0.17/1b Potassium . . . . . . . . 0.08/1b Lime . . . . . . . . . . 3.50/ton The fertilizer rates are based on recommended applications to account for natural fertility of the soil, nutrient loss from preceding crops and needs of the current crop, nitrogen fixation by legumes, and conservation tillage systems. Organic matter is slightly higher in Downs soils than Fayette and consequently, more 95 nitrogen. Corn removes nearly 1.0 lb. of nitrogen, 0.4 of phosphate and 0.3 lb. of potash.1 Oats remove about the same amount of nitrogen and phosphorus per bushel as corn but much higher quantities of potash. Soybeans remove nearly as many nutrients as corn or oats but provides most of its nitrogen needs through fixation of atmosphere nitrogen. Alfalfa hay is considered a nitrogen building crop and can provide 85 to 100 lbs. of nitrogen for succeeding crops.2 Conventional tillage systems incorporate broadcast fertilizers into the plow layer. This provides excellent placement for efficient plant utilization and prevents nutrient loss either as a gas to the atmosphere or from rainfall runoff. The conservation tillage prac- tices of mulch or no tillage do not allow as optimum of fertilizer placement. Broadcast fertilizers remain near the surface and are less available to growing plants. A larger proportion of the total fertilizer need to be applied as a starter during the planting operation or as a side dress. The amount which can be applied as a starter, however, is limited. As a result of the poorer fertilizer placement, slightly higher application rates are recommended for corn with mulch or no-till systems. 1C. J. Overdahl and G. E. Ham, "Fertilizing Soybeans," in Soils, Soil Manegement and Fertilizer Monographs, Special Report 24, Univer- sity of Minnesota, Agricultural Extension Service, 1978, p. 79. 2W. E. Fenster and C. J. Overdahl, "Predicting Nitrogen Needs," in Soils, Soil Management and Fertilizer Monographs, Special Report 24, University of Minnesota, Agricultural Extension Service, 1978, p. 10. 96 .mEymw o>yumucomoygey :o ysooo umcu .ommfiym mpfioyx :yoo mo ou sauna omHm mopmy omoch n owcmy oga ucommymoy omochm c o a o Hy< sac pacmyyaaaam mcmonxom xn popooeym mH ma my mH HH< ucoenmwfinmumo x8: ammfiym yo :yoo an povoo o o o o HH< -oym acoESmenmumo Am: ucosnmyfinmumo ma ma ma ma Hy< ya: gay: myao OH 0y as oy yy< mamaasam ma am am am amz ya; me mm mp mp mHH m m m x o oooym :yo mm om my mH om ma MH 2 p p u WMN me pmH pod omH mcmonxom yo awmfiym .az may has apy myy .ayaa ya papaaaya :yau mmfi wm~ mHH mHH cm a ................... oyo< yea .maq -uuiuuuuiuuuiuu--- Hyay-az apayayy awaysyy paayam apayyyy yypa pyayy maaaaaasau payaaaam cogs: Hm:0yu:o>:ou Hp:0yu:a>:ou wpauoaaom moym xpsum muOmozzyz ammocusom .mEoumxm owmfifiyu o>ypmsyoufiw yop:= mwfioflx moyo popoodom 6:8 mu:o:o;Eoo :oyumuoy yom nappy :OMumoyflzmm yoNyHyuyom :owoyufic onSmm< .pum oanmh 97 .mEymm o>ypmucomoymoy :o y3ooo umzu mwfiowx :yoo mo owcmy ecu ucomoymoy omosbm aa aa aa aa Sp .3: pafiflaaamm mcponxom x2 popoooym co co co co HH< «coenmyfinmumo x8: awmfiym yo :yoo up cacao co oo oo oo HH< -oym ucaecmymnmumo x8: nae ma 8 mo ONH omm omm ONH HH< u xx“ pwwzumumo am am am am Sp maaaayam we mm om om omH km: cc om mp mp mHH m m m x a o a mp pp mm mm ca E .2 a p pa ay :yau mw mm cm om oma mcmonxom yo owmfifim av om mp mp mam .=yoo x5 vowooaym :you mp Op mm mm om ................... oyo< you .mnqiiuiuiunuiuiiiiuniu 2:82 9:52. amass: wayyam aaazyy Spa 3a; 38888 8839. some: Hp:oyp:a>:ou Hm:0yu:a>:ou pauoofiam m moym xpSHm mnemoccyz ummenusom .meoumxm owmfiayu o>yumcyouam yous: mwfiofix moyo wouoomom p:p mp:o:ogaoo :omuppoy yom mopdy :omumoyfimam youflfifluyom EDwmmmuom onSmm< .mum ofinmk 98 .mEymw o>yumucomoyooy :o ysooo umcu mommy» :yoo mo owzmy ecu ucomoyooy omocbm am am a... am :< .8: pafiyyaaamm mamon>0m x9 voooooym om om om om HH< ucoecmfifinmumo xw: owmfiwm yo :yoo x9 oopoo om om om om HH< loam unmeamwfinmumo Am: acme my m we om om om om HH< x8” owmzumumo am am 2.. am :< maaaayam cm on mo mo omH km: mm mo oo oo mHH a m m x o oooym :yo po mm om om oo um Ma a p o u ow on mo mo omfi w:mon>0m yo ommfiym we mo oo oo mHH .cyoo so oopoooym :you po mm op op oo ................... oyo< yam .momuiu----------uniiin :yyaz ampzyy amazyy wayyam amazyy :E Bay» aaaaaasau aaflaaam gums: Hmcofluco>cou Hp:0yu:a>:ou wumcyouam hops: moaofi» moyo wouoomam pap muzo:ooeoo :OMumpoy yom mopmy cemumoyflaom yoNfiHypyom mahocamosm ooESmm< .onm ofinwh 99 .oo ooze: oumy omsccm ommyo>m oou poo: my pouyomay oypy ooe .mymas :au ou pomyo syo>o coco mooyo 30y mooscyycoo ow ooyoomm my mayom o o o o smo poomyyomumm . . . . mcmoosom so o p o p o p o p oopoooym pcosomyyopumo sp: . . . . owmyym yo :yoo so o p o p o p o p paooooym ucosomyyomymo sm: . . . . ucoeomyyomumo o p o p o p o p smo ouyz memo o o o o mcmoosom smo o o o o mmHmmHm so ooooooym cyou . . . . mcmoosom yo owmyym oo o oo o co o oo o m.:yoo so ooooooym :you uuuuuuuuuuuuuuuuuuu oyo< you mzoeui--uiiuiiuiuiiuuii yyyy-az ampyoyy awaoyyy mayyam amayyyy yyaa yaaaaaeau cayypaam zoos: Hm:0yp:o>:ou Hm:0yu:o>:oo moym so5um poemoccyz ammoouDOm .msoumsm owmoyyy o>~ym=yoyom yoo:: my:o:ooEoo :Oyomyoy yew mopmy :Oyumoyyoom oEyH ooESmm< .sum oyomb 100 Herbicides. Weed control for both mulch and no-till systems is accomplished totally by chemical herbicides. It includes a com- bination of pre-emergence and post-emergence herbicide applications. Conventional tillage systems use a combination of chemical herbicide and field cultivations. For corn, all tillage systems assume some use of 2-4-D to control problem weed areas after the crop is well established. Conventional spring tillage assumes the use of a post-emergence herbicide (atrazine) to replace on field cultivation. The conser- vation tillage system uses a mixture of pre-emergence (atrazine and alachlor) herbicides. When soybeans follow in the rotation, a different combination of chemicals is required to prevent carry-over damage.1 The application rates used in developing these budgets were taken from Agricultural Extension Service recommendations and the prices used in Table 5-8 are those quoted by local herbicide retailers in southeast Minnesota. Farm Machinery Operation Cost The farm machinery operation cost in this model not only reflects the different kinds of operations for each crop and tillage system but also reflects different sizes of machines between repre- sentative farms. The small farms with limited capital and excess labor use a smaller size of equipment than the larger farms. In this application, the 160 acre farm uses the smallest size of equipment 1Soybeans are sensitive to atrazine carry-over and other chemicals have to be substituted. In these budgets, cyanazine is assumed as a substitute. 101 a a a a sac paomyyapamm AN.wH wN.NH aa.m aa.y ayaa so papaaaya amayym . . owmyym yo myoo so mo o my o o o ooooooym ucoeomyoomymo so: mcmoosom yo owmyym o. o o o .cyoo so ooooooyo muoo mo.oo mo.oo mp.o o memoosom aN.yN pm.om aa.m aa.m ya: so papaaaya ayau wa.wy wa.wy Na.my aa.H mapaosam so papaaaya ayau ommoym sm.oo mm.my mo.m om.o . yo :yoo so ooooooym :you uuuuuuuuuuuuuuuuuuuu oyo< you w inniniuuiunuuuuuuuuu Hoay-az awayyyy awayoyy wayyam amayyyy Hypo o0o52 om:0yu:o>:ou om:0yp:o>:ou pcocomeou scyymuom woym sosym muOmoccyE umwoousom .mEoumsm owwooyu o>yumcyowom yoocs mozocooEoo :Oyymuoy you mumoo ooyoyoyo: .onm ooomh 102 used in the area. For example, the 160 acre farm has tractors no larger than 75 horsepower and use only 4-row equipment. The 480 acre farm uses equipment of sufficient size to complete all spring tillage operations with no more than 150 labor hours. Because of the large investment per hour of operation for harvesting equipment, small farms with limited capital are assumed to rely on custom harvest. The number of acres harvested on these farms cannot justify the large investment in harvesting equipment. The interest charge alone for a new small combine exceeds the custom rate a farmer would have to pay for harvesting the small number of row crops on a 160 acre farm.1 In this model, a custom rate for harvesting corn, soybeans and oats is assumed. Small farms with roughage consuming livestock are assumed to have equipment to harvest hay or silage. The following custom rates were used:2 $/Acre corn harvest . . . . . . 23.00 soybean harvest . . . . . 14.39 oat harvest . . . . . . . 12.31 The data inputs for the budget generator to estimate machine operation costs include: 1The interest charge for a new combine costing $39,000 exceeds the custom rate of $23.00 per acre for the number of acres harvested on small farms. 2These are the suggested rates in "Minnesota Farm Machinery Cost Estimates for 1979" by Fred Benson and Bruce Hatteberg, Agricultural Extension Service, University of Minnesota (FM 609), St. Paul, Minnesota, February 1979, Table 11. 103 0 machine cost per hour of operation; 0 power unit cost per hour of operation; 0 fuel consumption by power unit; 0 labor hours per machine hour; 0 machine width; 0 field operation speed; 0 field efficiency; and 0 number of times over the field. These data are presented in Tables 5-10 through 5-17. Table 5-10 presents the kind and size of farm machinery on representative farms. Table 5-11 and 5-12 gives the operation cost per hour of power units and machine components. Tables 5-13 through 5-17 indicate the number of times over a field by each machine for the various crop and tillage system combinations. The cost per hour of operation includes depreciation, interest, insurance, repair and shelter for each machine and power unit.1 Field operation costs include the machine component, a power unit, fuel con- sumption and operator labor. The number of hours per acre in Table 5-11 are estimated using machine width, field operation speed and field efficiency components. Table 5-11 also indicates the number of labor hours to be associated with each hour of machine operation. The labor cost for machine operation assumes a wage of $3.50 per hour. Diesel and gasoline fuel consumption by power units is given in Table 5-12. 1These costs were developed from "Minnesota Farm Machinery Economic Cost Estimates for 1979" by Fred Benson and Bruce Hatteberg, Agricultural Extension Service, University of Minnesota (FM 609), St. Paul, Minnesota, February 1979. 104 T3”le 5-9 Assumed farm machinery on representative farms, southeast Minnesota study area 160 Acre Farm 480 Acre Farm Machine Grain Livestock Grain Livestock Tractor, 40 H.F. x x x x Tractor, 75 H.F. x x . . Tractor, 100 H.F. x x Tractor, 140 H.F. x x Combine power unit, small x . Combine power unit, medium . x Swather power unit . x . x Pick-up, 3/4 ton x x x x Truck, 2 ton . . x x Grain wagon x x x x Forage wagon x x Hay wagon/fork . x . x Stalk shredder x x x x Fertilizer spreader x x x x Anhydrous applicator x x x x Sprayer a x x x x Moldboard plow, J-lba x x x . Moldboard plow, S-lea . x Moldboard plow, 2-16 . . x x Chisel plow, 15 ft.b x x . . Chisel plow, 17 ft.b . . x x Springtooth drag, 30 ft. x x . . Springtooth drag 48 ft. . . x x Disc, 16 ft. x x . . Disc, 24 ft. 8 . . x x Cultivator, 4 row x x . . Cultivator 6 row . . x x Rotary hoe x x x x Planter, 4 row x x . . Planter, 6 row . . x x No-till planter, 4 rowC x x x x Grain drill x x x x Grain head, 13 ft. . . . x Grain head, 15 ft. . x . Corn head, 2 row . . . x Corn head, 3 row . . x Swather, 12 ft. . x . . Swather, 14 ft. . . . x Forage harvester, 1 row . x . Forage harvester, 2 row . x Round baler, 1 ton . x . x Forage blower . x . x 3Not included on farms using either mulch tillage or no-till systems. bUsed only on farms with mulch and no-till systems. cUsed only on farms with no-till systems. 105 Table 5-10. Machine operatior use rate, power source, labor requirement and cost, south:ast Minnesota study area Labor Use Rate Power Requirement b CostC Machine (hr./acre) Source (hr./m. hr.) (S) Moldboard Plow, 4-16 0.43 A,B 1.02 5.82 M:ldhoard plow, 5-16 0.“ C 1.02 8.54 Moldboard plow, 7-16 0.25 D 1.02 11.34 Chisel plow, 13 ft. 0.15 B 1.02 5.41 Chisel plow, 1” ft. 0.13 D 1.02 7.36 Springtooth drag, 30 ft. 0.06 B,C 1.08 15.47 Springtooth drag, 48 ft. 0.03 C 1.08 23.01 Disc, 16 ft. 0.13 B 1.02 8.72 Disc, 24 ft. 0.09 D 1.02 19.18 Cultivator, 4 row 0.20 A 1.04 3.83 Cultivator, 6 row 0.14 C 1.04 5.01 Rotary hoe 0.09 A 1.00 9.53 Planter, 4 row 0.21 A 1.16 16.5'~ Planter, 6 row 0.14 C 1.16 24.77 No-till planter, 4 row 0.29 A,C 1.16 17.83 Grain drill 0.16 A,B 1.11 20.53 Grain head, 13 ft. 0.24 E 1.11 3.05 Grain head, 15 ft. 0.21 F 1.11 3.69 Corn head, 2 row 0.6" E 1.11 4.84 Corn head, 3 row 0.45 F 1.11 7.94 Swather, 12 ft. 0.17 C 1.00 22.35 Swather, 14 ft. 0.14 C 1.00 22.85 Forage harvester 1.06 B,C 1.11 13.55 Round baler, 1 ton 0.22 B,C 1.11 7.82 Forage blower 1.06 B .. 5.91 Grain wagon 0.24 A 1.00 1.66 Forage wagon 1.06 A 1.00 6.10 Hay wagon/fork 0.75 A 1.00 1.66 Stalk shredder 0.23 A 1.00 6.53 Fertilizer spreader 0.03 A,B 1.33 17.93 Anhydrous applicator 0.11 C,D 1.33 16.46 Sprayer 0.07 A 1.25 5.51 Source: Fred Benson and Bruce Hatteberg, "Economic Cost of Machinery in 1979," Agricultural Extension Service, University of Minnesota, FM 609, St. Paul, Minnesota, February 1979. aPower source codes are identified in Table 5-11. b . Hours per machine hour. cIncludes depreciation, interest, insurance, repair and shelter cost, but does not include Operation costs of power units. 106 Table 5-11. Fuel type, fuel consumption and operation cost of power units, southeast Minnesota study area Fuel Operation Consumption Costa Power Unit Code Fuel Type (gal./hr.) ($/hr.) Tractor, 40 H.P. A Gasoline 2.4 (G) 3.45 Tractor, 75 H.P. B Diesel 4.5 (D) 6.07 Tractor, 100 H.P. C Diesel 6.0 (D) 8.32 Tractor, 140 H.P. 0 Diesel 8.4 (D) 10.23 Combine power unit, small E Gasoline 6.0 (G) 28.94 Combine power unit, medium F Diesel 7.7 (D) 36.36 Swather power unit G Diesel 3.1 (D) ..b Pick-up,3/4 ton H Gasoline 2.64 (G) 9.01 Truck, 2 ton I Gasoline 3.96 (G) 15.02 Source: Fred Benson and Bruce Hatteberg, "Economic Cost of Machinery in 1979," Agricultural Extension Service, University of Minnesota, FM 609, St. Paul, Minnesota, February 1979. a C I O I 0 Includes deprec1atlon, 1nterest, 1nsurance, repair and shelter cost, but does not include operation costs of power units. bPower unit costs are included with the Swather operation component. 107 .CHOU wm®>Hw£ EOpmSU meymw oomem .mEymm omom oyom oop :o soco myzooo :Oyumyomo ocyoome myoho .mcmoosOm yo owmoym so ooooooyo my :yoo :ooz ooosoocy we: my :Oyyoyooo myob o .yoxoyo cyoo oou moomoooy yoomo>ymo ommyom oou yoooxo owmoym you ysooo m:Oyymyooo oEmm oohm c.o o.o o.o o.~ o.o o o o o o o.~ o.m o.o o.o o.~ o.H c o o o.o o o.o o.o o.o N.N N.N N.H N.H o o o.o o.o o o.o o.H o.m o o.o o o o o o.~ o.~ o.o o.o o.~ o.~ o o o o.~ ............... oooyo oou yo>o moEyF uiuuuiiiuiuiuui oyoxoyo :you yaaaaya yyya-az youm>yposo oooym yoymoyomoo msoyosoc< ooo symuom youcmym cyou yosoymm mayo ouoouwzyyom omyo saya yamyao zoom oymoooyoz yoNyoyuyom umpoomoyo oyooooyom oomuw momy-az amayyyy awayyyy mayyam ampyyyy Hypo ovozz omzoyuco>cou om:0yu:o>:ou ocyoomz NOHN sosom moOmo::oz ummoou30m .:yoo you Eoymsm owmooyu so :oyymyoao ocyoomz .Noim oyomh m 108 A price of $0.90 and $0.80 per gallon of gasoline and diesel are used in the budget generating process to estimate fuel charges. In addition, a lubrication charge of 15 percent of fuel consumption was used. The number of times over each field by each machine is given in Tables 5—13 to 5-17 for the four tillage systems and crop component of a rotation. The data in the preceding tables are used to estimate the per acre costs for each machine operation. The data in these tables are used to calculate the per acre cost for all machine Operations for Specific crops and tillage systems. Other Input Costs Other input costs include interest on operating capital, drying charges for corn, and a cost for motor vehicle operation. Interest on operating capital was calculated on the cost of seed, fertilizer, and chemical inputs. An 11 percent rate for eight months was used in this calculation. A charge of $0.14 per bushel to dry corn was assumed. On small farms, a cost of $3.83 per acre was assumed for a pick-up use associated with crop production. On the 480 acre farms, a charge of $3.77 per acre for pick-up and $6.16 per acre for truck which was associated with crop production was assumed. Costs of Soil Loss Control Practices Limited data were available on practice cost, and what was available indicated a broad range of cost. The data developed for the practices considered in this study rely on the technical spec- ifications for practices contained in the Soil Conservation Service 109 .mcmoosOm umo>ymo Eoymso mEypw HomEm ”meymm oNym oyom oop co soco mysooo :Oyumyomo myobm a.y a a o yayaaya yyya-az a.y o.y o.H a.H paayaeau a a a.N o.N yaaa>yayau ~.o N.y a a yasayam a.y a.o a.y a.y yayaaya a a a.y a.y mayp aaaaamayyam a a.y a.o o.N amya a a.H a a saga yamyau a a O.“ a.y zaya pyaaapyaz a.y a.a a.o a.y yaNyyyyyam amaapaaym a.y a.y a.H a.y yappay;m xyaym uuuuuuuuuuuuuuu wooym oou yo>o moEyH uuuuuuuiuuuuiii oyyy-az amayyyy ampyyyy mayyam amaayyy Hypo aayaaaz ooHsz omCOyuco>cou Honeyuco>cou moyw sosum myOmoccyz pmmooyzom .mcmoosOm yom Eoymsm ommyoyu so :Oyumyooo ocyoomz .myum ooomh 110 .mumo umo>ymo EoumSO mEymm HymEm mmEymm oNym oyom owp co soco mySOOO COyymyomo myoho .mEymm :yoyw :o ooomoyo oymom omiom my so: .xooumo>yo wcyesmcoo owmowsoy opyz mEymm :o soco mysooo acyumyomo myoh o .owmoym yo mcmoosOm so ooooooyo oym memo coo: ooosoocy yo: my :Oyumyomo ocyoome myohm o.o o.o o.o o.o oocyoeou o.o o.o o.o o.o oyoymm o.o o.o o.o o.o oyooymzm o.o o.o o.o o.o Hoyyo :yoyo o.o o.o o o mayo oHOOpwcyymm o o o.o o.o omyo a a 0.2 0.2 good pypaopyaz o.o o.o o.o o.o yoNyHyuyom ammooooym o.o o.o o.o o.o myoopoyom oymum ............... ooooa oop yo>o moeye i----:-----u--- Hoay-az amayoyy ampooay mayyam amaoayy Hypo aayaaaz ooHsz om:Oyu:o>:ou om:Oyu:o>:ou poym spoum mpomo::yz ammoousom .ucoEomyoomumo smo «wommom pom mono yom owmooyu so :prmyomo ocyoomz .pyum ooomh 111 .mayam :yaym co oooooyo oyaom omiom my sa: .xOOymo>yy mayESmcoo owaowsoy oyyz mEyaw :o syco mysooo :Oyuayooo myobo .mcaoosOm yo omayym mzoyyom ycoeomyyoaymo sao my ooosyOCy yo: my :Oyuayomo yooooyom xyaum ooea o.y o.y o.y o.y oyoyao o.y o.2 o.y o.y oyoouazm o.2 o.y o.y o.y yyyyp :yayo o o o.2 o.y mayo opooywcyymm o.y o.y o.y o.m omyo 0 0.2 0 0 za2a 2amy20 0 0 0.2 0.2 3Ba pyaaap2a2 o.y o.y o.y o.y yoNyyyuyom ymaopaoym o.y o.y o.y o.y ayooooyom xyapm ............... oyoym ooy yo>o moEyH u------u--u---- 222y-az amp22yy aaa222y aayyam ama222y 22am aaypaaz oOyaz ya:Oyy:o>:ou Haneyuco>zou aoya spaym ayOmoccy: ymaooHSOm .ooyo yo>oo yao ysoouyz sao amyawya mo pcoeomyyoaymo yom omayyyu so m:Oyyayooo o:yooaz .myum oyoab 112 .mEyaw :yayw :o oommoyo oyaom omiom my sa: .xooymo>y2 wcyeomooo omaomooy ouyz mEyam :o syoo myoooo :Oyuayomo myoha o.m o.m o.m o.m «Hwyam 0.m 0.2 0.m 0.m ayaaaazm o.2 o.y o.y o.2 yoNyyypyom umaooaoym uuuuuuuuuuuuuuu oyoym ooy yo>o moEyH unnuuiuuuiuu--- 222y-az ama222y ama222y mayyam a0a222y 22am aayaaaz guys: ya:Oyy:o>:ou ya:Oyu=o>:ou aoya sooym aHOmoccyz umaoopDOm .sao aoyamya ooomyyoaymo you owayyyu so :Oyuayomo ocyooaz .oyum oyoab 113 standards for practices and other publications1 as well as rough cost estimates provided by district conservationists in the area. Much of the cost information is developed from judgments related to the adoption of specific practices. This section identifies the assumptions made to estimate costs for technical assistance, installation, and operation and maintenance of soil loss control practices. The technical assistance cost is assumed to be that provided by Soil Conservation Districts and Soil Conservation Service. A cost of $140.00 per day is assumed for technical assistance. This is based on the hourly wage of an engineer, an engineering aid and their overhead costs. The installation of grassed waterways and steep back-SIOped terraces require the use of earth-moving equipment as well as farm machinery, seed, and fertilizer to establish a permanent vegetative cover. A $75.00/hr. charge2 was assumed for earth-moving equipment operations. Farm machinery costs are the same as those estimated by the budget generator process. The seed and fertilizer are based on the Soil Conservation Service standards and specifications. The fertilizer prices are the same as those used in the crop budget 1R. P. Beasley, Erosion and Sediment Pollution Control (Ames: Iowa State University Press, 1972); Clifton Halsey and Kathryn Bolin, "Grassed Waterways-Construction and Maintenance," Extension Folder 480 (St. Paul, Minn.: Agricultural Extension Service, University of Minnesota, 1979); and USDA, Soil Conservation Service, "Grassed Backsloped Terraces," St. Paul, Minnesota, March 1977. 2This cost is based on local contractor price quote of $70.00/hr. plus a $75.00 transportation charge for a D-7 caterpillar bulldozer. 114 generator. The seed cost for bromegrass, Kentucky bluegrass, and ryegrass used to establish grassed waterways and steep back-slope terraces are those reported in 1978 Agricultural Statistics. The technical assistance and installation costs were amortized over the expected life span of the practice to estimate an average annual cost. An 11 percent interest rate was used to estimate annual cost. The life span for contouring, stripcropping and terracing practices was assumed to be 10 years. Grassed waterways have a 20-year life span. Tables 5-18 and 5-19 indicate the constructed cost for soil erosion control practices on Fayette and associated soils and Downs and associated soils, respectively. 115 o mm.o mw.o mw.o ps.o oooaoouoyaz o oy.ym my.ym my.ym ms.sm :Oyuayyaymoy o om.y om.y om.y om.y oooaymymma yaoycooob ”mooayyou poQOymixoao .mooum o mm.o mm.o mm.o sy.o oooacouoyaz o pm.m pm.m oy.m mo.y :prayyaumoy o om.o om.o om.o om.o oooaymymma 2aoyooooe ”moymmoyu-myypm o mm.o mm.o NN.o sy.o oooaooycyaz o pm.m pm.m oy.~ No.2 :Oyyayyaymoy o om.o om.o om.o om.o oocaymymma yaOyooooH ”woyyooycou ................ oyo< you myayyoo yaoco< omayo>< -i------------i- a0a2m m2 285 as: aaa2m $2 283 a0 a0a2m .ap aayaapya ano uyym ano uyym ano uyym ano uyym ano yyym myooomaou ooooooo opposam oyuosam opposam aoya soOum aHOmoccyz umaoouoom .myyOm ooyayOOmma oca opposam yom yooyoayw ooo2m o:a oosy yyOm so mooyyoayo yoypooo mmoy yyOm mo ymoo ooyaEyymm .synm oyoah 116 o mw.o mo.o ps.o o oocaooycyaz 0 02.2m 02.2m ~y.y~ 0 aayya22aama2 o om.y oN.y om.y o oooaumymma yaoyoooob "mooayyoy ooQOymuxoao .oooym 0 mm.0 NN.0 s2.0 0 aaaaaayayaz 0 pN.m a2.m No.2 0 cayya22aymay o om.o om.o om.o o oooaumymma yaoyoooob wwcymmoyoimyyym o mm.o NN.o sy.o o oozacoucyaz o pm.m o2.m No.2 o :Oyuayyaumoy o om.o om.o om.o o oooaymymma yaoycoooh "moyysouooo ................ oyo< yoo myayyoo yaocc< owayo>< uiuiuuuiiiuuuuiu aaa2m p2 aaa2m ap2 aaa2m a0 aaa2m mp aaa2m am aayaapya Spam a2ym spam 222m saam a22m spam 022m spam a22m wyooomaou mczoo mozoo mozoo mozoo . aoya sooym ayOmo:=yz ymaooHDOm .myyom oouayoomma oca mozoo you o:oyoayw oooym oza oosy yyom so moOyyoayo yoyucoo mmoy yyOm mo ymoo ooyaEyumm .wyum oyoah CHAPTER VI ON-FARM IMPACTS FROM POLICY OPTIONS The representative farm models outlined in the preceding chapters are used to estimate impacts of alternative soil conservation and non-point source pollution abatement policies. The empirical results from policy simulations are reported for each of the repre— sentative farms in this chapter. Greater detail of impacts for each policy simulation is included in Appendix C. Analysis of Policy Simulations Seven policy simulations are made for each of the eight rep- resentative farms. Net incomes from crop production are maximized in each simulation given specific policy constraints and other assumptions in the model previously addressed. The first simulation is a baseline and assumes no policy constraints on the model. The remaining simula— tions include various constraints on the model to reflect potential government activities to reduce soil loss and abate non-point source pollution. The results reported here include impacts of alternative policies on net income, soil loss and choice of conservation technology. Net income is the residual of total value of crop production plus any cost-share or subsidy payments after subtracting all production input cost,soil conservation practice cost and soil loss tax. Net income 117 118 estimates do not include returns from pasture or forest production, livestock enterprises or other income-producing activities that may occur on the farms. Neither does it include a land charge. Soil loss is tons of sheet and rill erosion as estimated by the Universal Soil Loss Equation. The choice of conservation technology includes the acreage treated by contouring, strip cropping, terracing and use of conservation tillage systems. Baseline The baseline simulation assumes no government programs exist to provide economic incentives, technical assistance or regulation of crop production technology. No conservation practices are included in the model and only conventional fall and spring moldboard tillage systems are considered. However, cropping systems having erosion rates exceeding 50 tons per acre are not included in any model application. Consequently, continuous row crop production is not considered as an option on the high erosive soils. On livestock farms, the choice of crop rotations and tillage systems is constrained by minimum production levels of hay and silage. Cost-Share on Practice The cost—share on practice option assumes government subsidy payments to partially offset the cost of applying contouring, contour strip cropping, and back-sloped terracing. This policy option approx- imates the incentives provided under the current Agricultural Conser- vation Program. In this simulation, farmers are assumed to receive 119 payments for 75 percent of the practice installation cost. Technical assistance for planning, land surveys, staking, and engineering inspection is provided in this option without charge to the farmer. The farmer, however, must assume all maintenance cost for the practices. As with all policy options considered in this study, the farmer receives no reimbursement for land removed from production as a result of the practice. Tillage Subsidy The tillage subsidy option assumes that payments are made to farmers who adopt conservation tillage systems for growing row crops. A annual cash subsidy of $6.00 is provided for each acre of corn, soy- bean, or silage which is grown under mulch or no-till and also uses contouring, strip cropping or terracing. Farms which use conservation tillage systems with straight row planting are not eligible for the subsidy. In this simulation, all costs for contouring, strip cropping and terracing are subtracted from net farm income. Soil Loss Maximum The soil loss maximum option assumes implementation of a mandatory soil conservation or non-point source pollution abatement policy. The policy requires that no crop production system be used which results in soil loss rates greater than the established tolerance level for that soil. The tolerance level for all soils considered in these models is 5.0 tons per acre per year. In these simulations, the farmer must pay the full cost of any practice including technical 120 assistance. The farmer, however, can select any conservation technology to reduce soil loss to tolerance and maximize net income. Soil Loss Tax The soil loss tax option estimates the impacts of imposing a tax on each ton of soil loss. This option assumes that a state or local unit of government could use their taxation power to levy a tax on soil loss to achieve soil conservation or non-point source pollution abatement goals. The Universal Soil Loss Equation could provide a basis for estimating the tax. This procedure would provide farmers with prior knowledge of the tax under various crop and production technologies and farmers could choose the production system most beneficial to their unique situation. In this application, a soil loss tax of $0.50 per ton is used. This tax is added to production costs in calculating net income. In these simulations, no cost-sharing on practice or tillage subsidies is assumed. Since the model does not address general market equilibrium, it is assumed there is no shifting of the tax burden. Consequently, the impact of the tax does not affect farm product prices. Combined Policy The combined policy option includes a mandatory soil loss restriction but also assumes the availability of cost sharing on practices and tillage subsidies. The soil loss restrictions and subsidies are the same as those discussed in the preceding policy options. This policy option is the same general nature as that con- tained in the Iowa Conservancy Law and the soil erosion control bill 121 introduced in the 1979 Minnesota Legislature. Under this legislation, farmers must restrict soil loss to specified limits when 75 percent cost-share funds are available for needed practices. Tillage sub- sidies, however, are not specifically mentioned in this legislation. All counties do not inclpde tillage subsidies in their list of eli- gible practices under the Federal Agricultural Conservation Program. Also when they are included, tillage subsidy payments are generally restricted to the year the system is adopted and not available in following years. Other than the continued availability of tillage subsidies, this policy option parallels the policy contained in this legislation. Minimum Conservation Plan The minimum conservation plan option assumes a policy which bans the use of straight row planting on erosive soils. In this simulation, grassed waterways are established in all fields and the practices of contouring, strip cropping or terracing are used when producing corn, soybeans or silage. In this option, no cost-sharing on practice or tillage subsidy is assumed. Consequently, the farmer pays the full cost of adopting any one of the practices. One of the Resource Conservation Act strategies receiving special attention is called cross compliance. Under this strategy only those farmers who maintain minimum conservation practices are eligible for government aid programs including price support and disaster loans. The objective of this option is to replicate the impacts of maintaining necessary conservation practices to be eligible for other programs under a cross-compliance type of policy. 122 Empirical Results on Representative Farms The impacts of alternative policy options on each representative farm are reported in Tables 6-1 through 6-8. It should be noted that in the following discussion, impacts of policy options are compared to baseline estimates. Although the baseline resulted in the most erosive condition, it was not always the most profitable alternative. A number of crop production activities using straight row conservation tillage systems have higher per acre profits than straight row conventional tillage systems. Under other simulations, the optimum combination of activities sometimes resulted in net incomes higher than the baseline. Because conservation tillage is a relatively new technology and not widely used, conventional straight row tillage systems were selected as a reference point even though a higher income alternative might exist. On the 480 acre grain farm with Fayette and associated soils, Table 6-1, the policy options which result in the greatest reduction in soil loss are the soil loss maximum and combined policy. In attaining tolerance levels on all fields, total soil loss is reduced by 81 percent from the baseline. Both options result in identical crop rotations, tillage systems and practice combinations. The loss in net income is $1,609 or 7.6 percent of the baseline under the soil loss maximum option. When subsidies were provided under the combined policy option, net income was almost identical to the baseline while government subsidies amounted to $1,720. 123 002 20m ym pmm.2 0 0pm.0m aa2a cayaa>yamaaa easyayz mp2 0mm 0 Nym.2 0Ny.2 000.2N say2aa paayasau 0A2 0 0 mNN.p op22.N_ yam.02 yap mma2 22am mp2 0mm 0 NsN.2 0 0mp.02 easyxae mma2 2yam 0A2 0 am pm0.m 2mm p20.~N spymaam ama222y 2A2 0 0 mNN.p 0 200.2N aayaaaya :a ayaam-ama0 0 0 0 Nmy.a 0 0m0.2~ aay2amam mmoyoao smoyoao smoyoao smooyo moo you :prmo sOyyoo owaoyo< owaoyo< omaoyo< mmoo ~xak. cyouom omayyye ooyu-oyyym ooyooycou yyom soymoom yoz :Oyua>yom:ou aoya sooum anemoocyz ymaooyoom .moyOyooo o>yyacyoyya yooco myyOm oouayOOmma pea opposam ouyz Eyam :yayw oyoa omp oou co styooooou :Oyua>yom:oo ooyymoa oca mmoy yyOm .soymoSm .oeoooy yoz .yuo oyoah 124 The soil-loss tax and cost-share on practice options have no impact on the adoption of soil conservation technology on the 480 acre grain farm with Fayette and associated soils. The tax, however, reduces income by $2,114. Soil loss is estimated to be reduced by 36 percent under these policy options. This reduction is not caused by the pol- icies but rather because straight row mulch tillage systems are more profitable as well as less erosive than the straight row system included in the baseline analysis. The policy option on this farm resulting in the highest net income is tillage subsidy. In this simulation, 170 acres of row crops were grown under mulch or no-till systems. Only 37 acres, however, have the necessary applied practices to be eligible for $221 of tillage sub- sidy. Under the tillage subsidy option, soil loss is reduced 41 percent from the baseline. The minimum conservation plan option is nearly as effective in reducing soil loss as the options with soil loss constraints. Soil loss is reduced by 76 percent and the 480 acre grain farm with Fayette and associated soils foregoes only 4 percent of the baseline income. When livestock enterprises are included on the 480 acre farm with Fayette and associated soils, Table 6-2, the policy options have the same general impacts. The baseline soil loss on livestock farms is less than on grain farms. This is because the more erosive soils are in permanent pasture and because soil conserving hay crops are forced into the crop rotations. As a consequence, the impacts are of less magnitude than on grain farms. 125 pm 0mm 0 may 0 mmm.y2 ap2a payya>yamaaa 5:22:22 00 0mm 0 pay 0N0.2 m0m.02 sa22aa paayasao 0y 0 0 s00.m o0p0.2_ mmy.y2 way mma2 2yam mm 020 0 mpy 0 amm.y2 easyxae mma2 22am pa 0 p2 00m.~ 0m 00y.m2 spymaam amp22yy ya 0 0 amm.m 0 may.m2 aayaaaya :a ayaom-amau 0 0 0 y0m.m 0 NmN.02 aay2amam smoyoao smoyoao smoyoao sm:0yo smo Amy :Oyuoo sOyyoo owaoyo< owaoyo< owaoyo< mmoo Hxako :youom omayyyh moyUumyyym ooyooyoou yyom soymoom uoz :Oyua>yom:ou aoya sooum aHOmoooyz umaoouoom .moyOyyoo o>yoazyoyya yooco myyom oooayOOmma ooa ouyosam oyyz Eyam xooumo>yy oyoa omp oop :o swoyocooou :Oyya>yom:oo ooyyooa ooa mm02 yyOm .soymoom .oEoooy uoz .Nuo oyoah 126 On the 480 acre livestock farm with Fayette and associated soils, the soil loss maximum policy results in the greatest reduction of soil loss. Strip cropping and mulch tillage systems were the applied technology. A 77.5 percent reduction in soil loss is achieved with a 4 percent reduction of income. The combined policy was nearly as effective in reducing soil loss and resulted in little change in income but required $1,048 in government subsidies. The minimum conservation plan option selected the same production and conservation technology as the combined policy, but without subsidies the net income is 5 percent less. The impacts on the 160 acre grain farm with Fayette and asso- ciated soils is reported in Table 6—3. The combined policy results in an 86 percent reduction in soil loss. This is a reduction from 25.5 tons per cropland acre to 4.4 tons per cropland acre. The practices include mulch and no-till systems in combination with strip cropping. This option also results in a net income reduction of 12.5 percent and requires $726 in government subsidy. The soil loss maximum policy without subsidy payments results in an 83 percent reduction in soil loss and nearly an 18 percent loss of income. Neither the cost-share on practicerxursoil loss tax options are effective in getting practices applied to the fields on the 160 acre grain farms with Fayette and associated soils. No soil loss, income, or applied conservation technology changes occur in the simu- lation with cost-sharing on practices. The soil loss tax option results in a shift from straight row conventional tillage to straight row 127 0 mm 0p 020.2 0 0y~.m ap2a aayaa>yamcaa 5552022 mm mN2 0 0pp 000 000.y say2aa paayaeau pa 0 0 20p.2 20~sm 000.0 ya» mma2 22am mp 0y 0 0pm 0 0ym.y easyxae mma2 2yam my 0 my mpm.~ 002 0N0.0 spymaam ama22yy 0 0 0 0N~.m 0 mma.m aayyaaya 0a ayaom-ama0 0 0 0 0N~.m 0 0N0.0 aay2ama0 smoyoao smoyoao smoyoao mmcoyo smo Amy :Oyumo soyyoo omaoyo< owaoyo< owaoyo< mmoo mxako cyanom omayyyo. acycloyyym ooyooyoou yyom soymoom uoz :Oyua>yom:ou aoya sooum aHOmoocy: ymaooHSOm .moyoyyoo o>yyaoyoyya yoooo myyOm oouayOOmma ooa ouuosam ouyz Eyam :yayw oyoa ooy oou :o swoyocoooy :Oyya>yomooo ooyyooa oca mmOy yyom .soymoom .osoooy uoz .muo oyoaH 128 conservation tillage. This shift reduces soil loss 55 percent and income 9.5 percent. The minimum conservation plan is nearly as effective as the tax option in reducing soil loss and income is reduced by only 7.5 percent. On the 160 acre livestock farms with Fayette and associated soils, Table 6-4, soil loss reductions occur only under mandatory and tax options. No change in crop production technology or soil loss resulted from either the cost-share on practice or tillage subsidy option. Only straight row mulch tillage is selected when a soil loss tax is assessed. Strip cropping in combination with mulch tillage is the required technology to reduce soil loss to tolerance levels on several fields. The options requiring soil loss to be less than or equal to tolerance results in a 2 percent income reduction when $437 in government subsidies are paid to farmers and a 7 percent reduction when the farmer paid full practice costs. Table 6—5 reports the model results of policy options on the 480 acre grain farm with Downs and associated soils. In the baseline analysis, average soil loss is 17 tons per cropland acre and net farm income is $58,759. A corn-soybean rotation is used on all fields with straight row conventional fall moldboard plowing. On policy options, which include conservation tillage systems, higher net income is obtained by shifting to straight row mulch tillage. As a result, income is increased approximately 1 percent while soil loss is reduced by 45 percent. The tillage subsidy option further reduces soil loss as contouring is also applied to all fields. In this option, soil 129 o oo o yyp o Nym.s :aym :pra>yom:oo easyoy: 00 00 0 220 00p mym.y say2aa paayasau 00 0 0 my0 sympm 002.y xaa mma2 22am 02 00 0 00m 0 0A2.y easyxae mma2 22am 0 0 0 000.2 0 00s.y spymoam a0022yy 0 0 0 000.2 0 00y.y aayaaaya :a ayaom-ama0 o o o mom.2 o mms.s ooyyomao smoyoao smoyoao smoyoao smoouo smo moo :Oyuoo sOyyoo owaoyo< owaoyo< omaoyo< mmoo fixaho :yoyom omayyyh moyu-myyym ooyoouoou yyom soymoom yoz :Oyua>yom:oo aoya sooym anemoocyz ymaoouoom .moyoyyom o>yyaoyouya yooos myyom ooyayOOmma ooa ouyosam ouyz Eyam xooymo>yy oyoa ooy oou :o swoyocoooy :Oyua>yom:oo ooyyoma oca mmOy yyOm .soymoom .oEoooy uoz .puo oyoae 130 opp o opp ymp.m o ms~.sm caym :Oyua>yom:oo EDEycyz 00p 00 02p 000.2 000.0 0p0.00 say2aa paayaeao 00p 0 0 0pm.p .202.0_ 020.00 xaa mma2 22am 20p 02 000 200.2 0 000.00 easyxae mma2 22am 0pp 0 0pp 20p.0 000.0 200.00 spymaam a0a222y 00p 0 0 0p0.p 0 000.00 aayaaaya 0a aypam-yma0 o o o pmo.s o oos.om ocyyomam smoyoao smoyoao smoyoao mm:Oyo you sow :Oyumo sOyyoo owaoyo< owaoyo< omaoyo< mmoo fixaHH :youom omayyyh ooyu-oyyym ooyoouoou yyom soymoom uoz :Oyua>yom:ou aoya sooym aHOmoccyz ymaoouoOm .moyoyyoo o>yuacyoyya yoooo myyOm ooyayOOmma oca mozoo oyyz Eyam :yayw oyoa omp oou :o smoyo:oooy :Oyya>yom:oo ooyyooa ooa m00y HyOm .soymoom .oeoooy uoz .muo oyoak 131 loss is reduced 68 percent and income is higher than in any other simulation. The minimum conservation plan results in an identical combination of rotations, tillages and practices as the tillage subsidy option. The soil loss maximum policy without any cost-share or subsidy payments reduces soil loss 74 percent while net income falls 11 percent. When $3,292 in subsidies is provided, additional practices are adopted and erosion is reduced an additional 11 percent while net income is only 6 percent under the baseline. The soil 1055 tax option reduces soil loss 45 percent and results in a tax of $2,121. When livestock enterprises are included on the 480 acre farms with Downs and associated soils, Table 6-6, the impact of policy options closely parallels the grain farms. Both policy options restricting soil loss to tolerance reduces soil loss more than 70 percent. The reduction in income is about 4 percent without subsidy payments and only 1.5 percent with subsidies. The cost-share on practice and soil loss tax options have no impact on the adoption of soil conserving rotations, tillages or practices. Under the tillage subsidy option, 306 acres receive a subsidy payment of $1,959. The minimum soil conservation plan results in a $1,574 loss in income but reduces soil loss 47 percent. The impacts of policy options on 160 acre grain farms with Downs and associated soils is reported in Table 6-7. 5011 loss restrictions are needed to reduce soil loss to tolerance level or below. The soil loss tax reduces average soil loss from 18.9 to 132 p0 00 000 000.0 0 000.0p 0020 =a2y0>yamaaa 5:02:22 000 0 002 000.2 00p.2 020.0p say2aa paayaeao 000 0 0 200.0 .220.2_ p20.0p xaa mma2 22am 200 0 p02 p00.2 0 000.0p easyxae mma2 22am 200 0 000 pp0.2 000.2 000.00 spymasm a00222y 02 0 0 02p.0 0 p20.00 aayyaaya aa ayaam-ama0 0 0 0 0p0.0 0 0p2.00 a=y2a000 smoyoao mmoyoao smoyoao smooyo moo may :Oyumo soyyoo owaoyo< owaoyo< owaoyo< mmoo fixaea :ySuom owayoye ooyuimyyum ooySchou yyom soymoom uoz :oyua>yom:ou aoya sosum auomoooyz umaooySOm .moyOyooo o>yuazyoyya yooco myyOm ooyayoomma oca mczoo ouyz Eyam xooymo>yy oyoa owp ooy :o smoyocoooy :oyya>yom:oo ooyyooa oca .m00y yyOm .soymoSm .oEoocy uoz .ouo oyoah 133 0 0 0p2 0py.2 0 000.02 0020 aayya>yamaaa 0052002 0p2 0 0p2 0p0 000.2 000.02 say2aa paayaaao 0p2 0 0 020.2 ommym p00.02 xpy mma2 22am 0p2 0 002 000 0 000.02 easyxaa mma2 22am 00 0 00 000.2 000 000.02 spymoam a00222y 0 0 0 000.0 0 0p2.02 aayaaaya aa ayaam-yma0 0 0 0 000.0 0 0p2.02 aay2amp0 smoyoao smoyoao smoyuao smcoyo soy Amy COyomo sOyyoo ouaoyu< owaoyo< omaoyo< mmoo Hxaka myopom 0002222. aay0-02yam payaaaaao 20am spymasm aaz :oyua>yom:ou aoya spaym ayOmo::yz pmaoou:Om .moyoyyo; o>yuacyouya yooco myyOm ooyayoOmma ooa mozoo ouyz Eyam :yayw oyoa ooy :o swooocoooy :oyoa>yom:oo ooyyoma oza mmoy yyOm .soymoom .oEoocy yoz .sno oyoah 134 10.1 tons per acre. The $755 tax results in an income reduction of about 5 percent. The tax policy is more effective than the minimum conservation plan options in maintaining income and reducing soil loss on this farm. An 80 percent reduction in soil loss occurs when maximum soil loss constraints are included in the model. Net incomes are 13 percent lower without the subsidy payments and 7.5 percent lower with payments. The cost-share on practice option causes no change in the model estimates. On 160 acre livestock farms with Downs and associated soils, Table 6-8, the maximum soil loss and combined policy options reduce soil loss 66 percent and 70 percent, respectively. The tax option is estimated to reduce soil loss 40 percent and the minimum conservation plan 44 percent. Under the tillage subsidy option, soil loss is reduced by one—third and no reduction occurs under the cost-share on practice option. No policy option causes more than a 4 percent reduction in net income on this farm. Generalizations From Results The impacts of the simulations which restricted soil loss to no more than 5.0 tons per acre are of particular interest. They replicate the proposed Minnesota law to enforce soil loss restrictions. With 75 percent cost sharing for practices and $6.00 tillage subsidies, income reductions occur on three of the four grain farms. The reduc- tions are 12.5 and 7.5 percent on the 160 acre farms and 6 percent on the 480 acre farm. This policy option has negligible income impact on the livestock farms and the one grain farm. Income changes are less than 2 percent on these five farms. 135 0 2p 00 p00 0 000.02 0020 aayap>yam=aa 0:52:22 00 02 p0 00p 000 p20.02 say2a0 paayaaao 00 0 0 220 o00pm 000.02 000 mma2 22am 00 02 00 000 0 0p0.02 easyxae mma2 22am 00 0 00 020.2 02p 000.02 spymaam a0022yy 0 0 0 000.2 0 200.02 aayaaaya :a ayaam-ymau 0 0 0 000.2 0 200.02 aay2ama0 smoyoao smoyoao smoyoao Amocoo poo say :Oyymo soyyom omaoyu< omaoyo< owaoyo< mmoo Hxa&_ :yoyom a0p222y aay0-02yam payaaaaao 22am spymasm aaz :oyua>yom:ou aoya so3um auomoooyz omaoouoom .moyuyyoo o>yuazyouya yoocs myyom oouayoomma oca mczoo oyyz Eyam xooymo>yy oyoa ooy :o smoyocoooy :Oyua>yom:oo ooyyoma oza mmOy yyOm .soymosm .oEoocy uoz .muo oyoab 136 When no subsidies are offered, the soil loss restriction policy reduces income on all farms but results in greater reductions on grain farms than livestock farms. On the 160 acre grain farms, a 17 and 13 percent reduction occurs on the farms with Fayette and Downs soils, respectively. On the 480 acre grain farms, the reduction was 7 and 11 percent, respectively, on farms with Fayette and Downs soils. The income reductions on all livestock farms except one was less than 4 percent and only a 6 percent reduction occurs on the 160 acre farm with Fayette soils. Also of special interest is the impact from the minimum conservation plan option which simulates the restrictions under a cross compliance type of strategy. The minimum conservation practice of grassed waterways with contouring, strip cropping or terracing is shown to effectively reduce soil loss on representative farms. On farms with Fayette soils, strip cropping was often applied and resulted in average annual soil loss less than tolerance on all farms except the 160 acre grain farm. The soil loss rates were higher on farms with Downs soils because many fields are in continuous row crop in which strip cropping cannot be applied. Soil loss on farms with Downs soils range from 5.5 to 12 tons per acre. Incomes are estimated to be reduced as a result of implementing a minimum conservation plan. The income reduction is greatest for the 160 acre farms with Fayette and associated soils. For the grain farm, income is 7.3 percent lower and for the livestock farm, it is 6.6 per- cent lower. On all other farms, net income is reduced by less than 4 percent under the minimum conservation plan option. 137 The tillage subsidy option offered economic incentive for adopting conservation tillage in combination with contouring, strip cropping or terracing. This option substantially increases the number of acres with treatments on representative farms with Downs and asso- ciated soils but was less effective in treating the Fayette and asso- ciated soils. On the 480 acre grain farm with Downs and associated soils, all 447 acres of row crops received the $6.00 subsidy. On other representative farms with Downs soils, at least 58 percent of all row crops had both conservation tillage and contouring applied. On representative farms with Fayette soils, at most only 35 percent of the row crops receive the subsidy. On the 160 acre livestock farm with these soils, the policy had no impact on the adoption of conservation technology. The cost sharing rate on practices assumed in this application was shown not to have sufficient economic incentive to get practices applied. Under the cost-share on practice option, there is no change from the baseline acreage of applied contouring, strip cropping or terracing on any farm. The only change in production technology which occurred with this option was increased straight row conservation tillage. The soil loss tax of $0.50 per ton of estimated soil loss was shown not to be effective in getting practices applied on representative farms. No contouring, strip cropping nor terracing are applied as a result of the tax. Additional acreage of straight row conservation tillage, however, occurs as a result of the tax on all 160 acre farms 138 and on the 480 acre livestock farm with Downs and associated soils. The increase in acreage using conservation tillage as a result of the soil loss tax ranged from 36 acres on the 160 acre livestock farm with Fayette soil to 350 acres on the 480 acre livestock farm. The tax did not cause soil loss to be reduced to its tolerance level. CHAPTER VII SUMMARY AND CONCLUSIONS Summary and Conclusions The purpose of this study is to measure on-farm impacts of alternative soil conservation and non-point source pollution abatement policies. The on-farm impacts include net income from crop production, soil loss, and choice of production technology. It is hypothesized that specific practices or policies have different economic impacts on farms because of their size, soil composition and enterprise combination. It was also hypothesized that different policy options have different on- farm impacts because of farm size, soil composition and enterprise combinations. These hypotheses were tested using eight representative farm models. The representative farms included two farm sizes, two major soil types and farms with and without roughage consuming livestock enterprises. Farm sizes included 160 acre and 480 acre farms. Soil types included highly erosive conditions represented by Fayette and associated soils and moderately erosive conditions with Downs and associated soils. The target population for this analysis was southeastern Minnesota. Seven model simulations were made to test alternative policy options. The policy options included cost sharing on practices, 139 140 subsidies for conservation tillage systems, restrictions which limit soil loss to tolerance rate, a tax on soil loss, and adoption of a minimum conservation plan. The cost-share on practice Option is similar to the currently administered Agricultural Conservation Program. The restriction on soil loss approximates the proposed restrictions contained in a soil erosion bill introduced in the 1979 Minnesota legislature. The minimum conservation plan is similar to requirements necessary to participate in other programs under a poten- tial cross compliance type of policy. The mathematical model for each representative farm includes a set of crop enterprise budgets reflecting alternative production technologies applicable to each farm and the selection of the most profitable combination of production technologies. On farms with livestock enterprises the most profitable combination is constrained by minimum levels of hay and silage production. Integer linear pro- gramming was the optimizing technique on livestock farms. On grain farms all constraints including land, labor and capital are implied in the budgets. As a consequence, the most profitable combination of production technologies for grain farms was selected by ranking poten- tial budgets and selecting the most profitable production technology for each field. Alternative policy options were analyzed by adding or deleting different activity sets in the model. The results from these analyses show that alternative practices and policy options impact on farm incomes, soil loss and applied pro- duction technology. It is further shown that representative farms of 141 different sizes, soil compositions and enterprise combinations are unequally impacted by different policy options. The policy options resulted in very slight increases in net incomes to reductions as great as 17.5 percent. In general, the largest income reductions occurred on all eight representative farms when pro- duction technologies were constrained to achieve soil loss at or below tolerance levels and when no cost sharing on practices or tillage sub- sidies was available to offset practice cost. Policy options including tillage subsidies, soil loss tax, and minimum conservation plan resulted in an increase of applied conservation technology, however, soil loss rates generally continued to exceed tolerance levels. The cost-share on practice was not effective in getting soil conservation technology applied on representative farms. The impact of policy options on net incomes from livestock farms was less than the impacts on grain farms. On all policy options resulting in lower net incomes, the percentage reduction in income was greater on the grain farms. The impact of most policy Options on net incomes was greater on representative farms with severe erosion hazard soils than with moderate erosion hazard soils. The largest reduction in incomes occurred on farms with Fayette soils when soil loss rates were forced to tolerance level. Small farms were less responsive in changing production technology under subsidy policy options than larger farms. Under soil loss restriction or tax policies, the percentage reduction of income for 160 acre farms was greater than for 480 acre farms. 142 Limitations and Needs for Future Study The findings from this study apply only to situations similar to the modeled representative farms. Although efforts were made to define the model farms to reflect impacts on broad target pOpulation, the generalizations which can be made remain a question. A number of references and data sources were used in developing the model and its data base. An attempt was made to select those sources that most accurately apply to a broader population. However, no probability statements can be made regarding either the data inputs or findings from this study. The target populations in this study are limited to soils and farm types in southeast Minnesota. Soil conservation policies have statewide and national applications. Additional studies are needed in other areas of the state and nation under different soil, climate and farming conditions before broad policy decisions are made. Administrative and enforcement cost of implementing the various policy options was not considered in this research. Continuation of current policies of voluntary programs and economic incentives could have a much different administrative and enforcement cost than a regu- latory or tax program. The institutional structure for implementing cost share and subsidy programs is already established and its cost and performance can be assessed from past experience. Regulatory or tax programs, however, will require a different institutional structure. Research is needed to assess the necessary institutional changes including the cost and performance of regulatory and tax options. 143 Although this study measures economic impacts of policy options on farm incomes, it does not necessarily indicate farmer preference. The farmer preference for various policy options is important in gaining political support to initiate a policy as well as its eventual performance. The current activities being conducted under the Resource Conservation Act1 are addressing the question of land user preference for specific implementation strategies. This study was limited to on-site, physical and economic impacts of alternative policy options. Obviously, the objective of non-point source pollution abatement practices is to improve off-site environments, especially water quality. Further research is needed to relate on-site practices to changes in water quality and other off-site environments impacted. Although a great deal of research is being con- ducted to measure both the physical and economic impacts, no conclusive evidence is available to directly link on-site practices to water quality. The research findings do not consider long-run implications from soil loss. Continued soil loss rates in excess of tolerance can be expected to result in soil depletion and reduced productivity at some time in the future. Studies are needed to assess potential long-run physical and economic impacts of soil depletion. A 1Land users are currently being asked to review alternative strategies for implementing soil and water conservation programs and report their preferences. This activity is being carried out by the U.S. Department of Agriculture as mandated in the Soil and Water Resources Conservation Act of 1977. 144 study.1 was conducted on southern Iowa soils to predict soil depletion stages and changes in crop production inputs and yields from continua- tion of current soil loss rates. Similar studies need to be conducted for soils in southeast Minnesota and other geographic areas to measure future costs and benefits from reductions in soil loss rates. This research did not address the long-run impacts on conser- vation tillage on crop production inputs or yields. Mulch and no-till tillage is relatively new technology and longitudinal studies are not available. Bauder and others2 have suggested that tillage practices affect the distribution and availability of plant nutrients. Limited research has shown that continuous no-till systems resulted in an accumulation of certain plant nutrients near the surface. These nutrients are less available, especially in dry years for crop production. Further research is needed to address fertilizer needs over time and the long-run limitations to conservation tillage systems. The land and capital requirements needed to adopt soil conser- vation practices which include grassed waterways, back-sloped terraces and other enduring practices has wide variations between soil types, tOpography and farms. The estimates used in this study were deveIOped 1Paul Rosenberry, Lacy Harmon, and Russell Knutson, Soil Depletion Study Reference Report: Southern Iowa Rivers Basin (Des Moines, Ia: U.S. Department of Agriculture, Soil Conservation Service and Economics Statistics and Cooperatives Service, February 1980). 2J. W. Bauder, G. W. Randall, J. B. Swan, J. A. True and C. F. Halsey, "Proposed Fact Sheet--Tillage Practices in South Central Minnesota" (St. Paul, Minn.: University of Minnesota, Agricultural Experiment Station). 145 from limited data from the 1978 Agricultural Conservation Program Evaluation, estimates provided by the Minnesota Soil Conservation Service and judgments of Soil Conservation Service district conser- vationists in southeast Minnesota. Further research is needed to develop a consistent data base for estimating installation cost. This base needs to include: technical assistance; actual construction inputs including earth movement and materials; land acreage removed from production; seed, fertilizer and machine operations to establish permanent vegetative cover and maintenance of the practice. The data base should reflect differences in inputs by soil types and topographic features. APPENDIX A MINIMUM LEVELS OF ALFALFA HAY AND CORN SILAGE PRODUCTION ON REPRESENTATIVE FARMS APPENDIX A MINIMUM LEVELS OF ALFALFA HAY AND CORN SILAGE PRODUCTION ON REPRESENTATIVE FARMS1 Corn Alfalfa Silage Hay Representative Farm (tons) (tons) 160 Acre, Fayette and associated soils 72 120 480 Acre, Fayette and associated soils 270 450 160 Acre, Downs and associated soils 45 75 480 Acre, Downs and associated soils 108 180 1These estimates represent the winter roughage requirements of a beef cow-calf enterprise which utilizes the pasture production on representative farms. 146 APPENDIX B SAMPLE BUDGETS FOR CROP ROTATION COMPONENTS BY TILLAGE SYSTEM APPENDIX B SAMPLE BUDGETS FOR CROP ROTATION COMPONENTS BY TILLAGE SYSTEM The following tables are samples of budgets used in the model to estimate net return per acre. The sample budgets included are for eight crop rotation components and two tillage systems on 480 acre grain farm with Fayette and associated soils. 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A 00.. .0 00puc. hzuzh0000¢ pxmz~00¢0. mz0~h¢¢u.0 0000. 00.0.000 00.20: .0 00. 0¢h~.¢0 020.00000 x0 h0ummhz~ 0000x020. 0.0 0.0 0.0 00.0 00.00ch0. 000000.00 00000.00z. 0000:.000. 000030000 020 0mmfina~p¢u. uxucx .000 0.00 0.00 0.00 uuucx .000 0.00 0.00 0.00 muucx 00 0000.0 0000.0 0000.0 0000 0000\020. 0.0 0.0 n.n 00.0 0 p 0 0 z 0 h0m0¢¢=u»¢= 00. .00000 >0000» 0000000 .0 mamzcxu 0.00000 x0~h¢0000000uhzmzma¢zcx 00000 00 000 00.00 mbhu»¢. APPENDIX C EMPIRICAL RESULTS FROM MODEL RUNS OF POLICY OPTIONS ON REPRESENTATIVE FARMS APPENDIX C EMPIRICAL RESULTS FROM MODEL RUNS OF POLICY OPTIONS ON REPRESENTATIVE FARMS The following tables of the results from seven policy simulation runs on all eight representative farms. The following policy options are associated with runs A through G. 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cc.cc cc.cc macexcaca cmace ”maec cc.ceccc cc.cNNN Nc.eacc cc.ecNN cN.ccec cc.chN acmcaa cc.cc cc.cc Nc.Nc cc.c cc.c cc.c ae: c ::a cc.c cc.c cc.c cc.c cc.c cc.c caec NN.cc NN.ce cc.c cc.c cc.c cc.c mceccc ae.cccc cc.c cc.cc ca.ch «c.NcN cc.ccc czemaacc . cc.chc cc.cec cc.cec cc.cacc Ne.cceN cc.chc zacc cmcca cc.cc.cc acema aca acam cmamcmc caca .ac :zazcccc .c.c :zzzccc .c.c cc .c.c cc .c.c cc .c.c zccaeaca mceccca acaac aacc acaac aacc accazcc accazcc accazcc mccaceaa ceaca dunno ccmca cmccccacc c: .caccc mccaceaa ccca ccccc czacc a :aea accacmccc mace cc" LIST OF REFERENCES Alt, Klaus, and E. 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