What is in this article?:
• The specter of herbicide-resistant weeds multiplying at astronomical rates has changed some growers’ thinking on the matter of conservation-tillage.
• Extension economists at the University of Georgia have completed an investment comparison of conventional- and conservation-tillage equipment using enterprise budgets.
Budgeted operating costs
For budgeted operating costs, the number was $532 per acre for irrigated and $400 per acre for dryland with yields of 1,100 and 700 pounds, respectively. “We do not have land rent in our numbers because it varies significantly across the state. Take land rent into consideration when you’re deciding if you need to forward contract cotton or protect it in the futures market by hedging.”
Total costs range from $790 to $900 for irrigated conventional-till cotton and $550 to $624 for dryland. “That gives us a break-even price of 72 to 82 cents for irrigated and 80 to 90 cents for dryland. And at break-even yields, we’re looking at 900 to 1,000 pounds for irrigated and 650 to 730 for dryland. We shoot for 700 pounds in the budget, so those growers on smaller acreages will need good rainfall to break even in this analysis.”
In reduced-tillage, says Smith, operating costs are higher because higher chemical costs are higher, so irrigated is $533 per acre and dryland is $408 per acre.
“Our total costs are $777 to $870 for irrigated and $500 to $600 for dryland, giving us a break-even price of 71 cents to 80 cents for irrigated and 78 to 85 cents for dryland. Yields are 900 to 1,000 for irrigated and 645 to 700 for dryland.”
Economists also looked at the sensitivity to changes in the price of diesel and herbicides. “As far as our current operating expenses are concerned, we’re seeing a slight advantage to conventional-till. However, conventional-tillage is more sensitive to changes in the price of diesel than reduced-tillage. As far sensitivity to herbicide costs, reduced-tillage will be more sensitive to herbicide costs than conventional-till.”
In conclusion, says Smith, investment costs are higher for conventional-till equipment. However, the operating expenses are offset by the higher chemical costs for reduced-tillage. “We need 25 to 50 pounds of 85-cent cotton to make an annual payment on the note, and farmers need at least 71 cents to buy and operate their new equipment.”