A Farm Management Analysis of Supplemental Center-Pivot Irrigation in Humid Regions

Abstract

Many farmers in humid areas are turning to supplemental irrigation as a means of hedging the risk of crop failure. While center-pivot irrigation systems provide more even water coverage than many other systems, they can be difficult to position on irregularly shaped fields that are common in many areas of the Eastern USA. In order to analyze the farmer's decision regarding the use of center-pivot systems, a risk programming model was developed using a grid system for optimal center pivot positioning. Due to the complexity of commodity programs, financing, risk, and field characteristics, partial budgeting techniques may not be capable of providing the insights into the interaction of farm management considerations that are generated by the model. The financial problems that have existed in the U.S. agricultural sector during the 1980s have slowed the growth of supplemental irrigation acreage. The inverse relationship between production and financial risks associated with supplemental irrigation is demonstrated by model results. In a case study in southern Alabama, irrigation could increase net farm income by as much as 100% over not irrigating by improving average yields and allowing some doublecropping. Irrigation could also decrease income variability as much as 32% by reducing yield variability. It is worth the investment provided a source of financing is available. The ability to benefit from irrigation use is often dependent on financial constraints. Irrigation may not be advisable or feasible depending on the farmer's debt load or debt limit. There is a clear tradeoff between production and financial risk that must be judged by the individual producer. Public sector initiatives to foster the expansion of supplemental irrigation should consider financial programs that extend the payoff period, thereby decreasing the debt burden in the initial years of the investment.