An Analysis of the Economic Effects of Cover Crop Use on Farm Net Returns per Acre in Central Indiana

Abstract

Utilizing cover crop treatments can have significant agronomic benefits for a farm enterprise. However, implementing this technology introduces additional costs. Data were obtained from a Central Indiana case farm to evaluate the relationship between applied nitrogen and corn yield, and how this relationship is impacted by introducing three different species of cover crops: annual ryegrass, cereal rye, and an oats and radish blend. The resulting information was then translated into a partial budget so that the effects on net returns could be analyzed using historical prices and stochastic modelling. The results showed that the impact on net returns per acre varied among cover crop species. The implementation of annual ryegrass resulted in a negative change to net returns. Conversely, implementing cereal rye or an oats and radish blend resulted in a positive change to net returns, with the largest net benefits accruing to the oats and radish blend.