Drainage water management impact on farm profitability

Abstract

Summary The representative farm planning model that is used for the 2005 Purdue University Top Farmer Crop Workshop base case was extended to include managed drainage activities in order to evaluate the impact of drainage management time on farm operations. The analysis considered two alternative enterprises: rotation corn – soybeans with and without controlled drainage activities. The baseline solution assumed that controlled drainage has 10% higher average yields than free flowing drainage, one drainage control structure is needed each 20 acres, and all drainage management work was done on good field days. The results suggest that the baseline optimal solution was rotation corn-soybeans with controlled drainage where 1,500 acres were cultivated with corn following soybeans and 1,500 acres with soybeans following corn. Compared to the enterprise without controlled drainage, the annual returns to resources were 10% and 7.9% higher with and without EQIP subsidy respectively. Time opportunity cost for the managed drainage activities in each time period in the baseline solution was zero except for Dec. 6 – Apr. 21 period when its value was $10/hour and 108.69 hours of labor were hired. This was because of the controlled drainage activities (both installation and boards removal occur in this time period) that completely utilize full-time field labor and require additional hours of part-time labor to be hired. When hiring part-time labor was not available, the optimal enterprise was rotation corn-soybeans with managed drainage on 2/3 of the farm and corn-soybeans without controlled drainage on 1/3 of the farmland for a total annual contribution margin of $675,505. Increasing labor available by one more hour would increase the profits by $281.30 (Dec 6 – Apr. 21), $28.06 (Apr 22 – Apr 25), $338.18 (Apr. 26 – May 2), $229.48 (May 3 – May 9), $9 (May 10 – May 16), $28.07 (Nov. 1 – Nov 14 and Nov 15-Dec 5). In the baseline scenario the yield advantage threshold for profitability of managed drainage was 2.3% and 4.5% with and without EQIP subsidy respectively.