Economic Analysis of Alternative Herbicide Regimes on Roundup Ready Soybeans

Abstract

Roundup (glyphosate) is a nonresidual herbicide that controls grasses and dicot weeds but is injurious to soybeans. The development of Roundup-resistant soybeans [Glycine max (L.) Merr.] (Roundup Ready soybeans) by Monsanto could allow farmers to substitute Roundup for all other herbicides to reduce production costs and weed control risk. Field trials at the University of Tennessee Milan Experiment Station from 1995 through 1997 were used to compare 1997 returns above variable costs for Roundup and 11 other herbicide systems on conventionally tilled, Roundup Ready soybeans. Although yields of only four herbicide systems on Roundup Ready soybeans were significantly lower than the yield of Roundup on Roundup Ready soybeans, net returns of nine systems were significantly lower. The significantly lower net returns resulted mostly from higher herbicide costs. Chemical companies would have to reduce the costs of most non-Roundup herbicide systems to unreasonably low levels (close to or less than zero) before farmers would have an economic incentive to use them instead of Roundup on Roundup Ready soybeans. Budgeted production costs for Roundup on Roundup Ready soybeans (Roundup Ready seed at $26/50 lb bag) were also compared with budgeted production costs for the non-Roundup herbicide systems on conventional soybean varieties (public-domain seed at $10.50/50 lb bag). Seven of the 11 non-Roundup herbicide systems on conventional varieties had costs that were greater than Roundup on Roundup Ready soybeans, suggesting that lower seed costs for the non-Roundup systems were more than offset by higher herbicide costs. Yields required to cover the cost differences between the non-Roundup herbicide systems and Roundup on Roundup Ready soybeans were calculated. These yield differences were added to the experimental yield obtained with Roundup on Roundup Ready soybeans to arrive at a break-even yield. A decision criterion for profit-maximizing farmers was developed from these break-even yields; if a profit-maximizing farmer expects to receive a yield from his/her highest-yielding conventional variety that is less than the break-even yield, the farmer should consider planting Roundup Ready soybeans to obtain a higher expected profit. If the decision criterion suggests staying with the conventional variety, the farmer should consider the nonbudgeted benefits of Roundup Ready soybeans, such as improved timeliness of planting and reduced weed control risk, before making the decision. To obtain more conclusive evidence about the relative profitability of Roundup Ready soybeans, future research should include side-by-side variety trials, more years of data, and no-tillage production methods.