Factors influencing the economic potential for alternative farming systems: Case analyses in South Dakota

Abstract

AbstractResults of calculations on the economic potential for alternative (low input, sustainable) farming systems in a small grain-row crop region of the Northern Plains are reported. Two sets of alternative farming systems, in which no chemical fertilizers or herbicides are used, are compared with various conventional and reduced till systems. In Farming Systems Study I (FSS1), an alternative rotation consisting of oats, alfalfa, soybeans, and corn is compared with conventional and ridge till rotation systems composed of corn, soybeans, and spring wheat. In Farming Systems Study II (FSS2), three systems with an emphasis on small grains are compared. An alternative system rotation consisting of oats, sweet clover, soybeans, and spring wheat is compared with conventional and minimum till rotation systems comprised of soybeans, spring wheat, and barley. Results of baseline economic analyses show that alternative farming systems can be competitive with more conventional systems in at least some situations. The alternative systems entail markedly lower direct costs, and the alternative system in FSS2 has approximately the same net returns as the comparable conventional and minimum till systems. The FSS1 alternative system has positive but somewhat lower net returns than the comparable conventional and ridge till systems. Sensitivity analyses were conducted with alternative system crop yields, chemical fertilizer and herbicide prices, and varying assumptions about future Federal farm program support levels and acreage set aside requirements. The yield sensitivity analyses show that one alternative farming system requires yields about 5–10 percent above those of the comparable conventional system to produce the same net returns. However, the other alternative system is competitive with a conventional system even with yields 5 percent lower. Analyses varying chemical fertilizer and herbicide prices reveal that the alternative farming system in FSS1 becomes competitive with more conventional systems when fertilizer and herbicide prices rise by 50 percent. The alternative farming system in FSS2 is already competitive at current fertilizer and herbicide prices. In some cases, sensitivity analyses with Federal farm program provisions indicate that reductions in farm program benefits increase the economic competitiveness of alternative farming systems. However, important exceptions occur. Results indicate that not only the level of future farm program benefits, but also the form of program provisions and compliance requirements, will affect the relative competitiveness of alternative farming systems.