FARM LEVEL ECONOMIC IMPACTS OF OWNING AND OPERATING IMPERMEABLE LAGOON COVERS

Abstract

The objective of this paper is to estimate the ownership and operating costs of installing impermeable lagoon covers on swine farms. An existing database of 42 swine production operations in 5 states was used to determine the economic and managerial impacts of installing impermeable lagoon covers. Supplemental information on management was obtained from phone interviews of agricultural businesses currently using impermeable lagoon covers. The costs and cash flow impacts of owning and operating an impermeable cover address economic feasibility. Agronomic feasibility is discussed in terms of management changes that would result from installing an impermeable cover. The major financial hurdle for installing an impermeable lagoon cover is the initial purchase price of the cover. For finishing operations, impermeable lagoon covers added $.72 to $3.41 per hundredweight to the cost of production. The covers accounted for 2% to 8% of the price independent producers received for their production; 14 to 65% of the revenue of contract producers. This cost brings no expectation of increased revenue. There will be additional operating costs associated with managing the cover and land applying the manure but, assuming that land is available, this cost is minor compared to purchasing the cover. If the cost of an impermeable cover can be overcome, the assumption that land is available to receive the additional nitrogen in the covered system presents the second hurdle. The model results indicate that land requirements for covered lagoon effluent applied according to a nitrogen rule increase an average of 3.5 times over that of open lagoons. Producers in North Carolina are likely to find that land is not available because they are already meeting most of the nutrient needs of their land with their current manure nitrogen supply. Producers in arid areas applying manure to crops that remove few nutrients from the soil will likely find that they too are short of land. Producers in Iowa and Missouri have the best potential to find sufficient land because their cropping system removes significant nutrients and they have access to additional land for receiving manure.