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Economics of Cover Crops

Are cover crops economical? That is a question that is discussed by Dr. Humberto Blanco in the September/October issue of the Crops & Soils Magazine of the American Society of Agronomy.

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Updated:

October 31, 2023

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Profitability of cover crops is important for high adoption of this BMP

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Direct costs of cover crops are seed, planting, and termination, while indirect costs can include reduced water for the next crop if water is limiting, slow soil warming due to increased residue, and potential yield reduction in the following crop, while cover crops demand more management from the farmer. Economic benefits of cover crops can include savings on fertilizer, herbicides, and other production costs, potential increase in crop yields, and soil C credits. Unfortunately, although worthy on their own merit, soil physical, chemical, and biological improvements obtained from cover crops can often not be expressed in monetary terms. The lack of economic benefits of cover crops is probably the major reason cover crop adoption is only 5% in the United States of America! In one study in the U.S. Corn Belt, cover crop costs ranged from $33 to $70 per acre, while economic benefits ranged from $37 to $78 per acre. In another study, 61% of cover crop costs were recuperated through improved N cycling, reduced soil erosion, and reduced N losses to subsurface drainage in corn and soybean systems. If cover crops replace the fallow year in water-limited regions, they can be expected to produce positive economic returns. It is evident these examples are not piquing anybody’s interest if one is looking for profit from cover crops. Therefore, Dr. Blanco proposes to look at how cover crops can become a profit center on their own merit, through (1) grazing or harvesting, (2) weed control benefits, (3) N-credits, (4) carbon credits, (5) crop residue, or (6) other ecosystem services. Let us review these here.

1. Grazing and Harvesting

Grazing and harvesting don't necessarily compromise other ecosystem services of cover crops and can help make them profitable. The forage produced has an economic value that may compensate for the increased costs incurred (such as fencing, water system, and harvesting) if biomass production is sufficient. Grass cover crops are more profitable than legumes or cover crop mixtures because the seed costs are affordable and the biomass production is higher. Four studies quoted showed annual net return from grazed or harvested cover crops ranging from $17 to $122 per acre.

2. Weed Suppression

Weed control with herbicides is becoming more costly with the increase in herbicide-resistant weeds. U.S. farmers spend more than $11 billion per year on herbicides. Cover crops can help reduce weed biomass by 90–100%. Grass cover crops are more effective and economical than legume cover crops due to lower seed costs and higher weed suppression. In one study in a winter wheat-fallow region, a cover crop justified one less herbicide application to control herbicide-resistant kochia.

3. Nitrogen Credit

Legume cover crops can provide significant nitrogen to the following crop, from 11 to 162 lbs/A of N with an average of 80 lbs/A N fertilizer equivalent. The author emphasized the benefits of leguminous cover crops to provide nitrogen in organic crop rotations, although he also mentions that adding some inorganic nitrogen to the nitrogen supplied by the cover crop might be more profitable. Grass (or other non-leguminous) cover crops can improve nitrogen cycling by taking it up from the soil and reducing leaching losses and later slowly returning it to the following crop.

4. Soil Carbon Credit

Dr. Blanco states that carbon credits from cover crops range from 0.09 to 0.25 tons/A/yr on a global scale. However, it is necessary to determine what is possible locally based on growth of the cover crops. Further, it is unclear how permanent the carbon from cover crops is in the soil because it can quickly be lost again if cover crops are not consistently used. Further, Dr. Blanco indicates that carbon sequestration from cover crops below 8 inches is not known because most studies focus on the topsoil only. Emerging carbon markets may add profit to cover crops.

5. Crop Residue Harvesting

Corn residue is valued at approximately $60 per ton for biofuel or livestock needs and is already harvested from about 10% of U.S. corn acreage. If cover crops are planted, one study suggested that 1.78 tons/A extra corn residue can be harvested without compromising soil function. The cover crop is especially important to provide soil cover in the spring when the soil would otherwise be completely bare after corn residue harvest.

6. Other Ecosystem Services

Cover crops supply ecosystem services such as reduced soil erosion, improved water quality, biodiversity, and wildlife habitat. If these services were valued economically, cover crops would be more profitable. Dr. Blanco mentions the estimated cost of soil erosion ($2.8 billion/yr in the Corn Belt according to one recent study), nitrogen losses (2.4 million lbs/N/yr from mid-western states valued at $485 million), and the costs of sediment and nutrient losses in runoff water, which can all be reduced by the use of cover crops.

This review makes it clear that for greater adoption, cover crops need to be profitable. At the moment, the clearest opportunity for profit seems to be through harvesting for forage or grazing, or increasing corn stover harvest (primarily for biofuel), while nitrogen fertilizer value is also worth looking at, as long as the farmer has clear guidance to know the N-value of the cover crop. The economics of weed suppression, carbon sequestration, and ecosystem services are still a bit 'pie in the sky', it seems. Pennsylvania farmers are well aware of the forage value of cover crops, which explains why cover crop adoption in PA is 8 times the national average (almost 40% of annual crop acres are followed by a cover crop in Pennsylvania’s Chesapeake Bay watershed, according to recent transect surveys - see Duiker and Richards, 2023). Approximately 2/3 of the cover crops in Pennsylvania are harvested for forage. It is heartening that new research suggests that most ecosystem benefits of cover crops are still realized with harvesting or grazing, which provides the clearest opportunity to make cover crops profitable.