March 2024

Profitability of winter cereal rye in integrated crop-livestock systems*

Despite the numerous environmental benefits associated with cover crop use, such as reducing erosion, improving infiltration, mitigating nutrient loading in surface waters, and improving soil health, many farmers in the Midwestern United States are still reluctant to include cover crops in their production practices. The Iowa Farm and Rural Life Poll (Arbuckle 2016) reported potential economic impacts had moderate-to-very strong influence on changes in 74% of producers’ management practices, and 57% of them agreed with the statement “pressure to make profit margins makes it difficult to invest in conservation practices.” The peer-reviewed literature based on survey methods (Plastina et al. 2018a,b,c), field experiments (Thompson et al. 2020), and simulations from physical models (Marcillo et al. 2019), concluded net returns to cover crops in the US Midwest were predominantly negative, even after accounting for cost-share payments.

In integrated crop-livestock systems, cover crop biomass in early spring can reduce their dependence on stored feed, and thus reduce feed costs (Lundy et al. 2018; Phillips et al. 2019). Cost savings from grazing cereal rye are highly dependent on the type of livestock, herd size, proximity of the feedlot to the field, and total available biomass. In Iowa, farms selling between 20 and 99 cattle and calves in 2017 sold an average of 47 head per farm and accounted for 40% of all farms with sales of cattle and calves in the state (USDA 2019). Malone et al. (2022) suggested harvesting cereal rye for forage between mid-May and early June before planting soybeans in the north-central US could be economically viable, particularly if producers did not observe soybean yield losses from the double-cropping alternative (Gesch et al. 2014; Nafziger et al. 2016).

Using experimental agronomic data from six location-years in Iowa (Marcos et al. 2023) and a partial budget framework, Plastina et al. (2023) evaluated the annual private net returns to cereal rye as a winter cover crop in the no-till corn phase of an integrated corn-soybean and cow-calf system in Iowa. This article summarizes the findings by Plastina et al. (2023).

Methods

The evaluation was conducted in two stages. First, the net returns to cereal rye in the crop system were calculated using experimental agronomic data from Marcos et al. (2023) and local average prices in a partial budget framework. Partial budgets captured the differences between total profits from no-till corn production in fields planted to cereal rye in the fall, and total profits from no-till corn production in fields left fallow over the winter.

Second, using data on cereal rye biomass collected from the experimental plots and local average prices, the hypothetical net cost savings from grazing cows in the cover-cropped field for a typical cow-calf enterprise were simulated. The hypothetical cow-calf enterprise consisted of 48 cows feeding on dry hay in a feedlot during winter and early spring. The cereal rye area was assumed at 160 acres, arranged in the shape of a square adjacent to the feedlot, where a removable electrified fence along the perimeter and a pre-owned and fully depreciated waterer were installed in the early spring and removed the day before rye termination. The temporary fence was assumed to consist of two lines of barbed wire held in place by removable T-shaped posts placed 20 feet apart, and electrified with a solar electric fence charger.

Annual net returns to cereal rye in an integrated crop-livestock operation were calculated as the direct sum of the net returns in the crop system and the net cost savings in the cow-calf enterprise. Only short-term "direct" effects of cereal rye were included in the analysis, since “indirect” benefits from cover crop use, such as reduced soil erosion or nitrate loading from subsurface drainage (Roth et al. 2018; Bergtold et al. 2017; Snapp et al. 2005), do not affect the private net returns to farming in the short-run.

Treatment factors for the agronomic experiment included planting date-method, seeding rate, and target termination date. The study utilized a split-split-plot design with six replications. The main plot treatment was the cereal rye planting method: broadcast or drill. Following ISU recommendations (Conservation Learning Group 2020), the subplot treatment was cereal rye target termination date: early and late termination dates targeted, respectively, 14 and 3 days before planting (DBP) corn. The sub-subplot treatment was seeding rate: high, medium, low, and zero. The seeding rates were 0.33, 0.67, and 1.0 million pure live seed (PLS) for drilled cereal rye; and, 0.67, 1.0, and 1.33 million PLS for broadcast cereal rye.

Cereal rye was established in mid-September in standing soybean (R7 growth stage; Pedersen & Licht 2014) for broadcast plots using a high clearance boom applicator. Soon after soybean harvest in mid- to late-October, drill plots were seeded in both 2019 and 2020 using a John Deere 750 10-ft., no-till grain drill. Since the different seeding dates have a confounding effect with the alternative planting methods, only two main treatments are evaluated: "early-broadcast" versus "late-drill." Early planting and late termination of cover crops has been associated with better establishment and biomass production (Ruis et al. 2019) and higher ecosystem services (Hively et al. 2009).

At all locations, May 1 was targeted as the ideal planting date for corn, but actual planting dates were affected by weather conditions. Consequently, cereal rye termination targeting 14 DBP actually occurred 19 to 39 DBP in 2019, and 10 to 13 DBP in 2020; while the 3 DBP target actually resulted in termination 13 DBP in 2019 and 2 DBP in 2020. Corn nitrogen management consisted of 150 lbs. N per acre applied mostly at the time of V4 to V6 corn stage (Abendroth et al. 2011). All locations utilized ISU recommendations for phosphorous and potassium fertilizer (Sawyer et al. 2006, Mallarino et al. 2013) as well as for weed management (Hodgson et al. 2020). The collected agronomic data included pounds of cereal rye biomass in November and on the date of termination; as well as corn planting date, harvesting date, and yield. The full agronomic experiment is described in detail in Marcos et al. (2023).

Results

The average corn yields were 193 bushels per acre in the check plots (left fallow in the previous fall), and 188 bushels per acre in the plots planted to cereal rye in the previous fall. Table 1 shows the corn yield differences between cover cropped plots and non-cover cropped plots. While the average yield penalty was 4.7 bushels per acre across all plots, the average yield penalty among early-broadcast plots was 12 bushels per acre and late-drilled plots obtained a yield bump of 1.8 bushels per acre with respect to the check plots. Higher seeding rates and a later termination date were associated with larger yield penalties.

Net returns to cereal rye in the absence of grazing (and therefore no revenue stream from the rye) averaged -$50.08 per acre and were negative for 82.2% of the treatments (Table 2). However, given the higher yield penalty for early-broadcast cereal rye, the net returns associated with such treatment are $67.16 per acre lower than those of late-drilled rye. Also, higher seeding rates and a later termination date were associated with more negative net returns.

The total biomass produced by cereal rye until its termination averaged 776 pounds per acre across all plots, and ranged between 38 and 3,855 lbs. per acre (Table 3). The potential feed savings in the cow-calf enterprise offset most of the losses related to yield penalties and extra costs to implement cereal rye, reducing the average losses from -$50.08 per acre (Table 2) in the absence of grazing to -$6.17 per acre when the rye was grazed.

On average, early-broadcast cereal rye produced an additional 976 lbs. of biomass per acre than late-drilled cereal rye: 1,264 vs. 288 lbs. per acre (Table 3). Consequently, early-broadcast cereal rye generated larger net cost savings in the livestock enterprise and resulted in lower net losses than late-drilled rye: -$3.22 vs. -$9.22 (Table 4). The substantial variability in net returns around their mean values (Table 4) was driven by the differences in biomass production and corn yields.

Figure 1. Net returns to grazed cover crops versus total biomass produced by termination date.

Implications for farm management

The findings have multiple implications for farm management:

First, the statistical relationship between higher cereal rye biomass in the spring and lower subsequent corn yields showcases the trade-off faced by farmers between producing higher environmental services and incurring economic losses. Private net returns to cereal rye in the no-grazing scenario were negative for 82.2% of the treatments and averaged -$50.08 per acre for those treatments. In the absence of large financial incentives (subsidies, cost-share payments, or payments for ecosystem services) their findings suggest cover crops will not be adopted at large scale in Iowa.

Second, average net returns were significantly less negative in late-drilled plots than in early-broadcast plots in the no-grazing scenario, as higher rye biomass negatively affected corn yields relatively more in the latter than in the former plots. This suggests Iowa farmers would be more likely to break-even if the planting date-method combination could be adjusted to achieve their environmental goals while minimizing corn yield losses. Late-broadcasting cereal rye (which was not explored in the study), could produce similar or even higher net returns than late-drilling, given the lower expenses associated with the former planting method.

Third, since seeding rates and target termination dates were not statistically significant factors affecting net returns to cereal rye in the no-grazing scenario, farmers could benefit from further research exploring the use of lower seeding rates and flexible termination dates to minimize costs subject to achieving their environmental goals. Marcillo et al. (2019) reported less negative private net returns to cereal rye at lower seeding rates.

Finally, the finding that 45.2% of the plots under grazing obtained average net returns of $43.32 per acre suggests that cereal rye could be profitable for a sizeable share of the integrated row-crop and cow-calf production systems in Iowa when the rye biomass is used as forage. Figure 1 illustrates the relation between net returns to cereal rye in the grazing scenario and total biomass produced by termination date (both grazed and left in the field). It seems to suggest that in order to be profitable while providing ground cover and its associated environmental benefits, cereal rye had to produce a total biomass of at least 1 ton (2,000 lbs) per acre by termination date. However, this is a testable hypothesis that should be further explored with a larger sample size.

Tables 1 and 2. Treated and untreated plots and net returns to cereal rye in absence of grazing.

Tables 3 and 4. Total cover crop biomass produced, and net returns to grazed cereal rye.

*For the complete list of references from this article, see the full report: Plastina A, Acharya J, Marcos FM, Parvej MR, Licht MA, Robertson AE. Does grazing winter cereal rye in Iowa, USA, make it profitable? Renewable Agriculture and Food Systems. 2023;38:e45. doi:10.1017/S1742170523000388.


Alejandro Plastina, extension economist, 515-294-6160, plastina@iastate.edu

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Alejandro Plastina

extension economist
515-294-6160
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