What decisions does a Farmer consider to determine whether to invest in Cover Crops?  While cover crops provide many benefits to a farming operation including: speeding infiltration of surface water; relieving compaction and increasing soil structure; adding organic matter that encourages beneficial soil microbial life and nutrient cycling, and sequestering nutrients that would otherwise get leached from the soil, many of these benefits are difficult to account on the ‘bottom line’.

Because every farm is a business, it only stands to reason that every decision on the farm is based on profit, loss, and risk. Decisions about what crops to grow, the right equipment to purchase, and whether to plant cover crops are all based on the bottom line.  If the numbers don’t add up, it will be harder to justify.

This article reviews the economics of using cover crops in situations where the benefits have an immediate accountable return on investment (ROI).  Producers will have an easier time to fit cover crops into their business model

Cover Crops as an Investment

In the short term – the costs of cover crop (seed, seeding and management) may indeed show a loss.  Yet farmer that have long-term experience and that carefully keep their books have determined that cover crops do pay over the long-term.  This is because cover crops provide an efficiency and resilience to the operation over time.

The farmer is most satisfied with the cover crop investment when:

• He/she has evaluated the economics of Cover Crops along with other management changes to their cropping operation that are designed to improve their overall efficiency. They don’t evaluate cover crops as one standalone management item
• Evaluate the economics of Cover crops on a multi-year time frame. In many cases, the maximum return builds over several years as the soil improves and with more experience.

One of the most often cited benefits of Cover Crops is the impact to the resiliency of the cropping system.  Farmers are finding less yield losses from drought and better access to their fields in a wet Spring.  Cover Crops are viewed as a type of ‘crop insurance’ that pays off in some years more than others. However, it is often difficult to quantify resiliency and the effects of resilience may not be apparent for 3-5 years.  On the other hand, when cover crops provide a more immediate benefit, then the justification becomes clearer.  This article reviews some ‘areas of return’ for the cover crop investment.

Accelerating the return on investment in Cover Crops

It generally takes three or more years for a cover crop investment to pay off unless there is a direct problem that they are being deployed to mitigate.  These are some situations where cover crops pay for themselves more quickly:

• Control herbicide resistant weeds (ROI 1-2 years)

59% of farmers have reported herbicide resistant weeds on some of their fields.  These may include Marestail, Palmer amaranth, and water hemp.   Producers are spending more on herbicides and often getting worst results.  This leads to lower yields and lower prices because of weed seed contamination. 

While no single management strategy can completely resolve herbicide resistance, cover crops are an effective tool for weed control.  The terminated Cover Crop biomass covers the normally exposed soil to reduce weed seed germination and growth.  When it works well, farmers have reported 90% less weed biomass and density.  This leads to fewer passes of post emergent herbicides and lower cost for herbicides themselves.  Based on the reduced labor and reduced herbicide costs, the return on cover crop investment in soybean fields was one year, and two years for corn fields.

• Livestock Grazing (ROI year one)

Grazing cover crops is one of the easiest ways to provide a positive first-year return.  If the infrastructure is already in place and the area is large enough, an operation can easily pay for the seed and seeding costs in the first year.  The study found an average annual return of $49.23 per acre when they were used to replace forage for livestock animals.

• Soil Compaction. (ROI two to three years)

Soil compaction causes lower rainfall infiltration, and stunted root growth.  The effects can be a poorly drained, muddy field with and average 10 – 20% reduction in yield according to this report.  By comparing the traditional solution of deep sub-soil tillage (which is likely a temporary solution) with deep rooted cover crop plants studies have found that he cover crop plots have equal or better yields than subsoilers.  Cover crops had the best advantage in drought years.  For corn acres, it took two years for the investment in cover crops to break even.  In soybean acres, the cover crop investment was starting to make a profit when they are compared to annual subsoiling.   

• When transitioning to no-till (ROI one to two years)

Cover crops ease the transition to no-till or strip-till farming by reducing the ‘yield-dip’ that happens during the first few transition years.  The result is increased aeration and reduced crusting and compaction. For soybeans, the break-even was year one.  For Corn, the break-even was in year two.

• When Fertilizer costs are high – (ROI 2-3 years)

For the conventional farmer, the addition of nitrogen from nitrogen fixing legume cover crops will be modest because they plant corn before the legumes have much growth in the Spring.  Therefore, the primary benefits of cover crops will likely come from sequestering nitrogen from manure or nutrients left in the soil from the previous cash crop.  The cover crop plants absorb the nutrients into their tissues and reduce nutrient leaching and volatilization from the root zones.  As the cover crop materials break down into organic matter through microbial degradation, they release the nutrients back into the soil.  While researchers and farmers are still measuring the amount of nutrients that could be ‘recycled’, a farmer can make educated decisions about reducing fertilizer inputs based on plant tissue tests and soil ‘health’ tests.  It has been estimated that $10-40/acre for corn and $5-10 acre savings for fertilizer are reasonable to assume in two the three years. 

• Where soil moisture is at a deficit or irrigation is necessary (ROI – 1-3 years)

There is clear and dramatic evidence that crops on fields planted with cover crops benefit during years of low rainfall or drought conditions.  Farmers reported and average of 9.6% increase in corn and 11.6% in soybeans on cover cropped fields compared to conventionally tilled acres.  Even fields that had one year of cover cropping experienced the moisture benefits.

Cover crops help capture and retain soil moisture by improving rainwater infiltration and by creating ‘macropores’ in the soil that hold more of the water in the root zone.  They also keep the surface of the soil cooler which reduces evaporation, reducing crop stress and allowing microbial activity to flourish near the soil surface.  The ROI is immediate in a drought year, but the cumulative effects of cover crops will increase every year, even in non-drought years for both soybeans and corn.

• When incentive payments are available. (ROI – one year)

Most farming acres are eligible for cover crop incentive payments through the Natural Resource Conservation Service (NRCS) Environmental Quality Incentives Program (EQIP).  In addition, other incentives are available through regional watersheds and local conservation organizations.  If the incentive payments exceed $35.00, they should cover the cost of basic cover crop seed and seeding.  

1. Myers, R., Weber, A., S. Tellatin. 2019. Cover Crop Economics. SARE Technical Bulletin. https://www.sare.org/Learning-Center/Bulletins/Cover-Crop-Economics(accessed April 2020).

The information in this article was condensed from the “Ag Innovations Series – Technical Bulletin “Cover Crop Economics:  Opportunities to Improve Your Bottom Line in Row Crops” June 2019