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Profitability Differences among No-Till and Conventional-Till Producers in North Central Kansas

Jason Fewell

Summary

Economies of scale often exist for farmers who adopt no-till because they are able to use fixed resources more efficiently. Crop rotation also affects no-till farmers’ profitability. This paper seeks to determine profitability differences among no-till and conventional-till farmers, differentiating among those who have practiced no-till for longer periods.

The transition to no-till can require relatively large investments in equipment and potentially have negative impacts on yields while producers adopt this technology. Thus, profitability of no-till farming might be considerably different in early years compared to later years. To quantify this, a time dimension is included to determine if long-run profitability is higher for long-term no-till farmers compared to later adopters. The analysis uses whole-farm cost and revenue data from 200 farmers in the Kansas Farm Management Association’s North Central region to compute five-year average profit margins per acre and determine profitability differences among farmers practicing no-till for at least five years, those practicing less than five years, and conventional till farms. Expense ratios help determine differences in whole-farm profitability among tillage practices.

By recognizing and understanding factors that impact profitability differences among operations, producers can make informed management decisions. Results from this study are expected to show that farmers are able to lower machinery costs by switching to no-till, thus increasing profit. Results can also assist expanding producers who lack machinery or labor requirements to accommodate additional land. Additionally, results will help producers identify how the adoption of no-till might affect crop rotation and corresponding production expenses.

Details

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