Study Develops Optimal Cover Crop Adoption Thresholds
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Study Develops Optimal Cover Crop Adoption Thresholds


Researchers have developed a new model that can suggest the optimal conditions for farmers to plant cover crops, or crops grown in between cash-crop seasons, to help ensure long-term cash-crop success. The findings could help improve farm budgets and serve as aids to farmers making decisions about their land.

The model, based on an examination of 35 years of available data on an experimental cotton farm in west Tennessee, accounts for local conditions – including current prices of cash crops and fertilizer as well as the health and fertility of the soil – and then suggests whether an investment in cover crops would be economically beneficial for farmers.

North Carolina State University researchers involved in the study say the model generally favors planting cover crops on fields with relatively healthy soil and on land that has not been tilled. The cost of planting and maintaining cover crops appears to reduce the need for fertilizer treatments, so high fertilizer costs would be one key factor in favor of planting cover crops, the researchers add.

Cover crops have been shown in the academic literature to improve soil conditions by controlling excess water and fixing nitrogen, among other benefits. But only a small percentage of farmers – about 4% nationally – utilize cover crops. Many farmers looking for short-term benefits may consider the costs of planting cover crops overly excessive.

“There is a lot of academic literature looking at short-term effects of cover crops, but our contribution here is in thinking about cover crops as a long-term investment,” said Rod Rejesus, professor and department extension leader of agricultural and resource economics at NC State and a co-author of a paper describing the research. “Agronomists seem to mostly agree that cover crops are a worthwhile investment; many economists say they are not. We find some truth to both sides of the argument in this paper: In certain conditions it might be worth it to plant cover crops; in other conditions it might not be worth it.”

Poor soil quality and low prices for nitrogen fertilizer products are two factors that tend to make cover-crop adoption sub-optimal, according to the model.

“If you’re starting from a place where the soil is degraded, it takes so long to build up better soil conditions that, from an economic perspective, it’s not worth it to plant cover crops,” said Zachary Brown, associate professor of agricultural and resource economics at NC State and a co-author of the paper. “Like other investments, farmers are interested to know how fast the returns are for cover-crops investments.”

The research also shows that, over time, cover crops can serve as “substitutes” for nitrogen fertilizer, as two of the studied cover crops, crimson clover and hairy vetch, both “fix” nitrogen in the soil.

“The more you use cover crops, the fewer fertilizer inputs are needed,” Brown said. “That effect also increased over time. So, the longer you used cover crops, the more they were able to offset nitrogen fertilizer.”

The paper appears in the European Review of Agricultural Economics. Former NC State Ph.D. student Le Chen, who is now at the University of Tennessee-Knoxville, is the paper’s corresponding author. Christopher N. Boyer and James A. Larson of the University of Tennessee-Knoxville also co-authored the paper.
“Dynamically optimal cover crop adoption”

Authors: Roderick M. Rejesus and Zachary S. Brown, North Carolina State University; Le Chen, Christopher N. Boyer and James A. Larson, University of Tennessee-Knoxville

Published: May 31, 2025 in European Review of Agricultural Economics

DOI: 10.1093/erae/jbaf018

Abstract: This paper develops a stochastic dynamic programming model to investigate optimal cover crop adoption policies, accounting for cumulative effects on soil fertility, uncertain future fertilizer and output prices, irreversibility of sunk machinery costs and flexibility in the timing of adoption over time. Based on data from a 35-year cotton field experiment in West Tennessee (1984–2018), we first estimate the static and dynamic yield effects of cover crop adoption and then use these estimates to evaluate the decision of a representative cotton farmer to adopt three cover cropping practices – hairy vetch, winter wheat and crimson clover – under conventional till and no-till production systems. Econometric estimates imply significant cumulative effects of cover crops on yields, as well as static and dynamic substitution effects between cover crops and nitrogen fertilizer inputs. With these substitution effects implying increasing marginal profit from soil fertility, our analysis suggests a threshold level of soil fertility level, above which it is optimal to adopt cover crops and below which it is not. Adoption of cover crops is more favored if no-till practices have been implemented. Moreover, in the presence of sunk costs that have not yet been incurred, the optimal strategy is to postpone the adoption of cover crops in both conventional till and no-till fields until crop prices improve, the cost of adoption decreases, or fertilizer prices increase. Our results also indicate that when fertilizer prices are higher, cover crop adoption in no-till systems can lead to substantial fertilizer cost savings, with the amount of those fertilizer cost savings increasing over time as soil health further improves.
Regions: North America, United States
Keywords: Business, Agriculture & fishing, Science, Agriculture & fishing, Environment - science

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