Datu Case Studies On-farm Economics of Cover Crops & No-till I’m Marcy Lowe, CEO of Datu Research Glad to be here First 4 Datu Case Studies on economics of cover crops & no-till As Beth said, we hope to do them nationwide In this presentation, I’ll share: Method we used Key takeaways Next steps On-farm Economics of Cover Crops & No-till Marcy Lowe, CEO, Datu Research NACD Annual Meeting January 30, 2018

2014 CIG, with support from Walton Family Foundation National Association of Conservation Districts 180+ Soil Health Champions Datu Research 4 Farmer Case Studies A little background on how these four case studies came about: Evidence that cover cropping and no-till can: Limit soil loss Reduce run-off Enhance biodiversity Need more hard data on: Farm-level economics What works where: the how, the why Audience: farmers! Quick to read, relevant to your own farm; importance of the narrative that explains the numbers www.daturesearch.com

4 Cases Moore Diaz Willis Kuhns K.F. Farm Diaz Farm Willis Farm Here are the four case-study farms: NACD helped get nominations from conservation districts Interviewing, vetting Each farmer had detailed records and willing to share them Diversity in farm size, geography Settled on these four: 25 acres to 2,300 acres Note that for this study, Kuhns Family Farm tracked no-till only (not cover crops)   K.F. Farm Diaz Farm Willis Farm Moore Farm Location Effingham County Illinois Stephenson County Illinois Gentry County Missouri Howard County Iowa Years of No-Till 23 26 30 25 Years of Cover Cropping 0* 5 4 3 Crop Corn-soybean rotation Livestock Hog - Cow-calf Acreage 1,800 1,500 2,300 www.daturesearch.com

Method: Partial Budget Analysis Focus on changes in income attributed to adoption Baseline is average of 2-7 years before study period Categories determined by literature review, consultations, interviews Each change in income expressed in $/acre Data from farmer records and in-depth interviews Validation by each case study farmer For our analytic framework, we chose partial budget analysis Changes in income ATTRIBUTED TO ADOPTION of cover crops Baseline ave. 2-7 years Budget categories Changes expressed in $ per acre Gathered data from farmer records, in-depth interviews Validation by each farmer; guidance from NRCS economists www.daturesearch.com

Categories Tracked Planting Erosion-related repairs Seeds Implements Machinery Termination Operator Fuel Learning activities Herbicide Fungicide Additional scouting Insecticide Workshops, internet Fertilizer application Cattle grazing N, P, K Replacing hay Yield These are the budget categories, and what they consisted of Some categories imply negative income changes (costs), some are positive income changes (savings) Planting Termination Fertilizer Application Erosion-related repairs Cattle grazing Yield – final category, to get the net change in income

Key Changes in Income Across Four Case Studies I’d like to show you what the changes in income looked like Starting first with a couple years from Michael’s 4-year experiment with cover crops Across Four Case Studies www.daturesearch.com

Income Changes Attributed To Cover Crops 2013 Here is Michael’s first year of cover crops Shows the changes in income Michael attributed to cover crops across four fields, in $/acre Categories as mentioned. You’ll notice he spent more on planting, more on learning activities (time spent on trainings, web research) The main positive change was in fertilizer application (big savings) As for yields, Different results on corn fields v soybean Corn yield went down – this is where we feel that the narrative becomes so important suspected because legume cc did not supply enough N, and C from the rye tied up more N in the soil Soybean yield went up, heavy rains early in season on nearby unplanted fields >But rye prevented erosion: add est extra 20 bushels of harvested [formula: Change in combined yield = (average corn yield * corn acreage + average soybean yield * soybean acreage) / (corn acreage + soybean acreage). Timing, nitrogen issues Rye prevented erosion www.daturesearch.com

2016 Michael’s 4th year of cover crops Well rewarded for experimenting One of the most positive changes: spent far less on fertilizer (same with Dan) Reduction was well timed, not like 2013 www.daturesearch.com

Change In Income Associated with Fertilizer Application 3 out of the 4 farmers reported significant savings in fertilizer (positive income changes) Showing the max/min view because it differed so much each year (in fact, by field) No one’s fertilizer costs increased Where there’s no min (blue bar), the farmer reported no change in income Frank Moore (northern Iowa) reported no change www.daturesearch.com

Change in Income Associated with Erosion Repair The other thing we were struck by was consistent savings in erosion repair Dan, Michael, Frank Moore all showed savings Lowest was no change Highest was $16 saved per acre www.daturesearch.com

Compared to the Baseline Planting costs increased by as much as $38 per acre Fertilizer costs decreased by as much as $50 per acre Erosion repair costs decreased by as much as $16 per acre Yields increased by as much as $76 per acre Yearly net change in income ranged from -$83 to $110 per acre Again, because results varied so much, no averages—instead, full range of the change in income across the four cases: Planting costs up by as much as $38 per acre Fertilizer costs down by as much as $50 per acre Erosion repair costs down by as much as $16 per acre Yields increased by as much as $76 per acre Yearly net change in income ranged: -$83 to $110 per acre Ups and downs Farmers were pleased with their learning curves Shows you don’t have to wait years and years for benefits www.daturesearch.com

Takeaways From All Four Case Studies Economic benefit takes time and experimenting Incentive programs further help the bottom line Adopters reap rewards from self-education Reduced fertilizer costs can bring dramatic savings In all four cases, adoption reduced erosion repairs Econ B increases over time: Net positive in 3 out of 4 years on Willis Farm immediate gains of no-till on Kuhns farm Incentive programs (additional analysis) help the bottom line In some cases the diff between + and – Adopters reap rewards from self-education Will help reduce adoption costs for future adopters Reduced fertilizer costs can bring dramatic savings 3 out of 4 cases In all four cases, adoption reduced erosion repairs Others may draw additional conclusions www.daturesearch.com

Tremendous Contribution By Datu Case Study Farmers! Stan Kuhns Dan Diaz Michael Willis Frank Moore Thank you to the farmers! Can’t thank you enough Data and time Incredible value created Speeding up the learning curve for other farmers Next steps: Get the case studies into farmers’ hands Study how best to do that (Linda Prokopy of Purdue) CCA role Seeking funding for more case studies in other geographies www.daturesearch.com

Thank you for your attention! Marcy Lowe CEO, Datu Research mlowe@daturesearch.com Really encourage all to offer feedback! This is only the beginning, we want to do more case studies How can we share this info with as many farmers as possible? www.daturesearch.com