Joleen C. Hadrich

Incorporating Environmentally Compliant Manure Nutrient Disposal Costs into Least-Cost Livestock Ration Formulation

Livestock rations are formulated to minimize feed cost subject to nutritional requirements for a target performance level, which ignores the potentially substantial cost of disposing of nutrients fed in excess of nutritional requirements. We incorporate nutrient disposal costs into a modified least-cost ration formulation model to arrive at a joint least-cost decision that minimizes the sum of feed and net nutrient disposal costs. The method is demonstrated with phosphorus disposal costs on a representative dairy farm. Herd size, land availability and proximity, crop rotation, and initial soil phosphorus content are shown to be important in determining phosphorus disposal costs.

Economic Comparison of Liquid Manure Transport and Land Application

A spreadsheet-based manure transport and land application decision tool, MANURE

Upper Midwest dairy farm revenue variation and insurance implications.

HAUL, was developed to provide farmers, custom applicators, and others involved with manure management a manure cost and labor calculator for liquid manure systems using top-loading tank spreaders and nurse tanks. The manure hauling capacity was a function of the machinery set selected, manure tank capacity, and hauling distance. Manure transport and application costs were a function of spreader tank capacity and hauling distance. Representative 175-, 350-, 700-, and 1,400-cow dairy farms were compared to evaluate hauling time and machinery costs for a range of machinery sets, hauling distances, and nutrient values for the manure applied. Equipment ownership and operating costs were calculated for agitation, pumping, manure transport, land application, and incorporation. Equipment ownership and operating costs ranged from 0.32¢/L of manure hauled per year (1.18¢/gal) for a 175-cow dairy using a 11400-L (3000-gal) spreader with an average hauling distance of 1.6 km (1 mile) and broadcast application with tillage incorporation to 0.50¢/L (1.91¢/gal) for a 1400-cow farm with slurry injection and an average hauling distance of 6.4 km (4 mile) with two 34100-L (9000-gal) spreaders and four nurse trucks for over-the-road transport. Two nurse trucks supplying a tractor-drawn spreader became more cost-effective than two tractor-drawn spreaders alone at a hauling distance of about 4.8 km (3 mile). Injection application increased the number of days needed for manure application compared to a broadcast application with tillage incorporation, but when the time for tillage incorporation was included the total time needed for field operations with injection was less than broadcast with incorporation. Manure injection increased application costs about 6% compared to a broadcast application with tillage incorporation. When high soil phosphorus (P) levels restricted manure application rates to crop P removal rates, the credited nutrient value of the applied manure was reduced by 45%. The credited value of unincorporated manure with soil P constrained by crop removal was reduced by 60% compared to injected slurry with soil P at a build-up level. In each case the value of the manure nutrients applied exceeded the cost of agitation, pumping, transport, land application and incorporation.

Impact of the Section 179 tax deduction on machinery investment

Purpose - The purpose of this paper is to examine the sources and magnitude of variation in accrual adjusted gross farm revenue and farm revenue net of feed purchases on Michigan dairy farms representative of Upper Midwest dairy farms. The paper aims to assess whether adjusted gross revenue-type insurance instruments meet insurability conditions when applied to dairy farms. Design/methodology/approach - Accrual adjusted dairy farm revenue and revenue net of feed purchased from Michigan dairy farm panel data from 1995 through 2006 were detrended and summarized. Variance decomposition was used to identify sources of variation in adjusted gross revenue and adjusted gross revenue less feed purchases. In-sample insurance premiums were estimated and Monte Carlo simulations were used to adjust these premiums for out-of-sample considerations. Findings - Milk price variation was the largest source of variation while milk production per cow varied little. Farms with smaller herds and those with larger percentages of farm revenue from crop sales had higher relative revenue variability and would trigger a higher frequency of indemnities under a whole farm revenue insurance contract. Research limitations/implications - Because the data analyzed conclude in 2006, the volatility of the past couple of years is not reflected. Therefore, researchers are encouraged to test the proposed insurance feasibility further with more recent data. Practical implications - The paper addresses considerations for the development and commercialization of a feasible dairy revenue insurance instrument. Originality/value - This paper fulfils a need to understand magnitude and source of revenue variation on dairy farms and how insurance might mitigate negative consequences of this variation.

Joint measurement of farm size and farm performance: a confirmatory factor analysis

Purpose - – The purposes of this paper are to determine the financial, structural, and tax policy factors that influence the probability of buying machinery and the intensity of the machinery purchases on North Dakota farming operations. Design/methodology/approach - – A double hurdle model was used to estimate the two decisions: purchasing machinery and the intensity of the machinery purchase. Data were collected from the North Dakota Farm and Ranch Management Business Association Annual Summaries for 1993-2011. Findings - – Results demonstrated that the tax incentive provided by Section 179 deduction had the largest positive effect on machinery purchases when compared to operating profit margin, leverage ratio, producer type, and experience of the principal operator of the farm. Originality/value - – Section 179 deductions have changed substantially over the 19-year period studied and have not been analyzed in previous machinery investment work. This analysis puts a numerical value on the effect of Section 179 deductions over time and demonstrates the large effect tax incentives have on machinery purchase decisions and levels.

An evaluation of the social and private efficiency of adoption: Anaerobic digesters and greenhouse gas mitigation

Purpose - The purpose of this paper is to determine if a single dominant measure defines farm size and farm performance consistently over a ten-year time period, or if alternative measures are needed. The paper also seeks to determine the correlation between farm size and farm performance and how this correlation may change over time. Design/methodology/approach - A confirmatory factor analysis was used to test the relative strength of farm size and performance indicator variables and estimate the relationship between farm size and performance latent variables. Data were collected from the North Dakota Farm and Ranch Business Management Association (NDFRBA) Annual Summaries for 2000-2009. Findings - Results demonstrated that a single indicator, such as acres or rate of return on assets, may not capture the array of farm size and farm performance concepts and multiple indicators should be used to jointly determine farm size and farm performance measures. Results also found a sequential decrease in correlation between farm size and performance for seven of the ten years. Originality/value - This paper addresses the issue regarding multiple measures for farm size and farm performance which helps provide the framework to begin developing a systematic classification of farms for use in strategic farm planning and guide future government policies, federal farm programs, and environmental regulations.

Quantifying the sources of revenue variation in the Northern Great Plains

Climate science has begun to recognize the important role of non-carbon dioxide greenhouse gas emissions, including methane. Given the important contribution of methane, anaerobic digesters (ADs) on dairy farms in the U.S. present an opportunity to reduce greenhouse gas (GHG) emissions. We quantify the social and private costs and benefits of ADs that have been adopted in California and find that, despite high initial costs, large reductions in GHG emissions bring significant social benefits and represent good social investments given a

Citizen complaints and environmental regulation of Michigan livestock operations.

36 per-ton social cost of carbon. Subsidies that lower the initial private investment cost can help align socially and privately optimal adoption decisions.

Awareness and pro-active adoption of surface water BMPs

Purpose - – The purpose of this paper is to determine the sources and factors affecting farm revenue variation on crop and livestock farms in the Northern Great Plains. Design/methodology/approach - – A two method approach is used. Variance decomposition analysis is completed on an 18-year balanced panel data set of North Dakota producers to determine the sources of farm revenue variation. The second component of this research uses a random effects estimator to determine the effect of farm characteristics on farm revenue variation measured by coefficient of variation. Findings - – Crop revenue is the largest source of farm revenue variation, with crop insurance being the largest source of revenue variation diversification. Small market crops and corn were found to increase revenue variation compared to those operations that received the largest sum of their revenue from wheat. Government payments and insurance payments were also found to increase farm revenue variation indicating they may provide an incentive to plant more risky crops. Originality/value - – This analysis examined specific enterprises that affect farm revenue variation, which has not been examined in earlier work. This distinction allows for focus on potential policy implications of small market crops and new crops in “transitional planting zones”.

Economic Comparison of Liquid Manure Transport and Land Application in the Great Lakes Region

Citizen environmental complaints filed against agricultural producers in Michigan were examined to determine farm and community factors influencing citizen complaints and the subsequent response of the farmer. Secondary citizen environmental complaint data were obtained from the Michigan Department of Agriculture from 1998 to 2007 with 1,289 observations. Citizen complaints were grouped into 5 categories: odor, surface water, ground water, combination, and other complaints. Complaints were further classified as nonverified or verified where verified meant that the inspected farm was not complying with relevant generally accepted agricultural and management practices. These data were used to examine how farm characteristics affected the likelihood of a verified complaint. Odor and surface water complaints accounted for 75% of all complaints. A probit regression analysis was used to estimate the probability of a verified complaint as a function of complaint type, farm characteristics, county characteristics, and seasonal factors. Results from the probit regression analysis revealed that larger operations, poultry, and hog farms received more nonverified complaints than other livestock farms. Surface water issues were 17% more likely to be verified complaints compared with odor issues, of which the surface water complaints often originated from sources other than neighbors. In contrast, odor issues were more likely to result from accepted management practices requiring no mitigation. Farms that received a verified citizen complaint were required to mitigate the complaint by implementing corrective practices. A log-level (log Y) regression was used to evaluate how farm characteristics influenced the cost to implement corrective practices on those farms receiving a verified citizen complaint. Costs to implement corrective practices to mitigate verified complaints were greatest for dairy operations and surface water complaints. Corrective practices required to mitigate a surface water complaint were predicted to cost 46% more than an odor complaint with an estimated average cost of