Learn How Cover Crops Improve Farm Economics

By Scout Nelson

Cover crops are becoming more common as farmers look for ways to improve soil health, reduce risks, and support long-term farm productivity. These crops are planted mainly to protect and improve the soil between regular cash crops. 

They can help improve soil structure, increase water-holding ability, reduce erosion, and support better water movement through the soil. Cover crops also help farms handle drought and other extreme weather conditions. 

The economic value of cover crops is an important part of the decision for farmers. Tong Wang, SDSU Extension Advanced Production Specialist, explained that cover crops can provide several benefits, but farmers need to consider both their costs and possible returns when choosing a cover crop system. 

Cover crop use across the state increased from about 0.9% of cropland in 2012 to 2.3% in 2022. Some counties in eastern South Dakota now have more than 4% of their cropland planted to cover crops. 

One of the biggest challenges is the cost of establishing a cover crop. Expenses can range from about $42 to $120 per acre. These costs may include seed, planting, fertilizer changes, application, and crop termination. Farmers may also face other costs. For example, a cover crop can use soil moisture or affect the timing of planting the next crop. These concerns can be especially important during dry years. 

However, cover crops can provide financial benefits over time. Research shows that they may reduce fertilizer costs by about $7.98 per acre. They can also improve the yield of a following crop, creating an estimated benefit of about $31.37 to $66.42 per acre. These benefits can vary based on weather, soil type, crop choices, management practices, and farm conditions. 

Cover crops can also improve the condition of the soil. Better soil structure can help water move into the ground and reduce runoff. More water stored in the soil can help crops during dry periods. Cover crops can also reduce soil loss from wind and water. These benefits may not always appear as direct income in one growing season, but they can support farm productivity over several years. 

Adding livestock can provide another way to improve the economics of cover crops. Research in South Dakota finds that grazing cover crops can create an early financial return. One study reported a net benefit of $17.23 per acre during the first year and $43.61 per acre during the second year. The analysis includes cover crop costs, grazing value, fencing, energizers, water tanks, and water hauling. 

Grazing can help farmers receive value from the cover crop before the next cash crop is planted. It can also provide livestock with additional feed. However, producers need to consider the costs of managing livestock, fencing, water, and grazing carefully before adding this practice. 

Financial assistance can also make cover crops easier for farmers to try. A survey found that 56% of producers would be willing to adopt cover crops when cost-share assistance is available. USDA conservation programs can help reduce some of the financial risk during the early stages of adoption. 

The Environmental Quality Incentives Program, or EQIP, can help new and early-stage cover crop users. The program can cover up to 75% of eligible establishment costs, including seed, planting, and termination. Producers can also receive technical help from conservation planners. EQIP contracts generally last from one to five years, giving farmers time to learn how cover crops perform on their farms. 

The Conservation Stewardship Program, or CSP, provides another option for farmers who already use cover crops and want to improve their conservation practices. CSP supports higher levels of conservation management. This can include using different plant species, deeper-rooted crops, and better grazing systems. 

CSP contracts generally last five years and may be renewed. The program looks at conservation across the farm rather than focusing on only one practice. Cover crops can support larger goals such as improving soil structure, reducing erosion, and increasing water infiltration. 

Farmers interested in these programs can contact their local USDA Service Center to learn about available assistance and application requirements. EQIP and CSP accept applications each year. New applications are generally due January 15, while CSP renewals are generally due June 20.

Photo Credit: minnesota-corn-growers-association