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SYMPOSIUM PAPERS

Economics of Crop Diversification and Soil Tillage Opportunities in the Canadian Prairies

^a Agric. and Agri-Food Canada, Semiarid Prairie Agric. Res. Cent., Box 1030, Swift Current, SK, Canada S9H 3X2
^b Dep. of Agric. Econ., Univ. of Saskatchewan, Saskatoon, SK, Canada S7N 4A5
^c Agric. and Agri-Food Canada, Lethbridge Res. Cent., Box 3000 Main, Lethbridge, AB, Canada T1J 4B1
^d Dep. of Agric. Econ., Washington State Univ., Box 696210, Pullman, WA 99164-6210
^e Dep. of Land Resour. and Environ. Sci., Box 173120, Leon Johnson Hall, Montana State Univ., Bozeman, MT 59717-3120
^f Agric. and Agri-Food Canada, Scott Res. Farm, Box 10, Scott, SK, Canada S0K 4A0
^g Agric. and Agri-Food Canada, Indian Head Res. Farm, Box 760, Indian Head, SK, Canada S0G 2K0
^h Potash and Phosphate Inst. of Canada, Suite 704, CN Tower, Saskatoon, SK, Canada S7K 1J5
ⁱ Agric. and Agri-Food Canada, Brandon Res. Cent., Box 1000A RR 3, Brandon, MB, Canada R7A 5Y3

* Corresponding author (zentnerr{at}em.agr.ca)

Received for publication February 8, 2000.

	ABSTRACT

TOP ABSTRACT INTRODUCTION SOIL-CLIMATIC REGIONS OF THE... ECONOMICS OF CROP ROTATIONS... CONCLUSIONS REFERENCES

 
Annual crop production in the Canadian prairies is undergoing significant change. Traditional monoculture cereal cropping systems, which rely on frequent summer-fallowing and use of mechanical tillage, are being replaced by extended and diversified crop rotations together with the use of conservation tillage (minimum and zero-tillage) practices. This paper reviews the findings of western Canadian empirical studies that have examined the economic forces behind these land use and soil tillage changes. The evidence suggests that including oilseed and pulse crops in the rotation with cereal grains contributes to higher and more stable net farm income in most soil–climatic regions, despite a requirement for increased expenditures on purchased inputs. In the very dry Brown soil zone and drier regions of the Dark Brown soil zone where the production risk with stubble cropping is high, the elimination of summer fallow from the cropping system may not be economically feasible under present and near-future economic conditions. The use of conservation tillage practices in the management of mixed cropping systems is highly profitable in the more moist Black and Gray soil zones (compared with conventional mechanical tillage methods) because of significant yield advantages and substantial resource savings that can be obtained by substituting herbicides for the large amount of tillage that is normally used. However, in the Brown soil zone and parts of the Dark Brown soil zone, the short-term economic benefits of using conservation tillage practices are more marginal and often less profitable than comparable conventional tillage practices.

Abbreviations: CT, conventional tillage • F–O–W, fallow–oilseed–wheat • F–W, fallow–wheat • F–W–W, fallow–wheat–wheat • O–W–W, oilseed–wheat–wheat • MT, minimum tillage • ZT, zero-tillage

	INTRODUCTION

TOP ABSTRACT INTRODUCTION SOIL-CLIMATIC REGIONS OF THE... ECONOMICS OF CROP ROTATIONS... CONCLUSIONS REFERENCES

 
IN THE SEMIARID CANADIAN PRAIRIES, water and its efficient use are key to successful dryland crop production. Historically, area producers have selected cropping systems that have relied on monoculture cereal cropping, frequent summer-fallowing, and extensive use of mechanical tillage for weed control on fallow areas and for seedbed preparation (Campbell et al., 1986). These production systems proved effective in enhancing crop yields, minimizing the need for purchased inputs, and generating higher and more stable farm incomes under the economic conditions of the day (Zentner and Campbell, 1988). However, these same farming systems have resulted in substantial soil loss by wind and water erosion, led to deterioration of the quantity and quality of soil organic matter, and contributed to soil salinization and greenhouse gas emissions (Campbell et al., 1990; Acton and Gregorich, 1995; Janzen et al., 1999). This, in turn, has lowered the soil's resistance to further erosion losses, reduced permeability and water-holding capacity, contributed to depletion of plant-available nutrients (especially N), and diminished overall soil productivity and environmental quality (Campbell et al., 1988, 1990).

In recent years, lower prices for cereal grains and declining costs for some inputs {e.g., herbicides like glyphosate [N-(phosphonomethyl)glycine]} coupled with changes in government policies and programs (e.g., grain transportation and farm safety-net programs), development of new markets and value-added opportunities, improvements in machinery design and soil management practices, and growing concerns about soil and environmental degradation have stimulated significant change in land use practices (Lindwall and Larney, 1993; Smith and Young, 2000a). The adoption and use of extended and diversified crop rotations, together with minimum-tillage (MT) and zero-tillage (ZT) management practices, are gaining widespread acceptance among producers.

For these newer cropping systems to be sustainable in the long term, however, they must: (i) be technically or agronomically feasible (i.e., suited to the soil and climatic conditions of the area, practical to implement, and capable of producing acceptable grain yields and quality); (ii) ensure that the quality of the soil, water, and air resources are maintained or enhanced; and (iii) be economically viable (Campbell et al., 1995; Young et al., 1999). This review paper focuses primarily on the latter aspect. We examine some of the main economic factors influencing producers' choices of these newer crop and soil management production systems in the Canadian prairies. The discussion draws primarily on data and findings from field experiments conducted by Agriculture and Agri-Food Canada and by western Canadian universities. Most of these economic factors and findings will also be relevant across the arid northern Great Plains of the USA.

	SOIL–CLIMATIC REGIONS OF THE CANADIAN PRAIRIES AND RECENT CHANGES IN LAND USE PRACTICES

TOP ABSTRACT INTRODUCTION SOIL-CLIMATIC REGIONS OF THE... ECONOMICS OF CROP ROTATIONS... CONCLUSIONS REFERENCES

 
The Canadian prairies have about 32 Mha of land suited to the production of annual crops. This region is divided into five main soil–climatic zones (Fig. 1 ; Campbell et al., 1990). About 21% of the cultivated area is located in the Brown soil zone; 22% in the Dark Brown; and the remainder in the more moist Black, Dark Gray, and Gray soil zones. In general, precipitation increases from <350 mm in the Brown soil zone located in the south to >475 mm in the Black and Gray soil zones located in the north while evaporation decreases from the Brown to the Gray soil zones (Table 1). Hence, the annual water deficit decreases from about 400 mm in the Brown soil zone to little or none in the Gray soil zones. Mean annual temperature, wind speed, frost-free period, and annual growing degree days (>5°C) decrease from southwest to northeast (Table 1).

View larger version (65K): [in this window] [in a new window]   Fig. 1. Major soil–climatic zones of the Canadian prairies.

View larger version (30K): [in this window] [in a new window]   Fig. 2. Trends in summer-fallow area and in areas planted to cereal, oilseed, and pulse crops in the Canadian prairies (Source: Statistics Canada, 1998).

Pulse crops [e.g., lentil (Lens culinaris Medikus) and field pea (Pisum sativum L.)] have also increased in popularity, with the seeded area approaching 1.4 Mha in 1998 (Fig. 2). Before 1993, <0.4 Mha was sown to pulses on the Canadian prairies. The increases have been from 0.30 to 0.67 Mha in the Black, Dark Gray, and Gray soil zones; 0.11 to 0.52 Mha in the Dark Brown soil zone; and 0.04 to 0.25 Mha in the Brown soil zone.

With crop diversification and the reduction in fallow, there has been an intensification of the cropping frequency in all soil zones (Table 2). In the 1970s, producers in the Brown soil zone cropped (mostly to wheat) one year and fallowed the next; in the Dark Brown soil zone, they cropped (mainly to cereals) 2 out of 3 yr; in the Black and Gray soil zones, they cropped 3 out of 4 yr. Currently, producers tend to crop 3 out of 5 yr in the Brown soil zone, 4 out of 5 yr in the Dark Brown zone, and 10 out of 11 yr in the Black and Gray soil zones.

View this table: [in this window] [in a new window]   Table 2. Trends in rotation length in the Canadian prairies.

	ECONOMICS OF CROP ROTATIONS AND TILLAGE METHODS—A REVIEW OF LITERATURE

TOP ABSTRACT INTRODUCTION SOIL-CLIMATIC REGIONS OF THE... ECONOMICS OF CROP ROTATIONS... CONCLUSIONS REFERENCES

 
Choosing the most profitable cropping system is not a trivial task for producers. Decisions must consider four sets of dynamic and interactive factors, namely, agronomic and environmental characteristics, economic and policy considerations, skills and personal attributes of farm managers, and social concerns (Campbell et al., 1990; Stonehouse, 1995). From a producer's perspective, there is an economic incentive to employ the crop rotation and soil tillage method that provides the greatest (net) return to management and risk taking in the short term and to land equity and other fixed assets of production in the long term. Consequently, profit-motivated producers will seek to adopt a new cropping system only if it is perceived to provide a net economic benefit relative to a currently used system in terms of lower production costs, higher net returns, lower business risk, or some combination of these. Producers seeking to adopt new farming systems also need to balance net returns earned in the short term against the possibility of higher costs and lower returns that may occur in the longer term if they choose crop rotations and/or tillage methods that do not adequately conserve the soil and water resources. In addition, social concerns about environmental issues could result in the adoption of production practices that are socially desirable but less profitable.

Impact on Production Costs
Early studies of cropping systems conducted in the Brown soil zone were focused primarily on monoculture wheat rotations managed with conventional tillage (CT) practices (Zentner et al., 1986). Results of these studies indicated that production costs (excluding land investment) generally increased as cropping intensity increased. For example, findings from the first 18 yr of a long-term crop rotation experiment at Swift Current, SK, indicated that cash costs (based on 1986 input cost levels) averaged $83 ha^-1 (or $88 t^-1 wheat produced) for fallow–wheat (F–W), $104 ha^-1 (or $94 t^-1) for fallow–wheat–wheat (F–W–W), and $187 ha^-1 (or $140 t^-1) for continuous wheat (Zentner and Campbell, 1988). These increasing costs, as the proportion of fallow in the rotation decreases, reflect the additional expenditures needed for seed, fertilizers, pesticides, and machinery operation and ownership as more of the land area is devoted to crop production less the savings in summer-fallowing costs. More recent work at this same location with F–W and continuous wheat, but using both CT and conservation tillage practices, revealed similar trends in that total costs (i.e., cash costs plus machinery overhead costs, measured at 1994 input cost levels) averaged $141 ha^-1 for F–W and $224 ha^-1 (or 59% more) for continuous wheat (Zentner et al., 1996b). However, the use of conservation tillage practices produced savings in labor, machinery operation, and ownership costs of $3 to $7 ha^-1 for MT and $6 to $9 ha^-1 for ZT-managed F–W, but the savings were only about $2 ha^-1 for continuous wheat systems. The smaller savings with conservation tillage practices in continuously cropped systems reflects the small difference in cost between one preseeding herbicide application to control weeds with ZT management and one preseeding tillage operation to control weeds and prepare the seedbed with CT (and MT) management. The savings in machine-related operating costs (fuel, oil, and repair) with conservation tillage practices arise from fewer trips across the field, combining two or more activities into one field operation (e.g., seeding and fertilizing), or using machines with greater capacity and lower draft requirements (e.g., sprayer vs. cultivator). The savings in machinery overhead costs arise from eliminating the need for tillage machines (e.g., cultivators), using smaller-sized power units with lower capital investment, or extending the life of machines because of their reduced annual use. However, the major machine investments of a tractor and combine are still required, and in some cases, producers may be required to purchase new or specialized machines when adopting MT or ZT management practices or when producing new crop types. The savings in labor with MT and ZT practices are also a direct result of less time spent performing field operations when using conservation tillage practices. This can translate into a significant savings in costs for hired labor, a particularly important consideration given the unreliable supply of farm labor. Alternatively, the additional free time may permit farm operators to expand their land base, thereby taking advantage of economies of scale and helping to spread the fixed costs of machinery ownership over a larger area, complete production tasks or activities in a more timely fashion, undertake new or additional on-farm value-added activities, perform custom work for neighbors, work off the farm, or spend more time on leisure and family related activities (Brown et al., 1994; Gray et al., 1996). However, in many cases, the demand for time spent on management aspects intensifies with conservation tillage practices combined with diversified crop rotations. Producers using these newer cropping systems must spend more time monitoring developing pest problems, devising control strategies, and obtaining marketing and crop quality information. Further, there is often an adjustment cost and, thus, increased risk as the manager goes through a learning process with a new production technology or crop type, wherein yields may be adversely affected for a short time or production costs may increase temporarily because of mistakes in judgement or until experience and refinements in applying a new cropping system are mastered (Wall and Zentner, 1999).

In contrast to these savings in labor- and machinery-related costs with conservation tillage practices, expenditures for herbicides were reported to increase by $11 ha^-1 with MT and by $31 ha^-1 with ZT-managed F–W (compared with CT), mainly reflecting the higher cost of controlling weeds on fallow areas with herbicides than with tillage (Zentner et al., 1996b). The net effect was that total costs for the F–W systems averaged 6% higher ($7 ha^-1 more) when using MT vs. CT practices and 29% higher ($37 ha^-1 more) when using ZT practices. Similarly, total costs for ZT-managed continuous wheat averaged 13% higher (about $29 ha^-1 more) than for the comparable CT-managed system, reflecting the increased expenditures for herbicides plus the need for somewhat higher rates of N fertilizer with ZT management (McConkey et al., 1996).

In a recently completed 4-yr (1992–1996) study of diversified cropping systems, also conducted in the Brown soil zone at Swift Current (Miller et al., 1997, 1998a, 1998b), total costs (measured at 1999 input cost levels, but excluding land investment) averaged $222 ha^-1 for fallow–crop–crop rotations compared with $303 ha^-1 (or 36% more) for continuously cropped systems (Table 3). Here too, production costs were higher for ZT than for CT management in both the 3-yr ($18 ha^-1 higher, or 9% more) and continuous crop rotations ($15 ha^-1 higher, or 5% more). Production costs also differed with the crop type grown (Table 4). In general, production costs were lowest for cereal grains [average of $347 ha^-1 when grown on fallow (including summer-fallowing costs) and $283 ha^-1 when grown on cereal stubble]. Production costs were intermediate for oilseeds ($361 ha^-1 for fallow cropping and $307 ha^-1 for stubble cropping) and highest for pulse crops ($431 and $358 ha^-1, respectively). The inclusion of pulse crops in the rotation provided direct savings in N fertilizer (because of the need for little or no additional N when the legumes are inoculated with an appropriate rhizobium culture at time of planting), but these fertilizer savings were more than offset by higher costs for seed, pesticides, and machine operations with pulse crops. For some pulse crops (e.g., field pea and lentil), specialized equipment (land rollers, flex-headers, pick-up reels, and vine lifters) is needed to help minimize harvesting losses, which adds to machine overhead costs, cost of servicing debt, and the overall business risk of adopting these newer cropping systems.

View this table: [in this window] [in a new window]   Table 3. Production costs and economic return for complete cropping systems in the Brown soil zone, Swift Current, SK (1992–1997).

View this table: [in this window] [in a new window]   Table 4. Yields, production costs, and economic returns for individual crops grown on fallow and on stubble under various tillage methods in the Brown soil zone, Swift Current, SK (1992–1996).

View this table: [in this window] [in a new window]   Table 5. Spring wheat yields, production costs, and economic returns when grown on the stubble of previous crop types and tillage methods in the Brown soil zone, Swift Current, SK (1993–1997).

In the more moist Black and Gray soil zones, the effects of tillage method on production costs tend to be more favorable. In the Thin Black soil zone at Indian Head, SK, Lafond et al. (1993) and Zentner et al. (1999) reported that total costs were significantly influenced by crop rotation but not by tillage method (Table 6). Total costs were lowest for the monoculture cereal rotation of spring wheat–spring wheat–winter wheat–fallow ($233 ha^-1), intermediate for the cereal–oilseed rotation of spring wheat–spring wheat–winter wheat–flax ($288 ha^-1), and highest for the cereal–oilseed–pulse rotation of spring wheat–flax–winter wheat–field pea ($296 ha^-1). The cost of producing individual crops within the rotations were generally unaffected by tillage method, except for field pea, which had lower costs for MT and ZT practices than for CT, and for spring wheat grown on fallow, which had lower costs when CT practices were used (Table 7). In another study at Indian Head, with a greater diversity of crop rotations, Sonntag et al. (1997) also reported that production costs were similar for ZT- and CT-managed systems. These trends were further supported by the recent findings from a 4-yr study of cereal–oilseed and cereal–oilseed–pulse rotations conducted in the Thick Black soil zone at Melfort, SK (Tables 8 and 9). Here, production costs averaged about $7 ha^-1 lower with MT than with CT practices and $14 ha^-1 lower with ZT practices for most crops except canola (Table 9). Among the crop types being tested, the cost of producing canola > field pea = wheat > barley > flax. These findings are also similar to those from a companion study conducted in the Gray soil zone at Tisdale, SK (Tables 10 and 11) and from an earlier 7-yr study conducted in the Gray soil zone at Rycroff, AB, where a ZT-managed fallow–canola–wheat–barley rotation showed a modest cost advantage over the comparable CT rotation (Blomert et al., 1997).

View this table: [in this window] [in a new window]   Table 6. Production costs and economic returns for complete cropping systems in the Thin Black soil zone, Indian Head, SK (1987–1998).

View this table: [in this window] [in a new window]   Table 7. Yields, production costs, and economic returns for individual crops grown on fallow, and previous crop stubbles and tillage methods in the Thin Black soil zone, Indian Head, SK (1987–1998).

View this table: [in this window] [in a new window]   Table 8. Production costs and economic returns for complete cropping systems in the Thick Black soil zone, Melfort, SK (1994–1997).

View this table: [in this window] [in a new window]   Table 9. Yield, production costs, and economic returns for individual crops in various rotations and tillage methods in the Thick Black soil zone, Melfort, SK (1994–1997).

View this table: [in this window] [in a new window]   Table 10. Production costs and economic returns for complete cropping systems in the Gray soil zone, Tisdale, SK (1994–1997).

View this table: [in this window] [in a new window]   Table 11. Yield, production costs, and economic returns for individual crops in various rotations and tillage methods in the Gray soil zone, Tisdale, SK (1994–1997).

Impact on Net Returns
Differences in production costs among crop rotations and tillage methods are only one side of the ledger. Higher production costs are justified if they are offset by higher revenues from increased grain yields, improved grain quality, or the sale of higher-valued crops.

In the Brown soil zone, the studies with monoculture wheat systems showed that F–W was the most profitable rotation when the price for wheat was below $130 t^-1 (Zentner and Campbell, 1988). At wheat prices between $130 and $160 t^-1, F–W and F–W–W provided the highest and about equal net return. At wheat prices between $160 and $275 t^-1, F–W–W was most profitable while continuous wheat provided the highest net return at wheat prices above $275 t^-1. These findings suggest that the less intensively cropped rotations are favored when grain prices are low while the more intensively cropped rotations are favored when grain prices are high. This is because as grain prices increase, the value of the grain being produced also increases, which raises the opportunity cost of leaving land idle for a season. For example, in this 18-yr crop rotation study at Swift Current, total annual wheat production averaged 949 kg ha^-1 with F–W, 1105 kg ha^-1 (or 16% more) with F–W–W, and 1354 kg ha^-1 (or 43% more) with continuous wheat, indicating that although fallow crop yields are typically higher than stubble crop yields, total production is less because no yield is forthcoming from land that is being summer-fallowed. Thus, as wheat price rises, the income (quantity x price) that is foregone by summer-fallowing instead of cropping the land also rises. In a later study, which included a tillage component, Zentner et al. (1996b) reported that CT generally provided the highest and ZT the lowest net return for both F–W and continuous wheat rotations on silt loam and clay soils; however, on a highly erodible sandy loam soil, a MT-managed F–W was more profitable. The relatively poor economic performance of conservation tillage practices, particularly ZT, in this study was due to a combination of higher input costs and the lack of significant yield advantages or grain quality improvements with MT and ZT management (McConkey et al., 1996). In fact, grain protein concentration in wheat grown under ZT was negatively influenced on the clay soil. This was attributed, in part, to lack of N availability (McConkey et al., 1996). Changes in wheat price were reported to have little influence on the economic rankings of the tillage methods because of the general absence of yield differences. While reducing herbicide costs typically favors conservation tillage practices, the researchers estimated that the cost of herbicides would need to decline by more than 50% from their 1994 levels (everything else equal) for ZT to be as profitable as CT in these monoculture wheat systems.

In the 4-yr study with diversified cropping systems at Swift Current, net returns (at 1999 expected grain price levels) were highest for the cereal–pulse systems and lowest for monoculture wheat and cereal–oilseed systems (Table 3), despite the former cropping systems having the highest production costs. Further, net returns for all cropping systems were lower with ZT than with CT management; however, the difference between tillage methods was much smaller in these diversified cropping systems than was observed for monoculture wheat systems, partly due to a yield advantage with ZT management for some of the newer crop types (Table 4). Net returns for the 3-yr fallow–pulse–cereal systems generally ranked lower than for the continuously cropped cereal–pulse systems. This suggests that some of these newer crop types are better suited to a stubble cropping environment while others are better suited to a fallow environment. For example, Miller et al. (1997)(1998a, 1998b) reported that yields of lentil, field pea, and chickpea (Cicer arietinum L.) grown on stubble averaged about 85% of those grown on fallow, whereas yields of mustard and wheat grown on stubble averaged only about 70% of the comparable fallow–crop yields (Table 4). The yields of early maturing, short-stature sunflower (Helianthus annuus L.) displayed trends similar to the pulses, but overall, the sunflower yields were too low to be economically viable. The relatively good economic performance of the pulse-containing rotations in this study, particularly the continuously cropped cereal–pulse system, supports the earlier findings of Zentner et al. (1997). They reported that average net returns were significantly higher for a wheat–lentil rotation than for the more traditional F–W, F–W–W, and continuous wheat systems when the price for lentil was >$280 t^-1, or more generally, when the ratio of lentil price to wheat price exceeded 1.9. This compares to threshold price ratios of 2.4 when substituting flax for wheat grown on fallow and 0.85 when substituting fall rye (Secale cereale L.) for wheat (Zentner and Campbell, 1988).

In the Dark Brown soil zone at Scott, findings from a study of nine cropping systems using CT practices also revealed that there was an economic incentive to diversify crop rotations away from traditional monoculture cereal systems to mixed cereal–oilseed systems (Zentner et al., 1996a). The researchers found that fallow–canola, fallow–canola–barley, and fallow–canola–wheat provided similar net returns as F–W–W and all of these rotations were significantly more profitable than F–W or fallow–wheat–barley at the 1994 grain price levels. They indicated that it was profitable to substitute canola for wheat grown on fallow when the ratio of canola price to wheat price exceeded 1.8. In another study at Scott, where crop yields were reported to have a modest 6% advantage with ZT compared with CT management (Brandt, 1992) but where production costs were also higher with ZT, Zentner et al. (1992) reported that ZT was economically superior to CT in the O–W–W rotation only when grain prices were high (i.e., >$221 t^-1 for wheat and >$410 t^-1 for oilseeds). However, when prices were low (i.e., <$103 t^-1 for wheat and <$191 t^-1 for oilseeds), the F–O–W rotation with CT management was best. They determined that if herbicide costs declined by as little as 15% from their 1991 values, then ZT would become the most profitable tillage method for the O–W–W rotation at all grain price levels examined. However, herbicide costs would have to decline by about 50% for ZT to become more profitable than CT in the fallow-based rotation. At Lethbridge, Smith et al. (1996) reported that net returns for well managed fallow–cereal rotations were similar for CT and MT but were significantly lower for ZT management, again reflecting the higher costs of controlling weeds on fallow areas with herbicides compared with mechanical tillage.

In the Thin Black soil zone at Indian Head, Lafond et al. (1993) and Zentner et al. (1999) reported that ZT and MT practices were more profitable than CT in all rotations (Tables 6 and 7). This reflects the combined effects of a 10 to 21% yield advantage for crops grown using conservation tillage practices (Lafond et al., 1992) and costs of production that were generally similar for all tillage methods. They also found that net returns were highest for the cereal–oilseed–pulse rotation, intermediate for cereal–oilseed, and lowest for the monoculture cereal rotation that included fallow once every 4 yr. Sonntag et al. (1997) also reported that net returns for the six highly diverse crop rotations at Indian Head were higher for ZT than for CT in three of the four study years. Further, they found that use of pre-emergence herbicides was more profitable than use of postemergence herbicides in a wheat–canola–wheat–lentil rotation regardless of tillage method.

The economic advantage of using conservation tillage practices together with diversified crop rotations was first reported for the Thick Black soil zone by Nagy (1997). In this study, it was determined that a one-pass direct seeding system using a 4-yr rotation of oilseed–cereal–pulse–cereal provided the highest annualized net return for all farm sizes and economic scenarios examined. This same rotation ranked second highest when operated with MT practices. An oilseed–winter cereal–pulse–spring cereal rotation using ZT management ranked third highest while an oilseed–cereal rotation that included fallow once every 6 yr generally ranked lowest. These findings were also confirmed in a more recent study conducted at Melfort (Tables 8 and 9). At Tisdale, in the Gray soil zone, net returns were also highest for an oilseed–cereal–pulse–cereal rotation when it was managed using CT practices (Tables 10 and 11); ZT management produced lower net returns for all crop rotation systems, reflecting the tendency for lower grain yields with ZT practices at this location (Table 11). In contrast, results from an earlier study conducted in the Gray soil zone of northwestern Alberta reported that net returns from a mixed cereal–oilseed rotation were highest for ZT management, intermediate for MT, and lowest when CT practices were employed (Blomert et al., 1997).

Impact on Business Risk
Income variability or business risk arises from yield risk, market risk, or both (Weisensel and Schoney, 1989). Yield risk, in turn, arises from variations in the amount and distribution of weather events; frequency and severity of crop pests; and effects of management practices on soil moisture conservation, nutrient dynamics, and other factors influencing plant growth and development. Market risk originates from unexpected changes in input costs and product prices as a result of market adjustments, capital purchases, changes in government policy and programs, and international events and agreements.

Decision making in risky situations often entails making a trade-off between the potential to earn higher net returns on one hand and having to accept a higher level of income variability on the other hand (Zentner et al., 1986). The amount of income variability (or risk) that producers are willing to accept depends on their personal preferences, attitudes towards risk, and financial or wealth position. Producers who are less willing to gamble will often forego production opportunities that offer significant increases in net return but have higher income variability for those production systems that offer lower net returns but also lower risk.

In the case of conservation tillage, it is unclear what the net impact on yield risk is from using these practices. On the positive side, many agronomic studies have shown that potential crop yields are similar or higher with conservation tillage due to higher soil moisture reserves and reduced evaporation losses (Lafond et al., 1996; Lindwall and Larney, 1993; Johnston et al., 1996). Several of these studies reported that ZT was particularly beneficial in stabilizing and maintaining acceptable yields in years when temperature is above normal and growing season precipitation is low or poorly distributed (Tessier et al., 1990; Brandt, 1992; McConkey et al., 1996), a situation that is commonplace in semiarid regions. Planting crops directly into standing stubble or with minimal soil disturbance also improves the microclimate for plants by maintaining surface soil moisture (which is important for shallow-seeded crops), reducing evaporation losses, and protecting seedlings against wind damage (Lafond and Derksen, 1996; Cutforth and McConkey, 1997). The reduced machine and labor requirements associated with using conservation tillage practices also permits more timely seeding operations during optimum soil and weather conditions, thereby improving the potential for higher and more stable crop yields with improved grain quality (due to reduced downgrading because of inclement harvest weather). In addition, the benefits of using conservation tillage practices for reducing soil losses and maintaining or improving long-term soil productivity are without question (Campbell et al., 1988; Acton and Gregorich, 1995; Smith et al., 2000). Together, these factors should help reduce the level of production risk associated with MT and ZT practices.

On the negative side, however, a few studies have reported lower grain quality (protein) with conservation tillage practices, which also negatively impacts product price (McConkey et al., 1996). Other studies with conservation tillage have reported greater problems with crop pests (and thus higher expenditures for pesticides) (Tessier et al., 1990; McConkey et al., 1996) and increased chances of developing herbicide resistant weed populations (Campbell et al., 1988; Johnston et al., 1996; Lafond et al., 1996). The higher cash outlays for inputs with conservation tillage, particularly in the drier soil zones; the need for additional capital purchases and greater management skills; and the inherent uncertainty surrounding the performance of any new technology (i.e., the learning curve) will tend to increase overall production risk and market risk.

Diversifying crop rotations by including a mixture of crop types has long been recognized as an effective means of reducing business risk. Each crop type has a different requirement for water, nutrients, and other resources, which affects the residual quantities available and, thus, the potential yield of subsequent crops. Growing a mixture of crop types can also produce other rotational benefits such as improved weed control, lower disease incidence, and improved soil quality, which may enhance the yields and grain quality of subsequent crops or reduce costs of production. Some agronomic studies have reported that yields of pulse and oilseed crops often display higher year-to-year variability than the yield of cereal grains (Miller et al., 1997, 1998a, 1998b), but others have reported the opposite trend with oilseeds (Brandt and Zentner, 1995). These same studies also found that cereal yields were generally less variable when grown on a noncereal stubble than when grown on the stubble of another cereal.

The extent to which crop diversification opportunities reduce business risk has been shown to depend not only on the relationships that exist among crop yields but also on the relationships among grain prices and among grain yields and grain prices (Weisensel and Schoney, 1989). For example, when the correlation between the price for one type of grain and that of another is high, there may be little advantage in reducing market risk by growing both crop types. The high correlation implies that both grains are influenced by many of the same market forces; that is, they are sold in the same market, can act as substitutes, or have common end uses. However, if the correlation between grain prices is low or negative, growing both crop types will often reduce market risk. Based on the price relationships that existed among the main grain crops over the 1985–1998 period (Table 12), the potential for reducing market risk by diversifying cereal-based rotations would appear greatest with lentil and to a lesser extent with mustard and flax. Similarly, if the correlation between the yield of one crop and that of another is high, it implies that both crops behave similarly in their response to weather events and management practices. Under these conditions, there may be little advantage in producing both crop types as a means of reducing overall yield risk. In contrast, if the yield–yield correlation is low, then growing both crops increases the chance of getting a high or acceptable yield with at least one of the crop types, thereby reducing yield risk (e.g., growing mustard or canola with wheat; Table 12). Finally, if the yield–price correlation for an individual crop is near zero, it implies that increases in the quantity produced will have little impact on the price received; however, if it is negative and large, it implies that small increases in supply will have a large negative impact on price. This is often the situation with new crop types where markets are small or localized and, thus, price inelastic.

View this table: [in this window] [in a new window]   Table 12. Correlations among grain prices and grain yields for selected crop types (1985–1998).

Producers also have other options for helping to manage the business risk of new crop and soil tillage systems. Participation in programs such as all-risk crop insurance and in safety-net programs (e.g., Net Income Stabilization Act) have proven effective in helping to reduce or manage the additional business risk associated with these newer farming systems (Zentner et al., 1986; Schoney, 1995; Nagy, 1997). Production technologies such as snowtrapping using tall stubble (Campbell et al., 1992) or permanent grass barriers (McConkey et al., 1990) can be used to enhance soil moisture conservation, and thereby act as a partial substitute for fallow. Late-fall dormant seedling, wherein the seed is planted just before freeze-up, offers the potential for increased yield stability due to earlier crop vigor to take advantage of early spring moisture, improved crop competitiveness with weeds, avoidance of high temperature stress during critical growth stages such as flowering, and reduced downgrading because of poor harvest weather (Johnson et al., 1998). Flex-cropping, wherein the decision to crop or fallow land is made each year based on the level of spring soil moisture reserves and expected grain prices, has also been shown to be effective in reducing the downside risks of stubble cropping using cereals (Young and Van Kooten, 1989; Weisensel et al., 1991; Zentner et al., 1993); however, its application to diversified crop rotations and conservation tillage management practices has not been studied.

Impact on Long-Term Costs and Benefits
Several studies have attempted to estimate the long term on-farm costs of soil degradation (or the benefits of soil conservation) attributable to erosion, organic matter loss, and salinization (Prairie Farm Rehabilitation Administration, 1983; Sparrow, 1984). For example, Prairie Farm Rehabilitation Administration (1983) estimated that the present value of the benefits from soil conservation on the Canadian prairies was in excess of $3.2 billion through the 1983–2000 period. Sparrow (1984) estimated that the direct cost to producers from wind and water erosion alone was about $239 million annually (measured in 1982 dollars). However, few studies have been conducted at the farm level or with particular production technologies (Van Kooten et al., 1990; Smith and Shaykewich, 1990; Ward and Van Kooten, 1990). Results of these latter studies have suggested that the true costs of soil erosion are much lower than the earlier aggregate estimates indicated. For example, Van Kooten et al. (1989) determined that the annualized user cost of soil erosion in the Brown soil zone was between $2.38 and $5.63 ha^-1. Further, they found that the on-farm cost of soil erosion was low, approaching zero, until the solum depth had declined to 10 cm, or about 25% of the present depth. This is directly related to the nonlinear relationship that exists between crop yields and soil depth. In the Black soil zone of Manitoba, Smith and Shaykewich (1990) reported that the annual user cost of soil erosion ranged between $0.00 and $2.55 ha^-1, depending on the soil group. They also found that MT dominated CT and ZT management; the additional soil conservation benefit from going to ZT was low on these soils. In a follow-up study, Van Kooten et al. (1990) examined the trade-off between profit and soil quality objectives. They determined that at a solum depth of 20 cm, producers would need to have substantial concern for soil quality before a change in agronomic practice from that chosen solely on the basis of a profit-maximizing objective would be justified. However, at lower solum depths, stewardship concerns need only be small to justify changes in agronomic practices. Smith et al. (2000) studied the long-term economic impact of cropping systems on soil organic C in the Dark Brown soil zone. They determined that the value of soil organic C ranged from $1 to $4 t^-1 ha^-1 yr^-1. The results of these latter studies are highly dependent on the strength of the empirical relationship between crop yield and soil productivity and on the assumptions made regarding costs of inputs, particularly energy and fertilizer; product prices; future technological advances; and changes in government policies.

At present, no empirical studies are available for the Canadian prairies that examine the long term on-farm and off-farm socioeconomic impacts of these newer and more diversified cropping systems.

	CONCLUSIONS

TOP ABSTRACT INTRODUCTION SOIL-CLIMATIC REGIONS OF THE... ECONOMICS OF CROP ROTATIONS... CONCLUSIONS REFERENCES

 
Canadian prairie agriculture is currently undergoing significant structural change in response to changing economic, environmental, and political conditions. Producers are increasingly adopting extended and diversified crop rotations together with conservation tillage practices. Many of these newer cropping systems are recognized as being more environmentally sustainable; however, often there is conflict between achieving the long-term goal of resource sustainability and the short-term goal of economic viability. This review paper, which examined the economic performance of the current land use changes using findings from field experiments conducted in western Canada, provides evidence that these newer cropping systems may indeed be win-win situations for producers in most soil–climatic regions.

Including oilseed and pulse crops in rotations that have traditionally been monoculture and cereal based, and reducing the frequency of summer fallow, contributes to higher net farm incomes in most regions, despite the higher production costs. However, in the Brown and drier parts of the Dark Brown soil zones where economic risk associated with stubble cropping is high, completely eliminating fallow from the rotation is not likely under present and near future economic conditions. The good economic performance of the mixed rotations is due to the production of higher-valued crop types (which more than offset the higher production costs) and to the rotational benefits that often accompany the mixed cropping systems, such as lower disease and weed pressures, greater residual soil nutrients and moisture reserves, and reduced soil losses. Together, these factors enhance the yield and/or grain quality of subsequent cereal crops and lower their costs of production. In many situations, the use of mixed cropping systems can also help reduce the overall business risk associated with continuously cropped systems.

In the Brown soil zone, MT and ZT management practices are generally less profitable than CT practices, even at the current low price for glyphosate. The poor economic performance of conservation tillage, particularly for fallow-type rotations, reflects the higher cost of controlling weeds on fallow areas using herbicides compared with mechanical tillage and the general lack of significant or consistent yield benefits with these tillage practices. In the Dark Brown soil zone, ZT management produces modest yield advantages and is marginally more profitable than CT in mixed oilseed–cereal rotations, particularly when grain prices are high or when herbicide costs are reduced slightly from their present levels. But, when grain prices are low, systems that include fallow and use CT methods provide similar or higher net returns in this soil zone. In contrast, in the more moist Black and, to a lesser extent, Gray soil zones, ZT and MT practices provide an economic advantage over CT for most cropping systems because of significant yield benefits and because production costs are generally similar for all methods of tillage management. In general, the profitability of cereal–oilseed–cereal pulse systems > cereal–oilseed > monoculture cereal rotations in these more humid regions.

	ACKNOWLEDGMENTS

 
The authors thank the Saskatchewan Soil Conservation Association and the Saskatchewan Agriculture Development Fund for funding some of the economic analyses reported.

	REFERENCES

TOP ABSTRACT INTRODUCTION SOIL-CLIMATIC REGIONS OF THE... ECONOMICS OF CROP ROTATIONS... CONCLUSIONS REFERENCES

 

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