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  • Writer's picturePrecision Ag Reviews

Planting the Seed for Economic Alternatives to Corn and Soybeans

An analytical approach to crop diversification creates new opportunities for farmers to transition acres out of tradition and into niche markets.

Farm half the acres and make twice as much money. The comment has stuck with South Dakota farmer Jeff Lakner for more than 40 years.

In 1981, it sounded comically optimistic. Today, it’s practically realistic as advanced ag technology and adopting sustainable farming methods help farmers do more with less.

However, Lakner and others are finding that doing less – or at least something different on marginally productive corn and soybean acres – can create opportunities to make more in the face of market instability and climate variability.

“Fall harvest is not the end of our return on investment,” Lakner says. “We’ve collected enough data over the years that we’re not averse to looking at crops and land uses that can deliver a similar ROI to corn and soybeans, along with additional soil health or economic benefits.”

Crop diversification is nothing new, but it’s regaining momentum as farmers apply data-driven analysis to determine whether tradition or transition can reduce cost-per-acre or increase return on investment.

Crunching the Numbers: Transition or Tradition? As farmers consider whether crop diversification is practical for their operation, 2023 crop budget estimates from the University of Illinois suggest that farmers can expect market variability to continue.

Here are a few key figures from the report:

  • $5.30 and $12.75 - per bushel prices for corn and soybeans, based on projected cost levels, resulting in marginal profitability similar to levels experienced from 2014-19.

  • $1,161 – Projected total costs (non-land and land costs) per acre on Northern Illinois farms in 2023, up from $1,054 in 2022 and up 39% since 2020.

  • $25 – Projected farmer returns per acre for central Illinois farmland with highly productive farmland. Returns for a typical 50/50 corn and soybean rotation in central Illinois from 2020-22 averaged $232 per acre.

Analyzing Alternatives

While corn and soybeans cover most of Lakner Farms’ 5,000 acres, the Wessington, S.D., operation also raises wheat and forage, along with 400 head of cows.

In the summer of 2021, they began a partnership with Ducks Unlimited and Pheasants Forever, mapping high-saline areas of their farm and seeding 60 acres with a salt-tolerant grass developed by South Dakota State University called Elkjer with other forage crops for grazing.

“It’s early, but our data validated areas where it’s far more productive to seed grasses vs. raising 280-bushel corn every year, just to break even,” Lakner says. “Economically, corn and soybeans are still our game, but we also need a feed source for our livestock, so there is a benefit.”

He says that transitioning row crop acres into pasture or a permanent cover is “low-hanging fruit” in terms of recovering a comparable ROI. But Lakner is looking to crunch the numbers on other alternatives.

This fall, the operation added MZB Analytics to compile and compare yield data and provide a Yield Efficiency Score to benchmark harvest data against other fields enrolled in the program. The new platform also integrates historical seed, fertilizer and equipment data to make informed cost-per-acre decisions on the farm.

“Breaking our fields out into zones, in most cases, three to five out of 13 are economically viable, so we want to take a comprehensive look at those marginal zones,” he says. “The ROI might be satisfactory today, but is it going to be sustainable long-term unless we do something different?

One option Lakner hopes to “move the needle on” is applying analytics to see if prairie grass could be a profitable cash crop on historically marginal corn and soybeans acres. They are also considering oil sunflowers as another alternative to corn, soybeans and wheat.

“Historically, we only planted sunflowers for our agronomic program, but there is a new soybean/sunflower processing facility being built in the area,” Lakner says. “The economics of having a dual-purpose processor in the region may change our crop mix.”

Innovator Influence

According to the most recent U.S. Ag Census data, only 10-15% of the approximately 2 million farms were identified as diverse. Still, that percentage could increase in the coming years, according to Linda Prokopy, Professor of Natural Resources Social Science at Purdue University.

In 2021, Purdue launched a $10 million grant project - #DiverseCornBelt – to stimulate farm diversification in the Midwest. Prokopy says innovative farmers are driving diversification and their motivation is both economical and environmental.

“They want to create a niche for themselves and be more financially resilient while also being conscious of soil health,” she says. “We’re seeing third crops added to rotations, more small grains and some corn and soybean farmers in Indiana growing tomatoes.”

Further west, there is more livestock grazing and cover crops. Still, Prokopy says there needs to be more support from crop advisors or extension research to establish viable crop alternatives in different areas.

Farm data hasn’t necessarily driven diversification for the growers Prokopy works with yet, but she sees yield and nutrient efficiency data becoming more influential in the decision-making process.

“Yield is an easy thing to measure with precision ag, but personally, I hope we see more farmers thinking about ROI across their entire operation,” she says. “It’s going to take more than one to two years of data for farmers to be confident in using it to commit to an alternative crop.”

According to the USDA, corn and soybeans will remain the “rational” choice for row crop farmers, with more than 85 million acres of each crop planted in 2022. Diversification will be a gradual trend, Prokopy says, but sustainable if farmers can capitalize on or create lucrative niches.

In 2021, Purdue University launched a grant-funded program called #DiverseCornBelt to promote and plan crop diversification to help Midwest farms be more resilient. The above graphic defines three levels of farm diversification the program focuses on – farm, market and landscape. (Graphic courtesy of Purdue University)

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