Influence of Wheat-Feed Grain Programs on Riskiness of Crop Rotations under Alternate Irrigation Levels

Declining groundwater levels in parts of the Great Plains could lead to reduced irrigation and a decline in the economies of those areas. Improved irrigation efficiency has helped slow the rate of decline in aquifer levels but adoption of limited irrigation and water conserving rotations could slow the decline even more. The objective was to estimate the riskiness and profitability of these alternatives with and without farm commodity programs. Three water levels—rainfed, limited irrigation (6 in./yr water allocation) and full irrigation (meet crop evapotranspiration demands) were established for continuous corn (Zea mays L.), winter wheat (Triticum aestivum L.)-cornsoybean [Glycine max (L.) Merr.], and corn-soybean rotations. The profitability of each rotation under each water level was estimated using results of field experiments conducted since 1981 in west central Nebraska and cost estimates based on a typical center pivot irrigation system covering 126 acres. Stochastic dominance techniques were then applied to the data by using combinations of prices for corn, wheat, and soybean to generate cumulative distribution functions. Profitability and riskiness were estimated with and without participation in the wheat and feed grain programs and with alternate acreage conservation reserve (ACR) levels. Results showed that the government program improved income levels and reduced income variation for each water level and all rotations. Program participation did encourage monoculture corn under full irrigation and under limited irrigation with low ACR requirements. Under rainfed conditions the relative ranking of the three rotations was not changed by program participation. Research QuestionGroundwater levels in areas of the Central Great Plains have declined significantly since the introduction of irrigation. Public concern with groundwater depletion has resulted in pumping allocations for irrigated agriculture in Nebraska and Kansas. Introduction of pumping allocations has resulted in increased efficiencies of water application in order to overcome the reduction in groundwater use to maintain crop yields. If further reductions in pumping allocations occur, crop yields, irrigated acreage, or crop rotations may change because less water will be available than is needed to produce maximum yields. The objective of this study was to estimate the impacts of government commodity programs on profitability and riskiness of cropping rotations under three water levels—full irrigation (meet crop evapotranspiration demands), limited irrigation (6 in. water allocation per crop per year), and rainfed. A related issue is whether or not the commodity program affects the choice of cropping rotations. Literature SummaryThe use of water conserving rotations such as a winter wheat-corn-fallow have been shown to increase rainfed corn grain yields over continuous corn. The concept of fallow following winter wheat for moisture conservation was included into a limited irrigation rotation of winter wheat-corn-soybean. Corn grain yields were greater following wheat than when following corn. Theoretical models for allocating water for irrigated crops have also been developed. These models theorized that only the crop which most effectively uses water shall be irrigated and that the amount of irrigation water that crop receives shall decrease from optimal until the marginal return equals the reduction in return from lowering the area of rainfed production. These studies did not incorporate the moisture conservation effects of the preceding crop on subsequent yields. Most studies did not incorporate the effects of farm programs on the water allocation and rotation decisions. Study DescriptionAn economic analysis was conducted using grain yields collected from 1986 to 1991 at North Platte, NE, to compare net returns of crop rotations and three irrigation levels. Average yearly grain prices for the prior 10 yr were used to determine the effects of price variability. The soil type was a Cozad silt loam with a pH of 7.5. Combinations of irrigation and crop rotations were used to give the following treatments: Water Treatments Rainfed Limited irrigation Full irrigation Crop rotations Continuous corn (CC) Corn-soybean-winter wheat (C-S-W) Corn-fallow-winter wheat (C-F-W)-rainfed only Corn-soybean (C-S) Reallocation of water for C-S-W-limited irrigation only A hypothetical farming situation consisting of a single center pivot covering 126 acres was assumed. Each crop grown in the rotation was assumed to be grown with equal acreage each year. Nonparticipation and participation in the 1990 Food, Agriculture, Conservation, and Trade Act (FACTA) was considered Applied QuestionsWhat influence did program participation have upon the optimal crop rotation for each water treatment? Program participation had-little impact upon the optimal rotation for full irrigation and rainfed production; however, program participation did strengthen the economic dominance of the continuous corn over other rotations under full irrigation. Program participation had an impact upon the optimal crop rotation for limited irrigation production. The optimal crop rotation when a producer did not participate in government programs was a corn-soybean-wheat rotation. When ACR requirements were less than 10% for corn, the continuous corn rotation was the dominant rotation. Only when ACR requirements were 20% for corn did the corn-soybean-wheat rotation dominate the continuous corn rotation. What influence did program participation have upon the net return and net return variability? Program participation increased net returns and reduced income variability for all rotations under all three water regimes. Those results are consistent with the purposes of government commodity programs. Participation in government commodity programs consistently reduced net return variability for continuous corn by more than 50%, whereas participation reduced net income variability by less than 50% for a cornsoybean and corn-soybean-wheat rotation.