Farmers will need significant incentives to plant more cover crops, and the subsidies will likely need to increase as the government’s acreage goals rise, according to a study by economists at The Ohio State University and the University of Illinois.
As of now, it’s unclear whether cover crops improve yields or reduce the risk to cash crops, the study says.
“Over time, cover crops are hypothesized to improve soil properties, including water retention, and thus may reduce drought yield loss. However, since U.S. crop weather has generally been benign in recent years, the hypothesis awaits a test year,” write OSU economist Carl Zulauf and Illinois economist Gary Schnitkey.
Citing the impact of premium subsidies on the increase in crop insurance participation, the economists concluded that a cover crop subsidy would have to be “sizable and will need to increase as the targeted share of acres planted to cover crops increases.” Incentives need to at least cover the planting cost, which the economists estimated at $37 an acre. That cost estimate includes $17 an acre for seed and $15 an acre for planting equipment.
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“The policy experience with crop insurance also suggests Congress will likely revisit the cover crop practice subsidy issue several times before settling on a subsidy with which it is comfortable,” the economists say.
President Biden’s Build Back Better bill that passed the House but stalled in the Senate would provide payments of $25 an acre to farmers who plant cover crops. Landowners could qualify for payments of $5 an acre as an inducement to allow renters to use the practice. The Congressional Budget Office has estimated the payments could induce farmers to plant more than 50 million acres of cover crops by 2026.
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