Some years back, many Cornbelt farmers switched away from a 50-50 corn and soybean rotation. The idea was to take advantage of better potential corn revenue since herbicides and other chemicals were more efficiently controlling pests than the 100% annual rotation. Increased corn acres have resulted, but how do you calculate the best acreage mix of corn and beans?
Over time, the percent of soybeans, compared to corn acres, has changed in Iowa, says economist Mike Duffy. About 1980 there were 6 bean acres for every 10 of corn, but that changed to 9 acres of beans for 10 of corn in 1983. Significant shifts occurred every 3-5 years as the rotation edged closer to 50-50. Since 2001 the shift has been rapidly departing 50-50 and is now less than 7 acres of beans for each 10 acres of corn.
In a recent newsletter, Duffy says that means one third of the corn in Iowa is continuous. While some farmers might look at a single crop and determine the revenue, Duffy says the entire rotation has to be evaluated to avoid being misled. Based on $6 corn and $12 beans, Duffy tabulated $138 of revenue from continuous corn, $284 revenue from rotated corn and $52 from soybeans. The corn-soybean rotation would average $168 per acre.
Duffy says if the rotated crops produce $30 more per acre than continuous corn, it would take a five bushel increase in corn or a per bushel price of $8.24 to equalize the two. By increasing the continuous corn yield from 165 to 170 and keeping the rotated corn yield at 180, Duffy says there is a 10 bushel breakeven difference. He says if your breakeven difference is more, then stay with your rotated crop. But if your difference is less than 10 bushels per acre, continuous corn will produce a better return.
The breakeven yield difference shifts as the relative price shifts. A few months back, when corn was $7 and soybeans were $13, the breakeven difference would have been 18 bushels; and any continuous corn yield that was less than 18 bushels lower than the rotated crop yield would make the continuous corn more profitable.
Now, add another dynamic to this equation and vary the timing and volume of nitrogen applied to the corn. Those were the variables in research that found the rotation effect is lessened by the amount and the timing. The result was a smaller breakeven gap if the nitrogen was applied in the spring, versus the fall, and if higher amounts of nitrogen were used. Duffy said the yield advantage of the rotation also appears to be diminishing, with rotated corn still doing better under stress conditions.
The Iowa State economist said small variations in prices can also shift continuous corn into a revenue advantage position. Those factors can also become important along with changes in varieties of corn and the demand structure for corn, “When evaluating the rotation choice it is important to remember the yield differences and the cost of production differences. It is important to evaluate the entire rotation, not just single years within the rotation.” And Duffy added that tillage can also have a yield impact on rotations.
Many Cornbelt farmers saw continuous corn suffer from dry conditions late in the growing season, and may wonder if they should return to a more normal rotation with soybeans. Many factors can affect the breakeven yield, which determines if there is more revenue in rotational corn or continuous corn. Among those are volume and timing of nitrogen application, tillage, corn varieties.
Source: FarmGate blog