Long-run return impacts for corn-soybean planting
For these three rotations, rotation returns are:
$484 for corn-soybeans
$504 for corn-corn-soybeans, and
$467 for continuous corn.
The highest yielding rotation is corn-corn-soybeans. Again, these rotations assume stability in plantings. Moving away from these rotations towards more corn can increase expected returns for one year. This is illustrated for two situations: 1) corn-corn-soybeans to continuous corn and 2) continuous corn to corn-corn-soybeans
Corn-Corn-Soybeans to Continuous Corn
Given the budgets in Table 1, this switch will increase returns in the first year but decrease returns in later years.
First year: Returns will increase in the first year as soybean acres are replaced with more corn. In the first year, the return will be $518 per acre, which equals the average of 1/3 of corn-after-soybeans returns ($578 per acre), plus of 1/3 corn-after-corn ($510 per acre), and 1/3 continuous corn returns ($467). The $518 per acre return is above the $504 return for corn-corn-soybeans.
Second year: In the second year of continuous corn, returns will decrease. One-third of the acres will be in corn-after-corn with a $510 per acre return and 2/3 will be continuous corn with a $467 per acre return, giving a return of $481 per acre for the continuous corn rotation in the second year. The $481 per acre return is below the $504 per acre return for corn-corn-soybeans.
Third year: In the third year, all land will be in continuous corn having a return and have a projected return of $467 per acre. The $467 per acre return is below the $504 return for corn-corn-soybeans.
The yearly tradeoffs then of moving from corn-corn-soybeans to continuous corn are:
Year 1: $16 per acre higher returns ($518 for all corn - $504 for corn-corn-soybeans).
Year 2: $23 per acre lower returns ($481 for all corn - $504 for corn-corn-soybeans).
Year 3 and beyond: $37 per acre lower returns ($467 for all corn - $504 for corn-corn-soybeans).
Since there returns vary over time, this is a present value problem. Under current realistic discount factors, present value calculations suggest corn-corn-soybeans is the most profitable rotation over time.
Continuous Corn to Corn-Corn-Soybeans
Switching from continuous corn to corn-corn-soybeans has the exact opposite effect of switching from continuous corn to corn-corn-soybean: returns will be lowered in the first year and then increased in later years.
First-year: In the first year, 2/3 of the acres will be continuous corn and 1/3 will be soybeans-after-two-years-corn. This combination will have a return of $453 per acre, which is $14 less than continuous corn.