Does Soil Health Pay? The Economics of Cover Crops and Regenerative Practices

0:00 So this is a brand new talk that I'm doing. I put this together because we get a lot of questions about this. You know, soil health, no-till, that cover crop, it makes sense, but is it going to make me any money or is it going to cost me money? Because I can't afford to do it if it's going to cost me money. Totally get that. We're the same way on our own farming operation as well. So I'm going to go through some of the dollars when it comes to some of this.

0:30 Just a little bit of background on us. My brother Brian and I farm in South Central Nebraska. We've been farming there all our lives. We live on the farm that we grew up on. We started green cover in 2009, but we still continue to farm right there in Nebraska. So we've been no-tilling for 30 plus years. We've been doing cover crops for the last 15 years. We're about two-thirds irrigated and a third dry land, and that is a blessing in dry years like the last couple have been in our area. Corn-bean rotation is pretty typical, and we still do a lot of corn-beans ourselves. We still have some things to learn ourselves, but as we've gone down this soil health path, we've added things to our rotation like rye and triticale and vetch and barley and sunflowers and buckwheat. Now we don't grow all those every year, but we have grown all of those.

1:22 So this talk is going to be on soil health economics, I guess you would say. And I just want to tell you what it's not, and then I'll tell you what it is going to be. This is not going to be a detailed look at my farming books. This is not going to be a detailed look at another farmer's books as well. This is going to be kind of bigger picture type thinking. It's not going to, as we look at this from an economic perspective, we're not going to factor in the incentives from different programs. And we've got a couple vendors over here that have some good programs to offer, so I encourage you to check that out. I will talk about it, but it's not going to be figured into the calculation. And the reason for that is, if soil health practices can't pay for themselves without a program incentive, then nobody's going to do that for the long term. So what I'm going to be talking about is how does this pay for itself outside of incentive money. If there's incentives out there, I certainly would encourage you to check that out.

2:21 And then it's also not going to be based on poor management. I know that there were some articles in newspapers. You know, anytime something like that's published, people send me stuff and go, 'Did you read this?' And some guy in Iowa was saying that you know, planting cover crops cost him $250 an acre. And you read through that and he lost all this yield. So I'm not saying that that can't or won't happen, but that happened because of poor management. That didn't happen because he planted a cover crop. It's because he didn't manage it properly. So we're not going to base this on poor management. We're going to base it on good management.

2:56 So what we're going to do is we're going to look at a corn-bean rotation, but then also we're going to look at what does it take, what does the numbers look like if we add some diversity to that. We're going to look at the direct benefits that come from adding soil health practices. We're going to look at the big picture but with both short and long range economics on these things. And we're going to base it on best management practices, not on poor management practices. Because I promise you, and you know, there was the article in the newspaper, and you can find people and you can even find your own experiences where things didn't work out the way that you wanted it to, mostly because of poor timing, poor management, things like that. So we're going to base this on kind of a best management practice situation.

3:45 And then in order to do what we're going to try to attempt here, I'm going to have to make some assumptions and do some estimates. So don't get hung up on the numbers. There's going to be a lot of numbers up here. We're going to work our way through a lot of numbers. Don't get hung up on the numbers. If I say something was worth $40 an acre and you think it was worth $50 or $30, it could very well be. Let's not get hung up and argue about whether it's $30, $40, or $50. Let's think bigger conceptually. You know, does that concept make sense? So don't get hung up on the numbers so much as looking at the concepts because I had to make some estimates and some assumptions as we worked our way through that. Okay, so that's what we're going to be trying to do here in the next 45 minutes.

4:28 Going to work our way through these different things. So what we're going to look at is three different soil health practices and we're going to compare it to conventional farming, conventional tillage-based farming. And I'm not doing that because I think a lot of you in here are stuck in a conventional tillage mindset. I don't think that there are very many people in here that way, but in order to really see does it pay the bills, that's what we have to compare it to. We have to compare it to the way that traditionally we would have been farming before we started, before we use cover crops, before we diversify the rotation.

5:04 So we're going to look at the conventional farming versus no-till versus no-till plus cover crops versus no-till plus cover crops versus a diverse rotation. So as we work our way through, those are the practices that we're going to look at. So first of all, in order to understand the economics, we have to understand what is it going to cost us to do this. And again, this is some of the numbers here for dollars an acre. What I'm estimating is, if you're going to switch to no-till, there's going to be some additional equipment, there's going to be additional management, and I'm just throwing the number of $40 an acre out there. I think that covers quite a bit.

5:41 A lot of people can switch to no-till and don't necessarily have to go buy all new equipment. You probably already had a sprayer, you probably already had tractors. You may have to get a different planter, a different drill, things like that. So I'm assessing a cost of $40 an acre to switch to no-till from an equipment standpoint. And then if we're going to add cover crops, there's going to be some expense there. There's no doubt about that. And I'm saying $30 an acre is what we're estimating here. This would be more of a fall-planted cover crop.

6:11 Now certainly if you plant just rye by itself you can probably do that for less than $20, but if you're going to diversify that, you're going to add some hairy vetch or some rapeseed or camelina or peas in there. We're just going to throw out the number of $30. And again, I'm trying as I throw these numbers out and estimate, I'm trying to be pretty conservative on the revenue and trying to be pretty generous with the cost because I don't want people coming and saying, well, he's trying to sell seed so he's padding his numbers or cooking his own books a little bit. So I'm trying to be fair as much as I can.

6:48 So $30 an acre for the seed, and then it's going to cost you something to put it in the ground. We're going to say $20 an acre to put it in the ground. So if we add a cover crop to our no-till corn and bean rotation, I'm saying we're going to assess a cost of $50 an acre to put that cover crop out there. Now termination, I don't have any cost in there for that. And I know when I see a lot of these types of presentations done, you know, they're estimating a termination cost. I'm not saying you're not going to terminate the cover crops, but my point is that you would be spraying anyway to kill weeds ahead of planting your corn or your beans. So I don't think that it is an additional cost. It's already figured into what you'd normally be doing in your regular farming rotation.

7:34 And then adding a small grain. So we looked, you know, again we're comparing it to no-till, no-till plus cover crops, no-till plus cover crops plus an additional component of your rotation, generally adding wheat. So again just throwing some numbers up here with corn and beans. And so what I'm doing as I figure this is I'm not looking at, okay, well I can sell corn for $6 a bushel and it cost me $5 a bushel to grow it. I'm not really caring how much it costs to grow it or how much you're selling it for. I'm simply looking at what is the margin that you can make on that.

8:08 And you know, I put a dollar a bushel in here. I think we'd all be excited if we thought we could make a dollar a bushel margin on corn this next year. Right now it doesn't look like that is going to be that good a margin, but that's what I put in there. So I'm saying for every bushel of corn that we can grow we've got a dollar of margin in there. That's how I'm figuring it. With beans I'm figuring $3 in margin. And so if you look at the corn and bean rotation with these numbers, we're looking at $140 an acre profit when we grow corn, $138 when we grow beans. So the average of that is $139 an acre.

8:45 Now if we were to add a small grain in here and everybody knows that wheat isn't as profitable as corn, and I would agree that's probably true.

8:57 Got let me see here get this the pointer. So I've got 45 bushels of wheat and I'm saying there's only a 25 cent margin now. I think it can be better than that but again I'm trying to be conservative in doing the costing here so I'm saying that wheat year instead of $140 or $138 it's only going to come in at like $11 bucks and I hear that all the time: well why would I plant wheat? It's a break even at best right? Well, is it maybe what I'm showing here.

9:27 I think that if you've ever tried this or talked to people that tried it, when you add wheat into your rotation it's going to improve the yield of your other crops. In fact, we were just having the conversation back here earlier on a corn on corn on corn on corn rotation. They're having nematode issues and they're having all kinds of pest issues. Well, when you start breaking the cycle of your rotation and diversifying it, you can grow it not only cheaper but you will get better yields. And so what I'm showing here is that in a three crop rotation now my corn yield went from 140 to 150 — that's about an 8% increase. I think that's very doable when you come into a three crop rotation versus two, and I think you can grow those extra bushels cheaper. So I gave an extra 10% in margin because of growing that corn. So now in my three-year rotation my profit per acre on corn is now $165 an acre versus $140. So now the wheat is barely breaking even by itself but that wheat year is bringing value to my other years within the rotation. Same with beans — I think I will increase my bean yield, probably not as much as corn but a little bit. I don't know that I can grow it any cheaper so I left that margin the same. And so when you look at it all together, basically what you're looking at is it cost you about $25 an acre to add the third crop in, even though wheat itself only made $27 here. I've got too many numbers — I need to go back through and clean this up a little bit. But basically it comes into about $25 an acre. You know, $139 average over two years, $114 a year over three years. So that's kind of the premise of the costing that we're going to be working with here. It's going to cost about $25 an acre to add that small grain in there. And again, the point that I want you to take with you here is not necessarily the numbers but don't just think of wheat as a break even at best type crop because it adds value to those other years as well.

11:35 Okay, so the cost summary: to go from conventional to no-till we're saying $40 an acre. No-till plus cover crops, it's about an additional $50, so now we've got $90 an acre for no-till and cover crops. And when we add in the loss of grain sales, there's the $25, plus I've got $65 now with cover crop seed and cover crop application in this small grain year. Because in the scenario that I'm describing, we're not coming in and planting double crop beans after our wheat harvest. We're planting a big cover crop and we'll talk about that as we go through. And so that big diverse cover crop is going to cost — we're just estimating $45 for seed, probably won't cost that much but again I'm trying to be generous there — and then another $20 for application. So we got $90 additional. You add that to the $90 from before, it's going to cost about $180 an acre to go from corn beans to corn beans and wheat in this scenario. So that's the cost that's what we have to now try to gain back in extra value from our soil health practices.

12:45 So what is the value of the soil health practices? Because it's going to cost money to switch over to these things, I have to see a return on that investment or it doesn't make sense to do it. So that's what we're going to look at now. So the first thing is just simply reduced fuel use. When you go from conventional farming to no-till farming, there is some significant energy savings, particularly from diesel fuel but other energy costs as well. And based on this study, the business case for conservation — I think this is some work done out of Illinois, the Precision Conservation Management guys — they're basically showing you can save about $37 per acre on energy costs, mostly fuel, in switching from a two-plus acre or two-plus pass tillage system to no-till. So right off the bat we've saved $37 an acre and that will be every year with no-till as compared to conventional tillage. Herbicide use — now herbicide use, we're probably going to spend more money when we switch from conventional to no-till on herbicides, and so I didn't add that in as a cost. It's going to show.

13:55 Up as a negative value, and you'll see as we go through the summary at the end of it, you'll see how it shows up there. But I'm going to figure if we switch from conventional tillage to no tillage, we're going to put in a cost of another $40 an acre for additional herbicide use because, you know, we're not tilling so we probably are going to have to spray more often, and that's just an additional cost.

14:16 Now when we add cover crops into that—so no till plus cover crops—this is information from the study. Rob Meyer from the University of Missouri is going to be one of our speakers tomorrow, and he's going to be talking more in depth about these studies. But what they've shown in those studies is that when you have cover crops in the system, and this is information reported by farmers who are actually doing it, they're saying $0 to $15 savings. This is the savings on herbicides the first year they do it, 10 to 25 when they've been doing it for 3 years as well as 5 years.

14:53 However, when they ask, do you have resistant weeds? And I don't know very many people that could answer no to the question, do you have resistant weeds? When resistant weeds are part of the equation now, it goes to approximately $27 an acre savings in herbicide cost when cover crops are part of the rotation. And again, this is farmer data—this is what guys have been reporting that they've seen. And so there is a herbicide savings when adding cover crops in with no till.

15:23 By itself, now you may think that's strange because, well, I plant a cover crop, I have to terminate or I have to kill it. But the cover crops are helping suppress, helping hold back some of the weeds, so you have to use different chemistries, different timing, different rates. So there is a savings as it goes.

15:42 So what we're going to figure for the purposes of the calculations here, I'm going to figure about a $20 herbicide saving when using cover crops over no till by itself. 27 is what reported, but we'll just call it 20. And then when we go to that third year, the third crop rotation—wheat requires less herbicides in corn and beans. Plus the diversity of the plants are going to help your overall weed control. Plus that big summer cover crop that we're going to plant after wheat, it's going to be largely terminated by cold weather. We're not going to necessarily have a lot of stuff in there that over winters. And so I think you can save at least another $10 a year in herbicide savings when we go to that third crop. So we're going to call it a $30 a year savings with the diverse rotation.

16:29 So in other words, it's going to cost us $40 a year no till by itself, $20 a year with no till and cover crops, and an additional $10 a year over conventional when we do all three practices. And at the end, I'll have a summary of all these put together.

16:44 All right, the next value center, the next value place that we see as we go into these soil health practices is the value of reduced erosion. Now, you guys all farm—you have seen way too much erosion in your lifetime. We know that there's too much out there. The science news is talking about more than 57 billion tons of soil have eroded from the US. Another report here: National soil erosion rates on tractor repeat dust bowl era losses 8 times over. So we know that we haven't fixed the erosion problem, and we know that it is a problem. But do we know? Do we understand what the cost is? What is the cost to the farm and to the farmer?

17:29 Well, we're going to have to make some assumptions here, and again we're going to base this on a conventional tillage situation. And so I'm going to say, let's assume a loss of 7 tons per acre with conventional tillage. Now I saw Candy in the room here somewhere, and she could get up here and do a way better job of explaining it. Some guys with conventional tillage are going to have way more than that, and some might have less if they're on really flat ground. But we're going to say 7 tons of soil—that's about a millimeter of thickness. Now a millimeter is not very big. 7 tons sounds like a lot, a millimeter sounds like almost nothing. But a millimeter over a whole acre is about 7 tons of soil per acre. So that's going to be kind of our baseline.

18:12 Now I think based on our own experiences and working with lots of farmers across the country, we can reduce that easily by 40% by employing no till techniques. So we can take that from 7 tons down to 4 tons of loss. That gets us under the USDA, the NRCS level, which is 5 tons. That's what is their.

18:36 Tolerance level, so we think we can reduce no till or by no till we can reduce that down to three tons. If we add cover crops in there, we can reduce it another three tons of loss, so taking it from seven down to four and then down to one. Now cover crops can make such a big jump because we've all seen plenty of no till ground that still has way too much erosion, and part of that's because it's not very good no till because they're removing the residue, they're maybe they're grazing it too hard, they're just not tilling it, but they're also not doing a lot of practices that maintain good cover on the soil. And that's where cover crops have such an impact in this situation because they're adding more cover onto the soil. So we think that we can go from seven tons down to four tons down to one ton by employing no till and then employing cover crops and then the diverse rotation. I'm saying we're down to just one ton of erosion now. I don't know if we can ever quite get to zero. Certainly in some years we would get to zero, but we're just going to say another half ton as we employ that diverse rotation, have the wheat crop in there, the second cover, the big diverse cover crop.

19:51 So with all that being said, what is the value of one inch of topsoil? So we know that erodes, we know that we can stop that. How do you put a value on topsoil? Well, it is priceless, and I don't know how well you can read these numbers here, but basically this is some work done by South Dakota State University and they just estimated simply the nutrient value of the soil, not the productive capacity, not the ability to infiltrate, the value of biology. They just simply did an analysis of, and this is in one inch of topsoil. Remember we're only losing a millimeter a year at seven tons, so this is a value of one inch of topsoil. And basically what they came up with is $3,000 an acre. $2,967 an acre is the value of the nutrients in one inch of topsoil. And so there is about 300,000 lbs of soil in one inch, so if you do the math, there that comes out to about $20 a ton in nutrients in soil in your topsoil.

21:03 So if you're losing seven tons of soil, you're losing $140 worth of nutrients every year from that conventional tillage practice. So if you do the math, that's kind of what you come up with there. And so with no till, we can save $60 a year, three tons times $20. With no tilling cover crops, we're saving six tons. That's $120. And then when we all three in there, that's $130. Now you don't get the value of those saved nutrients every year. So for the calculation purposes, as we come to the end of this and we look at the cost versus the value, I'm going to amortize these numbers out over seven years. I'm only going to take one seventh of this value as part of the payout from switching to soil health practices. And I think that's pretty conservative because if you can say, well, I'm saving six and a half tons of soil and I'm only counting that as, you know, $15 an acre, I think everybody would say, well, you're not really overestimating that.

22:07 Save soil just simply from nutrients, the productive capacity, and all those others, there's certainly value there, but it's difficult to know how to calculate it, so I'm not including that in the calculations.

22:19 Okay, increased organic matter. We know that when we go to no till and then we add cover crops and we add more diversity, we know that we can build soil organic matter and we know that that's hugely valuable. But how fast can we build that? I love this picture from our friend Jimmy Emmons. Many of you know Jimmy. He's been here and spoken at this event before. But this is a picture of some of his soil. This is the ground level and he's showing, look at the dark soil. This is Oklahoma Red Dirt. He's changing his Red Dirt to Black. And so you can see him driving the organic matter deeper and deeper down into his soil profile. So how fast can we do that? That's the question. And then what's that worth? Again, how do you put a value on soil organic matter?

23:09 So lots of numbers here. I'm not going to go through this. There's some calculations that we can do to try to figure out how fast we can increase organic matter. The one thing I do want to point out here is that Christine Jones, many of you have heard either her in person or watched some of her videos, Christine says liquid carbon from root exudates is five times more likely to become soil organic matter than the carbon from the

23:35 Decomposing plant, so in other words she's saying you can grow a whole bunch of cover crop and all that stuff on top the ground that decomposes. A lot of that carbon goes back to the atmosphere as CO2. That's just a natural part of that plant decomposing, but the carbon that goes into the soil from the root exudates is five times more powerful, five times more likely to become soil organic matter than the decomposition carbon. And so that's why cover crops are such a powerful tool because we typically have cover crops for their roots and not for what's above ground. We're trying to pump as much carbon into the soil as possible.

24:16 So with all these numbers, here's what I've kind of come up with based again on our own experience and working with a lot of you folks and others across the country. We think we've seen that in just going from conventional farming to no till and just a corn bean rotation, but no till—and this would be good no till, this isn't bailing your residue up every year or grazing it down to the ground—we think that you can gain about 0.05% of soil organic matter per year. So in other words, in 20 years of doing this, you can gain a percent. Now that's going to vary widely. Gabe Brown in North Dakota with the climate that he has does it a whole lot faster than somebody in Texas that has a hot, dry, long growing season type environment. So again, we're having to take some averages here. We've seen this on our own farm there in South Central Nebraska. I think that's realistic and possible to build a percent in 20 years just doing no till.

25:18 I think that you can double the speed of that happening when you add cover crops, so we can do that now in 10 years. No till plus cover crops, we can gain a percent of organic matter in 10 years, so 0.1% per year. And then when I add in the diverse rotation, particularly with the integration of livestock—and there's going to be some really good speakers throughout the conference that's going to be talking about all of these concepts in more detail, but particularly the livestock—that speeds it up even more. I think that you can gain a percent of organic matter in six years. And that's really getting some good things done, so 0.17% per year, six years to build a percent. If you go all the way to having the diverse rotation with livestock, unless you till, then you go back to zero, start over, because as you till, you're starting to burn up the organic matter that you've created.

26:14 So what's the value of organic matter? Well, just like the value of saved soil, we can look at the nutrients. And again, there's lots of ways that this becomes valuable. Nutrients are the easiest one to measure. We can send it into a lab. W Labs can test this for us and they can tell us exactly what's in there. So based on the nutrient content of organic matter, it's about $1,200 per percent. So in a percent of organic matter, there's 160 lbs of nitrogen, there's 116 lbs of phosphorus, and you go on down, there's 11,600 lbs of carbon. Kind of hard to know what to put a value on for carbon, so I just put it at a penny a pound there. And again, we can argue numbers later, but look at the big concepts. So about $1,200 worth of nutrients in a percent of organic matter.

27:06 And so as I can increase this in my fields—half a percent, or 0.05%, 0.1%, and 0.17%—you can see then that on average we can gain $60 of value per year with no till, $120 with no till and cover crops, and $204 with all three practices. Now again, I'm not going to necessarily see all that value in the first year, so I'm going to take these values and amortize that out over 7 years for the purposes of our calculation at the end.

27:43 Now we also know that in addition to those nutrients, organic matter does so many other things in the soil. There was a study in Michigan that found that for every percent of soil organic matter that you add, you get a 12% increase in crop yields. There was another—this is a global meta-analysis, which means they take studies from all over the world, they analyze them, and they kind of report some averages—they reported about 10% for corn and 20% for wheat as you add a percent of organic matter. So if we look at, we'll just say to make the math easy, we're just going to say for every percent of organic matter, we can expect a 10% yield increase. And I think you would all agree with that. If you've got something that's 2% organic matter versus 1%, you would expect at least a 10% yield increase on that soil.

28:32 Always more productive. And so if you look at the numbers there and we look at the value of the margin per acre, I just went with 185 is kind of an average across a lot of that we're looking at $10, $20, and $30 more or less per year with increased yield for a percent of organic matter or for the fraction of a percent that we're increasing. So again there's a lot of numbers coming up here because it is an incredibly complex system. There's lots of things that go into the value, there's lots of things that play into the yields that you're going to get.

29:09 Now Rob Meyer again is going to be talking a lot more about this. Rob is kind of the energy and the lead behind this National cover crop survey. He's going to be reporting on the latest survey and giving kind of a picture of what they've seen and where he thinks things are going to go. But as part of that information, this is probably the best study on cover crops versus no cover crops in the world in my opinion. And basically they've done this survey now one, two, three, four, five different times.

29:40 And one of the questions they ask in the survey is how much increased yield did you have in corn where you had cover crops versus where you didn't have cover crops, and then the same question for beans. And so I've averaged up the reports of all six of those years and that's what these averages right here are: 4.9 bushels for corn, 2.9 bushels for beans. But what's really interesting here is if you look at the year that had the biggest yield increase, that was 2012.

30:13 And 2012 was one of the driest years on record, and you would have thought that this would have been a negative number—oh, cover crops really hurt me in that year. And this is hundreds of farmers reporting across all manner of states. But what they found is that increased soil health helped them the most in those dry years. Now again, it has to be managed right, and I know this past year those guys back East were drier than normal and some of them didn't terminate their cover crops early enough because of the amount of spring moisture they had. And that's probably why the guy in the newspaper was quoted as saying cover crops cost me $250 an acre because he didn't terminate it soon enough based on the amount of moisture that he had in the spring.

30:58 But anyway, if you add up the numbers and you divide it out by how long the rotation is—and again the value I'm putting a $200 margin on corn and $6 on beans, which is twice the margin of a normal production. But my thought here is that at the top end when I'm adding yield at the top end because of these practices, I'm not adding additional fertility, additional herbicides, additional other things. This yield comes at a much higher margin because I don't have all those expenses in it to get it. So when you look at that, $9.84 a year for corn, $1.7 for beans, and that's an average yield boost for these fall cover crops of about $13 an acre.

31:43 And here's the really good news: it keeps getting better with time. This is the scatter chart of people that have reported. You can see, well, here it just says here, the farmers with 10 years or more of cover crop experience had yield gains of 6% in soybeans and 6% in corn. Those are two years or less of cover crop experience had soybean yields gains of 3%, and for corn it was about a break even. They didn't really see a difference. And so the point here is that it keeps getting better the longer you do these practices.

32:18 Part of it may be because you understand how to manage it better, and part of it is as your soil gets better, you start getting some of these residual effects. Remember I said that we're going to amortize a couple of those things over seven years. Well, when you do that, the first year I'm only getting the seventh of the value from this year. But next year I'll get a seventh of the value from that year plus a fraction of the value from the previous year. So these things build on each other and they compound and cascade. We'll talk a little bit more of that at the end.

32:51 The next area I want to talk about, and this may be actually one of the most important because we all understand that usually the number one limiting factor in yield and thus profitability is how much water do we get. And I've talked to a number of you already this morning and we swap stories about how bad we had it, how dry it was. And it's true, it was dry over a big area. Water definitely was a limiting factor this year, no doubt about it. So if we can save water by employing these soil health practices, well then that.

38:06 Decent place to start on corn and I think for beans we're going to see probably about four bushels. You know if you get an inch rain in August versus not getting it, it can easily add four bushels. So or if you have that extra inch stored in your soil. And for wheat we're going to call it about five bushel per inch. So if you go through and you do all those calculations in a 2-year rotation, we're going to gain about $88 of increased crop value just simply based on increased moisture. And in a three-year rotation about $90. And again, I'm not super confident in some of these numbers, so for the calculations I'm just going to say I'm just going to take half of that. I think it's more valuable than half of it, but when we do the numbers at the end we'll do $44 and $45 instead of 88 and 90. But the water savings and moving to these soil health practices is enormous.

39:02 Now we can also save and cycle a lot of nutrients as we go through this. So this is some work done in Iowa. How applicable is it here to you guys? Probably not quite as much. This is going to be more important as you have higher rainfall because you're going to be leeching out and running out a lot of these nutrients. But in Iowa, they basically found that they're losing about 0.14 lbs of nitrogen per day between April and September in a growing corn field. Now again, that's in an area where they get a lot of rainfall, so that's going to vary up or down. But the fields with cover crops only lost an average of 0.5 pounds of nitrate nitrogen per day because they had more organic matter. They had more roots out there to hold it. And this is while the corn is growing, the cover crop's no longer alive, but the cover crop had sequester the nitrogen and it releases it slowly as that cover crop breaks down.

39:57 So in the end, that equates to about 15 lbs of nitrogen per acre per growing season that stays in the field because of the cover crop versus not having a cover crop. Now some additional research, Eileen Clino from Purdue, basically some of her research said that that cover crop scavengers, so just having cereal rye out there, can scavenge 20 to 30 pounds of nitrogen after you harvested the corn. You have some leftover, it can hold on to 20 to 30 pounds of nitrogen that's not going into the water system but can stay into your soil. So if we look at all that, 15 lbs, 25 lbs, say 40 lbs of nitrogen that can be tied up and held on to at 70 cents a pound, that's $28 for that corn year. We know we're saving phosphorus and other things as well. Some of that's calculated into not have an erosion, but we're not figuring any value for that. But I put a note on here that cover crops must be managed to account for and allow for proper nitrogen release. So you can have the wrong cover crops, too much of one thing or not enough of the other, timing is off and you can tie that up. That's part of another talk now.

41:10 So that's the cover crop in a corn year. In the bean year, if we come out and we plant a legume cover crop or a mix that has legumes in it in the bean year, and this is some data from our farm, we took clippings, we sent them into Ward Labs, and what you see here is you can see that as the weeks go past, we produced over 200 lbs of nitrogen in some of these cover crops and cover crop mixes. But that didn't happen until the first week of June. Now not many of us are going to wait till the first week of June to plant our cover crops. So we're not going to say we're growing 200 lb of nitrogen every year. You can do that, you can grow 200 lb of nitrogen almost every year. You just can't plant your corn very early. And there's a lot of organic guys that do that. They trade off early planting corn for having a lot of good nitrogen fixation from hairy vetch or another legume cover crop. But you got to give it time to do the work if you're going to do that.

42:04 But I think that by the middle of May, early to mid-May, and the further south you go, so like down in Nebraska, I think it'd be middle of May, for down here in this part of the area I think by the first of May you could easily produce 50 lbs of nitrogen by having a legume component in your cover crop planted into beans to be followed by corn. Easily you could do 50 lbs of nitrogen. And the majority of that is going to be available because it's going to be a relatively low carbon-nitrogen ratio. I think 75% of that would be available if you had a good shot of legumes in there. So that's 38 lbs of nitrogen at 70 cents a pound, $26 credited in that bean year. If you divide that out by either two years or three years in the rotation, that you'll.

42:54 Get $13 or $9 and then for the summer cover crop. If we switch to the three-year rotation we can have a big cover crop in the mix. It's easy to produce 150 lbs of nitrogen from a cover crop planted in July. Now I say easy if you get a couple of rains on it you can easily produce 150 lbs of nitrogen. We see that all the time and so that again is going to be pretty available because it's going to have the whole winter to be breaking down. So I'm estimating 123 lbs of nitrogen again at 7 cents a pound, $86 for that year or $29 per year in that three-year rotation.

43:37 So again we're just looking at how many nutrients can we produce with nitrogen or can we cycle with some of these other ones with these cover crops. And then the last value center that I want to talk about before we kind of look at all of these totals is the grazing aspect. Now I know that you can graze in a corn bean rotation if you have, well even without a cover crop you can graze your stock. If you add a cover crop you add cereal rye in there you get it planted in a timely fashion you can really do some grazing there. I'm not counting that at all. I'm just simply looking at the summer planted cover crop in this scenario.

44:15 And so with this when we harvest wheat or we harvest rye or whatever that third crop is we can plant our cover crop now in July, maybe first part of August depending on when you get out there. We can do warm season and cool season species which adds a ton of diversity. We can do, you know, 8, 12, 20 species out there so we can just really have a massive amount of diversity. We can focus on fixing nitrogen if we want to. We can focus on biomass for grazing, all sorts of things that we can do. But the big thing here is that all of this diversity is a huge boost for our biology.

44:55 And so I think again based on what we've seen on our own ground and working with a lot of you folks out there we can produce 3 and 1/2 tons, 7,000 lbs of high quality dry matter biomass. Now we do not recommend haying this off even though that's really tempting for all you cowboys out there, a look at all that hay I could get, but 100% of the nutrients in that hay bale is leaving the field unless you haul manure back. If you graze it in the field, 80% of those nutrients are going to stay and that is a huge difference. Plus when I'm grazing I'm only figuring 50% is going through the cow. The other 50% is staying in the field. When you're haying it's probably more like 90% leaving the field and 10%. So there is a time and a place for putting cover crops up for hay. It is not going to be figured into this calculation. This is grazing only.

45:49 So if I graze 50% of what I have out there that means I've got 3,500 lbs of dry matter biomass for grazing which gives me 134 animal unit days. And if I just lease that out to a neighbor because I don't have my own cows, that should be worth 45 cents per animal unit day. I know that sounds expensive if you're just used to renting corn stocks but believe me it's pretty cheap for the value and the quality of forage that they're going to be getting. So that's $60 of income from doing this, really no additional work on your part other than just planting the cover crops. Over a three-year rotation that's an additional $20 a year that we can credit to this practice.

46:31 Now the value of that is easily two to five times higher if you're grazing your own animals. Now I know not everybody has their own animals, not everybody is set up or willing to do the extra management that it would take to bring in animals. So this would be one way to look at it is if you just simply rent that out. However, we've worked with some pretty creative producers and this is I don't expect you to be able necessarily to read this, it's pretty small up there, but we've got some calculators that we can use that show you what could you do in a grazing situation with something like this.

47:10 And so this is calculated. This is 100 acres. Let me see if I can find all the numbers here. This is 100 acres of summer cover crop grazing. I'm saying we're planting this July 7th, 100 acres, and I've got it divided into 10 10-acre paddocks. And so we're going to graze for each of these paddocks in turn. So 10 10-acre paddocks planted July 7th. We're going to start grazing it September 1st. I've got 150. So this is a spreadsheet that I have. I'd be happy to share this with you if you want it later to help you kind of do some of these calculations. I've got 150 head of 700 lb feeder calves.

47:48 I'm putting out there and so what this does then is it estimates how many pounds of dry matter biomass can I grow. So this first paddock has 56 days to grow. I'm saying we're producing 4200 lb of biomass. I'm grazing 50% of it and so I've got 150 head out here. So essentially that says that I can graze that for about eight days and then I go to the next paddock. The next paddock I can graze for nine days. I'm figuring about a 2 lb average daily gain for these animals at first and then that gets higher as they're out there and as they adapt to that. But again I'm pretty conservative. I've had guys report back to me they're getting well over 3 pounds a day gain on putting feeders out on high quality forage like this.

48:40 But in the end when you get all those calculations done, here's the numbers that I want you to focus on. On 100 acres planted in July, start grazing in September, graze through the end of November, first part of December, I can get about 35,000 lbs of gain on these feeder calves. Right now a feeder calf is worth about a buck eighty. And so that's $63,000 worth of value from grazing that 100 acres for essentially 3 months.

49:13 Now is there risk involved? Yeah, you have to buy the feeders, you have to sell them, you have to make sure you don't get upside down on that. And there's certainly going to be a lot of work involved in this. You got to put up fence, you got to move haul water, do all that stuff. So I'm figuring that 50% of that is going towards labor and management, $300 an acre. If you can't put up fence and haul some water for $300 an acre, you probably need a different profession.

49:41 And so in the end, if these numbers are all accurate, we've got $300 an acre return to our management and labor for our efforts there over a three-year rotation. That comes out to $100 a year.

49:56 So as we look at the summary now, and again there's other things that we could include in here, but our summary is that we've got on the expense side of things $40 an acre in no-till, $90 an acre no-till and cover crops, $180 an acre for no-till cover crops in a rotation. That's our expenses. We saved $37 an acre in fuel cost. We have the herbicide use. It's costing us an extra $40 for no-till and so these are showing up as negative values. So in essence it's an expense: $20 on no-tilling covers, $10 for no-till covers and rotation.

50:35 We've got the save soil from less erosion. This is my 7-year amortized number, so $8,507 and $18 on that saved soil. We've got the nutrients from soil organic matter, the value of that additional soil organic matter, similar numbers there. Again, that's on a 7-year amortization. I'm not taking all that value in one year. The additional yield from soil organic matter, those are those numbers.

50:59 And again, this is just a summary of everything we've gone through. We've got some additional yield from cover crops there. We've got the yield from saved water, that additional moisture we're able to accumulate through no-till cover crops and diverse rotation. And again I'm only taking half that value. I think we could take it all and say that is a real value, a real savings, but we're only taking 50% of that. Nutrients saved and cycled in the corn year, you can see those numbers. Nutrients produced in the bean year, nutrients produced in the wheat year. And again, that only shows up in the three-year rotation because we don't have the wheat in the other two.

51:39 So when you look at all that and then our $20 (this is on lease grazing), when you add all that up we've got a value of $68 switching to no-till, $156 no-till and cover crops, $234 with no-till cover crops and rotation. And then when we subtract the cost in turn from that, we're showing a net gain of $28 for switching to no-till, $66 switching to no-till and cover crops, and $55 switching to no-till cover crops and that diverse rotation.

52:09 But if we now say we're going to graze our own animals out there and not someone else's and we've got that $100 an acre value there, this is where the real value now comes. Is that I can have $140 an acre additional profit. That's not just a profit, that's the net gain over what I had before, if I employ and I highly manage these practices.

52:35 So soil health practices make sense and they also make dollars. If these numbers are anywhere close to accurate, now there's a lot of other things that I didn't even calculate in.

52:49 Here, what's the value of reduced compaction? It's big. I don't know how to measure that. I didn't find a good study to give me numbers on that, but there's certainly going to be less compaction with no till and cover crops and a diverse rotation. I don't know how to calculate that, but there's value out there. What's the value of increased soil biology? Again, it's significant, but I haven't found a good way to measure that yet. Maybe down the road we can get that added in.

53:15 Reduce crop insurance premiums. Now, this isn't going to be a big one, but there's likely going to be some legislation pass that gives you a $5 rebate on some of your crop insurance premiums. What about carbon payments, ecosystem service payments? I said I wasn't going to calculate that in here and I didn't, but there's the potential out there to get anywhere from probably $10 to $50 an acre for doing some of these practices, things that you would be doing already anyway. So that could add to your bottom line as well.

53:45 There's you can talk to the ADM guys over here, the Indigo guys back here. There's multiple programs out there that can help pay for some of these practices. Incentivize it conservation payments, whether it's through EQUIP or CSP. There's money out there to help you do some of that. And then I think there's going to be some really good future marketing opportunities and premiums for crops that are grown in this way. I don't know that we're quite there yet, but I think that's coming, that you will be able to command a market premium for regeneratively grown products.

54:21 Now we haven't even talked about what is the value to the environment, and it's huge. And that might be some of what you're getting paid for if you do ecosystem market payments. But the value to the environment is huge, but that's not direct to my bottom line so I didn't really include it in these calculations. But all of these things—the clean water, the longer life reservoirs and rivers, less hypoxia in the Gulf of Mexico, carbon sequestration—all of these things are valid values that could be inferred to these practices as well.

54:56 And just in closing, these practices have compounding and cascading effects. And Alan Williams with Understanding Agriculture, I hear him talk about this phrase compounding and cascading all the time, and I really like it. Compounding means it starts small, but then it grows and it grows and it grows and pretty soon if you invested a few dollars a long time ago that's added up to real money now. And it's the same way with soil health. If you invest in your soil early on, those effects compound. And the longer you're in the system, the better it gets. And then cascading simply means one thing happens and then it triggers another one and another one, and pretty soon you've got all these things happening, but it had to start with one practice that you did early on.

55:45 Long-term benefits. Again, this is a slide I pulled from David Lamb a number of years ago, but it just shows that the longer that you're doing these practices, the more benefits that it has. And really, guys, if you're like me, there's a financial component for doing this, but really one of the main reasons that we want to do this is because our land is a big part of our legacy, and we want to do it for those future generations that we hope will come back and inherit our land and continue what we've done.

56:15 So my last slide here: I want to challenge you in the next day and a half as we go through this conference. As you listen to Jay, as you listen to our panel, you listen to all of these speakers, as you talk to the vendors over here, you're somewhere on this scale of completely conventional to completely regenerative. Probably nobody is at the very tips of either one of these. We're all somewhere in here. And so I want to challenge you to go away from this conference with at least one practice that you're willing to go home and try, maybe one product, one new product that you've learned that you want to go home and trial. And make at least one new friend, one new acquaintance, who you will stay in contact with and that you can encourage and be encouraged by. Because that's the real value of a conference like this. It's not what you hear me say or someone else say. The real longterm value is going to be the connections that you make and the ability to continue that learning and that challenging and that encouragement for many years to come.

57:22 If that doesn't happen, that's not our fault. If that doesn't happen, that's your fault, because you weren't out there trying to make those connections. And they may not happen real naturally. You may have to put a little effort into it. So my challenge is: find at least one new practice, one new product that you want to look at, and make one new acquaintance. And if you do that, then your return on the investment of the time that you spent here over the last couple days will be very well worth it.