Wallaces Farmer

Who pays for cover crop seed and seeding?

Timely Tips: Landlord wants tenant to grow fall-seeded cover crop on land after corn and soybean harvest.

September 27, 2019

5 Min Read
seeding equipment outside a barn
SHARING COSTS: Some landowners are willing to pay part of the cost of cover crop seed with their tenant, as planting a cover controls erosion and improves soil quality.

My landlord wants me to seed cover crops after corn and soybean harvest on 300 acres I rent from him. I pay him $275-per-acre cash rent. I can’t see how a cover crop will make me any money. It’s not a cash crop. The cover crop will help improve soil health in the long run and save soil by helping reduce erosion, but the land is his, not mine. For seed and application, I figure the total cost to make the fall seeding will be $30 an acre. What are most farmers and landlords doing? Are they sharing the cost, or does the landlord pay for seed and seeding of a cover crop? Also, in a cash rent situation, who pays for applying burndown herbicide to kill the cover crop in spring?

Stout: I don’t think there is a standard for sharing the costs of seeding cover crops. My opinion might be different than others since I am a huge proponent of cover crops and have seeded all of my acres for several years, whether cash-rented or owned.

Since you state that your landlord wants you to seed cover crops, he obviously sees the benefit to the soil. So that makes me think he should be willing to at least share financially in the cost of adding the cover crops. He should at least cover the cost of the seed, and if you have a way to seed it, you could cover that cost if he insists that you participate financially.

Long term, you both will benefit from healthier soil with more active microbial activity and reduced erosion, so it might be a good idea to ask for a long-term lease so that you can reap some of those benefits. I think you should pay for the cost of a burndown herbicide in the spring.

Cover crops and no-till work great together, so it might be a good time to move in that direction if you aren’t already doing so. The burndown herbicide can be added to the preherbicide treatment, so there is no extra application cost and could even save you a tillage pass.

Miller: In my mind, the biggest hurdle we face in getting broader adoption of cover crops is the cost and lack of return on cash-rented ground. A diversified operation with cattle may be able to gain from extra forage, but for row crop operators, at today’s grain prices, it can be financially impossible.

I suggest you sit down with your landlord and explain that you have an interest in cover crops, but that the high cost and the lack of profit from low grain prices do not make it feasible.

Ask yourself: Would you put in cover crops if the landlord paid for the seed and chemical burndown?

If so, let the landlord know. Yet you would still be out fuel, labor and wear-and-tear on machinery, so there would still be some cost.

Better yet, would you sow cover crops if you had a five-year, flexible lease that included a cost adjustment for cover crops? Then let the landlord know that. Long-term improvement of the land should be a goal for both of you, but you need to know that you will be around — physically and financially — to benefit from it.

Plastina: Under some circumstances, cover crops might help mitigate weather risks and act as a complement to crop insurance for cash rent tenants. However, cover crops are typically evaluated as a long-term investment on soil health with positive environmental effects beyond the farm gate.

An Iowa State University survey of farmers who plant some of their acres with cover crops and some without concluded it is very likely that planting cover crops results in negative annual net returns to the producer, unless he or she receives cost-share payments and uses the green biomass in early spring as livestock feed.

If your landowner insists that cover crops be planted in the fields you operate, then it might be a good opportunity to review each of your expectations about conservation practices, their impact on your financial bottom line, and the need for some compensation from your landlord to have you run the risk of implementing those conservation practices.

Compensation can come in the form of:

  • an extended lease contract that would allow you to see some of the long-term benefits of cover crops

  • a cost-share agreement, where your landlord pays for at least some of your additional cash costs

  • a flex lease with a lower base rent

  • some other mutually convenient arrangement

The Center for Agricultural and Rural Development at ISU has developed several reports and tools you can use in preparation for the conversation, including several two-page summaries of published research and an online Net Returns Calculator for Cover Crops, where you can enter your own data to calculate the financial impact you can expect from using cover crops. For the calculator, go online to card.iastate.edu/conservation.

After renegotiating your lease, it is advisable to put the agreed practices in writing as a lease supplement, using the Ag Decision Maker File C2-08, “Lease Supple-ment for Obtaining Conservation Practices to Control Soil and Nutrient Loss.”

Final point: It is important to start small and grow into the cover cropping practice as you fine-tune the management of a more complex agronomic system.

 

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