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Wisconsin Ag News Headlines |
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Sustainable practices increase farm income
Wisconsin Ag Connection - 01/24/2024
Sustainability in agriculture is often discussed but rarely well-defined. Professor Paul Mitchell uses an analogy to explain this complexity: "Imagine safe driving. It's hard to measure, but following the speed limit is a clear indicator. Similarly, 'sustainable agriculture' is an umbrella term. We need specific practices to assess their value."
Traditionally, sustainable practices focus on environmental benefits like soil health and reduced pollution. However, Mitchell emphasizes the three pillars of agricultural sustainability: environment, economics, and social equity. He argues that economic profitability and social equity are often overlooked.
By focusing on economic benefits, farmers can adopt sustainable practices without sacrificing income. Mitchell and his colleague Fengxia Dong studied U.S. corn growers to quantify this. They analyzed data from nearly 1,800 farmers, assigning each a "sustainability score" based on their reported practices. Higher scores reflected less common, more impactful practices like precision lime application or crop diversification.
The results were interesting:
• Higher sustainability scores correlated with higher average income, even after accounting for other factors. Moving from the average score to the top 10% meant a 2.3% income increase, mainly due to higher yields and reduced variability.
• However, there was also a higher downside risk for farms with higher sustainability scores. This means a greater chance of unusually low yields, which can worry farmers. This risk stems from the limited historical data on newer practices compared to traditional methods.
The study highlights the importance of considering all aspects of adopting sustainable practices: average income, income variability, and downside risk. Overlooking the downside risk could lead to underestimating the benefits of sustainability.
Mitchell suggests mitigating this risk through multiperil crop insurance, which provides a guaranteed minimum income in case of crop loss. He believes understanding and addressing the economic implications of sustainable practices is crucial for their wider adoption in agriculture.
Despite the higher risk, the study showed a positive net effect from adopting sustainable practices. This is Mitchell's key message to farmers: "Sustainable practices can increase your average income, as long as you have insurance to manage the downside risk."
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