Agricultural Policy Review
Winter 2024
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The Iowa land market has experienced significant fluctuations over the past century, marked by three golden eras—in the 1920s, 1980s, and early 2010s—with each characterized by a significant surge in farm incomes and land values. The first two golden eras ended with marked crashes in land value, while the last ended with a less drastic market adjustment. Recently, the COVID-19 pandemic triggered another such surge, inevitably drawing comparisons to these golden eras and raising questions about the potential for a subsequent decline.
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Despite the numerous environmental benefits associated with cover crop use, such as reducing erosion, improving infiltration, mitigating nutrient loading in surface waters, and improving soil health, many farmers in the Midwestern United States are still reluctant to include cover crops in their production practices. The Iowa Farm and Rural Life Poll reports potential economic impacts had moderate-to-very strong influence on changes in 74% of producers’ management practices, and 57% of them agreed with the statement “pressure to make profit margins makes it difficult to invest in conservation practices.” The peer-reviewed literature based on survey methods, field experiments, and simulations from physical models, conclude net returns to cover crops in the US Midwest were predominantly negative, even after accounting for cost-share payments.
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In a recent report, USDA’s Economic Research Service summarizes the prevalence of agricultural and food sectors in the United States economy and finds that the $1.4 trillion spent in all agricultural, food, forestry, and related industries was about 5.5% of US gross domestic product, contributed about 1% to 2022’s US GDP, and directly created about 3.6 million jobs. This article focuses only on the initial production portions of the “agricultural, food, forestry, and related industries” in the supply chain in order to find the impact on the US economy from not just the direct spending but also indirect and induced effects that impact other industries.
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Common goods are characterized by two criteria—the good is rivalrous so that use by one person takes from use by another; and, it is also non-excludable so that those who do not pay can use the good. Excessive use for the social good, a reduction in resource availability, and a decline in resource quality generally ensue. Better management of the good requires mechanisms to both limit consumption and direct goods to those who value them most. These possibilities are not available for non-excludable goods. The extent to which either definition criterion is met varies greatly; and yet there is consensus that the underlying concept captures the essence of many resource use problems.
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Marketing of precision agriculture technologies generally focuses on potential benefits such as increased productivity and profitability, optimization of input use, and overall improved sustainability of farming practices. But what do farmers, the typical precision agriculture end users, think about these technologies? A recent Iowa Farm and Rural Life Poll survey examines use of key PA technologies and farmers’ perspectives regarding the potential benefits and concerns related to use of these technologies
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County-level data from the 2022, 2017, and 2012 US Census of Agriculture shows patterns of adoption and disadoption of cover crops and no-till in Illinois, Indiana, and Iowa, which jointly accounted for 19% of the value of crop production in the United States from 2017 to 2022. Over that period, cover crop adoption decelerated substantially with respect to the previous five years, and no-till area stagnated.