On November 18, the Environmental Defense Fund, K-Coe Isom and TeamAg, Inc. released a new study that shows farm conservation provides real financial benefits to Pennsylvania's dairy farmers who have been experiencing significant economic pressures.
The study-- How Conservation Makes Dairy Farms More Resilient, Especially In A Lean Agricultural Economy-- provided new, practical insights based on detailed case studies of four Pennsylvania dairy farm operations.
U.S. dairy farmers are in the fourth year of an economic downturn in which many farmers are struggling to break even. Dairy farmers are experiencing some price relief, but ongoing economic pressures are motivating them to become more resilient.
The economic uncertainties facing the dairy industry include highly variable milk and feed prices, unpredictable farm policies and extreme weather – most notably increased heavy rain events and flooding.
“Most of these factors are out of farmers’ control, but conservation is something farmers can be sure of,” said Suzy Friedman, director of agricultural sustainability at Environmental Defense Fund (EDF) and co-author of a new report, How conservation makes dairy farms more resilient, especially in a lean agricultural economy.
“The overriding lesson learned is that conservation contributes to the economic well-being and resilience of dairy farms,” Friedman said.
The Pennsylvania dairy farmers who took part in the study opened their books to provide valuable insights on how conservation practices impact farm budgets, and which practices can deliver the greatest return on investment.
The report builds off of a September 2018 farm finance and conservation report, also published by EDF and K·Coe Isom.
“The four case studies show how dairy farms of various sizes and budgets have financed different sets of conservation practices with a variety of benefits-- many of which the farmers did not realize until they participated in this study,” said Laura Sands, lead principal of production agriculture at K·Coe Isom.
“Too often, farmers miss or don’t quantify the economic benefits of conservation because it’s difficult to connect the agronomic and financial sides of any ag business. Farmers only discover the real value of conservation practices when they can see them in the context of their entire operation and tallied over multiple years, which takes time, expertise and commitment,” Sands said.
Looking across enterprise budgets, the report found that dairy farmers who adopt conservation practices that impact their cropping systems and dairy herd including manure storage, nutrient management, cover crops, conservation tillage and stream fencing realize a variety of cascading financial benefits such as reduced labor hours, savings on external feed and bedding, and lower vet bills due to improved herd health.
“Pennsylvania and other Chesapeake Bay states are actively working to improve water quality through many of the conservation practices identified in this report, but it’s important to know that these practices pay,” said Chris Sigmund, president of TeamAg, Inc. “This report gives us a roadmap for achieving profitable farms and a healthy Chesapeake Bay watershed.”
“Dairy farmers share a long-standing commitment to environmental stewardship and this report recognizes that we are doing our part to protect the planet’s natural resources,” said Marilyn Hershey, chair of Dairy Management Inc. and a Pennsylvania dairy farmer. “It also demonstrates that no two dairy farms are the same, underscoring the importance of partnerships that identify new practices and technology solutions that come with economic incentives and a positive environmental outcome.”
The report offers a number of specific recommendations for increasing financial and technical support for farmers through government programs, tax incentives and other innovative financing strategies.
“Dairy farmers and their supply chain business partners are highly motivated to increase their resilience to unfavorable economic and environmental conditions, and this report provides a path towards a more sustainable dairy economy,” Friedman said.
Key Findings
Among the key findings in the report are--
-- Conservation Practices Can Pay Often In Unanticipated Ways: Dairy farmers who adopted conservation practices including manure storage, nutrient management, cover crops, conservation tillage and stream fencing realized a variety of financial benefits, some of which they did not recognize or quantify prior to participating in this study.
These benefits included reduced labor hours, savings on external feed and bedding, and lower vet bills due to improved herd health.
Farmers also reported conservation practices improved soil quality, enabled them to get more value from manure and improved the quality of their forage. This resulted in higher crop yields, increased milk production and improved herd health.
-- Economic Gains Come At The Farm Level: Farmers benefited from looking at the farm enterprise holistically to better understand the full financial impacts of conservation adoption.
For example, a single conservation practice like planting cover crops had upfront costs or, in some cases, a short-term drag on yield, but delivered large returns on investment in all cases by year two or three. Similarly, the cost for a practice in one area of the budget was typically offset by the savings in one or more other budget categories.
-- Investments In Conservation Have Increasing Returns: Farmers that had access to additional financial assistance for conservation through cost share programs, grants and carbon credits were able to make larger investments in practices that achieved even greater economic and environmental benefits. This was especially true for the farmers that had access to sufficient resources to invest in improved manure management.
Recommendations
Based on the conservation economics of dairy farms in Pennsylvania, the report made these recommendations--
-- Improve Financial And Technical Assistance For Farmers To Realize Conservation Benefits At The Enterprise Scale: Conservation programs need to do more to encourage and help farmers see the economic benefits of conservation practices across farm budgets, which will encourage them to try new practices and maintain them for the long term.
Through financial and technical assistance programs, conservation districts, state agencies and the U.S.D.A Natural Resources Conservation Service should provide guidance to farmers and their advisers on how to track and assess the broader economic benefits of conservation practices on their own farms and provide examples, like those in this report, of how such practices have generated economic benefit on other farms.
In addition, conservation programs should extend contract lengths to encourage and enable farmers to reach the point at which conservation practices deliver a return on investment.
[Note: In March 2018, the interstate Chesapeake Bay Commission, including Pennsylvania legislators, also recommended significantly increasing technical assistance and funding for farm conservation practices.
[In January 2017, the Pennsylvania members of the Chesapeake Bay Commission wrote to all members of the General Assembly to outline the need to address the state’s water pollution cleanup problems, including farm conservation practices, and propose a potential solution-- a dedicated Clean Water Fund for Pennsylvania.
[So far, very limited actions have been taken to deal with these issues.]
-- Enhance and Better Leverage Innovative Financing Programs For Agricultural Conservation: Public grants and cost share programs are essential for many conservation investments, especially some of the more capital-intensive practices that can deliver some of the largest economic returns and environmental benefits.
Many of these conservation financing programs are highlighted in the September 2019 report by EDF and the National Association of State Departments of Agriculture, Innovative State-Led Efforts to Finance Agricultural Conservation.
Federal and state agencies, conservation districts and agricultural lenders should increase support for conservation through cost share programs, tax credits and low-interest loans.
-- Support Farmers’ Collection Of Actionable Financial And Environmental Data: Good recordkeeping is necessary to understand the environmental and financial impacts of conservation practice adoption, but not all farmers have access to robust and easy-to-use recordkeeping platforms.
Federal and state agencies, conservation districts and business partners such as Farm Credit should increase support for farm recordkeeping platforms and educational opportunities that combine financial and conservation management.
Increased access to these tools will help farmers better track and manage their data, gain valuable insights from the information collected and measure progress towards conservation goals.
One valuable resource farmers can use to track and document their economic and environmental performance is N Balance, which quantifies environmental outcomes with a simple calculation and allows farmers to share their conservation stories.
For more background on this study, visit EDFs Conservation Delivers Financial Benefits For Dairy Farmers webpage.
[Posted: November 18, 2019] www.PaEnvironmentDigest.com
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