Conservation delivers financial benefits for dairy farmers

Conservation can improve the financial health of dairy farms, according to a new report from EDF and K·Coe Isom AgKnowledge – How conservation makes dairy farms more resilient, especially in a lean agricultural economy.

Dairy farmers in Pennsylvania and across the U.S. are in the fourth year of an economic downturn in which many farmers are struggling to break even. At the same time, the impacts of nutrient loss to the Chesapeake Bay are a major challenge for bay states, which face near-term water quality milestones.

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It’s clear that new solutions are needed for reducing nutrient losses while also maintaining or improving the financial health of dairies.

Four Pennsylvania dairy farmers opened their books to allow for a comparative analysis of how their conservation practices impacted their budgets.

Key findings

The overriding lesson learned from this analysis is that conservation contributes to the economic well-being and resilience of dairy farms. The key findings include:

• Conservation practices can pay, often in unanticipated ways. Dairy farmers who adopt conservation practices including manure storage, nutrient management, cover crops, conservation tillage and stream fencing realize a variety of financial benefits including reduced labor hours, savings on external feed and bedding, and lower vet bills due to improved herd health.
• Economic gains come at the farm level. Farmers benefit from looking across the farm enterprise to better understand the full financial impacts of conservation. While practice adoption can increase some costs such as cover crop seed, farmers find that these costs are typically offset by the savings in another budget category.
• Accurate recordkeeping typically results in better management. Accurate and frequent recordkeeping for both economic and conservation measures is essential for dairy farmers to understand their farm’s economic status – whether profitable or not – and to assess the return on investment for conservation practices.
• Investments in conservation have increasing returns. Farmers that have access to additional financial assistance for conservation through cost share programs and grants are typically able to make larger investments in practices that achieve even greater economic and environmental benefits.

Recommendations

The report offers recommendations for increasing educational, technical and financial resources for farmers to make conservation practice adoption more viable. These recommendations include:

• Improve financial and technical assistance for farmers to realize conservation benefits at the enterprise scale. Conservation programs offered through conservation districts and state and federal agencies should include guidance to farmers and their advisers on how to track and assess the broader economic benefits of conservation practices. 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.
• Support farmers’ collection of actionable financial and environmental data. Not all farmers have access to robust and easy-to-use recordkeeping platforms. Federal and state agencies, conservation districts and business partners should increase support for farm recordkeeping platforms and educational opportunities that combine financial and conservation management.
• Enhance and better leverage innovative financing programs for agricultural conservation. Public grants and cost share programs are essential for many conservation investments, especially those that have higher upfront costs but can deliver some of the largest economic returns and environmental benefits. Federal and state agencies, conservation districts and agricultural lenders should increase support for conservation through cost share programs, tax credits and low-interest loans.
• Increase private sector support and incentives for conservation. Conservation is important to farmers’ economic viability and social license to operate, but they cannot do it alone. Farmer advisers, cooperatives, lenders and supply chain business partners each have a role to play. For example, agricultural lenders should analyze the business benefits and risks of conservation and share that information with their clients.

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