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Can it pay to irrigate pasture in Wisconsin?

By Brian Nischke, Alex Crockford, Thomas Kriegl 

Even in normal years, lack of moisture can substantially reduce forage yields in pastures. Since pasture is an economical source of feed, owners of grazing livestock have been interested in exploring if it makes economic sense to irrigate pasture.

Golden Sands RC&D received a Grazing Lands Conservation Initiative (GLCI) grant (Research project 545, Feasibility of Dairy Pasture Irrigation on Wisconsin’s Central Sands) to explore the question. They purchased two 12-pod K-line irrigation lines and installed them on Paul Onan’s 75-cow dairy farm near Stevens Point, Wis.in the spring of 2009. K-line irrigation was chosen for its relative affordability and flexibility. Onan installed a new six-inch well drilled 103 feet deep, with a flow of 100 gallons per minute with 100 psi at the well head and 50 psi at the end of each of three pod lines. Theoretically, if used constantly, one pod line could deliver an inch of water per week to 20 acres.

Research Project
Twenty acres of Mr. Onan’s farm received regular irrigation during the study. A digital
pasture plate meter was used to measure weekly pasture yields. Forage samples were collected and analyzed for quality. There were no additional fertilizer applications made to the research plots before or during the project beyond manure deposited by the cows. The research project concluded Sept. 1, 2010.

Production Response
The summer of 2009 was very dry. Total rainfall for Paul Onan’s farm was 7.25 inches from June 15 to Sept. 30, 2009, versus the normal of 15.5 inches for the region. Un-watered pastures became dormant near the end of June.

The following year, total rainfall on the Onan Farm was 24.5 inches from June 15 to Sept. 30, 2010, making irrigation unnecessary.

In 2009 irrigated plots produced an additional 1.5 tons of dry matter forage per acre.

Economic Analysis of Actual Performance
The investment in the new well, electric service, electric pump, two 12-pod K-lines plus piping from the well to the K-lines was annualized over the expected life of 20 years. A longer annualizing period makes it easier to justify an investment on an annual basis but lengthens the time in which cost of the investment is recovered.

The ownership costs of depreciation, interest, repairs, taxes and insurance were also included in annual fixed or ownership costs per acre and per acre inch (of water) based on 10, 20, 30, and 40 acres irrigated.

No cost was charged for land or other equipment since such costs exist with and without irrigation, nor was time value of money considered.

Actual operating costs accumulated in irrigating 20 acres in 2009 plus some unpaid labor and interest opportunity cost were used to calculate operating costs per acre and per acre inch and were combined with the annual ownership costs to determine total costs.

The entire increased forage yield resulting from irrigation was assumed to be consumed by the lactating dairy cows and was initially assigned the value of 150 relative feed value (RFV) hay. The total annual per acre cost was subtracted from the calculated value of the increased yield.

The approximate annual total cost of owning ($107.06/acre) and operating ($82.34/acre) the irrigation system in 2009 was $189.40 per acre (based on 20 acres), but returned an additional 1.5 tons dry matter (DM) per acre of dairy quality forage valued at $258.75 (1.725 as fed tons X $150/ton) for a $69.35/acre net return. (Added value of $258.75 minus cost of $189.40 per acre).

In 2010, the ownership ($107.06/acre) and operational costs ($19.62/acre) of the pod-line system were $126.68 per acre. The net return on the system for this year was a loss, as with a wet year there were no gains in production.

The cumulative loss of pod-line irrigation two years into operation was approximately $57.33 per acre, per year.

Research data was not kept after 2010, but since 2011 weather was much like 2010 and 2012 was one of the driest and warmest years on record, it is reasonable to assume the 2011 economic response to be the same as 2010 and the 2012 economic response greater than 2009.

“What If” Economic Analysis
Several factors limited the production response and economic performance in 2009. If, in another dry year like 2009, the farm crew committed themselves to:
• Productively applying the irrigation knowledge gained in 2009;
• Watering before visible plant stress and adequately irrigate 40 acres;
• Harvesting forage at the higher feed value vegetative stage (valued at $373.85 per ton DM based on milk value).

Since a goal in managed grazing is to harvest forage at the higher feed value stage, the production response is potentially more valuable than what was calculated initially. Therefore, assume consumption of half of the yield increase in the vegetative stage ($373.76 per ton DM) and half at 150 RFV ($150 per ton DM).

With these management improvements, the economic performance of other dry seasons could be improved over the economic performance initially calculated for 2009.

To see the potential for greater economic performance, eight scenarios were examined. The first four scenarios include:

  1. 1.5 ton DM yield gain at 150 RFV from 20 acres – the original reported 2009 results
  2. 1.5 ton DM yield gain at 150 RFV from 40 acres
  3. 1.5 ton DM yield gain (half at 150 RFV and half at vegetative stage) from 20 acres
  4. 1.5 ton DM yield gain (half at 150 RFV and half at vegetative stage) from 40 acres

The next four scenarios repeat the above scenarios with a yield response of 1.75 ton DM yield gain per acre, assuming irrigation started two weeks earlier (and longer), as hindsight says should have been done in 2009.

It’s obvious that when moisture is severely limited on a droughty soil, as it was for Paul Onan in 2009, this level of investment in irrigation equipment can produce enough of a yield response to more than pay the cost of irrigation in that year. But, can it pay for itself over the 20-year amortization period? How many non-response (wet) years can be subsidized by the economic gains of a dry year like 2009 in each of the eight potential scenarios?

 

*Column E = Ratio of Column C to Column D

Using Scenario 1 in table 2 as an example, the added value of increased yield per acre was $69.35 in 2009. The per-acre ownership and operating cost in 2010 was $126.68, nearly double the gain achieved in 2009. This shows us that it would take two years similar to 2009 to offset the irrigation costs in a no response year like 2010.

Because the other scenarios used more of the irrigation system’s capacity, their economic performance is better than scenario one. The other scenario results are possible in years as droughty or worse than 2009.

Conclusions
Without a production response, no investment in irrigation would pay.
Paul Onan’s Rosholt sandy loam soil has a relatively low water-holding capacity. Therefore an irrigation yield response is more likely from it than from many other Wisconsin soils.
Since Paul experiences 2009-like conditions (or worse) at least once every three years, and since the gain projected for several scenarios appear doable, it is likely that his irrigation system will pay for itself sooner than its 20-year amortization period.

Recommendations, Precautions
1. Inexperienced irrigation managers usually wait too long before starting to irrigate, and so forfeit some yield response.

  1. The operating cost for two acre inches was $21.25 in 2009. It would only take a dry matter yield increase of 283 lbs. of dry matter valued at $150 per ton to pay the operating cost for the two inches of water.

  2. More fertilizer will likely be required to consistently achieve higher yields from irrigation over a period of several years.

  3. Like any other capital investment, an irrigation system is more likely to pay for itself if used close to full capacity.

  4. Even if irrigation will pay for itself, producers should look to see if there would be another way to invest those dollars for a higher return.

  5. Managers of this study chose to use the K-Line system. While costs for equipment brands will vary, the same economic principles apply regardless of the irrigation equipment or system used.

  6. This study did not attempt to measure any environmental impacts associated with irrigation.

  7. Before investing in an irrigation system, producers should learn as much as they can about the principles of irrigation, the characteristics of their soils and micro climate. With this knowledge, projections for potential costs and gains can be made before investing. County Agricultural Agents can help find needed information.

For more information about this research, see http://cdp.wisc.edu.
Endnotes
Adapted from “Does It Pay To Irrigate Pasture In Wisconsin?” by Brian Nischke, Alex Crockford, and Tom Kriegl

Golden Sands Resource Conservation and Development Technician University of Wisconsin-Extension Langlade County Agricultural Agent

University of Wisconsin-Extension and Center for Dairy Profitability Farm Financial Analyst
The water holding capacity of several soils and much additional information about irrigation management is found in a NRCS 754 page irrigation guide.

From the March | April 2015 Issue

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