Optimizing precision conservation with on-farm precision experiment data: The role of crop insurance and spatially variable profit

Abstract

The study presents a land retirement framework that retires the least profitable portion of a field for conservation landcover. Our approach incorporates heterogeneity in optimal input use and profit within a field as well as impacts on crop insurance expenditures. Our approach also incorporates the potential for edge effects and changes in machinery overhead costs. Using on-farm precision experiment data from a midwestern corn field as a case study, we test our framework and compare the profit-maximizing land retirement strategy under alternative crop insurance approaches for partial-field land retirement. In our case study, optimal land retirement increases per-acre profit by $14.27, $27.95, or $32.21/acre in the no insurance, constant insurance, and adjusted insurance cases, respectively. Our general model shows that including crop insurance expenditures should increase the optimal amount of land in retirement (conservation), but the magnitude of the effect depends on the yield and profit heterogeneity within a field. In the most profitable land retirement strategy for our case study data, including crop insurance expenditures increases optimal land retirement by 3.4 %. Incorporating adjustments to average yield in crop insurance premiums generates 2.89 % ($4.26/acre) more profit compared to an estimation that ignores the impact of partial-field land retirement on yield.