January 24, 2002

Market Advisor: Herbicide-Tolerant Soybeans Gain Wide Acceptance

By George Flaskerud, Crops Economist
NDSU Extension Service

Nearly 70 percent of the soybeans grown in the United States in 2001 were herbicide-tolerant. Farm-level effects of adopting these soybeans were estimated in a recent study by USDA. Highlights of the study are presented here while the full text is available in the Oil Crops Outlook Yearbook at http://www.ers.usda.gov/publications/OutlookReports.htm.

The study focused on the benefits of potential yield increases and cost savings. They recognized, however, that these benefits are just part of the reason for such wide acceptance by farmers. Simplicity and flexibility were given as other major reasons for adoption. One herbicide can control a broad spectrum of weeds without crop injury or crop rotation restrictions.

The analysis in the study was based on 1997 data collected by USDA in their Agricultural Resource Management Survey (ARMS). This was the latest detailed ARMS data available on herbicide-tolerant soybeans. Detailed enterprise production practices and cost data are collected every four to seven years.

As the authors pointed out, the age of the data was a drawback of the study. Only about 17 percent of the soybeans grown in 1997 were herbicide-tolerant and, of those, not many were grown in northern states. They also cautioned that just one year of data was used in the study.

They calculated yield and cost differences between adopters and non-adopters two ways. They calculated average differences and econometric differences derived from a model. Results from the model were favored because it separated out impacts from other factors such as production practices, soil productivity, farm size, and the managerial ability of farm operators.

Yield and cost differences between adopters and non-adopters varied considerably by production region, which was also the case in previous research cited by the authors. Results were reported for eight regions and the United States overall. Results from the Northern Great Plains and Heartland regions and the United States are covered here. The Heartland region reflected primarily Iowa, Illinois, Indiana and Ohio, which grew 56 percent of the herbicide-tolerant soybeans in 1997.

Weed control costs included expenses associated with herbicides, herbicide application, scouting, and cultivation. The costs did not include seed premiums and the technology fee.

A small 3 percent higher yield was experienced by the adopters in the United States according to econometric model results. Average differences between adopters and non-adopters were reported for the regions. The adopters experienced an average yield increase of 14 percent in the Heartland region and an 11 percent increase in the Northern Great Plains region. The authors felt that the averages overestimated the increases. They concluded that "the adoption of herbicide-tolerant soybeans has little or no impact on U.S. soybean yields." They reported that a Minnesota study also concluded that there were no yield differences.

Weed control costs for the adopters were lower than for the non-adopters in six regions according to the econometric model (favored method). Data was not available on two regions. Econometric model results were not available for the Northern Great Plains region and one other region. Costs were 11 percent lower in the Heartland region. The decreases varied from 1 to 34 percent across the six regions.

Farmers contemplating growing herbicide-tolerant soybeans will have to weigh the potential benefits against seed premiums and the technology fee. Potential yield increases and weed control cost savings may not be sufficient benefits. Simplicity and flexibility may be the benefits that are deciding factors.

The projected 2002 Crop Budgets for the South Valley in North Dakota include herbicide-tolerant soybeans (http://www.ext.nodak.edu/extpubs/ecguides.htm). They are projected to provide a net cash flow of $31.73 per acre . The net cash flow is based on a market yield of 32 bushels per acre, a price of $4.97 per bushel including the loan deficiency payment, and a sum of all listed costs of $127.31 per acre. The costs include $29.70 per acre for seed and $9.50 per acre for herbicides.

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Source: George Flaskerud, (701) 231-7377, gflasker@ndsuext.nodak.edu
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsuext.nodak.edu