ECONOMIC ANALYSIS OF VARIABLE RATE APPLICATIONS OF IRRIGATION WATER IN CORN PRODUCTION

Authors: Lu, Yao; Sadler, Edward; Camp Jr, Carl

Submitted to: Irrigation Associations Exposition and Technical Conference Proceedings
Publication Type: Proceedings
Publication Acceptance Date: 10/7/2003
Publication Date: 11/17/2003
Citation: Lu, Y.C., Sadler, E.J., Camp Jr, C.R. 2003. Economic analysis of variable rate applications of irrigation water in corn production. In proceedings of Irrigation Associations Exposition and Technical Conference Proceedings. CDROM.

Interpretive Summary: Water is a precious resource and its supply is limited in many locations. Traditionally, farmers applied the same rate of water over the entire field. As a result, some areas were under applied while others were over applied, resulting in waste of water and lower profits. The variable rate application (VRA) of irrigation water applies precise amounts of water to specific areas where and when plants need them for optimal growth. This paper compared economic returns of two VRA strategies with four uniform application strategies in corn production. The results indicate that the two VRA strategies yielded larger net returns than all four uniform application strategies. Of the two VRAs, the profit-maximizing strategy conserved more irrigation water and produced larger net returns than the yield-maximizing strategy. However, the VRT applications require additional machinery and equipment. To be adopted by producers, the benefits of reduced irrigation water cost plus the value of increased yields or quality of corn must be greater than the additional costs associated with the VRT application. Because the VRT system used in this experiment was built for experimental research purposes, the costs were much higher than those would have been used for commercial growers. Thus, the VRT system built for the experiment is not profitable. Even for the commercial system, the additional costs of VRT machinery and equipment are more than the benefits of VRT. Thus, at present, the VRT application of irrigation water is not profitable compared to uniform applications. However, the costs of these machinery and equipment would be much smaller when precision irrigation technology is widely adopted by producers and these machines and equipment are mass-produced.

Technical Abstract: This paper compared economic returns of variable rate applications (VRA) of irrigatin water versus uniform applications in corn production. The data were obtained from an experiment conducted at the site-specific center pivot irrigation facility at Florence, SC, USA, during the 1999-2001 seasons. A water production function was estimated for each of the 396 plots for each year. Net returns from two VRA water application strategies (yield-maximizing and profit-maximizing) were compared with four uniform application strategies (yield-maximizing, profit-maximizing, Irr100, and IrrET). Irr100 is the 100% of irrigation base rate and IrrET is an amount that would have matched ET (evapotranspiration) exactly. The results indicate that the VRA applications yielded larger net returns than the uniform applications. Of the two VRAs, the profit-maximizing strategy conserved more irrigation water and produced larger net returns than the yield-maximizing strategy. However, the VRT applications require additional and equipment and control. The benefits of reduced irrigation water cost plus the value of increased yields or quality of corn must be greater than the additional costs associated with the VRT application. Because the VRT system used in this experiment was built for experimental research purposes that required additional details and resolution, the costs were much higher than those would have been used for commercial growers. Even for the commercial system, the additional costs of VRT machinery and equipment are more than the benefits. Thus, at present, the VRT application of irrigation water is not profitable compared to uniform applications. However, the costs of these equipment and controls are declining. Furthermore, the costs would be much smaller when VRT is widely adopted by producers and these equipment and controls are mass-produced.