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Assessing Investment Risk of Irrigation in Humid Climates

1996; Wiley; Volume: 9; Issue: 2 Linguagem: Inglês

10.2134/jpa1996.0228

2689-4114

E. C. Martin, J. T. Ritchie, Brian Baer,

Climate change impacts on agriculture

Journal of Production AgricultureVolume 9, Issue 2 p. 228-233 Research Assessing Investment Risk of Irrigation in Humid Climates E. C. Martin, Corresponding Author E. C. Martin [email protected] Dep. of Agric. and Biosystems Engineering, Univ. of Arizona Agric. Cen., Maricopa, AZ, 85239 Corresponding author ([email protected]).Search for more papers by this authorJ. T. Ritchie, J. T. Ritchie Dep. of Crop and Soil Sci., Michigan State Univ., East Lansing, MI, 48824Search for more papers by this authorB. D. Baer, B. D. Baer Dep. of Crop and Soil Sci., Michigan State Univ., East Lansing, MI, 48824Search for more papers by this author E. C. Martin, Corresponding Author E. C. Martin [email protected] Dep. of Agric. and Biosystems Engineering, Univ. of Arizona Agric. Cen., Maricopa, AZ, 85239 Corresponding author ([email protected]).Search for more papers by this authorJ. T. Ritchie, J. T. Ritchie Dep. of Crop and Soil Sci., Michigan State Univ., East Lansing, MI, 48824Search for more papers by this authorB. D. Baer, B. D. Baer Dep. of Crop and Soil Sci., Michigan State Univ., East Lansing, MI, 48824Search for more papers by this author First published: April-June 1996 https://doi.org/10.2134/jpa1996.0228Citations: 9 The authors would like to acknowledge contributions made by Fred Henningsen, Michigan Coop. Ext., retired, Dr. R. Black, Dep. of Agric. Economics, and Sharlene Rotman, admin. asst., Michigan State Univ. Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onEmailFacebookTwitterLinkedInRedditWechat Abstract Michigan has an estimated 475 000 acres of irrigated land. The irrigation is used to supplement seasonal rainfall during short periods of drought. Many row crops such as corn (Zeamays L.), soybeans [Glycine max (L.) Merr.], potatoes (Solanum tuberosum L.), and dry beans (Vicia faba L.) are under sprinkler irrigation systems. Much of the tree fruit acreage is also irrigated, using mainly drip/trickle systems. Though irrigation usually results in higher yields and income, it is possible that the expense of owning and operating an irrigation system outweighs income benefits if calculated over several years. The Irrigation Cost Analysis Program (ICAP) has been designed as a tool for assessing the risk associated with investing in an irrigation system for corn production. Using inputs such as purchase price, annual finance rate, production costs for irrigated and nonirrigated crops (e.g., fertilizer, seed, fuel, etc.), yield related costs, and irrigation costs, a user gains insight into the factors affecting the profitability and risk of such an investment. Using the validated CERES-Maize growth simulation and water balance model in conjunction with weather, management, and economic data, ICAP provides estimates on 30 yr net profit for irrigated and nonirrigated corn crops, and the increase in yield necessary to pay the increased costs. Research Question Use of irrigation to supplement water requirements is becoming increasingly common in many humid areas. The supplemental irrigation helps to offset the effects of short term drought and help maintain crop yield. However, there are hidden risks involved with investing in an irrigation system. Quite often, the costs associated with owning and operating an irrigation system can be greater than the economic benefits. To help growers better identify the risks, a computer program called Irrigation Cost Analysis Program (ICAP) was developed. ICAP uses information entered by the user in conjunction with yield and water use data generated from a growth simulation model, to help growers evaluate the economic risks involved in purchasing an irrigation system for corn production. Literature Summary Traditionally, programs that evaluate the cost:benefit of investment look only at the averages and do not take into consideration the highs and lows. Many of the input parameters are also lumped together into one large category. There are many changes, however, that occur when switching from dryland to irrigated strategies. Input costs increase with irrigated agriculture because more seeds per acre can be planted and the yield potential is higher, which causes increases in nutrient inputs. There are also additional trucking, drying, and harvesting costs associated with higher yielding irrigated strategies. All of these inputs must be considered. Most programs merely evaluate dry, medium, and wet years. ICAP uses 30 yr of weather in conjunction with the CERES-Maize growth simulation and water balance model to help determine the range of yields and irrigation water use values. A side-by-side comparison of dryland and irrigated management is given to allow the user to assess the economic risks involved in investment. Study Description A computer program was developed for the corn growers of Michigan. Data are available for the top 20 corn producing counties in the state. There are default data for all of the inputs for the program including system cost, repairs and maintenance costs, yield dependent costs, etc. However, the user is encouraged to enter real costs that they incur. The program is user-friendly, allowing the user to run several sets of data and make comparisons and answer “what if” questions. Applied Questions What are the risks involved in investing in an irrigation system for corn production in Michigan? Obviously, there is no single answer for this question. Each farm is different, with different costs and different expectations. However, the program did show that investment in an irrigation system did not necessarily guarantee more profit. It showed that a grower could lose money by investing in a system due to poor weather or the additional costs associated with owning and operating an irrigation system. It also demonstrated that the high net profits obtainable with a nonirrigated strategy may not be obtainable with an irrigated strategy. How will irrigation affect my profitability in corn production? The program helps to show how investment in an irrigation system helps to stabilize net profit. Depending on location and soil type, investing in an irrigation can help stabilize yields, reducing the potential for high gains and losses. The programs also helps illustrate how other costs associated with irrigation affect net profit. References Algozin, K.A. 1986. Evaluation of irrigation scheduling strategies for optimum resource use and economic returns in Michigan. M.S. thesis. Michigan State Univ. Dep. of Resour. Devel., East Lansing, MI. Google Scholar Algozin, K.A., Bralts, V.F., Ritchie, J.T. 1988. Irrigation strategy selection based on yield, water and energy use relationships: A Michigan example. J. Soil Water Conserv. 43(5): 428–431. http://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcApp=PARTNER_APP&SrcAuth=agrocropsoil&KeyUT=A1988Q949800024&DestLinkType=FullRecord&DestApp=WOS_CPL&UsrCustomerID=523bbf5d2a868de7bbaeea0bc70ec0e4 Google Scholar Boggess, W.G., Ritchie, J.T. 1988. Economic and risk analysis of irrigation decisions in humid regions. J. Prod. Agric. 1: 116–122. 10.2134/jpa1988.0116 Google Scholar Carberry, P.S., Muchow, R.C., McCown, R.L. 1989. Testing the CERES-Maize model to estimate production in the U.S. cornbelt. Agric. For. Meteorol. 40: 293–303. Google Scholar Loudon, T.L. 1994. 1993 Irrigation Survey. 26–41 Irrigation journal. Vol. 44(1). Adams Publishing Co., Cathedral City, CA. Google Scholar Martin, E.C., Ritchie, J.T., Loudon, T.L. 1985. Use of the CERES-Maize model to evaluate irrigation strategies Proc. Natl. Conf. on Adv. in Evapotranspiration Chicago, 16–17 Dec. ASAE, St. Joseph, MI. Google Scholar Michigan Energy Conservation Program for Agriculture and Forestry. 1991. Irrigation management and scheduling summary report. Michigan State Univ. Dep. of Agric. Engineering. Google Scholar Nott, S.B., Schwab, G.D., Shapley, A.E., Kelsey, M.P., Hilker, J.H., Copeland, L.O. 1989. Estimates for Michigan crop and livestock budgets, 1989. Michigan State Univ. Dep. of Agric. Economics Rep. no. 524 Google Scholar Piper, E.L., Weiss, A. 1990. Evaluating CERES-Maize for reduction in plant population or leaf area during the growing season. Agric. Sys. 33(3): 199–213. https://doi.org/10.1016/0308-521X(90)90049-V Google Scholar Richardson, C.W., Wright, D.A. 1984. WGEN: A model for generating daily weather variables USDA-ARS-8 Google Scholar Ritchie, J.T., Singh, U., Godwin, D., Hunt, L. 1989. A user's guide to CERES-Maize-V2.10. Int. Fert. Devel. Cent., Muscle Shoals, AL. Google Scholar Schwab, G., Black, R. 1989. IRRIGATION: Economic considerations you should make before investing. Michigan State Univ. Dep. of Agric. Economics Staff Paper 89-35 (V3R) Google Scholar Citing Literature Volume9, Issue2April-June 1996Pages 228-233 ReferencesRelatedInformation