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Underground Investments - Ohio Farmer

Is subsurface drainage a profitable tool or money down the drain?


Ag drainage contractor Ronald Cornwell says his toughest competition doesn't come from other area drainage contractors, it comes from the new combines, pick-up trucks and other shiny machines farmers would rather sp money on. "My biggest competitor is new paint," he says. "You install the tile below ground and it's invisible. Too many times it's out of sight, out of mind." However, poor drainage can affect yields much more than an old combine will, says Cornwell, a partner in Cornwell & Sons, Inc. from Mt. Blanchard, Ohio.

Often a subsurface drainage system will pay for itself in 10 years or less with increased yields, Cornwell says. Although the initial price of a system may seem high, spreading the cost over 10 years puts it in better perspective. In comparison, consider the cost of weed control, Cornwell suggests. If you sp $40 per acre each year for weed control, you will sp $400 per acre over 10 years. "That's the cost of a drainage system," Cornwell notes. "And after the 10 years you'll still have to pay for weed control."

In addition to the value of increased yield, farmers may also want to consider their need for drainage to ext the number of days suitable for field work, says Norm Fausey, soil scientist and research leader with the USDA Ag Research Service. This is particularly important for large-scale farmers, he notes. "As the scale gets bigger, time windows get tighter and tighter," he explains.

The yield increases that result from improved subsurface drainage vary, but the improvements can be significant, according to Larry Brown, Ohio State University Extension Ag Engineer. For instance, an 11-year Ohio State study on Hoytville silty clay soil showed subsurface drainage can improve average corn yields by 20 to 30 bu. per acre in plowed and ridge tilled fields. For soybeans, the study showed drainage can improve yields by 7 to 14 bu. per acre.

To estimate how much a new or updated subsurface drainage system will improve yields in a particular field, consider soil type, water table characteristics, and drain spacing and depth, Brown recomms. Local Soil and Water Conservation Districts and Ohio State Extension offices can help you gather this information.

Brown is currently working with a team of more than 75 specialists from government agencies and the university to revise the drainage guide for Ohio. The team expects to have new soils tables and drainage recommations finalized by the of the year.

Ohio State researchers are also studying drainage systems that may improve yields even more and also provide environmental benefits, Brown says. For instance, ponds or wetlands for collection of drainage water and control structures allow farmers to conserve water for use later in the season and also reduce loss of nutrients which can pollute water downstream. "Advances are coming in how we manage these systems," he says.

To estimate the return on an investment in subsurface drainage you'll need to consider a range of factors including expected yield improvement, crop prices, tax depreciation, and price of the drainage system, according to Kevin Rapp, ag marketing manager for Advanced Drainage Systems, Inc. (ADS). To help farmers estimate the return on an investment in drainage, ADS has developed a spreadsheet analysis program available through local ADS representatives and ADS contractors.

The analysis starts with inputs from the grower, including acreage, drainage project cost, loan payment schedule and interest rate, crop and estimated yield improvement, buyer's tax bracket, and a 'disaster factor.' The disaster factor shows the extra advantage a drainage system provides in a year with unfavorable weather, Rapp explains. Farmers usually expect to see at least one crop failure every 10 years related to excessive rain or drought. Good drainage reduces the impact of either weather extreme, giving farmers with good drainage a significant advantage, according to Rapp.

The analysis shows ten years of cash flow data as well as an estimate of the percent return on investment and the break even year&emdash;the year in which cumulative cash flow will exceed the purchase price of the drainage project. The analysis also calculates the additional bu. per acre needed each year to cover the total annual cash outlay for principal loan payment, interest expense and operation expenses for the drainage system.

As an example, consider a $45,000 drainage project on a 100 acre field. Using an estimated corn yield benefit of 33 bu. per acre and corn price of $2.50, the analysis shows the value of additional yield to be $8,250 per year. In a 'disaster' year the additional yield would be worth $16,500. Assuming one disaster year, it would take 9 years for the system to pay for itself. The return on investment would be 119 percent. If the estimated yield advantage is increased to 35 bu. per acre, the analysis shows a break even point of eight to nine years and a 129 percent return on investment.