Economic analysis of alternative herbicide regimes on roundup ready soybeans

Roundup (glyphosate) is a nonresidual herbicide that controls grasses and d icot weeds but is injurious to soybeans. The development of Roundup-resista nt soybeans [Glycine max (L.) Merr.] (Roundup Ready soybeans) by Monsanto c ould allow farmers to substitute Roundup for all other herbicides to reduce production costs and weed control risk. Field trials at the University of Tennessee Milan Experiment Station from 1995 through 1997 were used to comp are 1997 returns above variable costs for Roundup and 11 other herbicide sy stems on conventionally tilled, Roundup Ready soybeans. Although yields of only four herbicide systems on Roundup Ready soybeans were significantly lo wer than the yield of Roundup on Roundup Ready soybeans, net returns of nin e systems were significantly lower. The significantly lower net returns res ulted mostly from higher herbicide costs. Chemical companies would have to reduce the costs of most non-Roundup herbicide systems to unreasonably low levels (close to or less than zero) before farmers would have an economic i ncentive to use them instead of Roundup on Roundup Ready soybeans. Budgeted production costs for Roundup on Roundup Ready soybeans (Roundup Ready seed at $26/50 lb bag) were also compared with budgeted production costs for th e non-Roundup herbicide systems on conventional soybean varieties (public-d omain seed at $10.50/50 lb bag). Seven of the 11 non-Roundup herbicide syst ems on conventional varieties had costs that were greater than Roundup on R oundup Ready soybeans, suggesting that lower seed costs for the non-Roundup systems were more than offset by higher herbicide costs. Yields required t o cover the cost differences between the non-Roundup herbicide systems and Roundup on Roundup Ready soybeans were calculated. These yield differences were added to the experimental yield obtained with Roundup on Roundup Ready soybeans to arrive at a break-even yield. A decision criterion for profit- maximizing farmers was developed from these break-even yields; if a profit- maximizing farmer expects to receive a yield from his/her highest-yielding conventional variety that is less than the break-even yield, the farmer sho uld consider planting Roundup Ready soybeans to obtain a higher expected pr ofit. If the decision criterion suggests staying with the conventional vari ety, the farmer should consider the nonbudgeted benefits of Roundup Ready s oybeans, such as improved timeliness of planting and reduced weed control r isk, before making the decision. To obtain more conclusive evidence about t he relative profitability of Roundup Ready soybeans, future research should include side-by-side variety trials, more years of data, and no-tillage pr oduction methods.