Duration: 10/01/2025 to 09/30/2030

Administrative Advisor(s):

NIFA Reps:

Non-Technical Summary

Agricultural economists in the region have been meeting annually for many years to discuss ongoing research and extension activities being conducted at the various universities to address these issues. Recently, issues pertaining to conservation initiatives on marginal productive agricultural lands, sustainable production initiates, and communication of extension research have been identified as emerging issues for stakeholders in the region. The purpose of the Delta Region Farm Management and Agricultural Policy Working Group (SERA-35) has been to address these and other relevant issues and to analyze the impact of such issues on the economic viability of commercial farming operations in the region from a farm management and risk management perspective.

Statement of Issues and Justification

The lower Mississippi River Delta region of Arkansas, Louisiana, and Mississippi, along with adjacent production regions in those states, comprise one of the largest and most diverse agricultural production areas in the United States and is an area advantageous for commercial crop production. Its topography is well suited for large-scale mechanized agriculture consisting of, but not limited to corn, rice, and soybeans. These commodities represent the major agricultural row crops produced in the region, along with sizeable crop acreage devoted to the production of cotton, sorghum, and wheat as well. There are extensive surface water resources with more than 99,000 acres of perennial streams and lakes along with Oxbow lakes, created from past streams and river meanderings, are prevalent throughout the region. These lakes serve as water resources utilized for purposes of irrigation and recreation as well as flood control.

Commercial farming operations across the region share many similar characteristics of production and face common challenges. Although some differences exist across the region, machinery implements and production cost structures are relatively similar for major crops produced by states in the region. In addition, farming operations across the region also face similar current challenges related to the long term economic viability of row crop agricultural production. Some of these challenges or issues include: (1) adopting new production technologies to reduce per unit production costs, (2) determining optimal enterprise mix and farm size as production costs and commodity market opportunities change over time, (3) assessing and anticipating the impacts of rising fuel and fertilizer prices on farm profitability, and (4) understanding the changes in the recently passed farm bill and how those changes will affect on-farm management and crop production decision making.

Much of the research and extension activities of faculty within SERA-35 over the past few years have focused primarily on two farm management areas: commodity production cost estimation and agricultural commodity policy analysis. One of the primary objectives of this group has been to develop, estimate and publish annual production cost estimates of major agricultural enterprises in the region. This work requires major effort related to data collection of major production practices and input prices, computer model development and estimation of variable and fixed commodity production costs under a range of production technologies and practices. Recent commodity production cost publications produced by the three states, along with related farm planning and crop production economic analyses, are listed in the reference section of this proposal. Over the past few years, faculty members from the three states have spent a considerable amount of time educating agricultural producers regarding program decision options under the farm bill. This activity has included numerous presentations, publications, and other outreach efforts. A listing of each state’s 2018 farm bill information web site is listed in the reference section at the end of this proposal.

In addition to the farm management area of the group’s extension and research activities, conservation program and natural resource management topics have also been introduced to stakeholder groups in Arkansas, Louisiana, and Mississippi. These policy-oriented economic reports cover a range of topics such as: cover crop adoption and initiatives, surface water irrigation use efficiency, and forest land management. Faculty members have also provided applied work consisting of conservation policy adoption in whole farm cost and return modeling as well as economic impact statement of sector contribution.

Given these emerging areas of focus for SERA 35, communication efforts and outreach have also been discussed. As policy programs centering on commodity program support become more complex, there is a critical need to disseminate this information to stakeholder groups. Traditional print media, now coupled with internet blog posts, and webinars provide the foundation for effectively disseminating this information in a timely manner.

Related, Current and Previous Work

Published results of research conducted in the areas of farm management and resource allocation for farm firms producing field crops address a wide variety of topics. A review of previous and current research is presented as to its relevance pertaining to the major objectives of this SERA group. The first section reviews work relating to the estimation of enterprise costs and returns projections and enterprise budget analysis. The following sections review previous research related to the evaluation of the economic feasibility of alternative crop production technologies within a single enterprise as well as in a whole-farm context. 

Farm management can be defined as the process of making decisions about the allocation of scarce resources in agricultural production for the purpose of meeting certain management goals (Kay, et al., 2004). Although the scope of farm management may be subdivided in different ways, it generally includes the following management activities: deciding what to produce and how; using land; determining level of mechanization; determining scale of production; acquiring inputs; marketing products; forecasting price; acquiring and using funds; forecasting future financial needs; and keeping detailed records. Farm management decisions are made for the purpose of meeting certain business goals which have been established by the farm manager.

The application of the these farm management principles is best embodied in a set of projected costs and returns for a particular enterprise (e.g., rice). While the follwoing review of farm managment literature highlights altenative rice production systems, the priciples can be applied to similar crops produced in the Mississippi River Delta Region.

Economic research tied to hybrid rice production in Louisiana has documented the production cost and return differences associated with hybrid rice production (Deliberto and Salassi, 2010; Deliberto and Salassi, 2011; and Deliberto and Salassi, 2012). An economic evaluation of hybrid rice production in Arkansas, utilizing simulation methodology to compare net returns and net return variance (risk) across hybrid and conventional varieties, found that hybrid varieties exhibited mean paddy yield advantages relative to the best performing conventional variety and that the hybrid yield advantage was not associated with increased yield risk (Lyman and Nalley, 2013). Further research from the LSU AgCenter subsequently identified conventional and Clearfield as being more profitable on a per-acre basis relative to hybrid rice cultivars.

An alternative rice production practice concerning the irrigation water delivery system is gaining attention in the farm press. Research has been evaluating alternative wet and dry (AWD) rice production that grows rice without standing water. The AWD practice has the potential to reduce water application costs incurred by the producer, with early studies showing a slight yield advantage versus traditional paddy grown rice. Additional concerns with the AWD center on increased weed and disease pressures that may mount with the introduction of AWD. Row rice has attractive characteristics for producers located in northeastern Louisiana, as rice is commonly rotated with soybeans and planted on older soybean beds. Field efficiency savings can affect from the reduction in field trips (times over) and the construction/removal of rice levees. Therefore, economic work in developing the appropriate costs and returns of this system will justify any economic benefit to AWD adoption as compared with conventional surface or well-irrigated delivery systems on the profitability of production. Lower commodity prices coupled with the desire to reduce production expenditures are leading factors that will influence the adoption rate among producers. Research has supported the development of new rice production methods whose emphasis was on increasing water use efficiency (e.g., AWD) as an alternative production method of addressing concerns regarding groundwater depletion as well as greenhouse gas emissions (GHG) associated with rice production (Nalley, et al., 2015). International rice research has compared the productivity and the economic performance of different rice varieties using two different water management systems to enhance rice cultivation at the economic, environmental, and agronomic levels (Ben Hassen, et. al, 2017).

Climate-smart agriculture (CSA) is an integrated approach to managing landscapes—cropland, livestock, forests, and fisheries—that addresses the interlinked challenges of food security and accelerating climate change (World Bank, 2021). One of the key pillars of sustainability is economics. While reducing greenhouse gas emissions is essential, any climate action taken by rice producers must be evaluated in terms of investment cost and operational efficiency within their farm management plan (USA Rice, 2022). CSA can be economically evaluated (via enterprise budgeting and investment analysis) as to estimate the potential change in income of the rice operations implementing climate-smart practices compared to traditional or conventional production or cultivation methods. As a secondary measure, greenhouse gas emissions can be recorded (IRRI, 2019).

Beginning with The Agricultural Act of 2014, counter-cyclical price supports were maintained in farm bill statute via the Price Loss Coverage Program (PLC). This program operated similar to the target price program of the previous farm bill, albeit with a higher reference price to protect producers against downturns in market price. Most rice producers in all rice-producing states elected to participate in PLC. New agricultural income protection via the Agriculture Risk Coverage Program (ARC) concentrated support by focusing on historical moving averages of actual commodity income, with support levels and acreages covered set at some percentage level (86%). This type of farm program change can significantly increase the income risk associated with crop production, particularly for crops like rice which have relatively high production costs per acre. The introduction of subsidized crop insurance as a primary tool for risk management also represented a paradigm shift in the government’s role in protecting the economic safety net of American agriculture. With this new type of federal agricultural income support, research is warranted to address questions regarding how well these programs would mitigate agricultural income risk for rice producers and how it might impact farm production and planning decisions made on farms where rice is the primary commodity produced. In the current farm bill, The Agricultural Act of 2018, both the PLC and ARC programs were continued under Title I farm support.

With changes in provisions and program options over time, federal farm programs have continued to have a significant impact on the economic viability of rice production in the United States. As a result, analysis of farm program provisions specific to rice has continued to be an important area of agricultural economics commodity research. Changes in government programs provisions and growing public concerns about GHG emissions from agriculture will also likely make rice producers more vulnerable to changing market conditions and place further weight on using production practices that reduce key production inputs and input costs (Watkins, 2018). Rice production costs are also largely relative to other field crops like soybeans or corn and are greatly impacted by prices paid for fuel and fertilizer. Higher production costs associated with rice production serve to reduce producer profit margins, making rice producers largely dependent on government payments to achieve profitability (Watkins, 2013).

The 2014 farm bill placed a greater reliance on crop insurance in an effort to strengthen the risk management suite of federal farm programs that comprise the “farm safety net.” Traditional yield and revenue protection policies remain in force, with a new program that begun in 2015 that offer area-wide shallow loss revenue protection, the supplemental coverage option (SCO). The margin protection program (MPP) is available to rice producers that provides coverage based on an expected margin, which is the expected area revenue minus the expected area operating costs (USDA, RMA, 2017). Selecting a crop insurance product involves a critical management decision concerning the farm’s ability and willingness to bear risk.

Participation in conservation programs can act to provide financial compensation to eligible producers. Rice farms in Louisiana can participate in easement on marginally productive rice fields. By doing so, marginal land that not able to achieve a satisfactory yield to cover production costs, may be enrolled in a conservation program in exchange for a conservation program payment. The conservation payment represents an income payment to the producer. The degree that a conservation payment would offset crop revenue is difficult to predict without assuming the necessary break-even yield for a particular tract. By using farm records, a producer can determine if the site productivity of a tract will cover variable production expenditures. If the tract will not meet the break-even production level, the question is: will the production loss be greater than a conservation payment? If the conservation payment is greater than the anticipated loss, the conservation payment can supplement farm income. The 2014 farm bill authorized the USDA Natural Resource Conservation Service (NRCS) to create a new conservation program known as the Regional Conservation Partnership Program (RCCP). Funds are competitively awarded for conservation projects designed by local partners in their region to improve water use efficiency, water quality, and wildlife habitat (USA Rice, 2015).

Objectives

1. Host an annual meeting for the purpose of communicating ongoing research and extension programs in farm management and production economics, identify research and extension needs, and discuss approaches for addressing those needs.
   
2. Continue the development of computer software and databases to support the estimation and publication of production costs for major agricultural commodities in the Arkansas, Louisiana and Mississippi Delta and adjacent production areas in other states as needed.
   
3. Evaluate implications of new production technologies, farm policy changes and other factors on the production economics of major crops in the region, including corn, cotton, rice, sorghum, soybeans, sugarcane, and wheat.
   

Methods

Objective one encompasses one of primary activities of this group, that is, to meet annually for the purpose of information exchange related to research and extension activities in the area of farm management and production economics. Members will have the opportunity to give presentations on various research and extension efforts in their respective states, both in terms of general objectives as well as specific research and/or extension activities. Through group discussion, research and extension needs in the farm management/production economics area will be identified along with potential approaches to address these needs.

Objective two will be accomplished through the continuation of ongoing collaborative work related to the estimation of production costs for major agricultural commodities in the region. The Mississippi State Budget Generator will continue to be the primary quantitative tool used in developing production cost budgets for various crop production systems commonly found across the region. Much of the current focus is on developing spreadsheet-based software capable of estimating projected values of variable and fixed production costs for agricultural enterprises in the region. Furthermore, as new crop production technologies are developed and adopted, enterprise budgets will need to be developed to reflect production practices associated with this technology as well as the expected production costs. Expected outcomes from this activity will include development of agricultural production databases which can be utilized for research and analysis of various farm management and policy issues as well as the annual publication of estimated production costs for major row crops and production technologies.

Objective three represents a collection of efforts through research and extension to address a variety of issues and factors which become relevant over time and have a direct impact on the economic viability and financial performance of agricultural farming operation. Examples such as the development of new crop production technologies, changes in farm program provisions, changes in commodity supply and demand market structures represent the types of factors which would be evaluated. A variety of research methods, including whole farm financial simulation, would be utilized to identify likely economic outcomes. This research would then provide information which could be communicated to agricultural producers through a variety of extension efforts.

Measurement of Progress and Results

Outputs

• The development and release of projected enterprise budgets and applied farm managment decision tools for extension faculty. Comments: Specific activities of most crop production extension education programs include publication of annual enterprise budget for corn, cotton, grain sorghum, rice, soybeans, sugarcane and wheat crops; design and development of educational risk management-focused farm program commodity payment projections tools for producers and stakeholders; and spreadsheet-based software programs emphasizing partial budgeting and cash flow budgeting for multiple crop enterprises on an annual basis.

Outcomes or Projected Impacts

• Through the release of enterprise budgets, extension faculty and producers are able to develop farm mangament plans based on expected costs, returns, and profitabiity of alternative crops and production systems.

Milestones

Projected Participation

View Appendix E: Participation

Outreach Plan

This SERA group would include participants in the farm management area of the agricultural economics discipline. The activity would be a multi-state effort with primary research and extension participants from the states of Arkansas, Louisiana and Mississippi. Research activities will focus on the production economics of major agricultural row crops in the region. This activity is primarily related to three of the five federal-state partnership goals as specified by the Southern Association of Agricultural Experiment Station Directors (Goals 1, 4, and 5). These three goals, with relevant activities from this proposed SERA group identified, include: Goal 1: An agricultural system that is highly competitive in the global market (integrated and sustainable agricultural production systems, precision agriculture, competitiveness in international markets), Goal 4: Greater harmony between agriculture and the environment (multiple uses of agricultural lands, nutrient management in agricultural systems, environmental policy and regulations), and Goal 5: Enhanced economic opportunity and quality of life for Americans (economic and policy analysis of agricultural industrialization, risk management and assessment in agricultural systems). Extension activities will be in the area of production agriculture, focusing on research and the development and dissemination of educational information and programs which can assist producers facing farm management and crop production decisions contributing to the long term economic viability of production agriculture across the region.

Organization/Governance

A chairman for the SERA group will be selected on an annual basis. An executive board of the SERA group will form the primary decision making body. Each of the three states (Arkansas, Louisiana and Mississippi) shall have a representative on the executive board.

This group will have a formal meeting annually to be held at a mutually agreed upon time and location. Furthermore, additional meetings may be held on an as needed basis to facilitate collaborative research and extension activities of the group.

One of the primary activities of this group will be to seek external funding opportunities to support the group’s research and extension objectives. Potential external funding sources will include competitive grants as well as external funding from stakeholder groups and other sources.

Literature Cited

Deliberto, M. and B. Hilbun. Cotton, Corn, and Soybean Net Return Comparison Decision Aid. Louisiana State University AgCenter. Department of Agricultural Economics and Agribusiness. Staff Report No. 2025-06. January 2025.

Deliberto, M. and B. Hilbun. Provisia^® Rice Enterprise Budget for 2025. Louisiana State University AgCenter. Department of Agricultural Economics and Agribusiness. Staff Report No. 2025-05. January 2025.

Deliberto, M. and B. Hilbun. Estimated Furrow Irrigated Rice Crop Budgets for Northeast Louisiana. Louisiana State University AgCenter. Department of Agricultural Economics and Agribusiness. Staff Report No. 2025-04. January 2025.

Deliberto, M. and B. Hilbun. Evaluating Rice Rental Arrangements Under the Price Loss Coverage Program as Specified in the 2018 Farm Bill. Louisiana State University AgCenter. Department of Agricultural Economics and Agribusiness. Staff Report No. 2025-03. January 2025.

Deliberto, M. and B. Hilbun. Projected 2025 Rice Farm Cash Flow Model. Louisiana State University AgCenter. Department of Agricultural Economics and Agribusiness. Staff Report No. 2025-02. January 2025.

Deliberto, M. and B. Hilbun. 2025 Projected Sugarcane Production Farm Costs and Returns Model. Louisiana State University AgCenter. Department of Agricultural Economics and Agribusiness. Staff Report No. 2025-01. January 2025.

Deliberto, M. and B. Hilbun. Projected Costs and Returns Crop Enterprise Budgets for Wheat Production in Louisiana, 2025. Louisiana State University Agricultural Center. Department of Agricultural Economics and Agribusiness. Agricultural Economic Information Report Series Publication No. 383. January 2025.

Deliberto, M. and B. Hilbun. Projected Costs and Returns Crop Enterprise Budgets for Rice Production in Louisiana, 2025. Louisiana State University Agricultural Center. Department of Agricultural Economics and Agribusiness. Agricultural Economic Information Report Series Publication No. 382. January 2025.

Deliberto, M. and B. Hilbun. Projected Costs and Returns Crop Enterprise Budgets for Sorghum Production in Louisiana, 2025. Louisiana State University Agricultural Center. Department of Agricultural Economics and Agribusiness. Agricultural Economic Information Report Series Publication No. 381. January 2025.

Deliberto, M. and B. Hilbun. Projected Costs and Returns Crop Enterprise Budgets for Corn Production in Louisiana, 2025. Louisiana State University Agricultural Center. Department of Agricultural Economics and Agribusiness. Agricultural Economic Information Report Series Publication No. 380. January 2025.

 

Deliberto, M. and B. Hilbun. Projected Costs and Returns Crop Enterprise Budgets for Soybean Production in Louisiana, 2025. Louisiana State University Agricultural Center. Department of Agricultural Economics and Agribusiness. Agricultural Economic Information Report Series Publication No. 379. January 2025.

Deliberto, M. and B. Hilbun. Projected Costs and Returns Crop Enterprise Budgets for Cotton Production in Louisiana, 2025. Louisiana State University Agricultural Center. Department of Agricultural Economics and Agribusiness. Agricultural Economic Information Report Series Publication No. 378. January 2025.

Deliberto, M. and B. Hilbun. Projected Costs and Returns Crop Enterprise Budgets for Sugarcane Production in Louisiana, 2025. Louisiana State University Agricultural Center. Department of Agricultural Economics and Agribusiness. Agricultural Economic Information Report Series Publication No. 377. January 2025.

Ben Hassen, M., F. Monaco, A. Facchi, M. Romani, G. Vale, and G. Sali. “Economic Performance of Traditional and Modern Rice Varieties under Different Water Management Systems,” Sustainability 9(3), 2017.

Deliberto, M., and M. Salassi, “Economic Risk and Return Analysis of Hybrid Rice

Production in Louisiana,” Proceedings:  Thirty-Fourth Rice Technical Working Group, p. 159,

Louisiana State University Agricultural Center, 2012.

 

Deliberto, M. and B. Hilbun, Projected Costs and Returns Crop Enterprise Budgets for Rice Production in Louisiana, 2021. Louisiana State University Agricultural Center. Department of Agricultural Economics and Agribusiness. AEA Publication No. 353. January 2021.

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International Rice Research Institute (IRRT). “Climate-Smart Practices for Intensive Rice-Based

Systems in Bangladesh, Cambodia, and Nepal”, Asian Development Bank, October 2019.

 

Kay, R., W. Edwards, and P. Duffy. Farm Management, Fifth edition, McGraw-Hill, Inc., New York, NY, 2004.

Laughlin, D. and S. Spurlock, User’s Guide for the Mississippi State Budget Generator, Version 6.0 for Windows, Mississippi State University, Department of Agricultural Economics, 2007.

Lyman, N., and L. Nalley, “Stochastic Valuation of Hybrid Rice Technology in Arkansas,” selected paper, Southern Agricultural Economics Association Annual Meeting, Orlando, FL, February 3-5, 2013.

Nalley, L., B. Linquist, K. Kovacs, and M. Anders, “The Economic Viability of Alternative Wetting and Drying Irrigation on Arkansas Rice Production,” Agronomy Journal 107:579-587, 2015.

Nalley, L., J. Tack, A. Barkley, K. Jagadish, and K. Brye, “Quantifying the Agronomic and Economic Performance of Hybrid and Conventional Rice Varieties,” Agronomy Journal 108:1514-23, 2016.

Richardson, J., S. Klose, and A. Gray, “An Applied Procedure for Estimating and Simulating Multivariate Empirical (MVE) Probability Distributions in Farm-Level Risk Assessment and Policy Analysis,” Journal of Agricultural and Applied Economics, Vol. 32, No. 2, pp. 299-315, August 2000.

United States Department of Agriculture. Risk Management Agency. Margin Price Provisions Rice, 18-MPP, May 2017.

USA Rice Federation, “Rice Stewardship: Sustaining the Future of Rice”, October, 2015.

USA Rice Federation. “Industry Update”, Rice Farming Magazine, March 2022.

Watkins, K., “Economic Analysis of Alternative Management Practices, Cropping Systems, and Government Policies on Arkansas Rice Production,” USDA NIFA Project ARK01982, 2013.

Watkins, K., “Economic Analysis of Input Management and Government Policies on Arkansas Row Crops,” USDA NIFA Project ARK02408, 2018.

Watkins, K., T. Hristovska, and M. Anders, “Stochastic Analysis of Monetary Benefits to Multiple Inlet Irrigation in Arkansas Rice Production,” Thirty-Fourth Rice Technical Working Group Meeting Proceedings, Hot Springs, AR, February 27-March 1, 2012, p. 151.

Watkins, K., D. Gealy, M. Anders, and R. Mane, An Economic Risk Analysis of Weed-Suppressive Rice Cultivars in Conventional Rice Production. Journal of Agricultural and Applied Economics, 50(4), 478–502, 2018.

Watkins, K., A. McClung, and R. Mane, Economic Risk Analysis of Rice Cultivars under Organic and Conventional Management. Selected Paper at the 2018 Southern Agricultural Economics Association Meeting, February 2-6, 2018. 

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Attachments

Land Grant Participating States/Institutions

Non Land Grant Participating States/Institutions