Understanding the Production Risk of Conservation Tillage Practices

Abstract

This study examines the effects of different degrees of conservation tillage methods on agricultural production losses. To accomplish this objective, we employ a unique county-level panel dataset containing data on conservation tillage acreage, crop insurance losses, and weather variables. The data encompasses corn and soybean production in the states of Iowa and Illinois spanning from 2005 to 2019. We employ the traditional fixed effect econometric model and conducted several robustness tests in the empirical research utilizing disaggregated monthly weather variables and extended duration aggregated weather variables. Evidence indicates that counties with elevated no-till practices tend to have greater overall farm losses, whereas counties with increased reduced till practices are likely to incur lower overall farm losses. Overall, our findings indicate that reduced tillage may mitigate agricultural output risk and serve as an effective climate change adaptation strategy in US agriculture. These results provide insights for policymakers aiming to consider integrating conservation tillage into risk management programs or subsidies more effectively by differentiating subsidies by tillage types.