evaluating the profitablity of pearl millet as a …
TRANSCRIPT
EVALUATING THE PROFITABLITY OF PEARL MILLET AS A NUTRIENT
MANAGEMENT PRACTICE BASED ON TWO CASE STUDY FARMS IN THE
SOUTHEASTERN PIEDMONT REGION OF GEORGIA
By
KENNETH CARTER DUNN
(Under the Direction of Cesar L. Escalante)
ABSTRACT
Georgia leads the U.S. in broiler production, and the Southeastern Piedmont region of
Georgia is dominated by its highly integrated and increasingly clustered broiler industry. As a
result, Georgia also leads in broiler litter generation. Broiler litter is most commonly disposed of
through field applications as a fertilizer, and excessive use impacts environmental quality due to
high levels of phosphorus contained in broiler litter. Management practices that better utilize
excessive nutrients while earning the producer profit are needed in this region. This study
analyzes the economic viability of pearl millet as a nutrient management practice based on two
case study farms. The analysis is addressed through the use of enterprise budgeting, sensitivity
analysis, and break-even analysis. Collected data on nutrient runoff was analyzed and compared
to the results of the economic analyses, pre and post-pearl millet implementation. From this, the
profitability of pearl millet as a nutrient management technique is determined.
INDEX WORDS: Pearl Millet, Enterprise Budget, Sensitivity Analysis, Break-even Analysis
EVALUATING THE PROFITABLITY OF PEARL MILLET AS A NUTRIENT
MANAGEMENT PRACTICE BASED ON TWO CASE STUDY FARMS IN THE
SOUTHEASTERN PIEDMONT REGION OF GEORGIA
by
KENNETH CARTER DUNN
B.S.A., University of Georgia, 2005
A Thesis Submitted to the Graduate Faculty of University of Georgia in Partial Fulfillment of the
Requirements for the Degree
MASTER OF SCIENCE
ATHENS, GEORGIA
2008
© 2008
KENNETH CARTER DUNN
All Rights Reserved
EVALUATING THE USE OF PEARL MILLET TO REDUCE NUTRIENT RUNOFF IN THE
SOUTHEAST PIEDMONT REGION OF GEORGIA
by
KENNETH CARTER DUNN
Major Professor: Cesar L. Escalante
Committee: R. Curt Lacy Dorcas H. Franklin
Electronic Version Approved:
Maureen Grasso Dean of the Graduate School University of Georgia December 2008
DEDICATION
I would like to dedicate this to my loving mother Patti Dunn- always an inspiration and a
driving force behind my educational aspirations. I would also like to dedicate this to my
grandfather Kenneth Meeks Dunn. Thanks for teaching me how to be a man. To Kristy, Travis,
Brandon, Nzaku- thanks for keeping it real at Conner Hall. It would have been tough to do
without you. To Ms. JoAnne Norris- words cannot describe how appreciative I am for all you
have done for me as an undergraduate and graduate student. I truly could not have done any of
this without you. Finally, I would like to dedicate this to Dr. Cesar Escalante, whose wisdom and
patience guided me through this project. Thank you all so very much.
iv
ACKNOWLEDGEMENTS
I would like to thank USDA-SARE for partially funding this project (grant LS04-
159). Thanks to Dr. Dory Franklin for guidance and well wishing. I would also like to thank the
producers who participated in this project for their time and patience. I would like to thank Dr.
Curt Lacy and Amanda Ziehl Smith for helping me along the way. And finally, thanks to Dr.
Jeff Wilson for providing me with pearl millet knowledge and research.
v
TABLE OF CONTENTS
Page
ACKNOWLEDGEMENTS.............................................................................................................v
LIST OF TABLES...........................................................................................................................x
LIST OF FIGURES ....................................................................................................................... xi
CHAPTER
1 INTRODUCTION .........................................................................................................1
1.1 Background....................................................................................................... 1
1.2 Brief History on Pearl Millet ............................................................................ 3
1.3 Objectives ......................................................................................................... 5
1.4 Organization...................................................................................................... 7
2 LITERATURE REVIEW ..............................................................................................8
2.1 The Broiler and Litter Production Industries .................................................... 8
2.2 Environmental Considerations.......................................................................... 9
2.3 Implications for Georgia Pearl Millet Production .......................................... 12
2.4 Shadow Price of Pearl Millet .......................................................................... 17
2.5 Pearl Millet as an Input to the Recreational Wildlife Industry ....................... 18
2.6 Pearl Millet as an Input to the Poultry Industry.............................................. 20
2.7 Pearl Millet as an Input to the Ethanol Industry ............................................. 23
2.8 Production Theory .......................................................................................... 25
2.9 Limitations of Pearl Millet Production ........................................................... 29
vi
3 FARM COMPARISON...............................................................................................33
3.1 Background..................................................................................................... 33
3.2 Environmental Characteristics of Study Farms .............................................. 36
3.3 Farm A ............................................................................................................ 37
3.4 Farm B ............................................................................................................ 39
4 EMPIRICAL METHODS............................................................................................42
4.1 Expected Utility, Risk Aversion, and Efficiency Criteria............................... 42
4.2 Marginal Revenue, Marginal Cost, and Profit Maximization......................... 46
4.3 Relationship Between Expected Utility Theory and the Profit Maximization
Motive ……………………………………………………………………48
4.4 Enterprise Budget Analysis............................................................................. 50
4.5 Economic Analytical Tools............................................................................. 59
5 RISK OF PHOSPHORUS LOSS.................................................................................67
5.1 Georgia Phosphorus Index.............................................................................. 67
5.2 Cost of Phosphorus Loss................................................................................. 68
5.3 Materials and Methods.................................................................................... 69
5.4 Results and Discussion ................................................................................... 72
6 SUMMARY AND CONCLUSION ............................................................................77
6.1 Study Summary............................................................................................... 77
6.2 Conclusions..................................................................................................... 78
6.3 Future Research .............................................................................................. 79
BIBLIOGRAPHY..........................................................................................................................81
viii
APPENDICES .............................................................................................................................. 91
A Farm A Pearl Millet Production Budgets................................................................... 92
B Farm B Pearl Millet Production Budgets ................................................................... 95
C Farm A Pearl Millet-cereal Rye Production System Budgets.................................... 98
D Farm B Pearl Millet-cereal Rye Production System Budgets.................................. 101
E Farm A Tall Fescue-common Bermudagrass Unimproved Hayfield Production
System Budgets…………………………………………………………………104
F Farm B Cereal Rye Production System Budgets...................................................... 107
G Ideal Pearl Millet Production Budget....................................................................... 110
ix
LIST OF TABLES
Page
Table 4.1: Pearl Millet Grain Revenues........................................................................................ 63
Table 4.2: Pearl Millet Break-even Analysis with Actual Yields................................................. 63
Table 4.3: Revenues with Ideal Yields ......................................................................................... 64
Table 4.4: Pearl Millet Break-even Analysis with Ideal Yields ................................................... 64
Table 4.5: Sensitivity Analysis, Changing Price Factors.............................................................. 64
Table 4.6: Sensitivity Analysis, Changing Yields ........................................................................ 65
Table 4.7: Sensitivity Analysis, Changing Costs.......................................................................... 65
Table 4.8: Sensitivity Analysis, Adjusting Days Grazed on Cereal Rye...................................... 66
x
LIST OF FIGURES
Page
Figure 2.1: Georgia Annual Broiler Production, 2002-2007 ........................................................ 31
Figure 2.2: Value of Georgia’s Broiler Industry, 2002-2007 ....................................................... 31
Figure 2.3: Neoclassical Production Function Illustrating Marginal and Average Product ......... 32
Figure 3.1: Farm A........................................................................................................................ 41
Figure 3.2: Farm B........................................................................................................................ 41
Figure 4.1: Profit Maximization ................................................................................................... 63
Figure 5.1: Total Phosphorus in Runoff, Pearl Millet-cereal Rye Production System................. 74
Figure 5.2: Dissolved Reactive Phosphorus in Runoff, Pearl Millet-cereal Rye Production
System……………………………………………………………………………75
Figure 5.3: Total and Dissolved Reactive Phosphorus in Runoff, Rye Cover Crop .................... 76
xi
CHAPTER 1
INTRODUCTION
1.1 Background
In Georgia, many farm fields of the Southeastern Piedmont region are considered high
nutrient status areas for phosphorus and nitrogen. This region, in the central to northern part of
the state, is characterized by integrated beef cattle/poultry systems, of which tall
fescue/bermudagrass pastures are fertilized with broiler litter and are used for continuous grazing
of cattle (Franklin, 2003). In these systems, nutrients are imported to farm fields in the form of
animal manure, inorganic fertilizer, or livestock/poultry feed, with only a small portion being
exported off of the farm. The animal manure, typically from poultry or dairy cow sources, is
used as a means of efficient sustainable management in order to fertilize grass lands used for
pasture/hay enterprises while improving overall soil quality (Franklin, 2003). Over time,
fertilizing with animal manures in an effort to provide grass lands with adequate nitrogen and
carbon for good productivity will lead to a gradual build up in soil phosphorus because the
nitrogen: phosphorus ratio of manures is smaller than that required by plants (Franklin, 2003).
There are concerns that these nutrient imports are leading to a net accumulation of phosphorus
and are potentially affecting environmental quality.
High nutrient status farm fields are ones in which soil test phosphorous levels exceed the
levels which may result in an increased risk of phosphorus runoff and surface water
contamination (Franklin, 2003). Farm fields with high nutrient status levels are thought to be the
1
result of an unbalanced management system where nutrient imports are greater than nutrient
exports (Franklin, 2003). The continuous importation of nutrients into the Southeastern
Piedmont region coupled with little to no exportation of nutrients can result in unhealthy nutrient
management systems which may lead to the eutrophication of surface waters (Franklin, 2003).
This phosphorus imbalance is primarily caused by the importation of Midwestern corn
into the region to be used for poultry feed. Imported Midwestern corn is high in phosphorus and
very little of the nutrient is exported off the farm through beef production. As a result, there
appears to be a need for a regional source of poultry feed and integration of forage/cropping
systems that can better utilize excessive nutrients in animal-based systems while increasing the
earning capacity of small farms (Franklin, 2003).
Pearl millet (Pennisetum glaucum [L.] R. Br.) has been identified as one of the more
practical poultry feed alternatives. Pearl millet has proven itself to be an equivalent or superior
grain to corn in many animal feed trials, particularly in poultry rations, and is a suitable crop for
production in the Southeast (Andrews et al., 1996; Davis et al., 2003). Regionally grown grains
could help to offset the imbalance of phosphorus importation while increasing efficiency for
regional producers by reducing transportation costs.
Several factors contribute to the rationale of the development of grain pearl millet in the
Southeastern United States (Wilson et al., 2006a). Pearl millet is an extremely drought resistant
grain. In fact, Collins et al. (1997) claims that it is “the world’s most drought resistant grain.” It
is able to grow in areas that are frequently subjected to dry periods and is able to produce grain
without the aid of supplemental moisture. The tolerance of soil acidity allows the root system of
pearl millet to develop deeper, letting the roots explore a larger volume of soil compared to other
grain crops (Ahlrich et al., 1991). This is partly the reason for its drought resistance (Menezes et
2
al., 1997). This increased drought tolerance should pique the interest of Georgia producers, who
have experienced record droughts in recent years.
Pearl millet is better suited for acidic and sandy soils compared to other summer grain
crops (Wilson et al. 2006a). This is because the Southeastern U.S. is an agroecosystem
characterized by acidic, infertile and weathered soils. Thus, pearl millet could emerge as a major
grain crop in this region (Wilson et al., 2006a).
Although pearl millet is extremely drought tolerant, it does also perform well in highly
fertile, well drained, and moist soils. In a study conducted by University of Georgia College of
Agricultural and Environmental Sciences Cooperative Extension Service, it is suggested that
pearl millet is “deep-rooted and can use residual nitrogen, phosphorous and potassium and,
therefore, may not need the levels of fertility required by other summer grains (Lee et al, 2004).”
These characteristics are an indication that pearl millet as a management practice could better
absorb and utilize excessive nitrogen and phosphorus while requiring less fertilizer.
Management practices that utilize excessive nutrients (Flynn et al., 1993; Menezes et al., 1997),
export them off of the farm, or at least away from stream-side fields, while increasing the earning
potential of the producer’s farm are needed in the Southeast (Franklin, 2003). Finally, pearl
millet matures quickly, making it an ideal component for double-cropping methods or rotational
cropping systems (Davis et al., 2003). All of these factors combined indicate that pearl millet
would be a crop very well suited to the Southeastern U.S. that will help to eliminate the net
accumulation of phosphorus caused by imported Midwestern corn.
1.2 Brief History on Pearl Millet
Pearl millet, an ancient grain that has been cultivated in Africa and India for thousands of
years, is a crop native to the harsh growing conditions of the Sahelian region of West Africa. As
3
a food source, pearl millet is ranked as the fourth most important tropical food cereal in the
world with over 64 million acres in production in India and the semi-arid western Africa
(Andrews and Bramel-Cox, 1994). It was introduced to the U.S. in the mid to late 1800’s, where
it emerged as a minor crop grown for forage production and livestock grazing in the Gulf Coast
and Southeastern U.S. Breeding pearl millet for forage improvement began with the pioneering
work of Dr. Glenn Burton of the USDA-ARS, Tifton, Georgia in 1936 (Wilson et al., 2006a).
This breeding work done by Glenn Burton, specifically the development of the Tift 23A
cytoplasmic male sterile line, revolutionized pearl millet hybrid production in India in the 1960’s
and later in the U.S. (Gulia et al., 2007). Successful breeding programs were initiated in India in
the 1960’s, and these programs focused on developing dual purpose hybrids and pearl millet
grain (Gulia et al., 2007). In the mid 1980’s, research for the development of pearl millet for
grain was initiated, and in the late 1980’s the USDA-ARS began developing dwarf parents to
produce grain (Wilson et al., 2006a; Gulia et at., 2007).
Presently, pearl millet is produced in the U.S. as a summer annual crop on as many as 2.5
million acres (Rahn, 2001), although no official records exist. Producers in the state of Georgia
today do not recognize pearl millet as a major grain crop but merely as a forage crop or food
source for their animals to graze upon (Rahn, 2001).
A major factor limiting widespread cultivation of pearl millet has been its susceptibility
to rust disease (Davis et al., 2003). The USDA-ARS and University of Georgia Coastal Plain
Experiment Station at Tifton, GA, however, has further developed TifGrain 102, a new
generation pearl millet hybrid in 2003. This new cultivar was bred to have an increased rust
resistance as well as other favorable characteristics (University of Georgia, 2005). Recently,
pearl millet breeding for grain research has been carried out extensively under the International
4
Sorghum and Millet (INTSORMIL) Collaborative Research Support Program, which is funded
by the United States Aid for International Development (USAID) (Gulia et al., 2007).
Today, much of pearl millet grain is being sold into premium-value markets supporting
such industries as agro-tourism and recreational wildlife, particularly as a supplemental food
source for quail (Wilson et al., 2006a). Because pearl millet is a relatively new grain crop in
Georgia, there are no real established markets for the grain as of yet (Lee et al. 2004). However,
there are many valuable potential markets for pearl millet as a grain. These potential markets
will be discussed in the literature review. In order for expanded integration of pearl millet in
U.S. agricultural production and use systems, it is necessary that pearl millet provide uses or
contribute economic value that cannot be satisfied by comparable alternatives (Wilson et al.,
2006a). Pearl millet has shown that it has the potential to reduce excess nutrient runoff, but is
there economic incentive for farmers to implement a change in their crop production practices?
1.3 Objectives
The objectives of this research are as follows:
1. To evaluate the relative profitability of the pearl millet enterprise for the dual purpose of
serving as a grain input to other industries and as a means to improve soil nutrient
management practices in the farms.
2. To determine the consistency and compatibility of economic and environmental goals of
profit generation and soil nutrient management through a shift from traditional livestock
feeding systems to the pearl millet-cereal rye production system.
1.3.1 Case Study Farms
As part of an environmental study funded by USDA-SARE, six farms in the Southeastern
Piedmont region situated on the Greenbrier and Rose Creek watersheds of Georgia modified
5
their pasture systems to become crop/forage systems. These farms switched their production
systems with the objective of reducing nutrient runoff from agricultural lands to surface waters
and improving environmental quality of local soils within the watersheds.
In this study, two farms switched their crop mixes to a pearl millet-cereal rye production
system, producing cereal rye in the winter and pearl millet in the summer. The winter rye
provides grazing for livestock as well as cover. Both farms contain hay lands as well as grazing
lands in addition to cropland dedicated to pearl millet production. Farm A had a livestock
operation consisting of 80 (40 cow/calf pairs) head. The field of study on Farm A is
approximately 8 acres, and was formerly an unimproved hayfield operation with a management
practice of tall fescue-common bermudagrass which was fertilized with broiler litter at a rate of 3
tons per acre. This field was classified as high phosphorus status prior to the implementation of
the pearl millet-cereal rye production system. Because of this, inorganic nitrogen fertilizer was
applied to the winter rye, but no fertilizer was applied to the pearl millet. Farm B also had a
livestock operation consisting of approximately 90 (45 cow/calf pairs) cattle. In addition to the
livestock operation, Farm B also had a quail operation. The field of study on Farm A is
approximately 20 acres, and was formerly a winter cereal rye (fertilized with 3 tons per acre of
quail litter)-summer fallow production system. Quail litter was applied at a rate of 3 tons per
acre prior to the planting of both enterprises of the pearl millet-cereal rye production system.
1.3.2 Methods
Our hypothesis is that the pearl millet crop will yield positive returns economically while
providing environmental benefits. To accept or reject this hypothesis, we use enterprise budgets
in conjunction with the results of the environmental study.
6
Enterprise budgeting is a tool used by agricultural producers, government agencies,
financial institutions, extension agents and many other advisers that aides in making decisions
pertaining to the food and fiber industry. It represents estimates of costs, income (receipts), and
profits associated with the production of an agricultural enterprise. Economic data was collected
through producer interviews. Enterprise budgeting will be vital in determining the financial
feasibility of pearl millet production. Based on the enterprise budgets, other economic tools such
as break-even analyses and sensitivity analyses will be employed to determine profitability under
different operating scenarios. The second objective will be accomplished by combining the
economic feasibility assessment of the first objective with the results of the water quality/soil
runoff study conducted by Butler et al (2008).
1.4 Organization
The remainder of this thesis is divided into 5 chapters. Chapter 2 will examine economic
as well as environmental quality literature to determine the viability and feasibility of growing
pearl millet to reduce nutrient runoff. Chapter 3 will be a comparison of practices amongst the
two farms studied, before and after the implementation of the pearl millet-cereal rye production
system. Chapter 4 will analyze and present the collected economic data, and Chapter 5 will
analyze the collected environmental data. Finally, Chapter 6 will summarize the study, present
conclusions, address limitations of the study, and will offer suggestions for future research.
7
CHAPTER 2
LITERATURE REVIEW
2.1 The Broiler and Litter Production Industries
In 2006, the U.S. poultry industry produced nearly 9 billion broilers (chicken, Gallus
gallus domesticus) (USDA-NASS, 2008). Impressively, the November 2007 circular release of
Livestock and Poultry: World Markets and Trade, the USDA Foreign Agricultural Service
anticipates that U.S. broiler production will rise 4% from its already lofty 80% share of global
production. The bulk of this industry is located in the Southeastern U.S., with Georgia,
Arkansas, Alabama, Mississippi, and North Carolina accounting for more than 60% of total U.S.
broiler production (Paudel and McIntosh, 2005).
A considerable amount of manure is generated during broiler production. In a ten-week
lifecycle, it is estimated that 1,000 broilers will produce approximately 3,219 lb. of litter (Perkins
et al., 1964). Using Perkins’ estimation, total broiler litter production in the U.S. exceeded 28
billion lb. in 2006. Estimations set forth by Sims and Wolf (1994) suggest that total litter
generated in 2006 contained over 275,570 tons of phosphorus. Animal feeding operations
(livestock grazing) are a major contributor to 5% of rivers and streams polluted by agricultural
practices, and are a responsible source for another 15% of water bodies (Paudel and McIntosh,
2005).
Georgia is the number one broiler-producing state in the U.S., with production of
approximately 1.4 billion broilers in 2007 (Fig. 2.1) (GASS, 2008). Georgia’s broiler industry
8
accounts for approximately 15% of total production in the U.S., and was valued at nearly $3.2
billion in 2007 (Fig 2.2) (GASS, 2008). Based on 2007 statistics, if Georgia were a country, it
would be the fifth largest broiler producing nation in the world behind the U.S., China, Brazil,
and the E.U. 27 (USDA-FAS 2007 and NAAS 2008). 2007 also marked the twenty-fourth
straight year that Georgia was the leading state in broiler production in the U.S. (GASS, 2008).
2.2 Environmental Considerations
The large amount of broiler production in Georgia also causes some environmental
impacts. In fact, it is estimated that Georgia’s broiler production alone produces more than 1.58
million tons of broiler litter annually (Paudel and McIntosh, 2005). Because broiler litter has
high value as a fertilizer (Kissel et al. (2008) estimate that it is worth $72.10 per ton based on
2007 fertilizer prices) and due to its valuable nutrient content and organic matter, the primary
and most desirable use is land application (Paudel and McIntosh, 2005). It is estimated that 90%
of all poultry wastes are directly applied to grasslands, pastures and hayfields (Carpenter, 1992),
leaving phosphorus exposed to surface runoff (Pionke, 1988). These estimated values are likely
to have risen since the research of Carpenter (1992), based on the consistently large annual
growth of the broiler industry in the U.S.
While broiler litter provides nutrition to crop plants, it does not necessarily offer the
correct balance of nutrients needed for top yield and quality (Gascho et al., 2001). Application
of broiler litter to grasslands may increase concentrations of phosphorus and nitrogen in surface
runoff (Kuykendall et al., 1999; Pierson et al. 2001; Sauer et al. 1999; Vervoort et al., 1998;
Vervoort and Keeler 1999), as well as through leaching (Liebhart et al., 1979, Dudzinsky et al.,
1983, Ritter and Chirnside 1984, Adams et al., 1994). Furthermore, surface runoff of
phosphorus is intensified if storms happen shortly after land application of manure (Edwards and
9
Daniel, 1993a, 1993b, and 1993c). Increased levels of phosphorus in soil and surface runoff of
phosphorus into nearby water bodies may cause eutrophication problems (Vervoort and Keeler,
1999; Paudel and McIntosh, 2005) because phosphorus typically acts as a limiting element for
aquatic production in freshwater lakes and streams (Schindler, 1977).
Water quality deterioration due to nitrogen and phosphorus is of serious concern for
southern watersheds, particularly in areas where broiler production is an important agricultural
industry due to its tendency to cluster (Paudel and McIntosh, 2005). Livestock grazing has been
shown to increase the likelihood of surface runoff, because grazing may cause increased
compaction (decreased soil permeability of water and air) and decreased infiltration (McGinty et
al., 1978; Usman, 1994; Wells and Dougherty, 1997). Fields dedicated to haying are less likely
to have the same runoff problems as fields used for livestock grazing. In a study conducted by
Franklin et al. (2003), it was determined that nutrient losses from pasture management systems
were significantly higher than the losses from hay systems because the nutrients are exported off
of the farm in the hay production process.
The application of broiler litter as fertilizer is generally done to meet the nitrogen needs
of the particular crop. Because boiler litter has a higher phosphorus: nitrogen ratio, litter is often
times over-applied trying to meet the crop’s nitrogen needs (Vervoort and Keeler, 1999). Ritz
and Merka (2004) estimate that poultry litter contains 3% nitrogen, 3% phosphorus, and 2%
potassium. Because forages typically require four times the amount of nitrogen than phosphorus,
phosphorus tends to be over-applied (Gaskin et al., 2005). This may lead to an accumulation of
phosphorus in soil, which could result in nutrient losses during runoff events (Sharpley, 1995;
Pote et al., 1996) and the eutrophication of nearby bodies of water (Moore et al. 1995).
10
Significant increases in soil nitrate levels have also been observed when application rates of
broiler litter are greater than plant needs (Gascho et al., 2001).
Part of the nitrogen in broiler litter is organically bound and therefore not as readily
available for plant usage as the nitrogen in commercial fertilizers. Most of the phosphorus
excreted in feces is organically bound, meaning it is not readily available for plant uptake and
has shown to contribute to increasing soil test levels of phosphorus (Wells and Dougherty, 1997).
Furthermore, nitrification and mineralization may add to soil nitrate concentration (White et al.,
1983; Ghidey and Alberts, 1999; Morecroft et al., 2000), which may potentially lead to higher
nitrate leaching into groundwater resulting in higher nitrate concentrations in stream base flow
(Reynolds et al., 1992; Cooper and Roberts, 1996). Watersheds in the Southeast have a nitrogen-
loading problem, due in large part to animal manure such as broiler litter (Puckett, 1994).
In the Southeastern Piedmont region, integrated bovine/poultry grassland systems are
commonplace. Many of the farm-fields are deemed to have high nutrient status because soil test
phosphorus levels exceed the levels that may result in an elevated risk of phosphorus
contamination to surface water bodies. This high nutrient status is believed to be the
consequence of unbalanced management systems in which nutrient imports are greater than
nutrient exports. Cattle absorb only a small amount of nutrients for support of various metabolic
processes through grazing, with most excreted through waste (Wells and Dougherty 1997). It is
estimated that 25% of nitrogen, 20% of phosphorus, and 15% of potassium contained in forage
are retained by grazing cattle, meaning that 75% of nitrogen, 80% of phosphorus, and 85% of
potassium are excreted through urine and feces (Wells and Dougherty 1997). As a result, only a
small amount of nutrients are exported from the farm when the cattle are sold (Franklin, 2003).
11
This situation requires nutrient management techniques that will better balance the system. Pearl
millet could be one possible solution.
2.3 Implications for Georgia Pearl Millet Production
2.3.1 Suitability of Production in Georgia
Considering Georgia’s current and anticipated climatic conditions, pearl millet has the
potential to become one of the state’s biggest crops. With a growing population, an increasing
amount of pressure is being placed on the state’s water supply (Rahn, 2001). Furthermore,
periodic restrictions on water use force difficult decisions for policymakers regarding water
allocations for growing populations versus the needs for agricultural production (Wilson et al.,
2006a). Georgia appears to be returning to a normal weather pattern “after nearly half a century
of relatively tranquil climate patterns (Rahn, 2001).” According to David Stooksbury, state
climatologist and engineering professor with The University of Georgia College of Agricultural
and Environmental Sciences, “this means that Georgians can expect greater year-to-year
variations in temperature and precipitation,” and, “the need for dryland farmers to diversify their
cropping patterns will increase with the increased climate variability (Rahn, 2001).” As of July
24th, 2008, some counties in Georgia are experiencing exceptional drought conditions, the worst
drought category (Stooksbury, 2008). Areas experiencing exceptional drought conditions
observe indicators only seen once in every 50-100 years (Stooksbury, 2008). Current drought
conditions are having serious hydrological and agricultural impacts. Stooksbury believes that
pearl millet is part of the response to Georgia’s water scarcity (Rahn, 2001). Due to its drought
resistance as a native of the semi-arid part of West Africa on the edge of the Sahara desert, pearl
millet is suitable to be grown in agroclimatic areas that experience frequent droughts and periods
12
of low and erratic rainfall. Another attractive characteristic for pearl millet is an extended
planting season in the Southern U.S. (Hidalgo et al., 2004).
2.3.2 Local Grains for Local Needs
With the climatic conditions of the Southeastern Piedmont region, pearl millet is an ideal
summer annual crop that can be regionally grown, thus reducing transportation costs and most
importantly decreasing the nutrient imports that come with corn used for broiler feed from the
Midwest, which accumulate in the excreta of poultry. Only about 10% of the grain used for feed
in the broiler industry is produced in the Southeastern U.S., and corn imported from the Midwest
carries a higher price tag than area produced grains (University of Georgia, 2000; University of
Georgia, 2005). According to Radcliffe et al. (2006), increasing regional grain production will
help to utilize poultry litter, thus closing the “nutrient loop” and reducing environmental
problems associated with manure phosphorus accumulation while helping to support regional
crop producers. With the estimated generation of 1.58 million tons of broiler litter annually,
supplementing broiler rations with locally produced grain can reduce the phosphorus importation
from Midwestern corn to Georgia by 8,000 tons (University of Georgia, 2005; Wilson
INTSORMIL, 2007).
Traditional poultry feeds have experienced a sustained upward rising cost trend since the
energy crisis of the early 1970’s (Singh and Perez-Maldonado, 2000). Pearl millet’s grinding
rate is 53% faster and requires 40% less energy to grind than corn (Dozier et al., 2005). Reduced
energy needed to finish the grain will result in reduced costs for poultry feed purchasers. With
feed costs estimated to be around 70% of total production costs, regionally grown pearl millet
could be lucrative for area broiler producers (Hanna, 2005).
13
Georgia produces over 23 million pounds of chicken daily, and 2 pounds of feed are
required for every pound of chicken, according to Abit Massey, executive director of the Georgia
Poultry Federation (Rahn, 2001). Supplying pearl millet grain to area poultry producers could
potentially create a large market for area crop growers. Only about 10% of the corn used for
broiler feed is produced within the region, and 135 million bushels of corn are imported to the
state as a result. Substituting for this Midwestern corn imported for broiler feed would require
production of more than 118 million bushels of pearl millet in Georgia, assuming a 50% pearl
millet broiler ration. Nearly 1.7 million acres of cropland would be required for this production,
assuming average crop yields of 4,000 lbs. per acre. The acreage planted and harvested in 2007
by ten principal field crops (including corn, cotton, and peanuts) in Georgia was 3.769 and 3.274
million acres, respectively (GASS, 2008). The demand for poultry feed is year-round and
growing annually. Meeting poultry ration demands could make pearl millet one of the major
crops in Georgia. Pearl millet would also help in the diversification of rural production and
economies (Wilson et al., 2006a).
Another economic benefit of pearl millet grain production that poultry growers could
potentially realize is lower feed costs due to the lack of human competition for pearl millet grain
(Singh and Perez-Maldonado, 2000). While pearl millet is a staple grain for many African and
Asian countries, human consumption in the U.S. is virtually non-existent. With world
population anticipated to reach the 7 billion mark in the next few years, demand for cereal grain
will increase and additional strains will be placed on the grain stocks. This increasing demand of
cereal grains for both human consumption and stockfeed is raising the cost for consumers and
producers who use the grain as an input (Singh and Perez-Maldonado, 2000). One way of
reducing these costs is to replace the traditional feeding grains with cheaper, yet equally efficient
14
grain alternatives that are not consumed by humans (Singh and Perez-Maldonado, 2000). This
idea is especially relevant with the growing interest in the use of corn in ethanol production,
making this grain resource scarcer and driving up the price.
In addition to broiler production, Georgia also has a large egg production industry,
ranking seventh in the U.S. Georgia egg producers can benefit by substituting pearl millet as a
primary feed source for their laying hens. In a study conducted by Kumar et al. (1991), results
determined better feed conversion and increased egg size when pearl millet was substituted for
corn at 60% by weight. Pearl millet and corn give equivalent feed efficiency and egg production,
but the fatty acid profile of eggs produced by pearl millet-fed hens varied from the eggs
produced by corn-fed hens (Collins et al., 1997). Hens fed pearl millet produced eggs that were
higher in mono-unsaturated and omega-3 polyunsaturated fatty acids and were lower in omega-6
fatty acids than when feeding any other common cereal (Collins et al., 1997). There are
recognized health benefits from human consumption of foods high in omega-3 polyunsaturated
fatty acids, such as platelet aggregation and immune function (Collins et al., 1997). Kinsella et
al. (1990) suggest that many Americans should increase their intake of omega-3 polyunsaturated
fatty acids, and should decrease the ratio of omega-6 to omega-3 fatty acids that they consume.
Due to the health benefits associated with foods high in omega-3 fatty acids, a potentially large
market for “designer” eggs remains untapped.
2.3.3 Pearl Millet for Human Consumption
Targeting ethnic food stores could be a lucrative option for pearl millet grain producers.
Pearl millet is a staple grain for native many populations of Africans and Asian-Indians.
Marketing to these two populations would ensure steady demand in the U.S. in the foreseeable
future (Gulia et al., 2007). Pearl millet is a nutritious cereal grain, high in calcium and protein
15
(Rahn, 2001). In Indian culture, pearl millet is known as “bajra,” and is used in traditional foods
such as chapatis, bread similar to a tortilla. An established quarantine on grain pearl millet has
made it increasingly difficult for these large ethnic populations to obtain this commodity.
According to the Code of Federal Regulations, Title 7, Volume 5, Section 319.41 (Cite:
7CFR319.41), pearl millet “may not be imported into the United States except in accordance
with this subpart: The raw or unmanufactured stalk and other parts of pearl millet (Pennisetum
glaucum).”
The Asian-Indian demographic is one of the fastest growing minority groups in the U.S.
In the years between 1980 and 1990, the population of Asian-Indians increased 110.6%, from
387,223 to 815,447 (Chacko, 2006). Furthermore, this population increased 106% between 1990
and 2000, growing to 1,678,765 (Chacko, 2006). This makes the Asian-Indian population the
third largest Asian demographic in the U.S. (U.S. Census Bureau, 2000). Out of the 1 million
Asian-Indians residing in the U.S., more than 1 million were born in their native country
(Chacko, 2006). In 2005, 79,169 Asian-Indians were living in Georgia and 65% of them were
born in India, according to Dr. Jeff Wilson. This would suggest that this demographic is more
likely to have strong cultural ties to their native India. U.S. grain pearl millet producers stand to
gain by targeting this demographic as well as native Africans, but marketing to Asian-Indian
Americans is not an easy task. Asian-Indian Americans are a very family and culturally-oriented
population, and careful marketing would be needed to ensure patronage (Chacko, 2006). Once
marketers study and become familiar with the customs and cultural values of the Asian-Indian
American demographic, a unique and potentially lucrative market niche will be established
(Chacko, 2006). In the state of Georgia alone the Asian-Indian American population has
spending power of about $1.5 billion, according to Dr. Jeff Wilson.
16
Although there are limited expectations for pearl millet to emerge as a grain for non-
ethnic (Asian-Americans, Native Africans) population consumption in the U.S., there are some
benefits present. For example, pearl millet production could potentially lower the cost of other
feed sources such as corn and soybean as human competition for the grains decreases. Human
consumption of corn and soybean grain in the U.S. is 27% and 20%, respectively (Fitzpatrick,
2007; U.S. Grains Council, 2008). If pearl millet becomes an alternative to soybean and corn for
feed, there will be fewer players in the market to increase the scarcity and will thus drive the
costs down (Singh and Perez-Maldonado, 2000). Potential markets in the health food industry
exist for grain pearl millet. Pearl millet is a gluten-free grain, and could emerge as a substitute
for wheat in the diets of persons diagnosed with celiac disease.
2.4 Shadow Price of Pearl Millet
Many feeding trials have been conducted utilizing a variety of livestock, poultry and
farmed fish species. An increasing amount of evidence is being presented that pearl millet has
the highest value as feed in bird rations, particularly young birds such as broilers and bobwhite
quail chicks (Savage, 1995; Hidalgo et al., 2004; Wilson et al., 2006a). The value of grain as
feed for animal production is determined based on its nutrient content and availability-
specifically amino acid and protein content, fiber, starch, fat, and digestibility (Wilson et al.,
2006a). Pearl millet grain does not substitute for corn at a 1:1 ratio in a typical ration of corn and
soybean meal (Wilson et al., 2006a).
The shadow price is pearl millet’s value based on its ability to act as a substitute for
soybean and corn meal in a nutritionally formulated feed ration (Wilson et al., 2006a). The
shadow price factors the higher protein content of pearl millet into its value. This higher protein
content acts as a substitute for some of the more expensive soybean meal (Wilson et al., 2006a).
17
The shadow price value also accounts for the lower amount of metabolizable energy of pearl
millet compared to corn (Wilson et al., 2006a). The shadow price of pearl millet is a function of
fluctuating commodity prices, and ranges from approximately 110 to 120% the price of corn,
compared to sorghum which ranges from 85 to 90% the price of corn (Wilson et al., 2006; Dale,
unpublished). The shadow price sets a baseline market value for the grain (Wilson et al., 2006a).
Added value could be derived from the end user, and may be reflected in prices paid through
private auctions or negotiations.
In addition to its use as an alternative crop for human and poultry feed consumption,
pearl millet’s benefits extend to other industries such as the recreational wildlife and energy
sector. The following sections discuss in detail the valuation of potential benefits of pearl millet
production to the recreational wildlife, feed and ethanol industries.
2.5 Pearl Millet as an Input to the Recreational Wildlife Industry
Recreational wildlife is a very important industry for the state of Georgia. In comparison
to Georgia’s valuable peanut industry, which ranks sixth in total value in the state (GASS, 2008),
total hunting expenditures exceed the value of the state’s peanut harvest by approximately 30%
(Wilson et al., 2006a). Estimations of in-state expenditures that are directly attributable to the
hunting of migratory and upland game birds exceed $37,600,000 annually, and there are more
than 85,600 migratory bird hunters in Georgia (International Association of Fish and Wildlife
Agencies, 2002). Pearl millet provides good quality cover as well as easy access to feed for wild
birds in the summer months while allowing easy accessibility to hunters in the fall months (Iler
and Hanna, 1995). The recreational wildlife and agro-tourism industries provide two unique
premium value marketing opportunities for pearl millet producers (Wilson et al., 2006a).
18
2.5.1 Preference for Pearl Millet as a Supplemental Feed
Supplemental feeding is a practice used by commercial wildlife areas to bolster
populations of game, and may be done year-round or in the food-scarce winter months (Wilson
et al., 2006a). The grain is commonly used for supplemental feeding to upland game birds (such
as bobwhite quail) and waterfowl. It is usually fed either by broadcasting in feed lines or placing
into feeders (Wilson et al., 2006a). It is conservatively estimated that nearly 10,000 tons of grain
are used annually in the state of Georgia in the commercial wildlife industry for supplemental
feed, at a cost of nearly $1,000,000 (Wilson et al., 2006a). Savage (1995) fed pearl millet grain
to newly hatched bobwhite quail chicks, and discovered that the pearl millet grain fed chicks
consumed more and wasted less feed than the chicks feeding on corn. Observations gathered
from wildlife managers tend to confirm this preferential feeding documented by Savage (1995)
(Wilson et al., 2006a).
Pearl millet grain is establishing itself as a higher quality feed supplement for businesses
that require healthy populations of wild game birds (Wilson et al., 2006a). Andrews et al. (1996)
suggest that bobwhite quail chicks fed corn are healthier than chicks fed corn, having improved
fourteen-day weight gains of 8-22% and an approximate 50% mortality reduction. Successful
hunting experiences encourage repeat customers and thus more revenue generated in the outdoor
sports industry. While the true economic value of pearl millet grain used for supplemental feed
is difficult to quantify, a successful recreational wildlife industry can have a tremendous impact
on a rural community’s economy (Wilson et al., 2006a). Renting farmland for hunting post-crop
harvest is typically around $100/person/day, and hunting at a commercial resort with a managed
wildlife habitat may range anywhere from $500-$1,000/person/day (Wilson et al., 2006a).
19
2.5.2 Reduced Mortality from Using Pearl Millet
Bobwhite quail are a desirable and economically important game bird species in the
Southern U.S. (Wilson et al., 2006a). Habitat degradation and loss of food sources have affected
native populations of the quail (Wilson et al., 2006a). In order to compensate for this native
bobwhite quail population decline, Georgia farmers produce about 5 million pen-raised quail
annually to be released into the wild for use in the agro-tourism and recreational wildlife
industries (Wilson et al., 2006a). Savage (1995) determined that pearl millet grain is the
preferred feed for bobwhite quail, as chick weight gain is increased by 17%, and chick mortality
is reduced by more than half (52%) when fed pearl millet grain as opposed to corn. Savage
(1995) also determined that newly hatched bobwhite quail chicks consumed more and wasted
much less feed than their counterparts who were fed corn. Not only do the pearl millet-fed
bobwhite quail grow faster, they also have higher survivability rates than their corn-fed
counterparts. The use of pearl millet grain in quail feeding rations could potentially increase
producer gross returns by $920 annually, based on reduced chick mortality costs alone (Wilson
et al., 2006a). Statewide, this value could potentially reach $153,000 (Wilson et al., 2006a). The
economic benefits associated with chick weight gain and bobwhite quail feeding preference have
not yet been quantified (Wilson et al., 2006a).
2.6 Pearl Millet as an Input to the Poultry Industry
2.6.1 Pearl Millet in Broiler Pre-starter and Starter Rations
It takes approximately 6 weeks time from hatching for a broiler to be market weight
ready, and each week accounts for about 17% of the production span for a broiler (Wilson et al.,
2006a). Due to the immature digestive systems of chicks, pre-starter and starter diets are utilized
by producers to boost broiler growth during days 4 to 14 of the production span (Wilson et al.,
20
2006a). Improved early growth reduces the total time to market-ready weight. In a 2 week
experiment conducted by Davis et al. (2003), incorporation of pearl millet in broiler starter diets
did not adversely affect performance. Broiler chicks fed pearl millet starter and pre-starter
rations experienced average body weight gains of 14%, 10%, and 11% better than chicks fed
corn rations at the 4, 7, and 14 days, respectively (Davis et al., 2003). This suggests that pearl
millet is a suitable substitute to corn/soybean in broiler starter diets.
2.6.2 Pearl Millet as a Feed Grain Substitute
Georgia’s large broiler industry presents an ideal potential market for pearl millet grain.
Pearl millet has been shown to be as good as, if not better than, corn as an alternative feed for
poultry. According to Davis et al. (2003), pearl millet has a similar true metabolizable energy
value (3,300 to 3,448 kcal/kg) and higher protein content (12 to 14%) than corn. Hidalgo et al.
(2004) report similar nutrition results. Furthermore, pearl millet does not contain any condensed
polyphenols such as tannins in sorghum, which may slow down or otherwise interfere with
digestibility (Andrews et al., 1993; Singh and Perez-Maldonado, 2000). Davis et al. (2003) also
find that the performance and carcass yield of broilers whose feed intake contained up to 50%
pearl millet were comparable to, if not better than, broilers who were fed typical corn-soybean
diets. Similarly, Sullivan et al. (1990) found that weight gains and feed/gain ratios in pearl millet
based diets are equal to those found in corn and some sorghum based diets. Pearl millet can
replace corn in poultry diets without affecting feed efficiency or weight gain (Smith et al., 1989).
Based on the levels of metabolizable energy and protein content alone, producers feeding a 50%
pearl millet based diet could potentially reduce feeding costs by approximately $5.57/ton
(University of Georgia, 2005). A 25% substitution of pearl millet grain in broiler rations has the
potential of saving poultry complexes $250,000 in feed costs annually (University of Georgia,
21
2005). With 20 major poultry complexes in the state, the Georgia poultry industry potentially
could be saving $5 million in feed costs annually (University of Georgia, 2005).
Pearl millet oil contains more saturated fatty acids than corn (Rooney, 1978). It is also a
good source of amino acids for poultry. Supplemental use of lysine or sulfur amino acids
appears to be unnecessary in pearl millet-soy diets (Amato and Forrester, 1995). With the
reduced need for supplemental protein, the feed cost per unit gain is approximately 3% lower for
millet than corn (Bramel-Cox et al., 1995).
2.6.3 Energy Savings in Ration Formulation by Using Pearl Millet
According to Dozier et al. (2005), pearl millet’s grinding rate is 53% faster and requires
40% less energy to grind than corn. Whole pearl millet grain may be successfully incorporated
as 10% of the broiler rations with no adverse effects in carcass performance (Hidalgo et al.,
2004). This technique of using whole grains in poultry rations has become a popular technique
in European poultry production (Hidalgo et al., 2004). As pearl millet grain is gradually
incorporated into the broiler rations, it is likely that whole grain pearl millet will be introduced
(Wilson et al., 2006a).
Davis et al. (2003) finds that the performance and carcass yield of broilers whose feed
intake contained up to 50% pearl millet were comparable to, if not better than, broilers who were
fed typical corn-soybean diets. Increasing the level of ground grain pearl millet up to 50% in
broiler rations could potentially result in an annual savings of $389 in electricity cost per broiler
producer, and could potentially result in a statewide savings of $647,000 in electricity costs
annually (Wilson et al., 2006a).
22
2.7 Pearl Millet as an Input to the Ethanol Industry
Ethanol use is on the rise. The Energy Policy Act of 2005 includes a renewable fuels
standard that stipulates that the amount of ethanol and biodiesel used in the U.S. must double
(U.S. Congress, House of Representatives, 2005). From the years 2001 to 2006, ethanol
production grew by 20% annually, increasing by more than 455 million gallons produced per
year (Kenkel and Holcomb, 2006). By 2012, the required nationwide volume of ethanol and
biodiesel produced increases to 7.5 billion gallons. It is also forecast that by the year 2012, one
third of the annual corn crop will be used for ethanol production (Doering, 2006). In the U.S.
today, a majority of ethanol production is derived from corn or sorghum sources. The
development and expansion of the ethanol industry in the Southeastern U.S. is limited by the
quantity of corn and other feedstocks produced within the region (Wilson et al., 2007). As more
ethanol processing plants are being planned and existing plants are expanded, demand for
ethanol compatible cereal grains will result, thus raising prices (Wilson et al., 2007). Research is
therefore needed to identify other potential cereal grains that could supplement locally grown or
shipped in corn used for the fermentation process (Wilson et al., 2007). Wu et al. (2006) have
suggested that pearl millet could be a useful cereal grain for ethanol production. Pearl millet is
fully compatible in ethanol plants designed for corn fermentation (Wilson et al., 2006a). English
et al. (2006) anticipate that ethanol production will gross over $700 billion and will create over
5.1 million jobs by the year 2025, with much of this occurring in rural areas. Ethanol production
is yet another likely high-volume market for pearl millet grain for the future (Wilson et al.,
2006a).
There are two products of the fermentation process: ethanol and distiller’s dried grains
with solubles (DDGS). Ethanol is the goal of the fermentation process, and it is derived from
23
starch. DDGS are a cereal byproduct of the fermentation process and are primarily composed of
fat, fiber and protein (Wilson et al., 2006a). DDGS are a lower-cost energy and protein source
commonly used as a supplement to soybean meal and corn grain in livestock rations (Wilson et
al., 2006a, Hadrich et al., 2008). In a study conducted by Wilson et al. (2007), on a dry basis
DDGS from pearl millet contained a level of protein 16% greater than DDGS from corn. Due to
this higher protein content, the yield of DDGS from pearl millet post fermentation is higher than
that of corn (Wilson et al., 2006a). The DDGS from pearl millet are also likely to have a higher
fat content, a lower mycotoxin content and a better amino acid balance than that of corn (Wilson
et al., 2006b). Wilson et al. (2007) determined that pearl millet DDGS would earn a 13% greater
value income compared to DDGS from corn. Fermented pearl millet yields less actual ethanol,
but because of the higher protein content, the value and yield of the pearl millet DDGS result in
higher economic returns compared to corn (Gulia et al., 2007).
While corn takes 36 hours to ferment, pearl millet ferments in only 24 hours due to some
unique fermentation properties (Wu et al., 2006). A faster fermentation period allows for
quicker turnover batch processing (Wilson et al., 2006a). Since it takes 24 hours to prepare a
batch of cereal grain for ethanol fermentation, a small ethanol plant could process 146 batches of
corn ethanol in a year (Wilson et al., 2006a). Conversely, that same small ethanol plant could
potentially process 182 batches of pearl millet ethanol with the same equipment (Wilson et al.,
2006a). More finished product (ethanol and DDGS) would be produced, and more revenue will
result. Based on the current market values of DDGS and ethanol, the fermentation of pearl millet
potentially could earn a 25% increase in gross returns compared to other traditional feed inputs
(Wilson et al., 2006a).
24
2.8 Production Theory
Production economics is the application of microeconomic principles in agriculture, and
its logic provides a decision making framework on the farm (Doll and Orazem, 1978). In any
given production industry, production factors and products exist (Frisch, 1965). The process of
production is a transformation or movement of the factors of production to the finalized product
(Frisch, 1965). In an agronomic crop environment, production factors may include seed and
fertilizer while the product may be harvested grain, cotton lint, soybeans, etc. Crop production
entails the agricultural producer to manage production factors in order to produce outputs,
meaning the crop producer is a decision maker (Acquaah, 2002). An agricultural producer
should be capable of making the most economically efficient choices when selecting and
managing the appropriate inputs required for production (Acquaah, 2002). The crop producer is
faced with critical business decisions throughout the enterprise (Acquaah, 2002).
2.8.1 Production Function Analysis
Production function analysis is a useful technique for determining the most profitable
level of inputs and outputs, given their respective prices (Camacho, 1991). Inputs fall into three
general categories: variable (fertilizer, seed, herbicide), fixed (land, buildings, equipment) and
random (rainfall, characteristics of growing seasons) (Doll and Orazem, 1978). A production
function is the relationship between inputs and outputs. More specifically, a production function
is a “restriction on how inputs are transformed into outputs (Wetzstein, 2005, p. 185).”
Production function analysis can be useful in determining the most profitable combination of
inputs for a specific output (given input prices), as well as the most profitable combination of
products (given available resources and their prices) (Camacho, 1991).
25
The production function “expresses the physical or biotechnological relationship
between outputs and inputs (Camacho, 1991, p. 46).” The production function may be written
as:
(2.1) Q = f(x1, x2,…, xn)
This equation states that the quantity of output (Q) is a function of the quantity of inputs
(x1, x2,…, xn) used in production. In a crop production environment, these inputs may include
(but are not limited to): capital (land and equipment), materials (seed, fertilizers, and herbicides),
and labor. For each combination of inputs used, a unique output will result (Doll and Orazem,
1978). It is important to note that equation (2.1) applies to a given level of technology. As
technology becomes more advanced and efficient, the production function will change, as a firm
will be able to produce more output with a given level of input (Pindyck and Rubinfeld, 1992).
Production functions such as (2.1) are significant only if (1) inputs and outputs are
homogeneous, (2) the inputs are used in the most efficient manner, and (3) the function refers to
a specified timeframe and a single technique (Camacho, 1991).
2.8.2 Neoclassical Production Function and Profit Maximization
The neoclassical production function has been an accepted method in describing
agricultural production relationships for many years (Camacho, 1991). Figure (2.3) illustrates
the neoclassical production function, considering labor as an input. As more of the labor input is
used, the productivity of the input also increases at first (Camacho, 1991). This function turns
upwards (increases), initially at an increasing rate (Camacho, 1991). At the inflection point on
the illustration (point B), the neoclassical production function switches from one that is
increasing at an increasing rate to one that is increasing at a decreasing rate (Camacho, 1991).
The inflection point is the point where increasing marginal returns end and diminishing marginal
26
returns begins, or where the slope of the production function curve is at a maximum (Doll and
Orazem, 1978; Camacho, 1991).
The marginal concept is important in production function analysis, and marginal means
additional or incremental (Camacho, 1991). Marginal physical product (MPP) with regards to a
particular input is defined as the increase or decrease in total output resulting from a unit change
of a particular input, holding all other inputs held constant (Doll and Orazem, 1978; Wetzstein,
2005). MPP is always positive when output is increasing and is always negative when output is
decreasing (Pindyck and Rubinfeld, 1992).
The inflection point of a production function marks the point where MPP is at a
maximum of the total product curve (Camacho, 1991). As previously mentioned, the reflection
point of Figure (2.3) is point B. With regards to an input xi, MPP may be expressed by:
(2.2) MPPxi = ΔQ / Δxi
In Figure (2.3), considering labor as an input, the marginal product (MP) of labor may be
expressed by:
(2.3) MPL = ΔQ / ΔL
Average product (AP) is the output received per unit of input. In Figure (2.3), the
average product of labor may be expressed by:
(2.4) APL = Q / L
When MPL is larger than APL, APL is increasing (Pindyck and Rubinfeld, 1992). The
opposite is also true: when MPL is smaller than APL, APL is decreasing (Pindyck and Rubinfeld,
1992). Because of this relationship, it follows that MPL must equal APL when APL is at its
maximum (Pindyck and Rubinfeld, 1992). This intersection occurs at point M on Figure (2.3).
27
A finished product can be created in a variety of ways using various combinations of
inputs and depending on the techniques used. The physical production function does not provide
adequate information for decision making (Camacho, 1991). Economic theory must be
incorporated into the decision making framework in order to determine the best combination of
inputs or products (Camacho, 1991). In order to determine the most profitable level of inputs,
the cost of inputs(PxX) and the price of the output (P) must be considered, given a production
function (Q) (Camacho, 1991).
(2.3) π = TVP – TFC = PqQ –1
N
x=∑ PxX
where:
TVP = Total value of the product, PqQ
TFC = Total factor cost, P1
N
x=∑ xX
Profits from a production process will be maximized when the added return from the last
input is equal to the price of that input (Camacho, 1991). Profits are maximized when the value
of the marginal product (VMP) of an input is equal to its marginal factor cost (MFC) (Debertin,
1986).
According to Camacho (1991), there are three main factors affecting the most profitable
level of inputs: (1) price of the input i (Pxi), (2) commodity price of the output (Pq), and (3) the
physical production relationship, because it affects marginal physical product (ΔQ / Δxi). A
change in price for any of these three factors will affect the most profitable level (Camacho,
1991).
Relative profitability is a driving force for producers in the decision making process
when choosing to produce one commodity over another. Profit maximization as motivation for
28
production is known as “rational” behavior (Doll and Orazem, 1978). An exception to this, for
instance, may be a producer who is concerned with volume of production. Nonetheless,
elements of value judgment are included in the thought process (Frisch, 1965). There are three
main factors that determine profitability: costs, production (yields), and price received for the
commodity. The more uncertain these factors are, the higher the profits should be in order to
account for the risk and provide incentive for production. High crop productivity is required for
high profitability (Acquaah, 2002). Established markets with a good outlook and price are
necessary; otherwise the producer will choose to divert scarce resources to a more worthwhile
enterprise (Acquaah, 2002). Identification of markets and marketing channels is a critical part of
an agricultural producers’ business decision process, because the absence of an established
market means there is no outlet to sell the finished product. As a result, lack of an established
market is a major factor hindering pearl millet production in the U.S.
2.9 Limitations of Pearl Millet Production
Despite all of the perceived economic benefits that grain pearl millet production could
potentially bring to the Southeast, particularly Georgia, there are certain realities that must be
accepted in order to increase the likelihood for success. Wilson et al. (2006a) listed several of
these considerations.
• Pearl millet is not an indigenous crop to the U.S. There is no history or cultural tradition
tied to pearl millet production, and is barely even recognized by the agribusiness
community.
• Although many potential markets for pearl millet grain exist, current readily-available
markets are limited. Limited markets mean limited profitability potential for a pearl
millet producer. Coordinated marketing efforts are nonexistent.
29
• Factors such as market infrastructure, federal farm programs, proper equipment
availability, and existing production methods typically support the status quo in
agriculture and tend to hinder the introduction of new crops.
• In order for pearl millet production to be successful, every player in the production-
storage-utilization distribution chain has to earn a profit (Wilson et al., 2006a). The
necessary first link is for the pearl millet producer to profit, otherwise the crop will not be
grown and pearl millet grain will not be available for use as an input.
• Pearl millet has to compete against comparable grains such as corn and sorghum for
production acreage and in the marketplace, because profitability is a crucial part of the
business decision process. Pearl millet must provide uses or contribute economic value
that cannot be satisfied by comparable alternatives in order to be competitive.
• Values that cannot be satisfied by alternatives need to be identified through research.
A review of literature indicated that there are environmental issues surrounding Georgia’s
massive broiler industry, and that the emergence of regionally produced grains could help to
remedy these problems. Pearl millet was identified as a potential crop, and prospective markets
exist in the broiler, recreational wildlife, and ethanol industries. Economic literature reviewed
production theory, production function analysis, the neoclassical production function, and factors
affecting the decision making process of a producer. Finally, limitations hindering the successful
adoption of pearl millet were listed. This study moves forward to chapter 3, which presents a
comparison of the two case study farms.
30
Georgia Annual Broiler Production, 2002-2007
1,150
1,200
1,250
1,300
1,350
1,400
1,450
2002 2003 2004 2005 2006 2007
Year
Broi
lers
Pro
duce
d (M
illio
ns)
Broilers
Figure 2.1: Georgia Annual Broiler Production, 2002-2007
Source: GASS 2008
Value of Georgia's Broiler Industry, 2002-2007
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
2002 2003 2004 2005 2006 2007
Year
Dol
lars
(Mill
ions
)
Dollars
Figure 2.2: Value of Georgia’s Broiler Industry, 2002-2007
Source: GASS 2008
31
Figure 2.3: Neoclassical Production Function Illustrating Marginal and Average Product
Source: Pindyck and Rubinfeld (1992)
32
CHAPTER 3
FARM COMPARISON
3.1 Background
As part of an environmental study, six farms in the Southeastern Piedmont region of
Georgia modified their pasture systems to become crop/forage systems. These farms switched
their management practices as part of a larger demonstration with the objective of reducing
nutrient runoff and improving the environmental quality of local soils within the Greenbrier
Creek watershed. Two of the farms (the farms of this study) switched to a pearl millet
(Pennisetum glaucum [L.] R. Br.)-cereal rye (Lolium multiflorum L.) production system,
producing the pearl millet in the summer with cereal rye providing winter grazing for livestock
as well as cover. Cover crops are useful because they protect soil from erosion and other
weather issues (Acquaah, 2002). Both farms planted their crops at a target seeding rate of 5-6
lbs/acre (germination rates varied by farm) for the pearl millet and 120 lbs/acre for the rye.
Herbicide was used on both farms prior to the pearl millet planting in order to burn down the
winter cover crop and to provide weed control. Both farms contain hay lands as well as grazing
lands in addition to the cropland dedicated to pearl millet production.
3.1.1 Recommended Pearl Millet Production Practices
In the Piedmont region of Georgia, pearl millet may be planted for economical grain
production anywhere from May 1 to July 15 (Lee et al., 2004). Soil temperature should be at
least 70o F while planting, as cooler soils may cause problems with weed competition (Lee et al.,
33
2004). Pearl millet seed should be planted ½ inch to ¾ inch deep (Lee et al., 2004). The current
recommended row spacing for pearl millet is 14-21 inches; proper row spacing is necessary to
compete with late emerging weeds. Existing farm equipment may present a problem within the
region, because row spacing configurations are typically 7 ½ inches (for small grains) or 36
inches (for corn or sorghum). Neither one of these configurations is suitable for optimal pearl
millet grain yield (Wilson et al., 2006a). Lack of suitable equipment/machinery is a hindering
factor preventing the spread of pearl millet production in the U.S. Lee et al. (2004) concluded
that 21 inch row spacing leads to more consistent yield, grain protein content, and a reduction in
crop damage caused by the chinch bug. The recommended plant population density for pearl
millet is 225,000 plants/acre, although plant populations of 150,000 to 200,000 plants/acre are
adequate for good grain yields (Lee et al., 2004; Wilson et al., 2006a). Both producers in this
study experienced problems with uneven stand and head height while growing the pearl millet.
Pearl millet was grown for grain on both of these farms for the years 2005 and 2006. The pearl
millet was harvested for hay in 2007, with the drought driving this decision. Both of the
producers needed forage, and little or no hay was produced in the spring (because of weather).
Drought conditions resulted in no grass for the cows to eat- the only thing growing was the pearl
millet. Both producers choose to cut for hay to help feed their cows.
3.1.2 TifGrain 102
In this experiment, the pearl millet hybrid used by the two farms was TifGrain 102.
TifGrain 102 is a new generation pearl millet hybrid, released in 2003, which was developed
cooperatively and released through the research of the USDA-ARS and University of Georgia
Coastal Plain Experiment Station at Tifton, GA. Initially, hybrid seed was available to producers
in limited quantities beginning in 2002-2003, but seed production was later increased to keep up
34
with the demand from farmers (Gulia et al., 2007). Currently, this grain pearl millet hybrid is
commercially available (University of Georgia, 2005). Some notable characteristics of the
TifGrain 102 hybrid are that it is well suited for double-cropping systems, it is a shorter (dwarf),
earlier flowering (45-48 days) and earlier maturing variety (75-85 days), with fewer leaves and a
slightly larger grain size which makes for easier combining (University of Georgia, 2002; Wilson
et al., 2006a). TifGrain 102 develops larger seed spikes, which in turn yields higher quantities of
grain (Rahn, 2001). TifGrain 102 will produce approximately 4000-5000 lbs./acre in ideal
growing situations.
In general, the TifGrain 102 hybrid variety can be harvested 80 days after planting due to
its more compact growing season, making it ideal to use in rotational cropping and traditional
double cropping systems (Rahn, 2001, Davis et al., 2003).
TifGrain 102 has an increased resistance to rust disease (Puccinia substriata var. indica)
as well as a resistance to root-knot nematodes (Meloidogyne arenaria) which affect the quality
and yield of corn, peanuts, and cotton- mainstay crops of the Southeast U.S. (University of
Georgia, 2002; Timper and Hanna, 2005; University of Georgia, 2005). Rust disease resistance
is important because this fungal disease can cause significant crop losses in both yield and grain
size (Wilson et al., 1995). Additionally, it contains minimal fumonisins and aflatoxins when it is
grown in dryland production settings (Gulia et al., 2007). Finally, TifGrain 102 is a drought
tolerant variety that produces top quality grain without the use of irrigation (University of
Georgia, 2002).
3.1.3 Conservation Tillage/No-Till Drilling
Both farms planted their pearl millet seed utilizing the no-till drilling technique. The no-
tillage method of cropping is one of which soil disturbance during the planting process occurs
35
only in the spot the where the seed is placed (Acquaah, 2002). In other words, the crop is seeded
into a seedbed which has not been disturbed since the harvest of the previous crop (Acquaah,
2002). No-till or conservation tillage plantings are desirable in clayey soils or on highly erodible
land (Lee et al., 2004). In this study, the pearl millet was seeded into the winter cereal rye cover
crop. In this method of tillage, weeds were managed by the use of herbicides prior to planting
(Acquaah, 2002). The main goals of utilizing the conservation tillage method are to conserve
moisture, reduce soil erosion, improve soil structure, and increase soil carbon (reducing the
amount of carbon dioxide released by other non-conservation methods of tillage).
Moisture conservation is beneficial to crop producers in drought-ridden areas and for
farmers producing crops in dryland situations, as this can increase yields. Nutrients are less
likely to be lost to runoff with use of conservation tillage practices. No-till drill planting
provides more efficient soil sowing as well as lower production costs, but does not, however,
allow for any incorporation of litter fertilizer with soil after application, where it is most effective
(Spehar and Landers, 1997; Gascho et al., 2001).
3.2 Environmental Characteristics of Study Farms
3.2.1 Greenbrier Creek Watershed
The Greenbrier Creek is classified as a “fourth-order watershed” and is a typical Southern
Piedmont watershed, with a prominence of agriculture and a presence of urbanization (Franklin
et al., 2002). This watershed is characterized by its gently rolling to steep uplands (Franklin et
al., 2003). Average percentages for land use for these watersheds in 1998 for the categories of
agriculture, forest, residential, and miscellaneous were 27.5, 69.1, 0.1, and 3.1% respectively
(Franklin et al., 2002). The Greenbrier creek is a part of the Oconee River Basin, which joins the
Ocmulgee River and flows into the Altamaha River in Hazlehurst, GA.
36
3.2.2 Runoff Collection
In May 1998, stream collectors and small in-field runoff collectors (SIRCs) were
established on more than 20 farm fields within the Greenbrier and Rose creeks in Georgia
(Franklin, 2003). This infrastructure is still operational and serves as a backdrop for this study
(Franklin, 2003). These collectors were installed with the purpose of measuring the effects
management practices have on surface water quality. Specifically, the SIRCs were established to
determine the concentrations of phosphorus, nitrogen, and sediment on the edges of stream-side
fields (Franklin, 2003).
3.3 Farm A
Farm A has four total fields within this study. This farm has a cow/calf operation which
contained approximately 40 cow/calf (mixed herd) pairs throughout the length of this study.
Figure (3.1) presents a representative picture of Farm A.
3.3.1 Farm A Prior to Pearl Millet Implementation
Prior to the implementation of pearl millet on Farm A, the field of study (noted by the “1”
on the representative farm figure, approximately 8 acres) was a tall fescue-common
bermudagrass unimproved hayfield production system. Mineral fertilizer was applied to this
enterprise at recommended rates according to soil tests. Soil tests indicated high levels of soil
phosphorus. As such, only nitrogen and potassium were applied to the unimproved hayfield
production system. In addition to the haying enterprise, Producer A grazed cattle on this field for
approximately 54 days, with much of this grazing occurring in the winter. Some supplemental
feed was fed to the livestock (about 30% of the time) while grazing occurred.
37
3.3.2 Farm A After Pearl Millet Implementation
Farm A switched production from the unimproved hayfield production system to the
pearl millet-cereal rye production system in 2005. No fertilizer was applied to the 2005 pearl
millet crop because this field was considered to be a high nutrient status field prior to
implementation. Furthermore, due to its nutrient status level, no fertilizer was applied to the
winter cereal rye in either year. Inorganic nitrogen fertilizer and potash were applied to the pearl
millet crop in the summer of 2006. Based on soil test, no phosphorus was applied to this field
throughout the duration of this study. Producer A grazed the winter cereal rye from around
December 15th to April 15th, for 122 days of grazing (with supplemental feed provided 30% of
the time). This period of grazing left approximately ¼ inch of rye biomass, on which the pearl
millet was planted. This led to higher germination rates and ultimately higher pearl millet grain
yields (compared to Farm B), due to better soil contact and better soil temperature. Pearl millet
was harvested for grain in 2005 and 2006, and upon harvest, the livestock grazed on the
aftermath stover. Farmer A received about 3-5 days of aftermath grazing per harvest on pearl
millet stover.
Farm A contains 5 stream collectors and 7 SIRCs. Storm flow was measured using
rising-flow stream collectors and the SIRCs were used to collect runoff. Baseflow data was
collected twice a month just in front of each stream collector. Field 1 on the representative
figure of Farm A is the 8 acre field on which the pearl millet-cereal rye production system was
produced. It is enclosed by a permanent fence, and cattle do not have access to the stream from
this field. Field 1 contains 3 SIRCs. Fields 2 and 3 are in the same management system and were
used for pasture or grazing land. Field 3 was fertilized with broiler litter, while field 2 was not
fertilized. Field 2 does not contain any SIRCs whereas field 3 contains 3 SIRCs. The difference
38
in these two fields is that cattle did not have access to the stream from Field 2 whereas they did
have access from Field 3. Field 4 is a pasture field similar to fields 2 and 3, the only difference
being the stream management. Field 4 contains a pond that serves as a filter system for nutrients
and sediment to ensure clean water, and contains 1 SIRC. The pond also provides a water source
for the cattle. Field 4 was fertilized with broiler litter. Farm A’s riparian buffer has an average
width of 100 ft and is present along all stream passages. The riparian buffer, however, does not
surround the pond perimeter. In late 2000, the riparian buffer and the stream were fenced, and
approximately 5 years ago the riparian buffer was thinned (all large pine trees removed)
(Franklin et al., 2003). In 2007, the pearl millet was harvested for hay successfully on Farm A.
In total, 3.5 bales of pearl millet were harvested on July 28, 2007. This was crucial because
suitable livestock feed was scarce due to the extreme drought experienced in 2007.
3.4 Farm B
Farm B is comprised of two large fields. The field in which the pearl millet-cereal rye
production system was implemented is approximately 20 acres. Farm B had stream collectors
only; no SIRCs were used on this farm. Figure (3.2) presents a representative picture of Farm A.
3.4.1 Farm B Prior to Pearl Millet Implementation
Prior to the implementation of pearl millet-cereal rye production system on Farm B, the
field of study was a winter cereal rye-summer fallow production system. This rye operation
remained the same in practice before and after pearl millet implementation. Quail litter was
applied in the fall prior to the planting of the rye at a rate of 3 tons per acre. The winter rye was
grazed from December 15th to around April 1st, for 108 days grazing. After the grazing was
completed, nothing was done to the field before it was left to fallow (suspended cropping) in the
summer prior to the implementation of pearl millet. Also, no regular management (i.e. mowing)
39
or grazing was done on the fallow field. Advantages of letting a field fallow include soil
moisture conservation and soil erosion prevention. Soil moisture conservation is important for
crop production in dryland settings, as well as in areas experiencing frequent droughts.
3.4.2 Farm B After Pearl Millet Implementation
As previously mentioned, the winter rye enterprise on Farm B operated in the same
manner as it did prior to the pearl millet implementation; it was strictly a grazing operation. In
the transition to pearl millet, Farm B just changed its annual crop mix. Farm B spaced pearl
millet in 21 inch rows the first year (2005) as recommended, but later spaced the rows at 14
inches in hopes of controlling crabgrass problems. Farm B differs from Farm A, in that in
addition to it being a cow/calf operation, it also contains a quail enterprise. This quail operation
consists of approximately 160,000-170,000 quail. Both quail litter applications took place prior
to the planting of both crops, with the pearl millet fertilized in the spring and the rye fertilized in
the fall with litter generated from the quail operation at a rate of 3 tons/acre (6 tons/acre total).
The December 15th to April 1st period of grazing left approximately 1 inch of rye biomass, on
which the pearl millet was planted. This led to lower germination rates and ultimately lower
pearl millet grain yields compared to Farm A, and this was most likely due to poor soil contact
and cooler soil temperature. In 2005 and 2006, the pearl millet crop had to be replanted after the
initial planting died.
In 2007, the pearl millet crop was unsuccessfully harvested for hay on Farm B. This was
unsuccessful because the harvested hay had high concentrations of nitrate, due to quail litter
management and drought. Producers with broiler or quail operations must manage litter
somehow, most commonly through field applications. During a drought-stricken year, this can
lead to high nitrate concentrations, which can be harmful to livestock if consumed.
40
Figure 3.1: Farm A
Source: Dory Franklin
S1
S3
Pearl Millet
Hay
Pearl Millet
Stream collectors
RiparianArea
RiparianArea
S2
Pond
Figure 3.2: Farm B
Source: Dory Franklin
41
CHAPTER 4
EMPIRICAL METHODS
4.1 Expected Utility, Risk Aversion, and Efficiency Criteria
4.1.1 Expected Utility Theory
Agricultural producers tend to operate in a decision-making environment filled with
uncertainty (King and Robinson, 1981). For many of these agricultural producers, profit
maximization is the ultimate goal1. Along with profitability, risk must be considered in a
business decision thought process, and successful management of risk is necessary for producers
to maintain viable operations (Levy, 1998; Byrd, 2005). Weather, yield, price, and pests are all
types of uncertainty facing an agricultural producer in their business-making environment (Byrd,
2005). In order to help agricultural producers minimize risks, agricultural economists utilize
theoretical tools, such as expected utility maximization frameworks, to help facilitate the actual
decision making process (Byrd, 2005). In arriving at a decision, risk must be weighed against
profitability (Levy, 1998).
The expected utility hypothesis is the basis for much of the theory of decision making
under uncertainty, and provides a general decision rule (expected utility maximization) for
identifying agent’s preferences (King and Robinson, 1981). The expected utility function, as
defined by Wetzstein (2005), is the “weighted average of utility obtained from alternative states
1 As the profit goal is considered the dominant motivation for entrepreneurs or business-minded people to establish or operate a business, it is possible that some businessmen undertake a business activity for the sake of certain intrinsic benefits, such as treating business as a hobby or leisure, or for self-fulfillment. Thus, the profit incentive may not be the sole overriding motivation for all businessmen.
42
of nature (p. 588).” Each state of nature represents a risky alternative, and can be thought of as a
lottery (N) (Wetzstein, 2005). A state of nature is defined as a set of possibilities associated with
all possible outcomes, summing to 1, with a probability assigned to each outcome (Wetzstein,
2005). Because the expected utility theory assumes an agent’s behavioral rationality when
choosing amongst various states of nature, several axioms are relied on to define an agent’s
behavior when faced with a choice that results in a probability distribution of outcomes (Byrd,
2005). The axioms of ordering and transitivity, continuity, and independence are adequate for
determining a decision maker’s utility function when choices result in single dimensioned
consequences (Anderson et al., 1977; Byrd, 2005).
The axiom of ordering states that a decision-maker prefers one of two risky alternatives
(a1 or a2), or is indifferent between the two choices (Anderson et al., 1977). This axiom
precludes areas of indecision, and assumes that a decision-maker completely understands the
choices and can always make up their minds; indecision is not accepted following the axiom of
ordering (Wetzstein, 2005). Transitivity extends the axiom of ordering to situations where more
than two choices exist. The transitivity axiom states that if a decision-maker prefers a1 to a2 (or
is indifferent between the two choices), and prefers a2 to a3 (or is indifferent between the two
choices), ultimately the decision-maker will prefer a1 to a3 (or will be indifferent between the two
choices) (Anderson et al., 1977). This axiom implies that an agents’ preferences amongst
alternatives cannot be cyclical (Wetzstein, 2005). The continuity axiom states that “if a person
prefers a1 to a2 to a3, a subjective probability P(a1) exists other than zero or one such that he/she
is indifferent between a2 and a lottery yielding a1 with a probability P(a1) and a3 with probability
1-P(a1) (Anderson et al., 1977, p. 67).” This axiom implies that an agent, when faced with a
prospect involving a good and a bad outcome, will risk receiving the bad outcome if the
43
probability of getting the bad outcome is sufficiently low (Anderson et al., 1977). Finally, the
independence axiom states that “if a1 is preferred to a2, and a3 is any other risky prospect, a
lottery with a1 and a3 as its outcomes will be preferred to a lottery with a2 and a3 as outcomes
when P(a1)=P(a2) (Anderson et al., 1977).” This implies that an agent’s preference between a1
and a2 is entirely independent of a3 (Anderson et al., 1977). According to Wetzstein (2005,
p.587), “the idea of being able to jointly consume two or more states of nature is a fundamental
assumption of many theories dealing with choice under uncertainty and is summarized by the
Independence Axiom.” Wetzstein (2005) defines the Independence Axiom as:
If N, N’, and N’’ are states of nature, and (ρ) is the probability of an outcome occurring, then:
N N’ if and only if:
(4.1) ρN + (1 – ρ)N’’ ρN’ + (1-ρ)N’’
The state of nature N’’ should be independent of other states of nature and should have no
influence on an agent’s preference when choosing between state of nature N and state of nature
N’’ (Wetzstein, 2005; Byrd, 2005). Wetzstein (2005) notes that unlike commodities which are
typically consumed jointly, states of nature are mutually exclusive and consumed separately.
In 1944, Arthur Morgenstern and Johan von Neumann created the expected utility theory
as a model to gauge risk preferences (Byrd, 2005). Wetzstein (2005) represents the expected
utility function for two states of nature, as:
(4.2) U(x1, x2, ρ1, ρ2) = ρ1U(x1) + ρ2U(x2)
Each state of nature in this model is assigned a probability of occurrence (ρi) (Note: ρ1 + ρ2 = 1),
and for all states of nature (xi), the utility received from one state is added to the utility received
in another state (Wetzstein, 2005; Byrd, 2005). Decision-makers base their choices on each state
of nature based on probabilities (Byrd, 2005). Expected utility theory posits that a decision-
44
maker should maximize his/her subjective utility if he/she is to be consistent with his/her
expressed preferences (Anderson, et al., 1977).
4.1.2 Risk Aversion
A decision-maker’s preferences can be determined by measuring his/her response to risk.
Expected utility utilizes variance, a statistical measure of the spread of a probability distribution,
to measure variability in outcomes or states of nature (Wetzstein, 2005). The higher the variance
associated with a particular state of nature, the higher the variability in the outcomes and thus
risk correlated with that state of nature. The relationship between risk and variance is a
fundamental part of risk theory, and helps to provide a basis for analyzing the concept of risk
aversion when considering an agent’s preferences (Byrd, 2005). According to Wetzstein (2005),
an agent’s preferences will fit into one of three categories of behavior: risk aversion, risk neutral,
or risk seeking. It is generally accepted that most agents tend to have an aversion to risk
(Wetzstein, 2005). An agent who is risk averse will refuse to play in an actuarially fair game,
which is “a game where the cost of playing the game is equivalent to the game’s expected value
(Wetzstein, 2005, p. 590).” In other words, a risk averse agent will refuse to participate in
actuarially fair games unless some utility is derived from the process of playing the game, or if
the potential loss from playing the game is relatively small (Wetzstein, 2005). Furthermore, an
extension known as the St. Petersburg paradox exists where some agents may avoid a game
yielding positive expected returns (Wetzstein, 2005). The paradox exists because both the
expected payoff and the variance in the theoretical outcome of the game result to infinity (Byrd,
2005). For an actuarially fair outcome, the game would require setting the price of the game at
infinity, and no risk-averse agent would be willing to pay this for the right to play the game
(Wetzstein, 2005). The St. Petersburg paradox also indicates that because the variance of the
45
game is infinite, certain outcomes are worth more in utility than uncertain ones, even when the
expected payoffs for the uncertain outcome may be large or equal (Byrd, 2005).
In an actuarially fair game, agents with risk seeking preferences will play the game, while
agents with risk neutral preferences will be indifferent between playing the game and not playing
(Wetzstein, 2005). In order to measure the preferences of an agent belonging to either of these
groups, a derivation of their utility function is necessary (Byrd, 2005). In theory, the derived
utility functions serve as exact representations of a firms’ preferences (King and Robinson. 1981;
Byrd, 2005).
4.2 Marginal Revenue, Marginal Cost, and Profit Maximization
Profit is the difference between total revenue and total cost, and profit maximization is
the goal of most firms. In order to meet the profit maximization objective, a firm must make two
important decisions: what and how much to produce. These two decisions are largely shaped by
the firm’s ability to produce (technology, infrastructure, and machinery) and the cost of
necessary inputs (Wetzstein, 2005). An analysis of a firm’s revenue is necessary in order to
determine its profit maximizing level (Pindyck and Rubinfeld, 1992). Assume that a firm’s
output is q, and the firm receives revenue R. The revenue received by the firm is equal to the
product price P multiplied the number of units sold: R = Pq (Pindyck and Rubinfeld, 1992).
Production cost C is also dependent on the level of output (Pindyck and Rubinfeld, 1992). As
previously mentioned, a firm’s profit is the difference between revenue and cost:
(4.3) π(q) = R(q) - C(q)
In order to maximize profit, a firm will select the level of output where the difference
between revenue and costs is the largest (Pindyck and Rubinfeld, 1992). On Figure (4.1)
(illustrating profit maximization), this point is q*.
46
R(q), the revenue curve, is an upward sloping straight line. This is because given p,
revenue will increase proportionately with output (Pindyck and Rubinfeld, 1992). The slope of
the revenue curve is the marginal revenue, and shows how much revenue rises when output is
increased by one additional unit (Pindyck and Rubinfeld, 1992). C(q) is not a straight line
because fixed and variable costs are factored in. This curve represents the marginal cost, or the
additional cost associated with an additional level of output (Pindyck and Rubinfeld, 1992).
When output is zero, C(q) will still be positive because of fixed costs in the short run (Pindyck
and Rubinfeld, 1992). The two intersections between R(q) and C(q) (the cost curve) represent
break-even points, or level where only normal profits are earned. At a level of normal profit, a
firm is “receiving a return on the inputs they own at a level where there is no tendency for them
to employ the inputs in another production activity (Wetzstein, 2005, p. 262).” In situations
where normal profits are earned, firms will neither enter nor exit the market. For lower levels of
output (below the first intersection on the revenue curve), not enough revenue is generated
through sales to cover the variable and fixed costs associated with production, meaning profit
will be negative. At these levels of production, marginal revenue is greater than marginal cost,
indicating that increases in outputs will lead to increased profits (Pindyck and Rubinfeld, 1992).
As output is gradually increased, profit becomes positive (greater than q0) before maximizing at
q*, where it then decreases before becoming negative again (at the second intersection). Any
point to the right of the profit-maximizing output (q*), marginal revenue will be less than the
marginal cost, meaning a decrease in profits (Pindyck and Rubinfeld, 1992).
For profit maximization, one must take the equation for profit, π(q) = R(q) - C(q),
differentiate it, and set it equal to zero.
(4.4) Δπ / Δq = ΔR / Δq – ΔC / Δq
47
ΔR / Δq is marginal revenue (MR), which is the change in revenue associated with a change in
the level of output (Pindyck and Rubinfeld, 1992). ΔC / Δq, conversely, is the marginal cost
(MC), or the change in cost associated with a change in the level of output. Profit is therefore
maximized when an additional increment of output leaves profit unchanged (Δπ / Δq =0)
(Pindyck and Rubinfeld, 1992), or when:
(4.5) MR(q) = MC(q)
Thus, the profit-maximizing point q* is where marginal revenue is equal to marginal cost, or
where MR(q) = MC(q). If MR>MC, an incremental increase in output by a firm will adding
more to revenue than cost, and thus profit will increase (Wetzstein, 2005). Alternatively, if
MC>MR, an incremental decrease in output by a firm will subtract from cost more than
subtracting from revenue, and thus will also increase the firm’s profit (Wetzstein, 2005).
4.3 Relationship Between Expected Utility Theory and the Profit Maximization Motive
Since the expected utility postulates that a decision-maker should maximize his/her
subjective utility if he/she is to be consistent with his/her expressed preferences, profit
maximization relates well with this theory. Utility may be represented as a monetary outcome
(Doll and Orazem, 1978).
The purpose of this project was to determine whether or not it was a rational decision to
switch management practices to the pearl millet-cereal rye production system for each producer.
With the expected utility theory and the profit maximization goal, we are weighing what has
been done prior to the implementation of pearl millet versus the after scenario. This is a unique
issue because the expected utility theory is not strictly monetary; environmental benefits/issues
need to be taken into account. In this study, environmental benefits include: reduction in soil
48
phosphorus, reduction of phosphorus export in runoff (total phosphorus and dissolved reactive
phosphorus), and overall improved nutrient management.
The expected utility function of a producer may be expressed as:
(4.6) E(u) = μ – ρ(σ2)
Where μ represents profit and ρ(σ2) represents the probability of risk. This expected utility
function may be expanded to capture environmental costs/benefits (ξ):
(4.7) E(u) = μ – ρ(σ2) + ξ
Based on the above expected utility model, expressions can be developed to represent
different alternative conditions, such as the before and after scenarios. These expected utility
formulations for the production scenarios (before and after) will then be the basis for decisions
made by producers. The expected utility function could then be expressed as:
(4.8) E(u) = f(profit, environmental benefits) – ρ(σf2)
This states that a producer’s expected utility is a function of profits and environmental benefits,
minus the probability of risk. If return on investment decreases from a certain business decision,
a rational decision maker will likely decide to divert resources into another operation (Alexander,
2007). According to the received opinion conceptual frameworks, “rational decision makers will
make decisions based on maximizing their individual utilities regardless of the outcome for
others, assuming one is following the requirements of the laws, rules, and regulations of the
community” (Alexander, 2007, p. 158). This indicates that a rational decision maker will likely
choose the alternative consistent with profit maximization, assuming he/she is following
guidelines.
Based on the axioms mentioned in the expected utility section above, in order to
accurately reflect an individuals’ preferences, the producer must select the action with the
49
highest expected utility. In this study, the expected utilities of the before scenarios are weighed
against the expected utilities of the after pearl millet scenarios for both farms. Expected
profitability is the driving force behind many producers’ decision making process. The higher
the probability of risk, the higher the expected profitability of an enterprise needs to be to
account for this risk.
There is a tendency compelling managers not to pursue more morally preferable
initiatives when those initiatives conflict with the profit maximization objective (Alexander,
2007). Managers tend to make decisions that favor practices consistent with profit
maximization, at the expense of the better accepted and morally preferable alternatives
(Alexander, 2007). In order to overcome the constraint restricting the implementation of
normatively preferable practices, values other than profit maximization should be elevated to the
level of primary filtering value (Alexander, 2007). For example, instead of profit maximization
as the primary filtering value, ideal environmental sustainability should become the value if
research indicates that profit maximization should be understood through that ideal (Alexander,
2007). In order for this to happen, changes in the rules, laws and regulations defining and
guiding the market must occur (Alexander, 2007). In this system, “profit will be seen in terms of
how it is affected by, and derived from, maximizing ideal environmental sustainability instead of
determining our commitment to environmental sustainability as determined by how it affects
profit” (Alexander, 2007, p. 160)
4.4 Enterprise Budget Analysis
Deciding how to best allocate scarce resources is a fundamental step in the business
decision making process for a firm. Skillfully allocating scarce resources is particularly
challenging in industries often lacking complete information, such as agriculture, and requires
50
the budgeting process (Calkins and DiPietre, 1983). Enterprise budgets serve as the most basic
building blocks for total farm planning (Calkins and DiPietre, 1983). Land grant universities
create enterprise budgets for many agricultural commodities (Byrd, 2005). An enterprise budget
is a valuable business decision making tool that can help agricultural producers as well as
financial institutions, extension agents, and government agencies identify specific areas where
research may reduce the cost of inputs, and can help determine the optimal amount of output per
unit of enterprise (Calkins and DiPietre, 1983; Wilson et al., 2006a). This study utilizes
enterprise budgeting to determine both the total variable cost and the cost per acre of the pearl
millet production and pearl millet-cereal rye production system for the two farms. Enterprise
budgeting is also used to determine the profitability of the before scenarios for each farm.
Enterprise budgets are used as guidelines in the decision making process. Budgets are
developed as guidelines because input costs are highly variable, particularly in volatile markets
such as fuel and fertilizer. There are 3 basic components of an enterprise budget: gross returns,
total variable costs, and total fixed costs per acre (Byrd, 2005). Together, these three
components provide producers, lenders and other users with an estimate on profit (or lack
thereof) generated through the production of various agricultural commodities. The budgets
developed in this study follow a template commonly used by many agricultural entities. The
budgets begin with a gross return section. These returns may be hay sales (unimproved
hayfield), grain sales (summer pearl millet), or grazing revenues (unimproved hayfield, winter
cereal rye, summer pearl millet stover). The cost component of the budget consists of direct
expenses (variable costs) and fixed costs tied to production. Upon compilation of these three
sections, a net return (or loss) for the management practice or enterprise may be calculated. Pre-
pearl millet implementation financial data as well as post-pearl millet implementation data was
51
collected through producer interviews. Appendices A and B present the pearl millet budgets for
Farm A and Farm B, respectively. Appendices C and D present the pearl millet-cereal rye
production system budgets for Farm A and Farm B, respectively. Finally, appendices E and F
present the before scenarios for Farm A (tall fescue-common bermudagrass unimproved hayfield
production system) and Farm B (cereal rye-fallow production system), respectively.
4.4.1 Custom Farm Machinery Rates
In this study, 2005 custom farm machinery rates were used in the enterprise budget
analysis. These machinery rates were developed by Dr. Cesar Escalante (University of Georgia
Extension Economist) with the cooperation of county extension agents as well as custom farm
equipment operators. In gathering the cost data, 101 custom operators were given a survey
regarding the prices they charge to perform certain custom farm tasks. Information was
gathered, averaged, and reported, along with the highs and lows received from the operators for
tasks performed. Average costs were used in the enterprise budgeting.
Custom farm work is an option for farmers who choose not to own all of the equipment
necessary to run their various enterprises. Custom farm work can encompass the use of
machinery, equipment, labor, and other services required to perform various farm tasks. It is
also commonplace in agricultural communities to barter equipment/machinery/goods and
services. To ensure consistency of input prices for both farms, custom farm machinery rates
were used in place of actual machinery costs in the enterprise budgets. In this study, the
following average per acre custom farm machinery rates were assumed for both farms: no-till
drilling for the planting of both the rye and the pearl millet, spraying crop with herbicide, and
combining (hauling included). Farm A had some additional custom farm work done, in the pre-
52
pearl millet haying scenarios. Raking and tedding were custom done on the farm, with the
remaining processes completed via bartering.
4.4.2 Pearl Millet Pricing
Today, pearl millet is priced according to corn prices. In this study, pearl millet prices are
assumed to be 100% of corn prices. It is important to note that because there is no established
market to sell the pearl millet through; most of this commodity is sold through private
negotiations or auctions. Price premiums may result through these private negotiations or
auctions. In the year 2005, corn prices were $2.20 per 56 lb. bushel, and in 2006, corn prices
were $2.80 per 56 lb. bushel (GASS, 2007). Because corn prices are reported 56 lb. bushels, it is
necessary to convert the price to a $/lbs. basis. The results of this conversion were per pound
grain pearl millet prices of $0.039/lb. in 2005 and $0.05/lb. in 2006.
The fact that there is no real established market (base price) for pearl millet grain, is most
certainly a limiting negative factor impacting producers’ inclusion of this enterprise in their
whole-farm plan.
4.4.3 Pearl Millet Grain Yields
In 2005, total grain pearl millet yields for Farm A and Farm B were 29,220 lbs. and
29,960 lbs., respectively. This amounts to 3,652.5 lbs. per acre for Farm A, and 1,498 lbs. per
acre for Farm B. In the year 2006, total grain pearl millet yields for Farm A and Farm B were
25,288 lbs. and 31,180 lbs., respectively. This is 3,161 lbs. per acre for Farm A and 1,559 lbs.
per acre for Farm B. Farm B’s per acre yields are significantly less (more than 50% less) than
Farm A’s per acre yield. There are two possible explanations for the yield differences between
the farms. The first explanation has to do with different winter rye grazing practices of Farm A
and Farm B. Farm B grazed 20 acres of winter rye until April 1 before planting pearl millet
53
whereas Farm A grazed 8 acres of winter rye until April 15 before planting the pearl millet.
After the grazing of the winter rye was complete, the residual biomass was flattened and the
pearl millet was planted over it using the same equipment and same recommended seeding rate
per acre. Farm A, with the longer grazing period, had less winter rye biomass leftover
(approximately ¼ of an inch) compared to Farm B (approximately 1 inch). This led to better
soil/seed contact for Farm A, and better germination rates for Farm A (approximately 70% of
seeds germinated) compared to Farm B (approximately 40% of seeds germinated). The second
possible explanation for the better per acre yield is that due to the smaller amount of biomass
leftover on Farm A, as soil temperatures were likely warmer, favoring quicker germination.
4.4.4 Pearl Millet Revenues
As previously mentioned, pearl millet prices are assumed to be 100% of corn prices in
this study. Per pound corn prices were $0.039 and $0.05 in 2005 and 2006, respectively (GASS,
2008). Gross revenues were determined by multiplying yield by price received. Subtracting the
variable and fixed costs from the gross revenue figures leaves net revenues. Farm A received
some revenues from post-harvest aftermath grazing, a common technique utilized by grain crop
producers. The benefits from stover grazing were twofold- the livestock gained nutritional value
and the producer did not have to provide alternative feed sources (i.e. feeding hay or grazing
another field on the farm).
Farm A’s gross revenue from pearl millet in 2005 was $1,139.58 from grain sales, with
$400 credited from livestock grazing on the pearl millet harvest stover, for a total of $1,539.58 in
revenues. For Farm B, gross revenue in 2005 was $1,168.44 from grain sales. The year 2006
saw a slight decrease in grain yields for Farm A and a slight increase for Farm B. For Farm A,
gross revenue in 2006 was $1,264.40 from grain sales, with $560 credited from livestock grazing
54
on the pearl millet harvest stover for a total of $1,824.40. For Farm B, gross revenue in 2006 was
$1,559.00 from grain sales. Based on these two years of production, average revenues for Farm
A and Farm B were $1,681.99 and $1,363.72, respectively.
4.4.5 Pearl Millet Costs
Farm A’s total costs for pearl millet production in 2005 were $884.72, or $110.59 per
acre. Farm B’s total costs for pearl millet production in 2005 were $3,563.87, or $178.19 per
acre. 2006 saw Farmer A’s costs nearly double and a significant decrease in Farmer B’s costs.
In 2006, Farm A’s total costs for pearl millet production were $1,639.90 ($204.99 per acre),
while Farm B’s total costs for pearl millet production were $3,960.36 ($198.02). Averaging the
two years worth of cost budgets for both Farm A and Farm B gives us $1,262.31 ($157.79 per
acre) and $3,724.12 ($186.21 per acre), respectively.
4.4.6 Pearl Millet Net Returns/Losses
Based on the above mentioned costs and returns for the pearl millet enterprises, net
returns or losses can be calculated. For Farmer A, net returns were $654.86 ($81.86 per acre)
and $184.50 ($23.06 per acre) for 2005 and 2006, respectively. This illustrates the importance of
the post-harvest millet stover grazing, because it was the difference in Farmer A reporting a
positive net return as opposed to a negative net return. Averaging the two years gives total net
revenues of $419.68 ($52.46 per acre) for Farm A. Farmer B on the other hand, did not receive a
positive net return. Farmer B’s net losses were -$2,395.43 (-$119.77 per acre) and -$2,401.36 (-
$120.07) for 2005 and 2006, respectively. Averaging these two years yields total net losses of
-$2,360.40 (-$119.92 per acre) for Farm B. Table (4.1) presents the net revenues/losses
generated from pearl millet production for Farm A and Farm B.
4.4.7 Ideal Pearl Millet Grain Yields
55
According to Dr. Jeff Wilson, a research plant pathologist for the USDA-ARS Tifton
who works closely with pearl millet breeding and research, average to above average yields
should be in the 4,000-5,000 lb. per acre range. Assuming the same production costs for the
producers and an ideal yield of 5,000 lbs. per acre, both farmers earn a positive return from the
grain harvest. Farmer A earns $675.28 ($84.41 per acre) and $160.08 ($20.01 per acre) for 2005
and 2006, respectively. Averaging these two years yields a return of $417.68 ($52.21 per acre)
for Farmer A. Farmer B earns $336.20 ($16.81 per acre) and $539.60 ($26.98 per acre).
Averaging these two years yields a return of $437.80 ($21.89 per acre) for Farmer B. Table (4.3)
presents the net revenues generated from pearl millet production for Farm A and Farm B,
assuming the ideal grain revenues suggested by Dr. Wilson.
Dr. Wilson also estimates the per acre cost of pearl millet production to be around $125,
although this will vary with fluctuating input markets such as fuel and fertilizer. This ideal
estimated per acre cost for pearl millet production is exceeded each year for both producers, with
the exception being Farm A 2005. Yields for both Farm A and Farm B are below the average to
above average yields suggested by Dr. Wilson. Appendix G presents an ideal budget with ideal
yields (Wilson et al., 2006a).
4.4.8 Combined Revenues for the Pearl Millet-cereal Rye Production System
Pearl millet is well suited for double cropping, particularly when the other component of
the crop mix is a cover crop. In this study, the cereal rye crop provides significant returns and
increases the profitability for the established production system. It is important to note that the
cereal rye returns are strictly attributable to livestock grazing; no returns would have been
realized from the cereal rye enterprise in the absence of livestock grazing. It was assumed that
each producer was realizing $1.00 per cow per day in livestock grazing revenue.
56
As previously mentioned, Farmer A was grazing 80 cattle (mixed) herd from around
December 15th to April 15th, for 122 days of grazing, with supplemental feed provided 30% of
the time. Farmer B was grazing 90 cattle herd from around December 15th to April 1st, for 108
days of grazing, with supplemental feed provided 15% of the time. This rye grazing yielded
revenues of $6,832.00 ($854.00 per acre) for Farmer A and $8,262.00 ($413.10) for Farmer B.
These respective returns were observed for each producer in both 2005 and 2006. These grazing
revenues affect the profitability of the pearl millet-cereal rye production system significantly.
Farmer A receives positive net returns of $7,072.64 ($884.08 per acre) and $6,537.93 ($817.24
per acre) from the pearl millet-cereal rye production system for 2005 and 2006, respectively. On
average, Farmer A’s net returns are valued at $6,805.28 ($850.66 per acre). Farmer B receives
positive net returns of $3,759.59 ($187.98) and $3,611.18 ($180.56 per acre) from the pearl
millet-cereal rye production system for 2005 and 2006, respectively. Averaging these two years
yields a net return of $3,685.39 ($184.27 per acre).
4.4.9 Pre-Implementation Revenues
Farm A switched production from a tall fescue-common bermudagrass unimproved
hayfield production system to a pearl millet-cereal rye production system. Revenues were
received through hay sales and from livestock grazing. Hay bales weighed 900 lb. Hay
production yielded 44 bales in 2004 and 9 bales in 2005, for revenues of $1,089.00 ($136.13 per
acre) and $238.95 ($29.87 per acre). As was the case in Farm A’s rye grazing, supplemental
feed was given to the livestock while grazing took place on the tall fescue-common
bermudagrass about 30% of the time. Livestock grazing provided revenues of $3,080.00
($385.00 per acre) for both 2004 and 2005. Total net revenues for the tall fescue-common
bermudagrass production system were $2,976.84 ($380.78 per acre) and $2,118.42 ($273.47 per
57
acre) for 2004 and 2005 respectively. Averaging these two years gives total net revenues of
$2,547.63 ($327.12 per acre). Significantly higher net revenues are realized for Farm A under
the pearl millet-cereal rye production system in comparison to the tall fescue-common
bermudagrass production system.
Farm B switched production from a cereal rye-fallow production system to a pearl millet-
cereal rye production system. A fallow field is one that is left dormant during a growing season.
Management practices vary for fallow fields as far as preparation prior to the idle period.
Leaving a field to fallow can have some environmental benefits such as soil moisture
conservation and soil erosion prevention. Soil fertility may also be regained by leaving a field
dormant for a grow season.
Because Farm B’s rye operation remained the same through the years, revenues were
consistent. Livestock was grazed for the same period of time with the same amount of
supplemental feed was supplied, resulting in net revenues of $5,862.16 ($293.11 per acre) and
$5,859.63 ($292.98 per acre) for 2003 and 2004, respectively. Averaging these two years gives
total net revenues of $5,860.90 ($293.04 per acre). The cereal rye enterprise was the only source
of revenue for this farm field in Farm B’s before scenario. Because there was no management or
grazing done on the summer fallow, no costs or revenues were generated. In economic terms,
the fallow field had a total net revenue of zero in the years prior to the implementation of the
pearl millet. As such, budget creation was not necessary. Lower net revenues are realized for
Farm B under the pearl millet-cereal rye production system in comparison to the cereal rye-
fallow production system.
58
4.5 Economic Analytical Tools
4.5.1 Break-even Analysis
A break-even analysis “calculates the minimum benefit required from an activity in order
to justify making the change (Calkins and DiPietre, 1983, p. 146).” Using the cost and revenue
figures provided by the participating producers, this allowed the generation of break-even
analysis values. A break-even analysis is typically a type of simulation or “what if” analysis
with the goal of determining what level of production, value of production inputs, or value of
sales will result in a firm experiencing zero net revenue (Byrd, 2005). The break-even point of
an enterprise is where a business’s revenues are equal to its costs; no losses have been incurred
nor profits earned. As previously mentioned, the firm is earning normal profits at the break-even
point.
Break-even price is determined by dividing total costs by the total number of units sold.
Table (4.2) illustrates the break-even analyses for Farm A and Farm B. The break-even price per
pound of pearl millet grain sales for Farmer A was $0.03 in 2005 and $0.06 in 2006. On
average, Farmer A would have to receive $0.05 per pound of grain pearl millet in order to break-
even. It is much harder for Farmer B to break-even and potentially earn a profit on pearl millet
grain sales due to low per acre grain yields and high per acre input costs. Farmer B would have
to earn $0.12 in 2005 (3 times the price per pound of grain pearl millet in 2005), $0.13 in 2006
(over 3 times the price per pound of grain pearl millet in 2006), and an average of $0.12 per
pound of grain pearl millet in order to break-even. Break-even volume, on the other hand, is
determined by dividing the total cost of production per acre by the market price for the pearl
millet grain. This was done with respected to pounds and bushels. Farm A would have needed
to produce 2,832.65 lb. (49.32 bu.) per acre and 4,099.74 lb. (71.30 bu.) per acre in order to
59
break-even in 2005 and 2006, respectively. Average production would have needed to be
3,545.81 lb. (61.67 bu.) per acre for Farm A. Farm B would have needed to produce 4,569.06 lb.
(79.46 bu.) per acre and 3,960.36 lb. (68.88 bu.) per acre in order to break-even in 2005 and
2006, respectively. Average production would have needed to be 4,227.10 lb. (73.51 bu.) per
acre for Farm B. A break-even analysis under ideal yield situations may be seen in Table (4.4).
Yields were not affected, although break-even prices were reduced under the ideal yield
scenario.
4.5.2 Sensitivity Analysis
Sensitivity analysis is “the study of how the variation in the output of a model (numerical
or otherwise) can be apportioned, qualitatively or quantitatively, to different sources of variation,
and of how the given model depends upon the information fed into it (Saltelli, 2000).” Calkins
and DiPietre (1983, p. 120) define sensitivity analysis as “the process of changing the yield and
price estimates of a budget to determine the range over which the result is the same
(insensitive).” In this study, prices, yields, and production costs were adjusted on a percentage
scale. Averages (prices, yields) were assumed for these data when the sensitivity analysis was
performed, and modifications were made to certain operating parameters in order to determine
each producer’s chance of realizing positive net returns under different operating scenarios.
In the adjusted price factor sensitivity analysis [Table (4.5)], average price is assumed
($0.0445/lb.), and begins at 80% ($0.0356/lb.) with a 5% incremental rate increasing to 130%
($0.0579/lb.). At 105% ($0.0466/lb.), Farm A begins to realize a net profit of $1.39 per acre
($11.12 total), and realizes a profit of $39.29 per acre ($314.32 total) at the 130% increment.
Farm B, under this adjusted price factor sensitivity analysis, never realizes a net profit, losing
$99.68 per acre ($1,993.60 total) at the 130% increment. The same percentage increment
60
concept was used for the adjusted yield [Table (4.6)] and adjusted production cost [Table (4.7)]
sensitivity analyses. In the adjusted yield sensitivity analysis, average price and average per acre
yield are assumed for both farms in the analyses. Much like the price factor sensitivity analysis,
a 5% increase in production (105%) is the increment at which Farm A realizes a net profit ($1.39
per acre, $11.12 total). Farm B once again does not realize a net profit.
Finally, in the adjusted production cost sensitivity analysis, average price and average per
acre yield are assumed for both farms in the analyses. This sensitivity analysis mirrors the
adjusted price factor analysis. As opposed to the 5% increase in price received for the grain
pearl millet, a 5% decrease in production costs leads to a positive net revenue for Farm A ($1.70
per acre, $13.60 total). Once again, Farm B does not realize positive returns, losing $82.47 per
acre ($1,649.40 total) with a 20% reduction in production costs. A sensitivity analysis was also
done on the cereal rye grazing, to determine how fewer days grazing would affect profitability.
Grazing days were reduced by 10, 25, 50, and 100% for each farm, respectively. Table (4.8)
illustrates this. Reducing the number of days grazing on the rye had a significant impact on the
profitability of the pearl millet-cereal rye production system. A 75% reduction in days grazing
on rye was the level at which Farm A’s production system was no longer profitable. Conversely,
only a 50% reduction in days grazing on rye was the level at which Farm B’s production system
was no longer profitable.
Based on the results of the economic analyses of the case study farms, pearl millet in
itself is not a very profitable enterprise. Under different operating scenarios presented through
break-even and sensitivity analyses, pearl millet earned meager profits at best. Farm A’s average
break-even price (per pound) is slightly larger than average price received ($0.05 vs. $0.0445),
while Farm B’s is nearly triple that ($0.12) of average price received per pound of grain pearl
61
millet. Break-even yields followed this same pattern, with Farm A requiring a yield of 3,545.81
lbs. per acre (slightly above the average actual yield of 3,406.75 lbs. per acre), and Farm B
requiring a yield of 4,227.10 lbs. per acre (compared to average actual yield of 1,528.5 lbs. per
acre) in order to break-even. Assuming the producer was receiving ideal yields (5,000 lbs. per
acre), a reduction in prices required are realized, although break-even yields remain the same.
Pearl millet’s compatibility in a double-cropped system is useful, because it works well with the
cereal rye cover crop. Assuming livestock grazing as a source of revenue, the cereal rye crop
greatly improves the profitability of the production system. The next chapter presents
environmental results of the study.
62
Figure 4.1: Profit Maximization
Source: Pindyck and Rubinfield (1992)
Table 4.1: Pearl Millet Grain Revenues
Farm A Farm A Avg Farm B Farm B Avg Overall2005 2006 2005 2006
Total Yield (Lbs.) 29,220 25,288 27,254 29,960 31,180 30,570 28,912Price Factor ($/Lb.) $0.0390 $0.0500 $0.0445 $0.0390 $0.0500 $0.0445 $0.0445Revenue $1,139.58 $1,264.40 $1,201.99 $1,168.44 $1,559.00 $1,363.72 $1,282.86Yield/Acre (Lbs.) 3652.50 3161.00 3406.75 1498.00 1559.00 1528.50 2467.63Yield/Acre (Bu.) 63.52 54.97 59.25 26.05 27.11 26.58 42.92Revenue/Acre $142.45 $158.05 $150.25 $58.42 $77.95 $68.19 $109.22Total Cost/Acre $110.59 $204.99 $157.79 $178.19 $198.02 $188.11 $172.95Average Net Revenue/Acre $31.86 ($46.94) ($7.54) ($119.77) ($120.07) ($119.92) ($63.73)
Table 4.2: Pearl Millet Break-even Analysis with Actual Yields
Farm A Farm A Avg Farm B Farm B Avg Overall2005 2006 2005 2006
Break-even Sales/Acre $110.59 $204.99 $157.79 $178.19 $198.02 $188.11 $172.95Break-even Price ($/#) $0.03 $0.06 $0.05 $0.12 $0.13 $0.12 $0.07Break-even Price ($/Bu.) $1.74 $3.73 $2.66 $6.84 $7.30 $7.08 $4.03Break-even Volume (Lbs.) 2,835.65 4,099.74 3,545.81 4,569.06 3,960.36 4,227.10 3,886.46 Break-even Volume (Bu.) 49.32 71.30 61.67 79.46 68.88 73.51 67.59
63
Table 4.3: Revenues with Ideal Yields
Farm A Farm A Avg Farm B Farm B Avg Overall2005 2006 2005 2006
Total Yield (Lbs.) 40,000 40,000 40,000 100,000 100,000 100,000 70,000Price Factor ($/Lb.) $0.0390 $0.0500 $0.0445 $0.0390 $0.0500 $0.0445 $0.0445Revenue $1,560.00 $1,800.00 $1,680.00 $3,900.00 $4,500.00 $4,200.00 $2,940.00Yield/Acre (Lbs.) 5000.00 5000.00 5000.00 5000.00 5000.00 5000.00 5000.00Yield/Acre (Bu.) 86.96 86.96 86.96 86.96 86.96 86.96 86.96Revenue/Acre $195.00 $225.00 $210.00 $195.00 $225.00 $210.00 $210.00Total Cost/Acre $110.59 $204.99 $157.79 $178.19 $198.02 $188.11 $172.95Average Net Revenue/Acre $84.41 $20.01 $52.21 $16.81 $26.98 $21.89 $37.05
Table 4.4: Pearl Millet Break-even Analysis with Ideal Yields
Farm A Farm A Avg Farm B Farm B Avg Overall2005 2006 2005 2006
Break-even Sales/Acre $110.59 $204.99 $157.79 $178.19 $198.02 $188.11 $172.95Break-even Price ($/#) $0.02 $0.04 $0.03 $0.04 $0.04 $0.04 $0.03Break-even Price ($/Bu.) $1.27 $2.36 $1.81 $2.05 $2.28 $2.16 $1.99Break-even Volume (Lbs.) 2,835.65 4,099.74 3,545.81 4,569.06 3,960.36 4,227.10 3,886.46Break-even Volume (Bu.) 49.32 71.30 61.67 79.46 68.88 73.51 67.59
Table 4.5: Sensitivity Analysis, Changing Price Factors
Sensitivity Analyses (Per Acre Basis)A. Changing Price Factors
Farm AAverage Yield (Lbs./Acre) 3,407 3,407 3,407 3,407 3,407 3,407 3,407 3,407 3,407 3,407 3,407
Price Scenario (% of Ave. Price) 80% 85% 90% 95% 100% 105% 110% 115% 120% 125% 130%Average Price Factor $0.0356 $0.0378 $0.0401 $0.0423 $0.0445 $0.0467 $0.0490 $0.0512 $0.0534 $0.0556 $0.0579Average Revenue $121.28 $128.86 $136.44 $144.02 $151.60 $159.18 $166.76 $174.34 $181.92 $189.50 $197.08Average Cost $157.79 $157.79 $157.79 $157.79 $157.79 $157.79 $157.79 $157.79 $157.79 $157.79 $157.79Average Returns/Acre -$36.51 -$28.93 -$21.35 -$13.77 -$6.19 $1.39 $8.97 $16.55 $24.13 $31.71 $39.29
Farm BAverage Yield (Lbs./Acre) 1,529 1,529 1,529 1,529 1,529 1,529 1,529 1,529 1,529 1,529 1,529
Price Scenario (% of Ave. Price) 80% 85% 90% 95% 100% 105% 110% 115% 120% 125% 130%Average Price Factor $0.0356 $0.0378 $0.0401 $0.0423 $0.0445 $0.0467 $0.0490 $0.0512 $0.0534 $0.0556 $0.0579Average Revenue $54.41 $57.82 $61.22 $64.62 $68.02 $71.42 $74.82 $78.22 $81.62 $85.02 $88.42Average Cost $188.11 $188.11 $188.11 $188.11 $188.11 $188.11 $188.11 $188.11 $188.11 $188.11 $188.11Average Returns/Acre -$133.69 -$130.29 -$126.89 -$123.49 -$120.09 -$116.69 -$113.29 -$109.88 -$106.48 -$103.08 -$99.68
64
Table 4.6: Sensitivity Analysis, Changing Yields
Sensitivity Analyses (Per Acre Basis)B. Changing Yields
Farm AActual Average Yield (Lbs./Acre) 3,407 3,407 3,407 3,407 3,407 3,407 3,407 3,407 3,407 3,407 3,407
Yield Scenario (% of Ave. Yield) 80% 85% 90% 95% 100% 105% 110% 115% 120% 125% 130%Average Estimated Yield 2,725 2,896 3,066 3,236 3,407 3,577 3,747 3,918 4,088 4,258 4,429 Average Revenue $121.28 $128.86 $136.44 $144.02 $151.60 $159.18 $166.76 $174.34 $181.92 $189.50 $197.08Average Cost $157.79 $157.79 $157.79 $157.79 $157.79 $157.79 $157.79 $157.79 $157.79 $157.79 $157.79Average Returns/Acre ($36.51) ($28.93) ($21.35) ($13.77) ($6.19) $1.39 $8.97 $16.55 $24.13 $31.71 $39.29
Farm BActual Average Yield (Lbs./Acre) 1,529 1,529 1,529 1,529 1,529 1,529 1,529 1,529 1,529 1,529 1,529 Yield Scenario (% of Ave. Yield) 80% 85% 90% 95% 100% 105% 110% 115% 120% 125% 130%Average Estimated Yield 1,223 1,299 1,376 1,452 1,529 1,605 1,681 1,758 1,834 1,911 1,987 Average Revenue $54.41 $57.82 $61.22 $64.62 $68.02 $71.42 $74.82 $78.22 $81.62 $85.02 $88.42Average Cost $188.11 $188.11 $188.11 $188.11 $188.11 $188.11 $188.11 $188.11 $188.11 $188.11 $188.11Average Returns/Acre ($133.69) ($130.29) ($126.89) ($123.49) ($120.09) ($116.69) ($113.29) ($109.88) ($106.48) ($103.08) ($99.68)
Table 4.7: Sensitivity Analysis, Changing Costs
Sensitivity Analyses (Per Acre Basis)C. Changing Costs
Farm AActual Average Yield (Lbs./Acre) 3,407 3,407 3,407 3,407 3,407 3,407 3,407 3,407 3,407 3,407 3,407 Average Revenue $151.60 $151.60 $151.60 $151.60 $151.60 $151.60 $151.60 $151.60 $151.60 $151.60 $151.60Average Actual Cost $157.79 $157.79 $157.79 $157.79 $157.79 $157.79 $157.79 $157.79 $157.79 $157.79 $157.79
Cost Scenario (% of Ave. Yield) 80% 85% 90% 95% 100% 105% 110% 115% 120% 125% 130%Average Estimated Cost $126.23 $134.12 $142.01 $149.90 $157.79 $165.68 $173.57 $181.46 $189.35 $197.24 $205.13Average Returns/Acre $25.37 $17.48 $9.59 $1.70 ($6.19) ($14.08) ($21.97) ($29.86) ($37.75) ($45.64) ($53.52)
Farm BActual Average Yield (Lbs./Acre) 1,529 1,529 1,529 1,529 1,529 1,529 1,529 1,529 1,529 1,529 1,529 Average Revenue $68.02 $68.02 $68.02 $68.02 $68.02 $68.02 $68.02 $68.02 $68.02 $68.02 $68.02Average Actual Cost $188.11 $188.11 $188.11 $188.11 $188.11 $188.11 $188.11 $188.11 $188.11 $188.11 $188.11
Cost Scenario (% of Ave. Yield) 80% 85% 90% 95% 100% 105% 110% 115% 120% 125% 130%Average Estimated Cost $150.48 $159.89 $169.30 $178.70 $188.11 $197.51 $206.92 $216.32 $225.73 $235.13 $244.54Average Returns/Acre ($82.47) ($91.87) ($101.28) ($110.68) ($120.09) ($129.49) ($138.90) ($148.30) ($157.71) ($167.11) ($176.52)
65
Table 4.8: Sensitivity Analysis, Adjusting Days Grazed on Cereal Rye
Sensitivity Analysis (Per Acre Basis)A. Changing Days of Rye Grazing
Farm ADays Grazed/Acre 11 11 11 11 11
Grazing Scenario (% Reduction of Days) 100% 90% 75% 50% 0%Adjusted Days Grazed 0 1 3 5 11Average Revenue $0.00 $85.40 $213.50 $427.00 $854.00Average Cost $55.85 $55.85 $55.85 $55.85 $55.85Average Returns/Acre -$55.85 $29.55 $157.65 $371.15 $798.15Average Production System Profitability -$240.12 -$154.72 -$26.62 $186.88 $613.88
Farm BDays Grazed/Acre 4.59 4.59 4.59 4.59 4.59
Grazing Scenario (% Reduction of Days) 100% 90% 75% 50% 0%Adjusted Days Grazed 0 0.459 1.1475 2.295 4.59Average Revenue $0.00 $41.31 $103.28 $206.55 $413.10Average Cost $124.92 $124.92 $124.92 $124.92 $124.92Average Returns/Acre -$124.92 -$83.61 -$21.65 $81.63 $288.18
Average Production System Profitability -$309.19 -$267.88 -$205.92 -$102.64 $103.91
66
CHAPTER 5
RISK OF PHOSPHORUS LOSS
5.1 Georgia Phosphorus Index
In order to establish better management practices regarding agricultural phosphorus, 47
U.S. states have developed a system of phosphorus indexing which ranks fields according to risk
of losses of phosphorus (Sharpley et al., 2003; Butler et al., 2008). The Georgia phosphorus
index was developed as a tool to measure the risk of bioavailable phosphorus loss from
agricultural land to surface waters, and takes into consideration the sources of phosphorus,
management practices, and transport mechanisms (Cabrera et al., 2002; Gaskin et al., 2005;
Butler et al., 2008). The risk of phosphorus runoff impacting nearby surface waters is dependent
not only on its source, but also on transport factors (Lemunyon and Gilbert, 1993). Major
transport factors in this region are runoff and erosion.
The potential export of bioavailable phosphorus from agricultural lands to surface waters
is divided into three loss pathways: (1) particulate phosphorus in surface runoff, (2) soluble
phosphorus in runoff, and (3) soluble phosphorus in leachate (Butler et al., 2008). For each loss
pathway, phosphorus source factors (soil test phosphorus, inorganic fertilizer phosphorus,
organic fertilizer phosphorus) are adjusted according to management practice and summed to
determine a source risk rating (Butler et al., 2008). Transport risk ratings are also determined
using factors such as risk of leaching, risk of sediment loss, and risk of runoff for the three
pathways (Butler et al., 2008). The Percolation Index estimates leaching risk, the Revised
67
Universal Soil Loss Equation 1 determines sediment loss risk, and the runoff curve number is
used to estimate runoff risk for a field. The risk ratings for each pathway are summed, arriving
at a numerical phosphorus index which will fall into one of the following categories of risk: low,
medium, high, and very high (Gaskin et al., 2005; Butler et al., 2008). These categories of risk
indicate the vulnerability of bioavailable phosphorus runoff from agricultural lands to nearby
surface waters. The Georgia phosphorus index contains recommendations for agricultural
management practices to maintain the risk level in the medium range (Gaskin et al., 2005).
According to Georgia phosphorus index guidelines, ratings exceeding 75 indicate a high risk of
surface phosphorus runoff, and a better management practice should be implemented in order to
reduce risk to surface waters (Gaskin et al., 2005). Ideally, there will be less than 0.892
pounds/acre of total phosphorus leaving the farm in the form of runoff.
The Georgia phosphorus index was developed to help agricultural producers identify
situations where management practices had a high risk of runoff and thus impacting surface
waters (Cabrera et al., 2002). Since October of 2002, the Georgia phosphorus index has assisted
agricultural producers with their nutrient management strategies (Gaskin et al., 2005).
5.2 Cost of Phosphorus Loss
According to the Georgia phosphorus index, farm fields designated to be at high risk of
phosphorus runoff cannot add or apply broiler litter. When a farm field reaches the high risk
designation, a producer following the Georgia phosphorus index is faced with three choices to
reduce high levels of phosphorus and thus returning the field to a recommended risk rating: 1) do
not apply broiler litter or any other fertilizer, 2) apply inorganic nitrogen fertilizer, or 3) change
management practices, in an attempt to better manage nutrients. If the producer decides to not
apply any fertilizer, a decrease in productivity will result. If the producer decides to apply
68
inorganic nitrogen fertilizer, production levels are likely to be maintained, but the cost will
increase compared to scenarios utilizing broiler litter as fertilizer. The Mississippi State
University Extension Service (2008) estimates that there are approximately 58 pounds of
nitrogen (of which 50% is plant available- 29 lb. nitrogen/ton) and 37 pounds of potassium (all
of which is plant available) per ton of broiler litter. According to the research set forth by Kissel
et al. (2008), in order to match the available nutrient levels provided by a ton of broiler litter, a
producer would have to spend $19.53 for ammonium nitrate and $14.3 on muriate of potash, for
a total of $33.83 (based on 2007 prices) (GASS, 2008). In speaking with area producers, the
average price paid for broiler litter was about $25 per ton, making it the less costly fertilizer
option. It is important to note that due to the volatility of the natural gas/fertilizer market, prices
of chemical fertilizer have increased, and as a result, prices for broiler litter have also increased.
Ammonium nitrate fertilizer alone witnessed a 22% increase from 2007 to 2008 (GASS, 2008).
The final alternative, with the right management practice, will lower the vulnerability of
phosphorus losses and therefore lower the field’s phosphorus risk level, and broiler litter will
once again be permitted for use on the field based on the Georgia phosphorus index.
5.3 Materials and Methods
In May 1998, stream collectors and small infield runoff collectors (SIRCs) were
established on more than 20 farm fields within the Greenbrier Creek and Rose Creek watersheds
in Georgia to evaluate the effect agricultural management practices have on surface water quality
(Franklin, 2003). This infrastructure is still operational and serves as a backdrop for the
environmental portion of this study (Franklin, 2003). Specifically, the SIRCs were established to
determine the concentrations of phosphorus, nitrogen, and sediment in runoff at the edges of
stream-side fields (Franklin, 2003). This chapter presents data collected from the SIRCs from
69
2004 through 2007. Field management was a pearl millet-cereal rye production system. The
pearl millet enterprise was considered a haying system in the environmental portion of this study
and was fertilized with inorganic nitrogen. The former management practice was a tall fescue-
common bermudagrass unimproved hayfield production system, which was switched to the pearl
millet-cereal rye production system in 2005.
Throughout the study period, runoff was monitored and samples were collected to
determine the concentrations of total phosphorus and dissolved reactive phosphorus (Butler et
al., 2008). Unfiltered runoff samples collected from the SIRCs were analyzed colorimetrically
for total phosphorus following a Kjeldahl digestion (USEPA, 1979, Butler et al., 2008). The
runoff samples were then filtered with a 0.45-μm filter, and the filtrate was then analyzed with
the molybdate blue method (Murphy and Riley, 1962; Butler et al., 2008). The 0.45-μm filter
separates particulate forms of phosphorus from the dissolved forms, and dissolved reactive
phosphorus can then be calculated by subtracting the particulate phosphorus from total
phosphorus from a sample. Because there were a large number of runoff events in which SIRC
capacity was exceeded, runoff calculations were determined using the curve number method,
which is used to estimate or predict direct runoff from excessive rainfall (Butler et al., 2008).
Curve numbers were determined by observations of management and cover of the fields
throughout the study and by soil type (Butler et al., 2008). Generally speaking, 2004 and 2005
tended to have a greater number of large volume rainfall events and greater annual rainfall than
2006 and 2007 (Butler et al., 2008). Field sample concentrations were then multiplied by
computed runoff volumes to determine nutrient loads (Butler et al., 2008).
In determining the contributing areas of each SIRC, high resolution digital elevation
models (DEMs) were created using measurements taken from the field utilizing a global
70
positioning system (Butler et al., 2008). The ARC/GIS workstation was then used to determine
the contributing areas of the SIRCs. Specific information regarding environmental data
collection procedures may be found in Butler et al., (2008).
Management data were gathered from each farm to calculate the vulnerability of
phosphorus losses for the contributing areas of the SIRCs for each year using the Georgia
phosphorus index (Butler et al., 2008). Fertilizer application information was collected through
farmer interviews. Mass export of dissolved reactive phosphorus and total phosphorus were
measured, and Georgia phosphorus index values were calculated each year (Butler et al., 2008).
The effects of forage systems (hay), nutrient source (inorganic nitrogen fertilizer), drainage
density, slope, year, soil phosphorus and other relevant interactions affecting the mass annual
export of total phosphorus and dissolved reactive phosphorus were measured using the PROC
GLM Procedure (SAS Institute, 1994; Butler et al., 2008). At the time of this writing, only the
data provided from the SIRCs had been analyzed. As such, only Farm A’s environmental results
will be presented.
5.3.1 Runoff Events
According to Tyson-Pierson (2000), an average of 20 run-off events occur in the
Southern Piedmont, with 74% occurring from November-March. Annual average rainfall is
about 49 in. (1250 mm) (Franklin et al., 2003). Most precipitation occurs in late winter/early
spring due to frequent cold and warm fronts, but the Southern Piedmont also receives a good
amount of rainfall in July due to thunderstorms fed from moist Atlantic winds (Hodler and
Schretter, 1986).
71
5.4 Results and Discussion
5.4.1 Georgia Phosphorus Index
The Georgia phosphorus index was used to determine the vulnerability of phosphorus
runoff attributed to the pearl millet management practice. According to the Georgia phosphorus
index, the higher the level of phosphorus present on a given farm field, the higher the expected
runoff. Overall, Farm A’s field did not differ much according to the Georgia phosphorus index-
it remained virtually unchanged, and stayed in the low risk rating level. Based on these results,
no management change would be suggested by the Georgia phosphorus index. In general,
applied broiler tends to raise the vulnerability of phosphorus runoff, leading to elevated levels of
risk ratings (Butler et al., 2008). Livestock grazing can also raise the vulnerability of runoff.
5.4.2 Phosphorus Export in Runoff
In general, dissolved reactive phosphorus and total phosphorus in runoff for Farm A
decreased. The pearl millet management practice or other environmental factors are a reason this
decrease. No phosphorus amendments were applied to this field due to its high nutrient status
prior to the implementation of the pearl millet management practice. This trend of dissolved
reactive phosphorus runoff closely resembles the precipitation pattern for the years of this study,
indicating that rainfall is one possible explanation for the overall decrease in dissolved reactive
phosphorus runoff for Farm A. The lack of a cover crop in the first year of pearl millet
implementation is an explanation in the increase from 2004 to 2005. Figure (5.1) illustrates total
phosphorus in runoff and Figure (5.2) illustrates dissolved reactive phosphorus in runoff from a
pearl millet-cereal rye production system fertilized with inorganic nitrogen fertilizer in
comparison to a continuous pasture fertilized with broiler litter.
72
Dissolved reactive phosphorus and total phosphorus were significantly less on farm fields
which utilized a rye cover crop in the winter versus fields that did not. There was also less
dissolved reactive phosphorus proportionate to total phosphorus on the winter rye fields
compared to those without a cover crop. This indicates that the cover crop may be the reason for
the phosphorus retention. Figure (5.3) illustrates the phosphorus in runoff of fields with and
without the cereal rye cover crop.
73
Field
Pearl Millet/Rye Pasture
Tota
l P (l
b ac
-1 y
r-1)
0
2
4
6
8
10
12
2004 2005 2006 2007
Figure 5.1: Total Phosphorus in Runoff, Pearl Millet-cereal Rye Production System
Source: Dory Franklin
74
System
Pearl Millet/Rye Pasture
Dis
solv
ed R
eact
ive
P (l
b ac
-1 y
r-1)
0
2
4
6
8
10
12
2004 2005 2006 2007
Figure 5.2: Dissolved Reactive Phosphorus in Runoff, Pearl Millet-cereal Rye Production
System Source: Dory Franklin
75
Runoff
Cover
No Rye Rye
Pho
spho
rus
in R
unof
f (lb
ac-
1 yr
-1)
0.0
0.2
0.4
0.6
0.8
1.0
1.2
Dissolved Reactive P Total P
b
a
B
A
Figure 5.3: Total and Dissolved Reactive Phosphorus in Runoff, Rye Cover Crop
Source: Dory Franklin
76
CHAPTER 6
SUMMARY AND CONCLUSION
6.1 Study Summary
This study began by addressing environmental issues regarding Georgia’s valuable
broiler industry. It was determined that the litter generated from broiler production is a valuable
source of both phosphorus and nitrogen (caused by Midwestern corn used as feed), and the most
common technique for usage of broiler litter is through field application as fertilizer. Phosphorus
runoff caused by excessive broiler litter use can cause detrimental environmental effects. It was
then argued that there is a need for regionally produced grains, particularly ones that will better
utilize excessive nutrients, while still earning the producer profit. Pearl millet was suggested as
one possible crop management technique that could better utilize excessive nutrients while
proving to be economically viable.
Recent literature related to pearl millet marketing was reviewed and several potential
markets for pearl millet were identified. Georgia’s massive broiler industry stands to gain from
locally produced grains, and the environment will benefit from the discontinuation of massive
phosphorus importation from Midwestern corn currently used as feed. The recreational wildlife
industry could also benefit from pearl millet production, particularly with regards to bobwhite
quail development and management.
Pearl millet production as an input for ethanol fermentation was next analyzed. With
ethanol production on the rise, ethanol producers can increase output and thus revenues due to
77
some unique fermenting properties of pearl millet. Finally, ethnic populations of Native
Africans and Asian-Indians present a comparatively lower value/volume potential market. Pearl
millet grain is a staple for many of these populations, and high quality grain (worthy of human
consumption) is difficult to acquire in the U.S. due to lack of production and import bans.
This study then considered the analytical tools necessary to determine the economic
viability of pearl millet production. Expected utility theory coupled with risk behavior was
discussed illustrating how producers make choice amongst risky alternatives. The profit
maximization motive was described, and it was determined that a producer or firm with the
maximization behavior was “rational.” An economic analysis was done using enterprise
budgeting based on data provided by the producers of the two case study farms. This analysis
was done for both the pre and post-pearl millet implementation, and these results were compared
to determine the profitability amongst the different scenarios. A break-even analysis was created
using the information provided by the enterprise budgeting. Finally, a sensitivity analysis was
performed adjusting the three factors affecting profitability: 1) cost of inputs, 2) yield of the
commodity, and 3) price received for the commodity. Varying these three factors determined the
profitability of pearl millet as an enterprise at different adjusted levels. Results of environmental
data collected from the farm fields determined the nutrient utilization of the pearl millet-cereal
rye production system.
6.2 Conclusions
6.2.1 Economic
Initial expectations were that pearl millet would be a profitable enterprise for the farms.
Based on the results of the economic analyses of the two case study farms, however, a rational
producer whose business decisions are driven by the profit maximization goal would not choose
78
to produce pearl millet. Positive net returns were observed on only one of the two farms, and
even then the enterprise earned only meager profits. The pearl millet crop enterprise itself is a
risky one, as there are no established markets to channel the commodity through. Sales of this
commodity are typically made through private negotiations or through auctions. Pearl millet,
however, is an ideal component to double cropping, and cereal rye is a perfect companion.
Results of the compiled pearl millet-cereal rye production system budgets indicate that
cereal rye greatly improves profitability for the crop mix. Revenues observed by the two case
study farms were solely derived from livestock grazing revenues (reduced feeding costs).
Without livestock grazing, this enterprise would not have been as profitable.
6.2.2 Environmental
The environmental results showed that pearl millet is a crop that utilizes excessive
nutrients well. Although pearl millet did not prove to be as profitable as was hypothesized, its
role as a nutrient management practice could potentially justify production. A producer with a
high nutrient status farm could implement the crop in hopes of better utilizing excessive nutrients
and returning the field to normal nutrient levels. The environmental results indicated that the
cereal rye crop is also beneficial to the environment either alone or in conjunction with pearl
millet. Total phosphorus and dissolved reactive phosphorus both decreased upon
implementation of the pearl millet-cereal rye production system on a high nutrient status farm
field.
6.3 Future Research
As pearl millet is a young, non-native crop to the U.S., more research needs to be
conducted on this grain. Establishing a transparent and accessible market for pearl millet grain
will provide the first necessary step for the successful adaptation of this crop in the agricultural
79
community. Further research into market development could encourage the successful adoption
of pearl millet for grain production.
80
BIBLIOGRAPHY
Acquaah, G. Principles of Crop Production: Theory, Techniques, and Technology. New Jersey: Prentice Hall Publishing Co. 2002.
Adams, P. L., T. C. Daniel, D.R. Edwards, D. J. Nichols, D. H. Pote, and H. D. Scott. 1994. “Broiler Litter and Manure Contributions to Nitrate Leaching Through the Vadose Zone.” Soil Science of America Journal 58:1206-1211.
Adeola, O., J. C. Rogler, and T. W. Sullivan. 1994. “Pearl Millet in the Diets of White Pekin Ducks.” Poultry Science 73:425-435.
Ahlrich, J.L., R.R. Duncan, G. Ejeta, P.R. Hill, V.C. Baligar, R.J. Wright, and W.W. Hanna. 1991. “Pearl Millet and Sorghum Tolerance to Aluminum in Acid Soils.” In: R.J. Wright et al. ed. Plant-soil Interactions at Low pH. Dordrecht, Netherlands: Kluwer Academic Publishers. pp.947-951.
Alexander, J. 2007. “Environmental Sustainability Versus Profit Maximization: Overcoming Systemic Constraints on Implementing Normatively Preferable Alternatives.” Journal of Business Ethics 76:155-162.
Amato, S.V., and R. R. Forrester. 1995. “Evaluation of Pearl Millet as a Feed Ingredient for Broiler Rations.” In: First Natl. Grain Pearl Millet Symp., Tifton, GA. In: I.D. Teare ed. University of Georgia Costal Plain Experiment Station, Tifton, GA. pp. 125-128.
Anderson, J.R., J.L. Dillon, and B. Hardaker. 1977. Agricultural Decision Analysis, 1st ed. Ames, Iowa: Iowa State University Press. pp. 65-108.
Andrews, D. J., J. F. Rajewski, and K. A. Kumar. 1993. “Pearl Millet: New Feed Grain Crop.” In J. Janick and J. E. Simon eds., New Crops. New York: John Wiley & Sons Publishers. pp. 198-208.
Andrews, D.J. and P. Bramel-Cox. 1994. “Breeding Cultivars for Sustainable Crop Production in Low-input Dryland Agriculture in the Tropics.” In: D.A. Buxton, R. Shibles, R. Forsberg, B.L. Blad, K.H. Asay, G.M. Paulsen, and R.F. Wilson eds., International Crop Science 1. Madison, WI: Crop Science Society of America. Chapter 28. p. 211-222.
81
Andrews, D.J., W.W. Hanna, J.F. Rajeski, and V.P. Collins. 1996. “Advances in Grain Pearl Millet: Utilization and Production Research.” In: J. Janick ed., Progress in New Crops. Alexandria, VA: ASHS Press. pp. 170-177.
Bramel-Cox, P. J., K. A. Kumar, J. H. Hancock, and D. J. Andrews. 1995. “Sorghum and Millets for Forage and Feed.” In: D.A.V. Dendy ed. Sorghum and the Millets: Chemistry and Technology. St. Paul, MN: American Association of Cereal Chemistryists. Chapter 11. p. 325-364.
Butler, D.M., D.H. Franklin, M.L. Cabrera, L.M. Risse, L.T. West, and J. Gaskin. 2008. Working Paper. “On-Farm, Field-Scale Runoff and Soil Phosphorus as Related to Grassland Management, Landscape Morphology, and the Georgia Phosphorus Index.” Journal of Soil and Water Conservation 63:in press.
Burton, G., A. T. Wallace, and K. O. Rachie. 1972. “Chemical Composition and Nutritive Value of Pearl Millet (Pennisetum typhoides (Burm.) Staph. And E. C. Hubbard) Grain.” Crop Science. 12:187-188.
Byrd, M. 2005. “A Farm-Level Approach to the Methyl Bromide Phase-Out: Identifying Alternatives and Maximizing Net Worth Using Stochastic Dominanace and Optimization Procedures.” MS Thesis, University of Georgia, Athens, GA.
Cabrera, M.L., D.H. Franklin, G.H. Harris, V.H. Jones, H.A. Kuykendall, D.E. Radcliffe, L.M. Risse, and C.C. Truman. 2002. The Georgia Phosphorus Index. Cooperative Extension Service, Publication Distribution Center, University of Georgia, Athens, Georgia. 4pp.
Calkins, P.H., and D.D. DiPietre. Farm Business Management-Successful Decisions in a Changing Environment, New York: Macmillan Publishing Company, 1983.
Camacho, A. 1991. “Economic Viability of Shrimp Mariculture: A Case Study for Georgia.” MS Thesis, University of Georgia, Athens, GA.
Carpenter, G.H. 1992. Current litter practices and future needs. In Proceedings 1992 National Poultry Waste Management Symposium (J. P. Blake, J. O. Donald and D. H. Patterson, eds). Auburn University, AL: Auburn University Printing Service.
Chacko, J.M. 2006. “Targeting the Asian-Indian American Market.” Applied Business Review. Christian Brothers University School of Business, March 24, 2006.
Collins, V. P., A. H. Cantor, A. J. Pescatore, M. L. Straw, and M. J. Ford. 1997. “Pearl Millet in Layer Diets Enhances Egg Yolk n-3 Fatty Acids.” Poultry Science. 76:326-330
Cooper, D. M and G. Roberts. 1996. “Nitrate Leaching From a Catchment in Central England.” Soil Use and Management.12:181-189.
82
Dale, N. Unpublished data.
Davis, A.J., N.M. Dale, and F.J. Ferrira. 2003. “Pearl Millet as an Alternative Feed Ingredient in Broiler Diets.” Journal of Applied Poultry Research. 12:137-144
Debertin, D.L. 1986. Agricultural Production Economics. New York: MacMillian Publishing Co.
Doering, O. 2006. “Ethanol and Energy Policy.” Report ID-340. Department of Agricultural Economics, Purdue University, West Lafayette, IN, 2006.
Doll, J.P. and F. Orazem. Production Economic- Theory with Applications, 3rd ed. New York: John Wiley and Sons. 1978.
Dozier, W.A. III, W. Hanna, and K. Behnke. 2005. “Grinding and pelleting responses of Pearl Millet-based diets.” Journal of Applied Poultry Research. 14:269-274.
Dudzinsky, M.L., S.R. Wilkinson, R.N. Dawson, and A.P. Barnett. 1983. “Fate of Nitrogen from NH4NO3 and Broiler Litter Applied to Costal Bermudagrass.” In: R.R. Lowrance et al., (eds.). Nutrient Cycling in Agro-Ecosystems. University of Georgia: University of Georgia Agricultural Experimental Station. pp. 373-388
Edwards, D.R., and T.C. Daniel. 1993a. “Drying Interval Effects on Runoff From Fescue Plots Receiving Swine Manure.” Transactions of the American Society of Agricultural Engineers. 36:1673.
Edwards, D. R., and T. C. Daniel. 1993b. “Effects of Poultry Litter Application Rate and Rainfall Intensity on Quality of Runoff from Fescue Grass Plots.” Journal of Environmental Quality. 22:361.
Edwards, D. R., and T. C. Daniel. 1993c. “Runoff Quality Impacts of Swine Manure Applied to Fescue Plots.” Transactions of the American Society of Agricultural Engineers. 36:81.
English, B.C., D. De La Torre Ugarte, K. Jensen, C. Hellwinckel, J. Menard, B. Wilson, R. Roberts, and M. Walsh. “25% Renewable Energy for the United States by 2025: Agricultural Economic Impacts.” Department of Agricultural Economics, University of Tennessee.
FAO (Food and Agriculture Organization of the United Nations). 2000. Bulletin of Statistics. Vol. 1, FAO, Rome. P. 16-36.
Fitzpatrick, M. 2007. “Soybean Use and Trends, 2001-2006.” United Soybean Board. U.S. Meat Export Federation. October 30, 2007.
Flynn, R.P., C.W. Wood, and J.T. Touchton. 1993. “Nitrogen Recovery from Broiler Litter in a Wheat-millet Production System.” Bioresource Technology. 44:165-173.
83
Franklin, D.H., J.L. Steiner, M.L. Cabrera, and E.L. Usery. 2002. “Distribution of Inorganic Nitrogen and Phosphorous Concentrations in Two Agricultural Southern Piedmont Watersheds.” Journal of Environmental Quality. 31:1910-1917.
Franklin, D.H., M.L. Cabrera, J.L. Steiner, L.A. Risse, L.M. Risse, and H.E. Hibbs. 2003. “Watershed Assessment through Ecological Research/Farmers Active in Research.” In: K.J. Hatcher (ed.). Proceedings of the 2003 Georgia Water Resources Conference. University of Georgia. Athens, GA. pp. 383-386.
Franklin, D.H. 2003. "Profitable Alternatives to Improve Water Quality from High Nutrient Status Farms.” Proposal for USDA/SARE Grant. Grant Approval LS04-159.
Frisch, R.1965. Theory of Production, Dordrecht-Holland: D. Reidel Publishing Co.
Gascho, G.J., R.K. Hubbard, T.B. Brenneman, A.W. Johnson, D.R. Summer, and G.H. Harris. 2001. “Effects of Broiler Litter in an Irrigated, Double-cropped, Conservation-tilled Rotation.” Agronomy Journal. 93:1315-1320.
Gaskin, J.K. Harris, M. Cabrera, and M. Risse. “Using the Georgia P-Index to Identify High Risk Management of Poultry Litter.” In: K.J. Hatcher (ed.). Proceedings of the 2005 Georgia Water Resources Conference. University of Georgia, Athens, GA.
Georgia Agricultural Statistics Service. 2007. Georgia Agricultural Facts 2007 Edition.
Georgia Agricultural Statistics Service. 2008. Georgia Agricultural Facts 2008 Edition.
Ghidey, F. and E.E. Alberts. 1999. “Temporal and Spatial Patterns of Nitrate in a Claypan Soil.” Journal of Environmental Quality. 28:584-594.
Gulia, S.K., J.P. Wilson, J. Carter, and B.P. Singh. 2007. “Progress in Grain Pearl Millet Research and Market Development.” Pgs. 196-203. In: J. Janick, and A. Whipkey, eds. Issues in New Crops and New Uses. Alexandria, VA: ASHS Press.
Hadrich, J.C., C.A. Wolf, J.R. Black, and S.B. Harsh. 2008. “Incorporating Environmentally Compliant Manure Nutrient Disposal Costs into Least-cost Livestock Ration Formulation.” Journal of Agricultural and Applied Economics. 40, 1:287-300.
Hodler, T.W., and H.A. Schretter. 1986. The Atlas of Georgia. Athens: The Institute of Community and Area Development, and University of Georgia.
Hidalgo, M.A., A.J. Davis, N.M. Dale, and W.A. Dozier, III. 2004. “Use of Whole Pearl Millet in Broiler Diets.” Journal of Applied Poultry Research. 13:229-234.
Hill, G.M., and W.W. Hanna. 1990. “Nutritive Characteristics of Pearl Millet Grain in Beef Cattle Diets.” Journal of Animal Sciences. 68:2061-2066.
84
International Association of Fish and Wildlife Agencies. 2002. Economic Importance of Hunting in America. Washington D.C.
Iler, A. and W.W. Hanna. 1995. “Pearl Millet in Wildlife Plantings.” In: Teare, I.D. (ed). First National Grain Pearl Millet Symposium. University of Georgia, Tifton GA. pp. 124.
Kenkel, P., and R.B. Holcomb. “Challenges to Producer Ownership of Ethanol and Biodiesel Production Facilities.” Journal of Agricultural and Applied Economics. 38(2):369-75.
King, R.P., and L.J. Robinson. 1981. “An Interval Approach to Measuring Decision Maker Preferences.” American Journal of Agricultural Economics. 63(3):510-512.
Kissel, D.E., M. Risse, L. Sonon, and G. Harris. 2008. “Calculating the Fertilizer Value of Broiler Litter.” Cooperative Extension, Colleges of Agricultural and Environmental Sciences & Family Consumer Sciences, University of Georgia. http://pubs.caes.uga.edu/caespubs/pubcd/C933/C933.htm. Accessed December 3, 2008.
Kuykendall, H. A., M. L. Cabrera, C. S. Hoveland, and M. A. McCann.1999. “Stocking Method Effects on Nutrient Runoff from Pastures Fertilized with Broiler Litter.” Journal of Environmental Quality. 28:1886-1890
Lee, D.W. Hanna, G.D. Buntin, W. Dozier, P. Timper, and J.P. Wilson. 2004. “Pearl Millet for Grain.” Cooperative Extension Service, University of Georgia College of Agricultural and Environmental Sciences Bulletin No. 1216.
Lemunyon, J.L., and R.G. Gilbert, 1993. “The Concept and Need for a Phosphorus Assessment Tool.” Journal of Production Agriculture. 6 (4):483-486
Levy, H. 1998. Stochastic Dominance- Investment Decision Making Under Uncertainty. Boston, MA: Kluwer Academic Publishers.
Liebhardt, W.C., C. Golt, and J. Tupin. 1979. “Nitrate and Ammonium Concentrations of Groundwater Resulting from Broiler Manure Applications.” Journal of Environmental Quality. 8:211-215
Maman, N., S.C. Mason, D.J. Lyon, and P. Dhungana. 2004. “Yield Components of Pearl Millet and Grain Sorghum across Environments in Central Great Plains.” Crop Science. 44:2138-2145.
McGinty, A., F.E. Smeins, and L.B. Merrill. 1978. “Influence of Soil, Vegetation, and Grazing Management on Infiltration Rate of Sediment Production of Edwards Plateau Rangeland.” Journal of Range Management. 32:33-37
Menezes, R.S., G.J. Gascho, W.W. Hanna, M.L. Cabrera, and J.E. Hook. 1997. “Subsoil Nitrate Uptake by Grain Pearl-millet.” Agronomy Journal. 89:189-194.
85
Mississippi State University Extension Service. 2008. “Poultry: Fertilizer Value of Broiler Litter.” http://msucares.com/poultry/poultry_litter.html. Accessed March 14, 2008.
Moore, P.A., T.C. Daniel, A.N. Sharpley, and C.W. Wood. 1995. “Poultry Manure Management-environmentally Sound Options.” Journal of Soil and Water Conservation. 50:321-327.
Morecroft, M.D., T.P. Burt, M.E. Taylor, and A.P. Rowland. 2000. “Effects of the 1995-1997 Drought on Nitrate Leaching in Lowland England.” Soil Use and Management. 16:117-123.
Murphy, J., and A.P. Riley. 1962. “A Modified Single Solution Method for the Determination of Phosphate in Natural Waters.” Analytica Chimica Acta. 27:31-36
National Agricultural Statistics Service. 2008. Agricultural Statistics 2008. United States Government Printing Office, Washington D.C.
Paudel, K.P. and C.S. McIntosh. 2005. “Country Report: Broiler Industry and Broiler Litter Problems in the Southeastern United States.” Waste Management. 25:1083-1088.
Perkins, H.F., M.B. Parker, and M.L. Walker. 1964. “Chicken Manure- Its Production, Composition and Use as a Fertilizer.” Georgia Agricultural Experimental Station Bulletin N.S. 123.
Pierson, S.T., M.L. Cabrera, G.K. Evanylo, H.A. Kuykendall, C.S. Hoveland, M.A. McCann, and L.T. West. 2001. “Phosphorous and Ammonium Concentrations in Surface Runoff from Grasslands Fertilized with Broiler Litter.” Journal of Environmental Quality. 30:1784-1789.
Pionke, H.B., J.R. Hoover, R.R. Schnabel, W.J. Gburek, J.B. Urban, and A.S. Rogowski. 1988. “Chemical-hydrologic Interactions in the Near-stream Zone.” Water Resources Research. 24:1101-1110.
Pindyck, R.S., and D. L. Rubinfeld. 1992. Microeconomics, 2nd ed. New York: Macmillan Publishing Co.
Puckett, L.J. 1994. “Nonpoint and Point sources of Nitrogen in Major Watersheds of the United States.” Water Resources Investigation Report 94-4001. U.S. Department of Interior, US Geological Survey.
Rahn, D. 2001. “Pearls of Great Promise.” University of Georgia Research Magazine. http://www.ovpr.uga.edu/researchnews/summer2001/pearls.html. Accessed November 16, 2008.
Reynolds, B., B. Emmett, and C. Woods. 1992. “Variations in Stream Water Nitrate Concentrations and Nitrogen Budgets over 10 years in a Headwater Catchment in Mid-Wales.” Journal of Hydrology. 136:155-175.
86
Ritter, W.F. and A.E.M. Chirnside. 1984. “Impact of Land Use on Groundwater Quality in Southern Delaware.” Ground Water. 22:38-47.
Ritz, C.W. and W.C. Merka. 2004. “Maximizing Poultry Manure Use Through Nutrient Management Planning.” Cooperative Extension Service, The University of Georgia College of Agricultural and Environmental Sciences, Athens, GA. Bulletin 1245.
Rooney, L.W. 1978. “Sorghum and Pearl Millet Lipids.” Cereal Chemistry. 55:584-590.
Saltelli, A. 2000. “What is Sensitivity Analysis?” In: Saltelli, A., Chan, K., Scott, M. eds., Sensitivity Analysis, Probability and Statistics Series, New York: John Wiley & Sons Publishers.
SAS Institute. 1994. SAS/STAT User’s guide, Version 8. 2nd ed. SAS, Cary NC.
Sauer, T.J., T.C. Daniel, P.A. Moore, Jr., K.P. Coffey, D.J. Nichols, and C.P. West. 1999. “Poultry Litter and Grazing Animal Waste Effects on Runoff Water Quality.” Journal of Environmental Quality. 28:860-865.
Savage, S. 1995. “Quail Performance on Pearl Millet Grain.” In: Teare, I.D. (ed). First National Grain Pearl Millet Symposium. University of Georgia, Tifton GA. pp. 121-123.
Schindler, D.W. 1977. “The Evolution of Phosphorous Limitation in Lakes.” Science. 195:260-262.
Sedivec, K. K., and B. G. Schatz. 1991. “Pearl Millet forage production in North Dakota.” North Dakota State University, Fargo ND, Bulletin R-1016. http://www.ag.ndsu.edu/pubs/plantsci/hay/r1016w.htm. Accessed May, 10 2008.
Sharpley, A.N., J.L. Weld, D.B. Beegle, P.J.A. Kleinman, W.J. Gburek, P.A. Moore, Jr., and G. Mullins. “Development of Phosphorus Indices for Nutrient Management Planning Strategies in the United States.” Journal of Soil and Water Conservation. 58:137-160.
Sims, J.T. and D.C. Wolf. 1994. “Poultry Waste Management: Agricultural and Environmental.” Advances in Agronomy. 52:3-83.
Singh, D.N. and R. Perez-Maldonado. 2000. “Nutritional Value of Pearl Millet as a Poultry Feed.” A Report for the Rural Industries Research and Development Corporation. Project No. DAQ 243J.
Smith, R.L., L.S. Jensen, C.S. Hoveland, and W.W. Hanna. 1989. “Use of Pearl Millet, Sorghum, and Triticale Grain in Broiler Diets.” Journal of Production Agriculture. 2:78-82.
87
Spehar, C.R. and J.N. Landers. 1997. “Characteristicas, Limitacoes e Future do Plantio Directo nos Cerrados.” p. 157-161. In: Seminario Internacional Do Sistema Plantio Directo. Embrapa-Trigo: Anais, Passo Fundo, RS, Brazil. pp. 127-131.
Stooksbury, D. 2008. “Drought Conditions Intensify Across Georgia.” University of Georgia College of Agricultural and Environmental Sciences. http://georgiafaces.caes.uga.edu/storypage.cfm?storyid=3478. Accessed August, 12 2008.
Sullivan, T.W., J.H. Douglas, D.J. Andrews, P.L. Bowland, J.D. Hancock, P.J. Bramel-Cox, W.D. Stegmeier, and J.R. Brethour. 1990. “Nutritional Value of Pearl Millet for Food and Feed.” In: Proceedings International Conference in Sorghum Nutritional Quality. Purdue University, West Lafayette, IN. pp. 83-94.
Timper, P. and W.W. Hanna. 2005. “Reproduction of Belonolaimus longicaudatus, Meloidogyne javonica, Paratrichodorus minor, and Pratylenchus brachyurus on Pearl Millet (Pennisetum glaucum).” Journal of Nematology. 37:214-219.
Tyson-Peterson, S.K. 2000. “Surface Water Quality in Grasslands Fertilized with Broiler Litter.” PhD Dissertation. Virginia Polytechnic Institute and State University, Blacksburg, VA.
University of Georgia College of Agricultural and Environmental Sciences. 2000. “Pearl Millet a Promising Crop for Georgia.” Compiled by Wayne Hanna. http://georgiafaces.caes.uga.edu/viewtext.cfm?id=944. Accessed August 4, 2008.
University of Georgia College of Agricultural and Environmental Sciences. 2002. “Pearl Millet Hybrids for Grain.” Compiled by W. Hanna and J Wilson. http://sacs.cpes.peachnet.edu/fat/pearlmilletgrain.htm. Accessed July 15, 2008.
University of Georgia College of Agricultural and Environmental Sciences. 2005. “Potential for TifGrain 102 Pearl Millet in the South-Eastern U.S.” Compiled by Wayne W. Hanna. http://commodities.caes.uga.edu/grasses/pearlmillet.htm. Accessed July 15, 2008.
U.S. Census Bureau. 2000. 2000 U.S. Census, American Fact Finder. http://factfinder.census.gov/servlet/SAFFIteratedFacts?_event=&geo_id=01000US&_geoContext=01000US&_street=&_county=&_cityTown=&_state=&_zip=&_lang=en&_sse=on&ActiveGeoDiv=&_useEV=&pctxt=fph&pgsl=010&_submenuId=factsheet_2&ds_name=DEC_2000_SAFF&_ci_nbr=013&qr_name=DEC_2000_SAFF_R1010®=DEC_2000_SAFF_R1010%3A013&_keyword=&_industry=. Accessed November 16, 2008.
U.S. Congress, House of Representatives. 2005. Energy Policy Act of 2005. Washington DC: House Document 58, 109th Cong., 2nd sess., 8 August. http://www.epa.gov/oust/fedlaws/publ_109-058.pdf. Accessed July 18, 2008.
U.S. Grains Council. 2008. “Corn.” http://www.grains.org/page.ww?section=Barley%2C+Corn+%26+Sorghum&name=Corn. Accessed December 1, 2008.
88
USDA-NRCS. 2007. Official Series Description- CECIL Series. http://ortho.ftw.nrcs.usda.gov/osd/dat/C/CECIL.html. Accessed November 16, 2008.
USEPA. 1979. Methods for Chemical Analysis of Water and Wastes. EPA-600/4-79-020. USEPA, Environmental Monitoring and Support Laboratory, Cincinnati, OH.
USDA-FAS, 2007. Livestock and Poultry: World Markets and Trade. Circular Series, DL&P 2-07, Washington, DC, November.
Usman, H. 1994. “Cattle Trampling and Soil Compaction Effects on Soil Properties of a Northeastern Nigerian Sandy Loam.” Arid Soil Research and Rehabilitation 8:69-75.
Vervoort, R.W., D.E. Radcliffe, and M.L. Cabrera. 1998. “Field Scale Nitrogen and Phosphorous Losses from Hayfields Receiving Fresh and Composted Broiler Litter.” Journal of Environmental Quality. 27:1246-1254
Vervoort, R.W. and A.G. Keeler. 1999. “The Economics of Land Application of Fresh and Composted Broiler Litter with an Environmental Constraint.” Journal of Environmental Management. 55:265-272.
Wells, K.L and C.T. Dougherty. 1997. “Soil Management for Intensive Grazing.” Soil Science News and Views 18(2):1-5. Lexington, KY: Kentucky Agricultural Experiment Station.
Wetzstein, M.E. Microeconomic Theory-Concepts and Connections, 1st ed. Mason, Ohio: Thomas Southwestern, 2005. pp. 584-618.
White, R.E., S.R. Wellings, and J.P. Bell.1983. “Seasonal Variations in Nitrate Leaching in Structured Clay Soils Under Mixed Land Use.” Agricultural Water Management 7:391-410.
Wilson, J.P., W.W. Hanna, G. Gascho, and D.M. Wilson. 1995. “Pearl Millet Grain Yield Loss from Rust Infection.” In: I.D. Teare (ed.). Proceedings of the First National Grain Pearl Millet Symposium. University of Georgia of Georgia Coastal Plain Experiment Station, Tifton, GA.
Wilson, J. P., P. Timper, C. C. Truman, N. M. Dale, A. B. Batal, X. Ni, R. Gitaitis, A. J. McAloon, G. Shumaker, G. Dowling, J. Brown, T. Webster, and A. Maas. 2006a. “Economics-driven Research and Incentives for Pearl Millet Production in the United States.” Proceedings of International Pearl Millet Breeding and Seed Production Workshop. ICRISAT, Hyderabad, India. May 2-15, 2006 (CD-ROM).
Wilson, J.P., Z. Jurjevic, W.W. Hanna, D.M. Wilson, T.L. Potter, and A.E. Coy. 2006b. “Host- specific Variation in Infection by Toxigenic Fungi and Contamination by Mycotoxins in Pearl Millet and Corn.” Mycopathologia. 161:101-107.
89
Wilson, J.P. 2007. “An African Pearl Finds a Home in the U.S.” INTSORMIL Report No. 9, January 12, 2007.
Wilson, J.P., A.J. Mcaloon, W.C. Yee, J. Mckinney, D. Wang, and S. Bean. 2007. “Biological and Economic Feasibility of Pearl Millet as a Feedstock for Ethanol Production.” In: Janick, J., and Whipkey, A. eds. Issues in New Crops and New Uses. Alexandria, VA: ASHS Press. pp. 56-59.
Wu, X., D. Wang, S. Bean, and J.P. Wilson. 2006. “Ethanol Production from Pearl Millet by Using Saccharomyces cerevisiae.” Cereal Chemistry. 83:127-131.
90
APPENDICES
91
APPENDIX A
Farm A Pearl Millet Production Budgets
Farm A 2005Assumptions
Number of Acres 8
ITEM UNIT UNITS/ACRE PRICE $/ACRE TOTAL AMOUNT
INCOME Pearl Millet LBS. 3652.50 $0.039 $142.45 $1,139.58 Post-Harvest Stover Grazing ($1/Cow/Day) DAYS 0.63 $80.00 $50.00 $400.00
TOTAL INCOME $192.45 $1,539.58DIRECT EXPENSES CUSTOM SPRAY Spraying Crop with Herbicide (Roundup) ACRE 1 $6.75 $6.75 $54.00 FERTILIZERS Amm Nitrate (34%N) LBS. 0 $0.00 $0.00 $0.00 Phosphate (P2O5) LBS. 0 $0.00 $0.00 $0.00 Potash (K20) LBS. 0 $0.00 $0.00 $0.00 HERBICIDES RoundUp GAL. 0.25 $49.00 $12.25 $98.00 CUSTOM PLANTING No-till Drilling ACRE 1 $15.60 $15.60 $124.80 SEED Pearl Millet Seed (2 Plantings) LBS. 12.875 $3.10 $39.91 $319.30 CUSTOM HARVEST/HAUL Combining, Hauling Included ACRE 1 $30.00 $30.00 $240.00 INTEREST ON OP. CAP. $ $836.10 2.64% $22.07
TOTAL DIRECT EXPENSES $107.27 $858.17RETURNS ABOVE DIRECT EXPENSES $85.18 $681.41FIXED EXPENSES Fence Depreciation with Interest Paid ACRE $3.32 $26.55
TOTAL FIXED EXPENSES $3.32 $26.55
TOTAL SPECIFIED EXPENSES $110.59 $884.72RETURNS ABOVE TOTAL EXPENSES $81.86 $654.86
92
APPENDIX A (cont’d)
Farm A Pearl Millet Production Budgets
Farm A 2006Assumptions
Number of Acres 8
ITEM UNIT UNITS/ACRE PRICE $/ACRE TOTAL AMOUNT
INCOME Pearl Millet LBS. 3161.00 $0.05 $158.05 $1,264.40 Post-Harvest Stover Grazing ($1/Cow/Day) DAYS 0.88 $80.00 $70.00 $560.00
TOTAL INCOME $228.05 $1,824.40DIRECT EXPENSES CUSTOM SPRAY Spraying Crop with Herbicide (Roundup) ACRE 1 $6.75 $6.75 $54.00 FERTILIZERS Amm Nitrate (34%N) LBS. 206.25 $0.21 $42.28 $338.25 Phosphate (P2O5) LBS. 0 $0.00 $0.00 $0.00 Potash (K20) LBS. 118.75 $0.19 $22.56 $180.50 HERBICIDES RoundUp GAL. 0.25 $49.40 $12.35 $98.80 CUSTOM PLANTING No-till Drilling ACRE 1 $15.60 $15.60 $124.80 SEED Pearl Millet Seed (2 Plantings) LBS. 19.125 $3.50 $66.94 $535.50 CUSTOM HARVEST/HAUL Combining, Hauling Included ACRE 1 $30.00 $30.00 $240.00 INTEREST ON OP. CAP. $ $1,571.85 2.64% $41.50
TOTAL DIRECT EXPENSES $201.67 $1,613.35RETURNS ABOVE DIRECT EXPENSES $26.38 $211.05FIXED EXPENSES Fence Depreciation with Interest Paid ACRE $3.32 $26.55
TOTAL FIXED EXPENSES $3.32 $26.55
TOTAL SPECIFIED EXPENSES $204.99 $1,639.90RETURNS ABOVE TOTAL EXPENSES $23.06 $184.50
93
APPENDIX A (cont’d)
Farm A Pearl Millet Production Budgets
Farm A AverageAssumptions
Number of Acres 8
ITEM UNIT UNITS/ACRE PRICE $/ACRE TOTAL AMOUNT
INCOME Pearl Millet LBS. 3406.75 $0.04 $150.25 $1,201.99 Post-Harvest Stover Grazing ($1/Cow/Day) DAYS 0.75 $80.00 $60.00 $480.00
TOTAL INCOME $210.25 $1,681.99DIRECT EXPENSES CUSTOM SPRAY Spraying Crop with Herbicide (Roundup) ACRE 1 $6.75 $6.75 $54.00 FERTILIZERS Amm Nitrate (34%N) LBS. 103.125 $0.10 $21.14 $169.13 Phosphate (P2O5) LBS. 0 $0.00 $0.00 $0.00 Potash (K20) LBS. 59.375 $0.10 $11.28 $90.25 HERBICIDES RoundUp GAL. 0.25 $49.20 $12.30 $98.40 CUSTOM PLANTING No-till Drilling ACRE 1 $15.60 $15.60 $124.80 SEED Pearl Millet Seed (2 Plantings) LBS. 16 $3.30 $53.43 $427.40 CUSTOM HARVEST/HAUL Combining, Hauling Included ACRE 1 $30.00 $30.00 $240.00 INTEREST ON OP. CAP. $ $1,203.98 2.64% $31.78
TOTAL DIRECT EXPENSES $154.47 $1,235.76RETURNS ABOVE DIRECT EXPENSES $55.78 $446.23FIXED EXPENSES Fence Depreciation with Interest Paid ACRE $3.32 $26.55
TOTAL FIXED EXPENSES $3.32 $26.55
TOTAL SPECIFIED EXPENSES $157.79 $1,262.31RETURNS ABOVE TOTAL EXPENSES $52.46 $419.68
94
APPENDIX B
Farm B Pearl Millet Production Budgets
Farm B 2005Assumptions
Number of Acres 20
ITEM UNIT UNITS/ACRE PRICE $/ACRE TOTAL AMOUNT
INCOME Pearl Millet LBS. 1498.00 $0.039 $58.42 $1,168.44
TOTAL INCOME $58.42 $1,168.44DIRECT EXPENSES CUSTOM SPRAY Spraying Crop with Herbicide (Roundup) ACRE 1 $6.75 $6.75 $135.00 Spraying Crop with Herbicide (2,4-D) ACRE 1 $6.75 $6.75 $135.00 Spraying Crop with Insecticide (Sevin) ACRE 0 $0.00 $0.00 $0.00 Surfactin GAL. 0.05 $9.50 $0.48 $9.50 FERTILIZERS Amm Nitrate (34%N) LBS. 0 $0.00 $0.00 $0.00 Phosphate (P2O5) LBS. 0 $0.00 $0.00 $0.00 Potash (K20) LBS. 0 $0.00 $0.00 $0.00 Quail Litter TONS 3 $25.00 $75.00 $1,500.00 HERBICIDES RoundUp GAL. 0.25 $49.00 $12.25 $245.00 2,4-D GAL. 0.25 $16.00 $4.00 $80.00 INSECTICIDES Sevin GAL. 0 $0.00 $0.00 $0.00 CUSTOM PLANTING No-till Drilling ACRE 1 $15.60 $15.60 $312.00 SEED Pearl Millet Seed LBS. 7.35 $3.10 $22.79 $455.70 CUSTOM HARVEST/HAUL Combining, Hauling Included ACRE 1 $30.00 $30.00 $600.00 INTEREST ON OP. CAP. $ $3,472.20 2.64% $91.67
TOTAL DIRECT EXPENSES $178.19 $3,563.87RETURNS ABOVE DIRECT EXPENSES -$119.77 -$2,395.43FIXED EXPENSES
TOTAL FIXED EXPENSES $0.00 $0.00
TOTAL SPECIFIED EXPENSES $178.19 $3,563.87RETURNS ABOVE TOTAL EXPENSES -$119.77 -$2,395.43
95
APPENDIX B (cont’d)
Farm B Pearl Millet Production Budgets
Farm B 2006Assumptions
Number of Acres 20
ITEM UNIT UNITS/ACRE PRICE $/ACRE TOTAL AMOUNT
INCOME Pearl Millet LBS. 1559.00 $0.05 $77.95 $1,559.00
TOTAL INCOME $77.95 $1,559.00DIRECT EXPENSES CUSTOM SPRAY Spraying Crop with Herbicide (Roundup) ACRE 1 $6.75 $6.75 $135.00 Spraying Crop with Herbicide (2,4-D) ACRE 0 $0.00 $0.00 $0.00 Spraying Crop with Herbicide (Sevin) ACRE 1.1 $9.00 $9.90 $198.00 Surfactin GAL. 0 $0.00 $0.00 $0.00 FERTILIZERS Amm Nitrate (34%N) LBS. 0 $0.00 $0.00 $0.00 Phosphate (P2O5) LBS. 0 $0.00 $0.00 $0.00 Potash (K20) LBS. 0 $0.00 $0.00 $0.00 Quail Litter TONS 3 $25.00 $75.00 $1,500.00 HERBICIDES RoundUp GAL. 0.25 $49.40 $12.35 $247.00 2,4-D GAL. 0 $0.00 $0.00 $0.00 INSECTICIDES Sevin GAL. 0.55 $32.00 $17.60 $352.00 CUSTOM PLANTING No-till Drilling ACRE 1 $15.60 $15.60 $312.00 SEED Pearl Millet Seed LBS. 7.35 $3.50 $25.73 $514.50 CUSTOM HARVEST/HAUL Combining, Hauling Included ACRE 1 $30.00 $30.00 $600.00 INTEREST ON OP. CAP. $ $3,858.50 2.64% $101.86
TOTAL DIRECT EXPENSES $198.02 $3,960.36RETURNS ABOVE DIRECT EXPENSES -$120.07 -$2,401.36FIXED EXPENSES
TOTAL FIXED EXPENSES $0.00 $0.00
TOTAL SPECIFIED EXPENSES $198.02 $3,960.36RETURNS ABOVE TOTAL EXPENSES -$120.07 -$2,401.36
96
APPENDIX B (cont’d)
Farm B Pearl Millet Production Budgets
Farm B AverageAssumptions
Number of Acres 20
ITEM UNIT UNITS/ACRE PRICE $/ACRE TOTAL AMOUNT
INCOME Pearl Millet LBS. 1528.50 $0.04 $68.19 $1,363.72
TOTAL INCOME $68.19 $1,363.72DIRECT EXPENSES CUSTOM SPRAY Spraying Crop with Herbicide (Roundup) ACRE 1.00 $6.75 $6.75 $135.00 Spraying Crop with Herbicide (2,4-D) ACRE 0.5 $3.38 $3.38 $67.50 Spraying Crop with Insecticide (Sevin) ACRE 0.55 $4.50 $4.95 $99.00 Surfactin GAL. 0.025 $4.75 $0.24 $4.75 FERTILIZERS Amm Nitrate (34%N) LBS. 0 $0.00 $0.00 $0.00 Phosphate (P2O5) LBS. 0 $0.00 $0.00 $0.00 Potash (K20) LBS. 0 $0.00 $0.00 $0.00 Quail Litter TONS 3 $25.00 $75.00 $1,500.00 HERBICIDES RoundUp GAL. 0.25 $49.20 $12.30 $246.00 2,4-D GAL. 0.125 $8.00 $2.00 $2.00 INSECTICIDES Sevin GAL. 0.275 $16.00 $8.80 $176.00 CUSTOM PLANTING No-till Drilling ACRE 1 $15.60 $15.60 $312.00 SEED Pearl Millet Seed LBS. 7.35 $3.30 $24.26 $485.10 CUSTOM HARVEST/HAUL Combining, Hauling Included ACRE 1 $30.00 $30.00 $600.00 INTEREST ON OP. CAP. $ $3,665.35 2.64% $96.77
TOTAL DIRECT EXPENSES $188.11 $3,724.12RETURNS ABOVE DIRECT EXPENSES -$119.92 -$2,360.40FIXED EXPENSES
TOTAL FIXED EXPENSES $0.00 $0.00
TOTAL SPECIFIED EXPENSES $188.11 $3,724.12RETURNS ABOVE TOTAL EXPENSES -$119.92 -$2,360.40
97
APPENDIX C
Farm A Pearl Millet-cereal Rye Production System Budgets
Farm A 2005Assumptions
Number of Acres 8
ITEM UNIT UNITS/ACRE PRICE $/ACRE TOTAL AMOUNT
INCOME Pearl Millet LBS. 3652.50 $0.039 $142.45 $1,139.58 Post-Harvest Stover Grazing ($1/Cow/Day) DAYS 0.63 $80.00 $50.00 $400.00 Livestock Grazing ($1/Cow/Day, 80 Cows) DAYS 10.68 $80.00 $854.00 $6,832.00
TOTAL INCOME $1,046.45 $8,371.58DIRECT EXPENSES CUSTOM SPRAY Spraying Crop with Herbicide (Roundup) ACRE 1 $6.75 $6.75 $54.00 FERTILIZERS Amm Nitrate (34%N) LBS. 0 $0.00 $0.00 $0.00 Phosphate (P2O5) LBS. 0 $0.00 $0.00 $0.00 Potash (K20) LBS. 0 $0.00 $0.00 $0.00 HERBICIDES RoundUp GAL. 0.25 $49.00 $12.25 $98.00 CUSTOM PLANTING No-till Drilling ACRE 2 $15.60 $31.20 $249.60 SEED Pearl Millet Seed (2 Plantings) LBS. 12.875 $3.10 $39.91 $319.30 Rye Seed LBS. 141.25 $0.22 $31.61 $252.89 CUSTOM HARVEST/HAUL Combining, Hauling Included ACRE 1 $30.00 $30.00 $240.00 INTEREST ON OP. CAP. $ $1,213.79 2.64% $32.04
TOTAL DIRECT EXPENSES $155.73 $1,245.84RETURNS ABOVE DIRECT EXPENSES $890.72 $7,125.74FIXED EXPENSES Fence Depreciation with Interest Paid ACRE $6.64 $53.10
TOTAL FIXED EXPENSES $6.64 $53.10
TOTAL SPECIFIED EXPENSES $162.37 $1,298.94RETURNS ABOVE TOTAL EXPENSES $884.08 $7,072.64
98
APPENDIX C (cont’d)
Farm A Pearl Millet-cereal Rye Production System Budgets
Farm A 2006Assumptions
Number of Acres 8
ITEM UNIT UNITS/ACRE PRICE $/ACRE TOTAL AMOUNT
INCOME Pearl Millet LBS. 3161.00 $0.05 $158.05 $1,264.40 Post-Harvest Stover Grazing ($1/Cow/Day) DAYS 0.88 $80.00 $70.00 $560.00 Livestock Grazing ($1/Cow/Day, 80 Cows) DAYS 10.68 $80.00 $854.00 $6,832.00
TOTAL INCOME $1,082.05 $8,656.40DIRECT EXPENSES CUSTOM SPRAY Spraying Crop with Herbicide (Roundup) ACRE 1 $6.75 $6.75 $54.00 FERTILIZERS Amm Nitrate (34%N) LBS. 206.25 $0.21 $42.28 $338.25 Phosphate (P2O5) LBS. 0 $0.00 $0.00 $0.00 Potash (K20) LBS. 118.75 $0.19 $22.56 $180.50 HERBICIDES RoundUp GAL. 0.25 $49.00 $12.25 $98.00 CUSTOM PLANTING No-till Drilling ACRE 2 $15.60 $31.20 $249.60 SEED Pearl Millet Seed (2 Plantings) LBS. 19.125 $3.50 $66.94 $535.50 Rye Seed LBS. 141.25 $0.28 $39.55 $316.40 CUSTOM HARVEST/HAUL Combining, Hauling Included ACRE 1 $30.00 $30.00 $240.00 INTEREST ON OP. CAP. $ $2,012.25 2.64% $53.12
TOTAL DIRECT EXPENSES $258.17 $2,065.37RETURNS ABOVE DIRECT EXPENSES $823.88 $6,591.03FIXED EXPENSES Fence Depreciation with Interest Paid ACRE $6.64 $53.10
TOTAL FIXED EXPENSES $6.64 $53.10
TOTAL SPECIFIED EXPENSES $264.81 $2,118.47RETURNS ABOVE TOTAL EXPENSES $817.24 $6,537.93
99
APPENDIX C (cont’d)
Farm A Pearl Millet-cereal Rye Production System Budgets
Farm A AverageAssumptions
Number of Acres 8
ITEM UNIT UNITS/ACRE PRICE $/ACRE TOTAL AMOUNT
INCOME Pearl Millet LBS. 3406.75 $0.045 $150.25 $1,201.99 Post-Harvest Stover Grazing ($1/Cow/Day) DAYS 0.75 $80.00 $60.00 $480.00 Livestock Grazing ($1/Cow/Day, 80 Cows) DAYS 10.68 $80.00 $854.00 $6,832.00
TOTAL INCOME $1,064.25 $8,513.99DIRECT EXPENSES CUSTOM SPRAY Spraying Crop with Herbicide (Roundup) ACRE 1.00 $6.75 $6.75 $54.00 FERTILIZERS Amm Nitrate (34%N) LBS. 103.125 $0.10 $21.14 $169.13 Phosphate (P2O5) LBS. 0 $0.00 $0.00 $0.00 Potash (K20) LBS. 59.375 $0.10 $11.28 $90.25 HERBICIDES RoundUp GAL. 0.25 $49.00 $12.25 $98.00 CUSTOM PLANTING No-till Drilling ACRE 2 $15.60 $31.20 $249.60 SEED Pearl Millet Seed (2 Plantings) LBS. 16 $3.30 $53.43 $427.40 Rye Seed LBS. 141.25 $0.25 $35.58 $284.65 CUSTOM HARVEST/HAUL Combining, Hauling Included ACRE 1 $30.00 $30.00 $240.00 INTEREST ON OP. CAP. $ $1,613.02 2.64% $42.58
TOTAL DIRECT EXPENSES $206.95 $1,655.61RETURNS ABOVE DIRECT EXPENSES $857.30 $6,858.38FIXED EXPENSES Fence Depreciation with Interest Paid ACRE $6.64 $53.10
TOTAL FIXED EXPENSES $6.64 $53.10
TOTAL SPECIFIED EXPENSES $213.59 $1,708.71RETURNS ABOVE TOTAL EXPENSES $850.66 $6,805.28
100
APPENDIX D
Farm B Pearl Millet-cereal Rye Production System Budgets
Farm B 2005Assumptions
Number of Acres 20
ITEM UNIT UNITS/ACRPRICE $/ACRE TOTAL AMOUNT
INCOME Pearl Millet LBS. 1498.00 $0.039 $58.42 $1,168.44 Livestock Grazing ($1/Cow/Day, 90 Cows) DAYS 4.59 $90.00 $413.10 $8,262.00
TOTAL INCOME $471.52 $9,430.44DIRECT EXPENSES CUSTOM SPRAY Spraying Crop with Herbicide (Roundup) ACRE 1 $6.75 $6.75 $135.00 Spraying Crop with Herbicide (2,4-D) ACRE 1 $6.75 $6.75 $135.00 Spraying Crop with Insecticide (Sevin) ACRE 0 $0.00 $0.00 $0.00 Surfactin GAL. 0.05 $9.50 $0.48 $9.50 FERTILIZERS Amm Nitrate (34%N) LBS. 0 $0.00 $0.00 $0.00 Phosphate (P2O5) LBS. 0 $0.00 $0.00 $0.00 Potash (K20) LBS. 0 $0.00 $0.00 $0.00 Quail Litter TONS 6 $25.00 $150.00 $3,000.00 HERBICIDES RoundUp GAL. 0.25 $49.00 $12.25 $245.00 2,4-D GAL. 0.25 $16.00 $4.00 $80.00 INSECTICIDES Sevin GAL. 0 $0.00 $0.00 $0.00 CUSTOM PLANTING No-till Drilling ACRE 2 $15.60 $15.60 $312.00 SEED Pearl Millet Seed LBS. 7.35 $3.10 $22.79 $455.70 Rye Seed LBS. 123.5 $0.22 $27.64 $552.79 CUSTOM HARVEST/HAUL Combining, Hauling Included ACRE 1 $30.00 $30.00 $600.00 INTEREST ON OP. CAP. $ $5,524.99 2.64% $145.86
TOTAL DIRECT EXPENSES $283.54 $5,670.85RETURNS ABOVE DIRECT EXPENSES $187.98 $3,759.59FIXED EXPENSES
TOTAL FIXED EXPENSES $0.00 $0.00
TOTAL SPECIFIED EXPENSES $283.54 $5,670.85RETURNS ABOVE TOTAL EXPENSES $187.98 $3,759.59
101
APPENDIX D (cont’d)
Farm B Pearl Millet-cereal Rye Production System Budgets
Farm B 2006Assumptions
Number of Acres 20
ITEM UNIT UNITS/ACRE PRICE $/ACRE TOTAL AMOUNT
INCOME Pearl Millet LBS. 1559.00 $0.05 $77.95 $1,559.00 Livestock Grazing ($1/Cow/Day, 90 Cows) DAYS 4.59 $90.00 $413.10 $8,262.00
TOTAL INCOME $491.05 $9,821.00DIRECT EXPENSES CUSTOM SPRAY Spraying Crop with Herbicide (Roundup) ACRE 1 $6.75 $6.75 $135.00 Spraying Crop with Herbicide (2,4-D) ACRE 0 $0.00 $0.00 $0.00 Spraying Crop with Insecticide (Sevin) ACRE 1.1 $9.00 $9.90 $198.00 Surfactin GAL. 0 $0.00 $0.00 $0.00 FERTILIZERS Amm Nitrate (34%N) LBS. 0 $0.00 $0.00 $0.00 Phosphate (P2O5) LBS. 0 $0.00 $0.00 $0.00 Potash (K20) LBS. 0 $0.00 $0.00 $0.00 Quail Litter TONS 6 $25.00 $150.00 $3,000.00 HERBICIDES RoundUp GAL. 0.25 $49.40 $12.35 $247.00 2,4-D GAL. 0 $0.00 $0.00 $0.00 INSECTICIDES Sevin GAL. 0.55 $32.00 $17.60 $352.00 CUSTOM PLANTING No-till Drilling ACRE 2 $15.60 $15.60 $312.00 SEED Pearl Millet Seed LBS. 7.35 $3.50 $25.73 $514.50 Rye Seed LBS. 123.5 $0.28 $34.58 $691.60 CUSTOM HARVEST/HAUL Combining, Hauling Included ACRE 1 $30.00 $30.00 $600.00 INTEREST ON OP. CAP. $ $6,050.10 2.64% $159.72
TOTAL DIRECT EXPENSES $310.49 $6,209.82RETURNS ABOVE DIRECT EXPENSES $180.56 $3,611.18FIXED EXPENSES
TOTAL FIXED EXPENSES $0.00 $0.00
TOTAL SPECIFIED EXPENSES $310.49 $6,209.82RETURNS ABOVE TOTAL EXPENSES $180.56 $3,611.18
102
APPENDIX D (cont’d)
Farm B Pearl Millet-cereal Rye Production System Budgets
Farm B AverageAssumptions
Number of Acres 20
ITEM UNIT UNITS/ACRE PRICE $/ACRE TOTAL AMOUNT
INCOME Pearl Millet LBS. 1528.50 $0.045 $68.19 $1,363.72 Livestock Grazing ($1/Cow/Day, 90 Cows) DAYS 4.59 $90.00 $413.10 $8,262.00
TOTAL INCOME $481.29 $9,625.72DIRECT EXPENSES CUSTOM SPRAY Spraying Crop with Herbicide (Roundup) ACRE 1.00 $6.75 $6.75 $135.00 Spraying Crop with Herbicide (2,4-D) ACRE 0.5 $3.38 $3.38 $67.50 Spraying Crop with Insecticide (Sevin) ACRE 0.55 $4.50 $4.95 $99.00 Surfactin GAL. 0.025 $4.75 $0.24 $4.75 FERTILIZERS Amm Nitrate (34%N) LBS. 0 $0.00 $0.00 $0.00 Phosphate (P2O5) LBS. 0 $0.00 $0.00 $0.00 Potash (K20) LBS. 0 $0.00 $0.00 $0.00 Quail Litter TONS 6 $25.00 $150.00 $3,000.00 HERBICIDES RoundUp GAL. 0.25 $49.20 $12.30 $246.00 2,4-D GAL. 0.125 $8.00 $2.00 $40.00 INSECTICIDES Sevin GAL. 0.275 $16.00 $8.80 $176.00 CUSTOM PLANTING No-till Drilling ACRE 2 $15.60 $15.60 $312.00 SEED Pearl Millet Seed LBS. 7.35 $3.30 $24.26 $485.10 Rye Seed LBS. 123.5 $0.25 $31.11 $622.19 CUSTOM HARVEST/HAUL Combining, Hauling Included ACRE 1 $30.00 $30.00 $600.00 INTEREST ON OP. CAP. $ $5,787.54 2.64% $152.79
TOTAL DIRECT EXPENSES $297.02 $5,940.33RETURNS ABOVE DIRECT EXPENSES $184.27 $3,685.39FIXED EXPENSES
TOTAL FIXED EXPENSES $0.00 $0.00
TOTAL SPECIFIED EXPENSES $297.02 $5,940.33RETURNS ABOVE TOTAL EXPENSES $184.27 $3,685.39
103
APPENDIX E
Farm A Tall Fescue-common Bermudagrass Unimproved Hayfield Production System Budgets
Farm A 2003Assumptions
Number of Acres 8
ITEM UNIT UNITS/ACRE PRICE $/ACRE TOTAL AMOUNT
INCOME Hay (900 LB. Bales) LBS. 4950.00 $0.0275 $136.13 $1,089.00 Livestock Grazing ($1/Cow/Day) DAYS 4.81 $80.00 $385.00 $3,080.00
TOTAL INCOME $521.13 $4,169.00DIRECT EXPENSES FERTILIZERS Amm Nitrate (34%N) LBS. 0 $0.00 $0.00 $0.00 Phosphate (P2O5) LBS. 0 $0.00 $0.00 $0.00 Potash (K20) LBS. 0 $0.00 $0.00 $0.00 Broiler Litter TONS 3 $25.00 $75.00 $600.00 HERBICIDES CUSTOM PLANTING No-till Drilling ACRE 1 $15.60 $15.60 $124.80 SEED Ryegrass Seed LBS. 60 $0.51 $30.78 $246.24 CUSTOM HARVEST/HAUL Raking ACRE 1 $8.67 $8.67 $69.36 Tedding ACRE 1 $8.67 $8.67 $69.36 INTEREST ON OP. CAP. $ $1,109.76 2.64% $29.30
TOTAL DIRECT EXPENSES $133.71 $1,139.06RETURNS ABOVE DIRECT EXPENSES $387.41 $3,029.94FIXED EXPENSES Fence Depreciation with Interest Paid ACRE $6.64 $53.10
TOTAL FIXED EXPENSES $6.64 $53.10
TOTAL SPECIFIED EXPENSES $140.35 $1,192.16RETURNS ABOVE TOTAL EXPENSES $380.78 $2,976.84
104
APPENDIX E (cont’d)
Farm A Tall Fescue-common Bermudagrass Unimproved Hayfield Production System Budgets
Farm A 2004Assumptions
Number of Acres 8
ITEM UNIT UNITS/ACRE PRICE $/ACRE TOTAL AMOUNT
INCOME Hay (900 LB. Bales) LBS. 1012.50 $0.0295 $29.87 $238.95 Livestock Grazing ($1/Cow/Day) DAYS 4.81 $80.00 $385.00 $3,080.00
TOTAL INCOME $414.87 $3,318.95DIRECT EXPENSES FERTILIZERS Amm Nitrate (34%N) LBS. 0 $0.00 $0.00 $0.00 Phosphate (P2O5) LBS. 0 $0.00 $0.00 $0.00 Potash (K20) LBS. 0 $0.00 $0.00 $0.00 Broiler Litter TONS 3 $25.00 $75.00 $600.00 HERBICIDES CUSTOM PLANTING No-till Drilling ACRE 1 $15.60 $15.60 $124.80 SEED Ryegrass Seed LBS. 60 $0.53 $31.80 $254.40 CUSTOM HARVEST/HAUL Raking ACRE 1 $8.67 $8.67 $69.36 Tedding ACRE 1 $8.67 $8.67 $69.36 INTEREST ON OP. CAP. $ $1,117.92 2.64% $29.51
TOTAL DIRECT EXPENSES $134.76 $1,147.43RETURNS ABOVE DIRECT EXPENSES $280.11 $2,171.52FIXED EXPENSES Fence Depreciation with Interest Paid ACRE $6.64 $53.10
TOTAL FIXED EXPENSES $6.64 $53.10
TOTAL SPECIFIED EXPENSES $141.40 $1,200.53RETURNS ABOVE TOTAL EXPENSES $273.47 $2,118.42
105
APPENDIX E (cont’d)
Farm A Tall Fescue-common Bermudagrass Unimproved Hayfield Production System Budgets
Farm A AverageAssumptions
Number of Acres 8
ITEM UNIT UNITS/ACRE PRICE $/ACRE TOTAL AMOUNT
INCOME Hay (900 LB. Bales) LBS. 2981.25 $0.0285 $83.00 $663.98 Livestock Grazing ($1/Cow/Day) DAYS 4.81 $80.00 $385.00 $3,080.00
TOTAL INCOME $468.00 $3,743.98DIRECT EXPENSES FERTILIZERS Amm Nitrate (34%N) LBS. 0 $0.00 $0.00 $0.00 Phosphate (P2O5) LBS. 0 $0.00 $0.00 $0.00 Potash (K20) LBS. 0 $0.00 $0.00 $0.00 Broiler Litter TONS 3 $25.00 $75.00 $600.00 HERBICIDES CUSTOM PLANTING No-till Drilling ACRE 1 $15.60 $15.60 $124.80 SEED Ryegrass Seed LBS. 60.00 $0.52 $31.29 $250.32 CUSTOM HARVEST/HAUL Raking ACRE 1 $8.67 $8.67 $69.36 Tedding ACRE 1 $8.67 $8.67 $69.36 INTEREST ON OP. CAP. $ $1,113.84 2.64% $29.41
TOTAL DIRECT EXPENSES $134.24 $1,143.25RETURNS ABOVE DIRECT EXPENSES $333.76 $2,600.73FIXED EXPENSES Fence Depreciation with Interest Paid ACRE $6.64 $53.10
TOTAL FIXED EXPENSES $6.64 $53.10
TOTAL SPECIFIED EXPENSES $140.87 $1,196.35RETURNS ABOVE TOTAL EXPENSES $327.12 $2,547.63
106
APPENDIX F
Farm B Cereal Rye Production System Budgets
Farm B 2003Assumptions
Number of Acres 20
ITEM UNIT UNITS/ACRE PRICE $/ACRE TOTAL AMOUNT
INCOME Livestock Grazing ($1/Cow/Day, 90 Cows) DAYS 4.59 $90.00 $413.10 $8,262.00
TOTAL INCOME $413.10 $8,262.00DIRECT EXPENSES FERTILIZERS Amm Nitrate (34%N) LBS. 0 $0.00 $0.00 $0.00 Phosphate (P2O5) LBS. 0 $0.00 $0.00 $0.00 Potash (K20) LBS. 0 $0.00 $0.00 $0.00 Quail Litter TONS 3 $25.00 $75.00 $1,500.00 HERBICIDES CUSTOM PLANTING No-till Drilling ACRE 1 $15.60 $15.60 $312.00 SEED Rye Seed LBS. 123.5 $0.21 $26.31 $526.11 INTEREST ON OP. CAP. $ $2,338.11 2.64% $61.73
TOTAL DIRECT EXPENSES $119.99 $2,399.84RETURNS ABOVE DIRECT EXPENSES $293.11 $5,862.16FIXED EXPENSES
TOTAL FIXED EXPENSES $0.00 $0.00
TOTAL SPECIFIED EXPENSES $119.99 $2,399.84RETURNS ABOVE TOTAL EXPENSES $293.11 $5,862.16
107
APPENDIX F (cont’d)
Farm B Cereal Rye Production System Budgets
Farm B 2004Assumptions
Number of Acres 20
ITEM UNIT UNITS/ACRE PRICE $/ACRE TOTAL AMOUNT
INCOME Livestock Grazing ($1/Cow/Day, 90 Cows) DAYS 4.59 $90.00 $413.10 $8,262.00
TOTAL INCOME $413.10 $8,262.00DIRECT EXPENSES FERTILIZERS Amm Nitrate (34%N) LBS. 0 $0.00 $0.00 $0.00 Phosphate (P2O5) LBS. 0 $0.00 $0.00 $0.00 Potash (K20) LBS. 0 $0.00 $0.00 $0.00 Quail Litter TONS 3 $25.00 $75.00 $1,500.00 HERBICIDES CUSTOM PLANTING No-till Drilling ACRE 1 $15.60 $15.60 $312.00 SEED Rye Seed LBS. 123.5 $0.21 $26.43 $528.58 INTEREST ON OP. CAP. $ $2,340.58 2.64% $61.79
TOTAL DIRECT EXPENSES $120.12 $2,402.37RETURNS ABOVE DIRECT EXPENSES $292.98 $5,859.63FIXED EXPENSES
TOTAL FIXED EXPENSES $0.00 $0.00
TOTAL SPECIFIED EXPENSES $120.12 $2,402.37RETURNS ABOVE TOTAL EXPENSES $292.98 $5,859.63
108
APPENDIX F (cont’d)
Farm B Cereal Rye Production System Budgets
Farm B AverageAssumptions
Number of Acres 20
ITEM UNIT UNITS/ACRE PRICE $/ACRE TOTAL AMOUNT
INCOME Livestock Grazing ($1/Cow/Day, 90 Cows) DAYS 4.59 $90.00 $413.10 $8,262.00
TOTAL INCOME $413.10 $8,262.00DIRECT EXPENSES FERTILIZERS Amm Nitrate (34%N) LBS. 0 $0.00 $0.00 $0.00 Phosphate (P2O5) LBS. 0 $0.00 $0.00 $0.00 Potash (K20) LBS. 0 $0.00 $0.00 $0.00 Quail Litter TONS 3 $25.00 $75.00 $1,500.00 HERBICIDES CUSTOM PLANTING No-till Drilling ACRE 1 $15.60 $15.60 $312.00 SEED Rye Seed LBS. 123.50 $0.21 $26.37 $527.35 INTEREST ON OP. CAP. $ $2,339.35 2.64% $61.76
TOTAL DIRECT EXPENSES $120.06 $2,401.10RETURNS ABOVE DIRECT EXPENSES $293.04 $5,860.90FIXED EXPENSES
TOTAL FIXED EXPENSES $0.00 $0.00
TOTAL SPECIFIED EXPENSES $120.06 $2,401.10RETURNS ABOVE TOTAL EXPENSES $293.04 $5,860.90
109
APPENDIX G
Ideal Pearl Millet Production Budget
IDEAL
ITEM UNIT UNITS/ACRE PRICE $/ACRE
INCOME Pearl Millet LBS. 5000.00 $0.0445 $222.50
TOTAL INCOME $222.50DIRECT EXPENSES SEED Pearl Millet Seed LBS. 4 $3.50 $14.00 FERTILIZERS Amm Nitrate (34%N) LBS. 80 $0.29 $23.20 Phosphate (P2O5) LBS. 20 $0.24 $4.80 Potash (K20) LBS. 20 $0.19 $3.80 Broiler Litter TONS 0 $22.50 $0.00 HERBICIDES 1 $7.65 $7.65 INSECTICIDES MACHINERY- PREHARVEST Fuel GAL. 2.5 $2.10 $5.25 Repairs & maintenance ACRE 1 $11.00 $11.00 MACHINERY- HARVEST Fuel GAL. 1 $2.10 $2.10 Repairs & maintenance ACRE 1 $12.00 $12.00 LAND RENT ACRE 0 $0.00 $0.00 LABOR HRS. 3 $9.00 $27.00 INTEREST ON OP. CAP. % /6 mos $123.15 7.50% $4.62 DRYING (5% required) BU. 52.2 $0.13 $6.79
TOTAL DIRECT EXPENSES $122.20RETURNS ABOVE DIRECT EXPENSES $100.30FIXED EXPENSES
TOTAL FIXED EXPENSES $0.00
TOTAL SPECIFIED EXPENSES $122.20RETURNS ABOVE TOTAL EXPENSES $100.30
110