Ontario Grain Farmer February 2021

When we include both the operating costs ($1.03/acre-inch) and capital costs ($550/acre) but ignore costs for developing water supplies, there are few years where irrigation benefits outweigh the costs. For the complete results of this study see Dr. Xu’s Policy Brief posted with the online version of this article at www.ontariograinfarmer.ca . 30 0 5 10 15 20 25 30 Time Period of 2020-2036 0 5 10 15 20 25 30 Time Period of 2037-2053 0 5 10 15 20 25 30 Time Period of 2054-2070 Base Scenario C1 Scenario C2 Scenario C3 Scenario Number of Counties Where Irrigation Climate Scenarios “At current costs and with current climate conditions, irrigation is not economically attractive to field crop producers across Ontario,” says Xu. ECONOMICS There are some things that might improve the economics. Operating on electric power will reduce the operating costs but the expense of bringing electricity to the pumping site must be considered. Equipment costs might come down with greater adoption and competition. Equipment could become more efficient. The available crop genetics is likely to continue to improve resulting in higher yield potential that could be captured by ensuring water stress is not a limiting factor. Additionally, during the modeling study, other factors of improvement in crop input use efficiency, double cropping opportunities, among others were not considered and might change the equation for irrigation. If water is not limiting, then all other production factors can be optimized financially and environmentally. If, as a grain farmer, you can use irrigation to increase yields with each acre, does this mean you can put in less acres of corn? Perhaps devote acres to other crops, such as cash crop hay which spreads risks and improves soil health among other things? The increasingly high value of land is also driving the idea of irrigating grain crops. For example, if you have a contract or fixed volume of corn that you need to produce, and precipitation variability results in you missing your target, how can the demand be met? One option is to purchase more acres (knowing that in dry years the low yields across all acres will meet the target) or to invest in irrigation to ensure that the current acreage can consistently produce the target quantity of grain. With land costs of $10,000/ acre to $20,000/acre it may be better to invest in irrigation at $1,200/acre? In general, consider that it is not profitable to irrigate just to meet your average yield in drought years. Irrigation must increase the yield/profit in every year in order for irrigation costs to be overcome by the benefits. If drought losses are something you routinely experience, the next article in this series will walk through a case study exploring all the steps for implementing irrigation. This article was written with contributions from Glenn Fox, University of Guelph. Rebecca Shortt, Kevin McKague, and Ian McDonald are with the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA). Qin Xu is with the University of Guelph. l FIGURE 2. ECONOMIC FEASIBILITY OF IRRIGATION ACROSS THREE SUB-PERIODS OF 2020 TO 2017. NUMBER OF COUNTIES WHERE IRRIGATION WOULD BE PROFITABLE UNDER FOUR CLIMATE SCENARIOS FOR 3 DIFFERENT TIME PERIODS (CONSIDERING BOTH VARIABLE AND FIXED COSTS). THIS GRAPH ILLUSTRATES THAT IRRIGATION BECOMES MORE ATTRACTIVE TO GRAIN FARMERS IN THE THIRD SUB-PERIOD (2054-2070). GRAPH COURTESY OF OMAFRA. continued from page 29 Number of Counties where irrigation would be profitable.