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Oct. 12: Crops continue to pour in

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Cost of soybean rust     Send a link to a friend

[NOV. 1, 2004]  URBANA -- If soybean rust arrives in the Midwest, it could cost Illinois growers from $58 million to more than $102 million per year in combined spraying costs and yield losses, according to a new study by Peter Goldsmith, assistant professor in the Department of Agricultural and Consumer Economics at the University of Illinois.

"The model uses three different scenarios based on the severity of the outbreak and the number of spraying applications," said Goldsmith, who also serves as the Fellow in Agricultural Strategy at the National Soybean Research Laboratory. "It is clear that rust will have a significant economic impact no matter which scenario is used."

The first scenario assumes that one spray application would be used on 25 percent of the soybean acreage in the state at a cost of about $15 per acre. This is based on a relatively mild infestation in which there would be about a 5 percent yield loss if no spraying occurred.

"By spraying, the overall yield loss would be reduced to just over 3 percent or about $18 million," Goldsmith said. "The total cost of spraying would come to about $40 million or about $58 million for the two costs added together. At the same time, it would avert a crop loss of $92 million, which provides a net gain of $34 million compared to not spraying at all."

Despite the cost, spraying the crop once pays huge dividends for growers compared to taking no action at all. Goldsmith notes, however, that the numbers change considerably if two spray applications are used.

"In that case, the cost of spraying increases to more than $79 million," he said. "Crop losses fall to about $4.6 million. Just as in the previous scenario, it would avert a crop loss of $92 million. Although almost all the crop is saved, the spraying costs are so high that the net gain is only about $8.4 million."

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The last scenario is based on a severe outbreak of rust in which a 25 percent loss would occur if the soybeans were not sprayed. Goldsmith notes that, even by spraying twice, the severity of the disease will push the crop loss up to about $23 million.

"The total cost, which includes both the spraying costs and crop loss, would come to more than $102 million," Goldsmith said. "Even so, not spraying would result in a total crop loss of about $460 million. Despite the cost, this translates into a net gain of nearly $358 million or $33.92 per acre compared to taking no action at all."

Goldsmith points out that his analysis is based on there being ample supplies and an orderly market for the needed fungicides.

"This may not be the case if we are not prepared," he said. "In a severe outbreak, prices could quickly become volatile and product selection less than optimal. It is especially critical for manufacturers, wholesalers and farmers to prepare early for the arrival of soybean rust so that supplies of environmentally preferred fungicides will be widely available."

[University of Illinois news release]

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