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Abstract

Regulatory changes by federal and state agencies portend a switch from nitrogen-based livestock manure disposal policies to phosphorus-based policies. This paper estimates the compliance costs of such a policy change for a hypothetical hog-grain farm in North Central Indiana. The farm includes 1,500 acres of cropland and has the capacity to raise 11,970 grow-finish hogs annually. The farm model also as the potential to produce four different crops on six different land types. A nonlinear math-programming model was developed to determine the optimal mix of management activities for a phosphorus-based regulation. The model allows mitigation of compliance costs via the choice between four different pig diets, three alternative methods of manure disposal, changes in timing of manure application, and crop pattern adjustments. This analysis concludes that the new regulation will result in a decrease in whole-farm returns above variable costs, the use of phytase enzyme in pig diets, and an increase in wheat acreage. The model also reveals that it is optimal for the farmer to hire a custom hauler to assist in application of manure in an effort to reduce the degree to which available field days constrain farming activities and land application of manure. The estimated cost to the farmer, as a result of the policy change, ranges between $0.56 and $21.74 per unit of pig production capacity.

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