Manure Management for Water Quality: Costs to Animal Feeding Operations of Applying Manure

Nutrients to Land. By Marc Ribaudo, Noel Gollehon, Marcel Aillery, Jonathan Kaplan, Robert Johansson, Jean

Agapoff, Lee Christensen, Vince Breneman, and Mark Peters. U.S. Department of Agriculture, Economic Research

Service, Resource Economics Division. Agricultural Economic Report 824. 

Abstract

Nutrients from livestock and poultry manure are key sources of water pollution. Ever-growing numbers of animals

per farm and per acre have increased the risk of water pollution. New Clean Water Act regulations compel the

largest confined animal producers to meet nutrient application standards when applying manure to the land, and

USDA encourages all animal feeding operations to do the same. The additional costs for managing manure (such as

hauling manure off the farm) have implications for feedgrain producers and consumers as well. This report’s farmlevel analysis examines onfarm technical choice and producer costs across major U.S. production areas for hauling

manure to the minimum amount of land needed to assimilate manure nutrients. A regional analysis then focuses on

off-farm competition for land to spread surplus manure, using the Chesapeake Bay region as a case study. Finally, a

sectorwide analysis addresses potential long-term structural adjustments at the national level and ultimate costs to

consumers and producers.

Keywords: manure management costs, price and quantity adjustments, water quality, animal waste, manure nutrients, excess nutrients, confined animals, CAFO, manure nitrogen, manure phosphorus, manure use, assimilative

capacity, nutrient management plan

Acknowledgments

This report was developed by the Manure and Water Quality Research Team co-led by Noel Gollehon, Production

Management and Technology Branch, and Marc Ribaudo, Resource and Environmental Policy Branch. The report

could not have been possible without the cooperation and support of the Branch Chiefs of both Branches who fostered a cooperative research environment. This report benefited from the insightful comments and information provided by Kitty Smith, Ralph Heimlich, Keith Wiebe, Marca Weinberg, Utpal Vasavada, Robert Kellogg, Dan

Meyer, Patty Lawrence, Tom Christensen, Glenn Carpenter, Dave Moffitt, Richard Reynells, Doug Parker, Jim

Pease, Ron Fleming, Ken Foster, James Cash, Zhengxia Dou, Vernon Meacham, and Tom Ferguson. Thanks to

William McBride and Sara Short for assistance with the ARMS data. Thanks to Howard McDowell and Bob

House for assistance with the USMP model. Thanks also to Dale Simms for the excellent editorial assistance and

Anne Pearl for the text layout and cover design.

To purchase a paper copy of this report, call 1-800-999-6779

Washington, DC 20036-5831 June 2003
Contents

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iii

Chapter 1—Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Chapter 2— Background: Livestock and Poultry Industry Structure, Environmental Quality, 

and Regulatory Climate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Structural Change and Concentration of Animals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Confined Animals and Excess Nutrients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Manure Nutrients and Water Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Environmental Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Changing Regulatory Landscape . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Overview of Previous Literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Chapter 3—Farm-Level Analysis: Nutrient Management and the Need for Land . . . . . . . . . . . . . . . . .14

Net Costs of Meeting a Nutrient Standard for Hogs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Net Costs of Meeting a Nutrient Standard for Dairy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31

Appendix 3-A: Fleming Model for Estimating Net Costs of 

Following a Nutrient Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33

Chapter 4—Regional Analysis: Costs and Distribution of Manure Management . . . . . . . . . . . . . . . . . .36

Modeling Manure Management in the Chesapeake Bay Watershed . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36

Applying Manure to Land in the Chesapeake Bay Watershed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37

Alternatives to Land Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53

Appendix 4-A: Modeling Manure Management in the 

Chesapeake Bay Watershed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54

Chapter 5—National Analysis: Industry Effects of Manure Management . . . . . . . . . . . . . . . . . . . . . . . .62

Manure Nutrient Restrictions at the National Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78

Appendix 5-A: Market Interaction Primer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80

Chapter 6—Summary and Implications for Policy and Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82

Implications for Policy and Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85

Boxes

Scope of Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Calculating the Nutrient Application Rate Under Nutrient Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Reducing Manure Nutrients Through Feed Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

Willingness To Accept Manure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Nutrient Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38

Manure Handling Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

Industrial Processes for Using Manure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87

ii • Manure Management for Water Quality USDA/Economic Research Service
Executive Summary

U.S. farmers are world leaders in the production of animal products. The United States

has the largest fed-cattle industry in the world, and is the world’s largest producer of

beef. The U.S. is also the world’s largest producer of poultry meat and the third largest

producer of pork products. Livestock and poultry production cuts widely across all elements of the farm sector; more than half of U.S. farms raise animals, and animal products account for about half of the total receipts for agriculture. In 2002, U.S. farmers

produced nearly 86 billion pounds of meat and poultry products, more than 70 billion

table eggs, and 170 billion pounds of milk products. But in supplying households with

hamburgers, pork chops, and ice cream, livestock and poultry farms also generate more

than 350 million tons of manure that must be disposed of.

When used as a fertilizer, livestock and poultry manure can provide valuable organic

material and nutrients for crop and pasture growth. However, those same nutrients—

nitrogen and phosphorus—can degrade water quality if they are overapplied to land and

enter water resources through runoff or leaching. New regulations—enacted by the

Environmental Protection Agency in February 2003—require the largest confined animal operations to meet nutrient application standards when disposing of their manure by

spreading it on cropland. 

The EPA regulations affect only those largest farms designated “concentrated animal

feeding operations,” or CAFOs. While making up only about 5 percent of animal feeding operations, they contain 50 percent of all animals and produce over 65 percent of

excess nutrients. If all CAFOs meet the nutrient standards outlined in the new regulations, increases in production costs could be felt throughout the food and agricultural

system. We evaluated these costs at the farm, regional, and national levels to provide a

full perspective on potential economic impacts. 

• Complying with the EPA regulations will require CAFOs to spread their manure over

a much larger land base than they are currently using, and most will need to move

their manure off farm. Only 18 percent of large hog farms and 23 percent of large

dairies are currently applying manure on enough cropland to meet a nitrogen standard. Further, even if they spread manure over their entire land base, only 20-50 percent of all large hog farms operate enough land to meet land application standards,

depending on whether a nitrogen or phosphorus standard is to be met. The new regulations will require even more large dairies to move their manure off farm; at best,

just slightly more than one-quarter of all large dairies manage an adequate land base

to spread their manure on and fewer than 2 percent have an adequate land base to

meet a strict phosphorus-based standard. Similar results would be expected for beef

and poultry.

• Livestock and poultry farms’ annual net income could decline by more than $1 billion (around 3 percent), but the precise outcome depends greatly on the extent to

which cropland operators are willing to substitute manure for commercial fertilizers,

and the degree to which revenue from sales of higher priced animal products mitigates increases in production costs. Livestock and poultry producers’ net income is

predicted to decline by $1 billion if 40 percent or more of all U.S. cropland is available for spreading manure. On the other hand, if cropland farmers accept manure on

only 20 percent of cropland, the per-animal cost to CAFOs for disposing of their

manure would increase such that they would likely reduce their production. The net

effect of increased manure transportation costs and decreased production levels, offset by increased prices for animal products, could result in a small (0.3 percent)

increase in net revenues to livestock and poultry producers that remain in production. 

USDA/Economic Research Service Manure Management for Water Quality • iii
• Phosphorus-based standards are more costly than nitrogen-based standards. A farmlevel analysis of hog and dairy CAFOs suggests that their production costs could

increase by twice as much, on average, under a phosphorus-based versus a nitrogenbased standard. The higher cost associated with the phosphorus standard reflects

higher concentrations of phosphorus in manure than of nitrogen, relative to crop

nutrient needs. More land is required to spread manure under a phosphorus standard

than under a nutrient standard because less manure is needed per acre to satisfy

crops’ phosphorus needs. The cost gap between the nitrogen and phosphorus standards would shrink if regulations allow phosphorus to accumulate in the soil profile.

• Production cost increases will vary by species and by region. In general, costs will

be lower in the Corn Belt than in other regions. Crop production is more prevalent

there and livestock concentrations are lower, so manure does not have to be hauled

as far off the farm to reach adequate land. Costs to hog producers, in particular, will

depend greatly on where farms are located. Costs are highest in the Mid-Atlantic

where hog densities are greater and cropland is not as common a land use in counties where hogs are raised. Under a phosphorus standard and with 20 percent of

crop operators willing to take manure, hog farms in the Mid-Atlantic, South, and

West would experience a 2- to 3-percent increase in production costs, while hog

farmers in the eastern and western Corn Belt would be virtually unaffected. Large

dairy farms tend to be more homogeneous across the regions we examined, so

dairies in the North and South both experience similar increases in production costs

(about 3 percent for a phosphorus-based standard when 20 percent of crop operators

accept manure). 

Crop producers are not subject to the new EPA manure management regulations, but are

likely to experience indirect effects. Crops are linked to animal production in two ways.

Many crops are used as livestock and poultry feed. Any changes in livestock and poultry

production in response to the environmental regulations could result in shocks to the

feed markets. On the other hand, cropland farmers could reap the benefits of using

manure as a nutrient source. As adjustments filter through the food and agricultural system, consumers could also be affected.

• Net returns in the crop sector could increase by more than $400 million as manure

nutrients replace commercial fertilizer. While small price increases for some crops

are predicted, and would have a positive effect on revenues in the crop sector, the

$400 million gain is primarily associated with savings due to reduced commercial

fertilizer use. Of course, commercial fertilizer suppliers would feel some portion of

that gain as a loss in revenues.

• Sectorwide adjustments in livestock and poultry production, and related changes in

feed crop production, could result in price shifts that would be felt throughout the

food and agricultural system. If farmers’ willingness to accept manure is limited,

prices for animal products could increase by up to 6 percent, while prices for feed

crops (e.g., corn, oats, and soybeans) could increase by 1 to 3 percent. However, if

manure is accepted on 40 percent or more of cropland in each region, prices for

crops and animal products are all likely to remain unchanged. Results will also

depend on domestic and international market dynamics (which influence price

responsiveness).

• Consumers could bear the cost of higher prices for animal products, but they could

also benefit from improved water quality. Although livestock and poultry producers

could see higher net revenues if cropland farmers’ willingness to accept manure is

limited, that net benefit reflects increased consumer costs. The result is a net ecoiv • Manure Management for Water Quality USDA/Economic Research Service
nomic loss when consumer costs and producer benefits are added together. This

analysis does not quantify the value of environmental benefits.

Although EPA regulations apply only to large operations, USDA policy encourages all

animal feeding operations (AFOs) to adopt nutrient standards voluntarily, and provides

financial assistance for doing so. Bringing all AFOs under the umbrella of farms meeting nutrient standards would increase the amount of manure needing transportation, and

increase the demand for cropland to spread it on. In some regions, the competition for

land could be severe.

• For most farms trying to meet a nutrient standard, the most immediate problem is

finding enough land to spread manure on. Transporting manure to adequate land is

the largest cost for meeting a standard. While many small and medium-size farms

control enough land to meet nutrient standards, most are not applying manure on all

of their cropland, thereby over-applying manure nutrients on the portion that receives

manure. 

•Production cost increases for small and medium-size animal feeding operations are

generally less than 1 percent. This result holds under all scenarios we evaluated,

including the entire range of assumptions about cropland farmers’ willingness to

accept manure, because small and medium-size AFOs generally have to move a

much smaller portion of their manure off the farm.

•If all AFOs meet a nutrient standard, costs to the livestock and poultry sector could

exceed $2 billion (7.1 percent), and price increases to consumers would be greater

than if only CAFOs met the standard. Although production cost increases could be

relatively small at the farm level for small and medium-size AFOs, the increased

demand for receiving cropland means that costs to CAFOs would be larger than if

they were the only operations attempting to apply their manure at agronomic rates. In

addition, the large number of AFOs suggests that even small costs at the farm level

could translate into substantial costs sectorwide.

•Competition for land for spreading manure could be severe in regions with high concentrations of animals. Animal feeding operations in 2 to 5 percent of U.S. counties

produce more manure nutrients than can be absorbed by all of those counties’ cropland and pasture. Those counties are primarily in North Carolina, States surrounding

the Chesapeake Bay (Virginia, Maryland, and Delaware), Southeastern States (such

as Georgia, Alabama, and Arkansas), and in California. Consequently, operations in

those regions would have to compete for available land if all manure were to be

spread at agronomic rates. This could result in farther travel and higher costs. 

•The willingness of cropland operators to accept manure is critical in determining

whether land application is feasible for disposing of all manure in regions with high

animal concentrations. For example, in the Chesapeake Bay Watershed, under a

phosphorus-based standard, if less than 60 percent of cropland receives manure

because of cropland operator preferences, there would not be sufficient land for

spreading manure within a 90-mile radius of manure production.

•Industrial processing of poultry litter might be a feasible alternative when the transportation costs for hauling manure to available land are high. Analysis for the

Chesapeake Bay Watershed suggests that cost savings from not having to haul

manure long distances could be sufficient, on a per-ton basis, to cover the annualized

capital costs of industrial facilities such as fertilizer plants. Whether such plants are

economically viable in the long run is uncertain, but a closer look at such alternatives

seems warranted by public agencies concerned with manure management and water

quality.

USDA/Economic Research Service Manure Management for Water Quality • v
•AFOs are being encouraged by USDA to adopt nutrient standards voluntarily, so the

estimated cost increases suggest that many AFOs will not have sufficient incentive to

voluntarily meet nutrient standards without financial assistance. 

•Financial assistance may be available to all animal operations, which would offset

some of the costs associated with improved manure management. USDA’s

Environmental Quality Incentives Program (EQIP) is designed, in large part, to provide relief to animal operations attempting to comply with EPA regulations. EQIP

provides technical assistance, cost-share payments, and incentive payments to assist

crop and livestock producers with environmental and conservation improvements on

the farm, with 60 percent of the program’s funding ($1 billion per year) allocated to

addressing livestock issues. To the extent that livestock and poultry producers’ costs

may be reduced through this or other conservation programs, the cost estimates and

adjustments discussed in this report will be an overestimate.

Our analyses focused on land application of manure and the costs that animal producers

might face in meeting nutrient application standards. Our findings have identified several issues that will require additional research, and indicated potential options for reducing the costs of meeting environmental goals.

•Crop producers’ willingness to accept manure is a very important determinant of

manure-spreading costs. A number of factors impede greater use of manure, including uncertain nutrient content, soil compaction associated with heavy manure application machinery, and odor. Research on how these impediments might be overcome,

education on the benefits of using manure, and financial assistance for crop farmers

using more manure could reduce farmers’ manure management costs.

•Advances in feed management in the near future may increase the options available

to livestock and poultry producers for reducing nutrients in manure. Further economic analyses could indicate the potential for such advances to reduce overall manure

management costs, and how the use of such feed management options might be

encouraged. We found that one such option, phytase in hog feed to reduce phosphorus concentrations, could reduce manure management costs for large hog farms under

a phosphorus-based standard by up to 20 percent.

•The costs of complying with manure management requirements could instigate structural and geographical shifts in the livestock and poultry sectors. Our analysis indicates that the highest per-unit costs for meeting a nutrient standard are often borne

by the largest operations. Sectors such as swine and poultry have seen a significant

move toward integration, the use of production contracts, and larger farms, primarily because of the efficiencies these structural changes bring. The impacts of manure

management costs on the potential benefits from this structure could influence

whether such trends continue, whether smaller operations (non-CAFOs) not affected

by current regulations become more competitive, and the degree to which location

will be considered in expansion decisions.

vi • Manure Management for Water Quality USDA/Economic Research Service
USDA/Economic Research Service Manure Management for Water Quality • 1

Livestock and poultry manure can provide valuable

organic material and nutrients for crop and pasture

growth. However, nutrients contained in animal

manure can degrade water quality if they are overapplied to land and enter water resources through

runoff or leaching. The nutrients of greatest water

quality concern are nitrogen and phosphorus. Animal

waste is a source of both. 

A shift in the livestock and poultry industry over the

past several decades toward fewer, larger operations

has prompted public concern over the use and disposal

of animal manure. Manure lagoon spills in North

Carolina and pfiesteria piscicida outbreaks in North

Carolina and Maryland have raised public concerns

about the way manure is stored and handled. In

response, State and Federal environmental protection

authorities now require that manure be handled and

applied to land so as to minimize runoff and leaching.

However, such restrictions affect livestock and poultry

production costs.

Producing feed on the farm, once a mainstay of animal

production, is becoming rare. As animal operations

grow larger, they increasingly buy feed from outside

the farm. This is reflected in the reduced amount of

available cropland per animal on livestock and poultry

farms (Gollehon et al., 2001). Nevertheless, land application is still the predominant method for disposing of

manure and recycling its nutrient and organic content

(USDA-EPA, 1999). Concerns have consequently arisen that crops and other vegetation are not fully assimilating nutrients in manure, and that excess nutrients

are increasingly likely to degrade nearby water

resources. The land application rate—the quantity of

manure spread on an acre of land—is believed to be

the single most important manure management decision affecting the potential for contamination of water

resources by manure nutrients (Mulla et al., 1999). 

Recent policies and programs for increasing the efficient use of nutrients and protecting water quality from

nutrient runoff all emphasize the importance of properly handling animal manure. The Unified Strategy for

Animal Feeding Operations, jointly developed by the

U.S. Department of Agriculture (USDA) and the

Environmental Protection Agency (EPA) in 1999,

states: “Land application is the most common, and

usually most desirable method of utilizing manure

because of the value of the nutrients and organic matter. Land application should be planned to ensure that

the proper amounts of all nutrients are applied in a

way that does not cause harm to the environment or to

public health. Land application in accordance with a

comprehensive nutrient management plan (CNMP)

should minimize water quality and public health risk”

(USDA-EPA, 1999, pp. 8-9). A goal of the Unified

Strategy is that all animal feeding operations—regardless of size—voluntarily adopt CNMPs for managing

their nutrient resources, including both commercial

fertilizer and animal manure.

However, rules promulgated in 2003 by EPA are

designed to change the way animal operations are handled under the Clean Water Act. Under the new regulations, “concentrated animal feeding operations”

(CAFOs) would be required to meet nutrient application standards as defined in a nutrient management

plan. The plan would become a part of the National

Pollutant Discharge Elimination System (NPDES) permits that all CAFOs need in order to operate.

Violations of the permit are subject to fines and/or

facility closure. 

Manure Management for Water Quality:

Costs to Animal Feeding Operations 

of Applying Manure Nutrients to Land

Marc Ribaudo, Noel Gollehon, 

Marcel Aillery, Jonathan Kaplan, Robert Johansson, Jean Agapoff, 

Lee Christensen, Vince Breneman, and Mark Peters

Chapter 1–Introduction
2 • Manure Management for Water Quality USDA/Economic Research Service

Implementation of nutrient standards for manure application will raise manure management costs for many

farms. At the farm level, their implementation will, in

many cases, require operators to find additional land

on which to spread manure and to absorb the cost of

transporting and applying animal manure to this land.

If land off the farm is required, animal operations may

incur additional rental payments or disposal fees. In

most cases, though, the animal operation pays only the

cost of hauling and applying manure.

In some areas of the country, large concentrations of

confined animals would strain the ability of any individual CAFO to secure adequate land locally for

spreading manure. The competition for land would

likely elevate waste-handling costs since some operators would be forced to transport manure over longer

distances for disposal. The willingness of crop producers to accept animal manure from livestock and poultry operations will also determine land supply and

hauling distance. High transportation costs regionally

could encourage the development and expansion of

alternative uses of manure, such as for commercial fertilizer or energy production. High manure management

costs could, under certain circumstances, induce animal operations to spread out geographically, to relocate to areas with more abundant land, or to reduce

herd size.

Implementation of new requirements on animal waste

management could affect not only producers, but consumers as well. A substantial spike in waste management costs could result in regional shifts in animal

production and increased prices for animal products

and certain feedgrains and other crops. 

Objectives

Previous studies have suggested that restrictions on

manure management similar to the ones promulgated

by EPA will increase the costs of manure management.

Systematic analyses across the different animal sectors

would help to identify critical issues arising from

implementation of the new rules. We present a multidimensional framework, based on farm-level, regional,

and sectorwide analyses (see box, “Scope of

Analysis”). The different scales are important 

because each addresses a different set of issues or

questions.The interactions between the resource base

and manure management are best examined at the

farm level. However, the impacts of a national policy

are felt across regions, and these impacts can be transferred across the economy through the market system.

We use the most comprehensive data available to provide a fuller understanding of the costs of the new

rules across farm types, regions, and a range of values

for key policy variables. We specifically address competition for land on which to spread manure, an issue

that has not been addressed in the literature, as well as

the willingness of landowners to accept manure. 

Chapter 2 reviews some of the structural changes that

have occurred in the livestock and poultry sectors, animal agriculture’s impact on water quality, State and

As with all research, the strengths and limitations of this

analysis are framed by the study objectives and reflected in the study’s scope, methodology, and analytic

assumptions. While motivated by Federal policy provisions first proposed in 1999, our study is not intended as

a direct examination of either EPA’s new CAFO regulations or USDA’s nutrient management policies. Rather,

the study provides an independent analysis of a key provision of these and other Federal and State animal waste

initiatives—the land application of manure at agronomic

rates. The study examines the costs and feasibility of

reliance on land application for manure disposal and the

effect of key factors (including policy provisions) on

these costs.

The study includes three analytic components—farmlevel, regional, and national analysis—to address a

range of issues pertinent to the land application question

(see table, p. 4). Each of these analyses focuses on

issues best evaluated at its respective scale. The farmlevel analysis examines onfarm technical choice and

costs at the producer level for hauling manure to the

minimum amount of land needed to assimilate manure

nutrients. The regional analysis focuses on off-farm

competition for land to spread surplus manure, using the

Chesapeake Bay region as a case study. The sectorwide

analysis addresses potential long-term structural adjustments at the national level and ultimate costs to consumers and producers.

While there are many differences in the scale, scope of

analysis, economic variables, and assumptions about

various facets of the animal industry, there are several

unifying elements. Crop producer willingness to accept

manure and its influence on producer costs is critical

throughout the range of analyses. Our treatment of

nutrient application standards, the primary policy tool,

adheres to a strict definition of the standards throughout the study. Finally, the cost coefficients used to characterize the nutrient management policies, as well as

the physical coefficients used to convert animal numbers to manure nutrients, are consistent among the three

analyses.

Scope of Analysis
USDA/Economic Research Service Manure Management for Water Quality • 3

Federal regulations to address those issues, and other

research on the impact of environmental regulations on

the animal sector. In chapter 3, survey data for hogs

and dairy are used to estimate the short-term, farmlevel implications of applying manure to land according to a nutrient standard across U.S. regions. This

analysis best captures the interactions between a

farm’s resource base and manure disposal decisions,

including how much land livestock farms would

require beyond what they currently control, as well as

the cost of hauling manure to this land. Both nitrogenand phosphorus-based nutrient standards are assessed. 

Item Farm-level model

(Chapter 3)

Regional model

(Chapter 4)

National model

(Chapter 5)

Analytic focus Land required for

manure spreading,

and cost of hauling

Land required for

manure spreading,

and cost of hauling

National price,

production, and

welfare impacts

Geographic scope Multistate regions Chesapeake Bay

Watershed

National

Unit of analysis Farm County/subcounty USDA Farm Regions

Species considered Swine, dairy Swine, dairy, poultry,

feedlot beef

Swine, dairy, poultry,

all beef

Manure system types Lagoon, slurry, dry

(dairy)

Lagoon, slurry,

dry/litter

Lagoon, slurry,

dry/litter

Nutrient management

costs included

Manure transport, application, nutrient content testing (soil and

manure), management plan development

Analytic tool Farm-level manure

hauling and

application model

Regional manure

hauling and

application model

U.S. regional

agricultural sector

model (USMP)

Model structure Simulation Optimization,

minimize net costs

Optimization,

maximize net returns

Manure/Animal

production

Fixed Fixed Estimated in model

Crop production Fixed Fixed Estimated in model

Output prices n.a. n.a. Estimated in model

Farm size class

considered

Yes No Yes

Onfarm manure use

tracked

Yes Yes No

Willingness-to-accept

manure considered

Yes Yes Yes

Competition for land

for spreading

No Yes Limited

Manure hauling

distance

Estimated in model Estimated in model Weighted average

Nonland-based

options

Phytase Phytase, industrial

treatment

n.a.

n.a. = not applicable.

Scope of Analysis
4 • Manure Management for Water Quality USDA/Economic Research Service

In chapter 4, regional policy implications are assessed

for a case-study area of high animal concentrations.

The analysis examines how the competition for land

influences the costs of spreading manure from the

viewpoint of a resource manager or policymaker trying

to minimize manure transportation costs. Both nitrogen- and phosphorus-based standards are assessed. In

chapter 5, the analysis is extended nationally to assess

the broader impacts of improved manure management

on the welfare of U.S. producers and consumers. A

model of the U.S. agricultural sector is used to estimate impacts of manure management on prices, total

production, and geographic distribution of production.

The final chapter summarizes the findings and draws

important conclusions for policymakers concerned

with manure management and water quality.
USDA/Economic Research Service Manure Management for Water Quality • 5

The animal sector has undergone major changes in the

last several decades. Economic factors pertaining to

demand for meat products and organizational changes

to enhance economic efficiency have resulted in larger

confined production facilities that are often geographically concentrated. Increased facility size and regional

concentration of livestock and poultry operations have

given rise to concerns over the management of manure

and potential impacts on environmental (particularly

water) quality. This chapter reviews structural trends in

the animal industry, potential impacts on water quality,

and changes in the regulatory environment facing animal feeding operations.

Structural Change and

Concentration of Animals

The number of farms with confined animals has

declined dramatically and steadily from 435,000 in

1982 to 213,000 in 1997 (Gollehon et al., 2001). This

decline occurred primarily in smaller operations (less

than 300 animal units of 1,000 lb live weight). During

the same period, the number of medium (300-1,000

animal units) and large operations (more than 1,000

animal units) grew. Medium-size operations grew by

4,400 farms to account for about 6 percent of all confined livestock and poultry farms in 1997, while large

farms more than doubled to almost 4,000 farms (2

percent).

While total animal farms declined, the number of confined animals increased 10 percent between 1982 and

1997, indicating a significant increase in the average

number of animals per farm. A decline in animals on

small farms was more than offset by growth on medium-sized farms and large farms (Gollehon et al.,

2001). In 1997, the largest 2 percent of all livestock

farms produced 43 percent of all animals, by weight

(Gollehon et al., 2001).

The driving forces behind structural change in livestock and poultry production are no different than

those that affect many other industries: innovation and

economies of size. Using new technologies and practices yields significant profits. To make use of these

technologies and to capture economies of size often

requires significant amounts of capital. Organizational

innovations, such as production contract arrangements,

enable growers to access the capital necessary to adopt

innovative technologies and garner economies of size.

The significant economic benefits from vertical coordination in the animal sector, particularly for poultry

and swine, have led to both larger operations and a

geographic concentration of animal production

(Martinez, 2002; Martinez, 1999; McBride, 1997;

McBride and Key, 2003). 

The innovation and economies of size that characterize

the livestock and poultry sector also served to separate

animal production from crop production. Large, specialized facilities today focus on producing animals

and purchase most of their feed from off the farm.

This means there is less land on the farm on which to

spread manure. The amount of land per animal unit

across all animal types declined nearly 40 percent

between 1982 and 1997 (Gollehon et al., 2001).

Increased animal concentrations and less land per animal have raised concerns that nutrients in manure are

not being fully utilized by crops and are increasingly

likely to enter ground and surface water. These concerns are heightened by events such as the lagoon rupture in Onslow County, NC, that released 25 million

gallons of concentrated waste into the New River in

1995 (Mallin, 2000) and outbreaks of the toxic

dinoflagellate pfiesteria piscicida in North Carolina

and Maryland (Pease et al., 1998). Previous literature

clearly points out that the value of manure is not sufficient for large confined feeding operations to manage

according to agronomic needs, even before considering the environmental impacts (Roka and Hoag, 1996;

Henry and Seagraves, 1960). Continued overapplication of nutrients on land increases the potential for

environmental damage.

Confined Animals and 

Excess Nutrients

Land application has been and remains the predominant method for disposing of manure and recycling its

nutrient and organic content (USDA-EPA, 1999). If

manure is properly managed, plants assimilate most

nutrients. When too much manure is spread on the

Chapter 2—Background:

Livestock and Poultry Industry Structure,

Environmental Quality, and Regulatory Climate
6 • Manure Management for Water Quality USDA/Economic Research Service

land, nutrients build up in the soil and enter nearby

water resources through runoff or leaching.

In 1997, a large percentage of recoverable nutrients

from manure (nutrients that are available for application after collection and storage) were in excess of

what the cropland controlled by animal feeding operations could assimilate, based on reported acreage and

crop yields (Gollehon et al., 2001). Excess manure

nutrients indicate a potential for environmental damages resulting from nutrient transport to water

resources. Actual impacts depend on the magnitude of

the nutrient surplus, whether manure nutrients leave

the farm, the nutrient management practices used on

the farm, the vulnerability of water resources to nutrient pollution, and agro-ecological conditions such as

soil type and climate (Jones, 2001).

While small and medium-size livestock and poultry

operations produce a large share of total nutrients, the

largest operations generate the largest share of nutrients in excess of crop needs (Gollehon et al., 2001).

This is consistent with a finding (Roka and Hoag,

1996; Henry and Seagraves, 1960) that large operations tend to view manure as a waste rather than a

resource, and dispose of it on land closest to the facility. For example, the 6 percent of farms larger than

1,000 animal units (AUs1) were estimated to generate

65 percent of excess nitrogen and 68 percent of excess

phosphorus (fig. 2-1) in 1997. The poultry sector produces the most total nutrients of any sector, even

though it made up only 15 percent of confined animal

farms. In 1997, poultry were estimated to generate 60

percent of all excess nitrogen on confined animal

farms, and 61 percent of excess phosphorus (fig. 2-2).

Dairy made up nearly half of confined animal farms,

yet generated only 7 percent of excess nitrogen and 5

percent of excess phosphorus.

The calculations of onfarm nutrient excess may overstate excess manure nutrients actually applied because

some manure is moved off production farms in some

cases. However, because of transportation costs, the

use of animal manure as a fertilizer may not be economically feasible on many non-livestock farms.

Historically, a large share of the manure produced does

not leave the farm on which it is produced (Bosch and

Napit, 1992; Bouldin et al., 1984). Among the major

field crops, the share of acres treated with manure

ranges from about 15 percent for corn and 10 percent

for soybeans to less than 3 percent for wheat (USDA,

ERS, 2000a). 

However, total excess nutrients on confined livestock

farms are more likely to be understated than overstated

in this analysis because neither commercial fertilizer

applications nor atmospheric deposition of nutrients

are considered. Most crop farms without livestock, and

many farms with livestock, use commercial fertilizers

because they are less bulky, easier to apply, and have a

more certain nutrient content than manure. For many

producers, the convenience of commercial fertilizer

often outweighs the value of manure as both a source

of nutrients and a soil amendment that improves the

physical and chemical properties of cropland. 

When animals are concentrated geographically, operators may have difficulty finding enough land off the

producing farm to fully assimilate the nutrients in the

manure. Many factors can limit the amount of land

available for spreading, including land cover, topography, depth to water table, location of streams and

wells, local regulations, transportation costs, and crop

producer preferences. Gollehon et al. (2001) found that

most counties had adequate cropland to handle the

manure generated by all animal types raised on confined facilities in those counties, assuming that all crop

and pasture lands were available to livestock producers. However, the assimilative capacity of nearby land

was potentially limiting in some areas of high animal

concentrations. 

In 68 counties nationwide, the estimated manure

nitrogen produced on confined livestock and poultry

farms exceeded the assimilative capacity of all the

county’s crop and pasture land. These counties are

primarily in North Carolina, northern Georgia,

Alabama, central Mississippi, western Arkansas, and

California. Many more counties (152) had countylevel excesses of phosphorus. These counties are primarily in western Virginia, eastern Maryland,

Delaware, eastern North Carolina, northern Georgia

and Alabama, central Mississippi, western Arkansas,

and southern California.

Manure Nutrients and Water Quality

Nitrogen and phosphorus are significant pollutants of

U.S. waters. Nutrient pollution is a leading cause of

water quality impairment in lakes, rivers, and estuaries

(U.S. EPA, 2000a). Nitrogen is easily soluble and

readily transported to surface waters through runoff

and tile drainage, and to ground water through

leachate. Phosphorus is only moderately soluble and

relatively immobile in soils, but erosion can transport

1 An animal unit is defined by EPA as 1 slaughter and feeder cattle, 0.7

mature dairy cow, 2.5 swine weighing more than 25 kg, 30 laying hens or

broilers if a facility uses a liquid manure system, and 100 laying hens if a

facility uses continuous overflow watering.
USDA/Economic Research Service Manure Management for Water Quality • 7

considerable amounts of sediment-adsorbed phosphate

to surface waters. If soils have been overfertilized,

rates of dissolved phosphorus losses in runoff will

increase due to buildup of phosphates in the soil. 

Nitrogen and phosphorus accelerate algae production

in receiving surface waters, resulting in a variety of

problems including clogged pipelines, fish kills, and

reduced recreational opportunities (U.S. EPA, 2000a).

Besides harming aquatic ecosystems, nitrogen in

water is also a potential human health threat, particularly to infants. 

Nutrients in water resources originate from a number

of sources, including industry, municipal waste treatment, agriculture, and atmospheric deposition. While

well-publicized events such as those in North Carolina

and Maryland fueled the public’s perceptions of the

problems from animal operations, a large number of

watershed and plot studies have authenticated animal

agriculture’s impacts on water quality. States reported

to EPA in 1996 that animal operations (feedlots, animal feeding operations, and animal holding areas)

were a major factor in 5 percent of rivers and streams

impaired by agriculture, and a contributing source in

15 percent more (U.S. EPA, 1998).2 A USGS study of

Excess N Excess P AFOs

Source: Kellogg, 2002.

Figure 2-1

Excess nitrogen, excess phosphorus, and AFOs by size class

<300 AU

7%

>1,000 AU

65%

300-1,000 AU

28%

6%

68%

26%

77%

17%

6%

Poultry Feedlot beef Dairy Swine

Figure 2-2 

Excess nitrogen, excess phosphorus, and AFOs by animal type

Source: Kellogg, 2002.

15%

7%

18%

60%

16%

5%

18%

61%

Excess N Excess P AFOs

49%

15% 9%

27%

2 U.S. EPA's assessment relies on State self-reporting, which is incomplete

and inconsistent between States (U.S. GAO, 2000). The Clean Water Act

required that such a report be submitted to Congress every 2 years. 
8 • Manure Management for Water Quality USDA/Economic Research Service

nitrogen loadings in 16 watersheds found that manure

was the largest source in 6, primarily in the Southeast

and Mid-Atlantic States (Puckett, 1994). In the

Mississippi River’s drainage basin, animal manure was

estimated to contribute 15 percent of the nitrogen load

entering the Gulf of Mexico (Goolsby et al., 1999).

Nitrogen from the Mississippi River was found to be

the leading contributor to a large zone of hypoxic

(oxygen deficient) waters in the northern Gulf

(Rabalais et al., 1999). A study of the relation between

nitrogen concentrations in surface water and land use

in the upper Midwest found that the level of nitrogen

contamination is most strongly related to streamflow,

acreage in corn and soybean production, density of

cattle production, and population density (Mueller et

al., 1993). Monitoring by USGS in the National Water

Quality Assessment Program found that the highest

concentrations of nitrogen in streams occurred in agricultural basins, and were correlated with nitrogen

inputs from fertilizers and manure (USGS, 1999). 

The State of Minnesota recently conducted an extensive environmental impact assessment of animal agriculture’s impacts on water resources, and reviewed

hundreds of studies conducted by scientists across the

country (Mulla et al., 1999). Some of the main points

they developed from the literature include:

•Livestock waste can contribute significantly to

phosphorus loads in surface waters.

•Feedlot runoff contains extremely large loads of

nutrients; if not properly collected before entering

surface waters, this runoff can severely degrade

surface-water quality.

•Nutrient losses in runoff from manured or fertilized

fields were much greater than losses from unmanured or unfertilized control plots.

•Nutrient losses in runoff increased with the rate of

manure or fertilizer applied.

•States with high concentrations of feedlots generally experience 20-50 lagoon spills and feedlot runoff

events per year that degrade water quality.

•As the size of animal operations increases, nutrient

imbalances also typically increase. This is mainly

due to a lack of proper land area for spreading

manure.

•As the density of animals in a watershed increases,

the impact on surface-water quality grows. This is

primarily due to increased production of manure 

nutrients, and inadequate crediting of nutrients in

manure when farmers calculate their nutrient applications to cropland. 

Environmental Regulations

In response to these concerns, a variety of Federal and

State regulations have been enacted or proposed. The

major Federal environmental law affecting animal

operations is the Clean Water Act (CWA). Specifically,

animal feeding operations (AFOs) may be covered by

the National Pollutant Discharge Elimination System

(NPDES) program established under the Act. NPDES

permits are required by point sources (facilities that

discharge directly to water resources through a discrete

ditch or pipe) before they can discharge into navigable

waters. The permits specify a level of treatment for

each effluent source. Federal NPDES permits may be

issued by any of the 44 States authorized to implement

the NPDES program, or by EPA. 

Agriculture is typically exempted from NPDES

requirements. However, under regulations developed

by EPA in 1974, certain AFOs can be designated

“concentrated animal feeding operations” (CAFOs)

and considered a point source under the NPDES 

program. EPA’s regulations (contained in 40 C.F.R.

§122.23 and Part 122, Appendix B) define an AFO 

as a facility where:

•Animals have been, are, or will be stabled or confined and fed or maintained for a total of 45 days

or more in any 12-month period, and

•Crops, vegetation, forage growth, or postharvest

residues are not sustained in the normal growing

season over any portion of the lot or facility where

the animals are housed. (This does not include

fields where manure might be spread.)

A CAFO is defined as an AFO that:

•Confines more than 1,000 animal units, or 

•Confines between 301 and 1,000 AUs and discharges pollutants into waters through a manmade

ditch, flushing system, or similar manmade device,

or directly into waters that pass through the facility,

or

•Is determined to be a significant contributor of pollutants to U.S. waters.

The CAFO definition contained an exemption for

facilities that discharge only in the event of a 25-year,

24-hour storm event. The definition also exempted 
USDA/Economic Research Service Manure Management for Water Quality • 9

poultry operations that used dry manure handling systems. The Effluent Limit Guideline (which establishes

the discharge goal for facilities requiring a permit)

applicable to the NPDES permit for CAFOs is no discharge of pollutants to waters except in the event of a

25-year, 24-hour storm (40 C.F.R. § 412). 

These provisions, notably, were applied only to the

animal production facility. The rules presumed that

manure removed from the production area was handled appropriately through land application. Land

application of nutrients was traditionally treated as a

nonpoint-source pollution issue, and as such, not regulated under the Clean Water Act. The high animal densities and potentially high levels of excess nutrients

brought about by structural change in livestock production indicated that manure nutrients were being

overapplied, but Clean Water Act regulations provided

no direct response until recently.

Most States have implemented regulations for controlling the environmental impacts of AFOs that start to

address the problems associated with modern production methods (table 2-1). Thirty-five states have some

type of non-NPDES permit, license, or authorization

program that covers CAFOs or AFOs. Of note, 34

States have a requirement covering manure application

rates (prior to Federal requirements), and 27 States

require the development and use of manure management plans. 

Voluntary agricultural programs improve water quality

by promoting various nutrient management practices.

The Environmental Quality Incentive Program (EQIP)

was initiated in the 1996 Federal Agriculture

Improvement and Reform Act (1996 Farm Act) and

amended by the 2002 Farm Security and Rural

Investment Act (2002 Farm Act). EQIP provides technical assistance, cost-share payments, and incentive

payments to assist crop and livestock producers with

environmental and conservation improvements on the

farm. Animal feeding operations can receive financial

assistance for waste management structures and for

nutrient management. Contracts for financial assistance are for 1 to 10 years, with a maximum of

$450,000 per farm over FY2002-2007. By statute, 60

percent of the available funding for the program is earmarked for practices related to livestock production.

EQIP was funded at about $200 million per year from

1996 trough 2000. Funding is authorized to increase

incrementally from $400 million in 2002 to $1.3 billion in 2007.

Changing Regulatory Landscape

In response to the changing structure of animal production, USDA and EPA announced in 1999 the

Unified National Strategy for Animal Feeding

Operations (USDA-EPA, 1999). The Strategy sets

forth a framework of actions that USDA and EPA plan

to take, under existing legal and regulatory authority,

to minimize water quality and public health impacts

from improperly managed animal manure. The

Unified Strategy, when fully implemented, will set

minimum standards for all State water quality protection programs.

The Unified Strategy establishes the goal that all

AFO owners and operators develop and implement

technically sound, economically feasible, and sitespecific comprehensive nutrient management plans

for properly managing the animal manures produced

at their facilities, including onfarm application and

off-farm disposal, if any. The Strategy cites land

application as the most desirable method of using

manure because of the value of its nutrients and

organic matter (USDA-EPA, 1999). Nutrient management plans, adopted voluntarily or through regulation, would be tailored to address the individual

needs and practices of each AFO.

To approach the goals of the Unified Strategy and to

mitigate actual and potential water quality impacts

from CAFOs, EPA revised the regulations for CAFOs

at the end of 2002 (U.S. EPA, 2003). Some of the

major changes for the NPDES permit and Effluent

Limit Guidelines are:

•Eliminating the 25-year/24-hour storm exemption.

•Eliminating the exemption for poultry operations

with dry manure handling systems.

•Making a nutrient management plan part of the

NPDES permit, including land application of animal manure.

•Adopting a zero-discharge requirement with no

overflow allowance for new swine, veal, and poultry CAFOs. 

•Requiring installation of depth markers for open

liquid impoundments (lagoons).

EPA estimates that up to 15,500 operations might

qualify as CAFOs under the proposed regulations.

Currently, about 12,000 operations are large enough 
10 • Manure Management for Water Quality USDA/Economic Research Service

Table 2-1—State regulations for controlling animal manure

Permit type Permit conditions

Federal State State non- Effluent Management Land application

State NPDES NPDES NPDES limits plan plan

AL X X X X

AK X

AR X X X X X

AZ X X X

CA X X X X

CO X X X X

CT X X X X

DE X X

FL X X X X

GA X X X X

HI X

IA X X X X

ID X X X X X

IL X X X X X

IN X X X X

KY X X X X X

KS X X X X

LA X X X X X

MA X

MD X X X

ME X

MI X X

MN X X X X X

MO X X X X X

MS X X X

MT X X X X

NE X X X X X

NC X X X X

ND X X X

NH X

NJ X X

NM X X X X

NV X

NY X X

OH X X X X

OK X X X X X

OR X X X

PA X X X X

RI X

SC X X X X

SD X X X

TN X X

TX X X X X X

UT X X

VA X X X X X

VT X X X

WA X X X X X

WI X X X X

WV X X X

WY X X X X

Totals 7 40 35 29 27 34

Source: U.S. EPA, 2002b, "State Compendium: Programs and Regulatory Activities Related to Animal Feeding Operations,"

www.epa.gov/owm/stcpfin.pdf

Permit conditions are requirements imposed through either NPDES or State non-NPDES programs.
USDA/Economic Research Service Manure Management for Water Quality • 11

to be considered CAFOs, but only about 2,500 actually have permits. This difference is due to the storm

exemption, the poultry/dry manure exemption, and lax

enforcement.

Of note, the new regulations require that CAFO nutrient management plans be based on the most limiting

nutrient for applying animal manure and commercial

fertilizer to cropland. This requirement essentially

expands the coverage of the Clean Water Act from the

production facility to the land where manure is

applied. Plans would be nitrogen-based in areas where

soil phosphorus is low. Where soils have high phosphorus content, plans would be phosphorus-based. A

nutrient standard will limit manure application rates on

most land, increasing competition for land where

“spreadable” land (land capable of using manure as a

plant fertilizer) is relatively scarce, and inflating overall manure management costs. This is especially true if

nutrient management plans are phosphorus based.

Animal manure contains more phosphorus than nitrogen relative to plant needs, meaning that less manure

can be spread on a given acre under a phosphorus limit

than a nitrogen limit (Mullins, 2000). Therefore, with

a given amount of manure, more land would be

required for spreading under a phosphorus limit than a

nitrogen limit.

Changes in industry structure and environmental regulations raise important questions about the economic

impacts of abiding by the new nutrient standards.

These impacts are the subject of this report.

Overview of Previous Literature

The economic literature on the environmental aspects

of manure from confined animal feeding operations

has taken two tracks. One deals with the joint production of meat and manure and the incentives to take

advantage of the nutrient content of manure. The other

deals with the costs to the industry of meeting restrictions on manure management in order to achieve an

environmental goal.

Henry and Seagraves (1960) presented the basic economics of transporting animal waste. They recognized

the potential environmental problems from poultry litter as that sector was moving toward larger production

facilities. The two most important factors that determine the net value of manure are its nutrient content

and the distance it needs to travel before it is used.

Nutrient content enhances manure’s value, while transportation distance reduces it. The authors conclude

that the unprofitability of moving litter long distances

(because of an unfavorable weight-to-nutrient ratio)

leads to nearby application. With higher application

rates that surpass crop needs, the value of manure

drops because crops cannot utilize the extra nutrients.

Roka and Hoag (1996) looked for evidence that swine

producers factor the value of manure into their livestock management decisions. In their estimation, a

farmer makes three decisions that affect the value of

manure: choice of a treatment system, choice of area

receiving effluent, and choice of crops grown. The

authors found that the value of pork dominates a producer’s hog marketing decisions, and that producers

are relatively insensitive to the value of manure. Under

the most favorable conditions, manure value is negative (-$2.94/head), yet production cycles or other management options were not changed in order to increase

manure’s value. Manure’s negative value may prompt

farmers to view it as a waste rather than a resource,

and to overapply it on land nearest the production

facility.

Gollehon et al. (2001) and Kellogg et al. (2000)

demonstrate that large confined animal operations produce excess nutrients. Census of Agriculture data show

the relationship between increased concentration in the

livestock/poultry industry and the increase in onfarm

“excess” manure nutrients, or nutrients above a crop’s

needs. They showed that excess nutrients have

increased between 1982 and 1997, and that excess

nutrients occurred primarily on large facilities.

Innes (2000) developed a conceptual model of livestock/poultry production and regulation to illuminate

the issues of manure generation and management. The

model represents the waste management decisions of

private livestock producers, manure impacts on the

environment, the effect of market forces, and implications for the design of efficient government regulatory

policies. The model includes spills from animal waste

storage (lagoons), nutrient leaching and runoff from

fields, and direct ambient pollution from livestock

operations, including odors, pests, and ammonia gases. 

Innes used the model to evaluate how various regulations on livestock production affect economic efficiency, and found that the externalities associated with

livestock production (e.g., water pollution and air pollution) result in too many large facilities that are also

inefficiently large. Another finding is that regulations

that focus only on waste handling result in inefficiencies in spatial arrangements of production. A solution

to improve economic efficiency is to regulate livestock

facility sizes and entry as well. Innes contends that

when the government cannot directly regulate manure

application, producers will always choose to spread

more manure nutrients to nearby cropland than crops
12 • Manure Management for Water Quality USDA/Economic Research Service

can use. In this instance, regulating observable producer choices that affect manure-spreading practices

might enhance economic efficiency.

Farm-level assessments have dominated empirical

research on how manure restrictions would affect livestock operations. These assessments generally rely on

representative farm modeling to estimate costs of management changes needed to comply with an environmental goal. The models are generally optimized

across various management options, including number

of animals, storage system type, manure application

rates, and crops grown.

Fleming et al. (1998) estimated the costs of spreading

manure according to a nutrient application standard for

various types of swine farms in the Midwest. This

study emphasized the transportation costs of hauling

manure to land for spreading. While not an optimization model for manure management, the model provides a means for estimating short-term costs of

spreading manure. Fleming et al. also used the model

to find an “optimal” herd size, balancing the costs of

manure spreading with the benefits of manure nutrients for crop production. They concluded that manure

nutrient returns are maximized where nutrient-hungry

crops are grown close to a medium-size swine finishing facility and manure is stored in a nutrient-conserving manner (slurry tank). With a lagoon, the cost of

delivering nutrients is always greater than the value of

nutrients due to nutrient loss in storage. Basing

manure applications on phosphorus levels was found

to increase the value of manure nutrients, but also

increased delivery cost because phosphorus-based

application rates require more land for spreading. The

authors also noted that the market value of hogs, not

the value of manure nutrients, will generally drive

swine production decisions.

Fleming and Long (2002) used the same model to

evaluate the cost of restricting access to cropland with

excess slope for the purpose of reducing surface

runoff of nutrients and other contaminants. Reducing

the amount of land available for application increases

the costs of moving manure to suitable land. Swine

producers in Kentucky would see increased manure

management costs of 35 cents per head if manure

nutrient applications were restricted to land with less

than 12-percent slopes (7-percent reduction in suitable

land area). Larger swine farms faced a much higher

cost ($2.11 per head) because of the higher acreage

requirements.

Schnitkey and Miranda (1993) estimated the longrun

impact of phosphorus runoff controls on a representative hog-corn farm in the Midwest. Their model

allowed adjustments in manure hauling distance, application rate, and number of animals on the operation.

They found that placing runoff controls on livestockcrop producers would reduce both livestock supply

and producer net income.

Yap et al. (2001) also used a representative farm

model to estimate the economic impacts of phosphorus-based manure management for a north-central

Indiana hog-grain farm. Adjustments to meet a phosphorus-based manure disposal policy included changes

in cropping patterns, feed rations, manure disposal

methods, and disposal locations. Like Schnitkey and

Miranda, they found that moving from a nitrogenbased policy to a phosphorus-based policy reduced

farmer net returns, even allowing for changes in feed

rations, the use of a custom applicator, and hauling

manure off the farm.

Huang and Magleby (2001) and Huang and Somwaru

(2001) used individual farm models applied to survey

data to estimate the costs of restricting the land application of manure for different size hog farms in two

ERS-defined regions, the Heartland and Southern

Seaboard.3 Management options evaluated included

adjustments in the amount of cropland receiving

manure and in the manure application rate. The analysis looked at short-term impacts, assuming no change

in operation size or management systems. (The models

thus optimized on net returns from crop production

alone rather than on net returns from both hog and

crop production.) Both studies found that, for larger

operations that are targeted by current policy, livestock

production is the primary economic activity and, consistent with the findings of Roka and Hoag, these

operations do not have the incentive to alter their operations to enhance the value of manure.

Bosch et al. (1997) used three representative farm

models to estimate the economic impacts from reducing phosphorus in poultry litter (through the use of

phytase in feed) in the Chesapeake Bay watershed.

Under a phosphorus-based application standard, using

phytase to reduce the phosphorus content of poultry

litter was found to increase its nutrient value by allowing it to be applied to cropland at a higher rate. This

higher application rate enables more of the crop’s

nitrogen need to be met by poultry litter, so less commercial nitrogen is applied. However, the value of lit3 The Heartland region mainly covers Iowa, Illinois and Indiana, and parts

of Ohio and Missouri. The Southern Seaboard mainly covers Virginia,

North Carolina, South Carolina, Georgia, and Alabama. A description of

ERS regions can be found at http://www.ers.usda.gov/Emphases/Harmony/

issues/resourceregions/resourceregions.htm#new
USDA/Economic Research Service Manure Management for Water Quality • 13

ter as a nutrient source is less under a phosphorusbased plan than under a nitrogen-based plan, whether

phytase is used or not. Under a nitrogen-based plan,

poultry litter meets both the nitrogen and phosphorus

needs of the crops, and no commercial fertilizer is

needed.

Pease et al. (1998) used representative dairy and dairypoultry farms in Virginia to simulate farm income

effects of nutrient management policies. Current nutrient applications exceeded recommendations on many

farms. Nitrogen application restrictions were found to

increase net returns for many dairies, indicating that

dairies were treating manure as a waste. A phosphorus

restriction provided a greater reduction in nutrient

losses, but greatly reduced dairy and dairy-poultry

farm incomes. The farm costs were deemed unsupportable for most dairies.

Bosch et al. (1998) estimated the savings to hog farms

with anaerobic lagoons when using phytase-treated

feed and faced with phosphorus-based manure application limits. Phytase can reduce the phosphorus content

of manure. Using representative farm models, the

authors showed that phytase was economically beneficial to farms with limited land. Farms with a higher

land-to-hog ratio were better off without using phytase. They also found that phosphorus-based nutrient

standards were more costly to hog farms than nitrogen-based standards, even with the use of phytase.

Babcock et al. (1997) used an accounting approach to

estimate the cost to Iowa hog producers of incorporating manure in order to reduce runoff, odor, and

volatilization of ammonia. They found that the cost

per head for requiring soil incorporation of manure

depended on the amount of manure hauled, how it was

stored (which affects nutrient content), and the number

of producers not currently incorporating. Compliance

was estimated to increase costs 17 cents/hog if incorporating slurry and 68 cents/hog if incorporating

lagoon liquid. These costs were deemed sufficient to

hurt Iowa’s competitiveness if the restrictions were

Iowa-specific.

While the farm-level studies described above generally

incorporate restrictions on land availability, they do

not consider the effects of competition from nearby

farms also seeking land on which to spread manure. A

regional analysis that considers competition for

manure disposal off the farm was conducted in the

Eucha/Spavinaw watershed (ESW) in Oklahoma

(Wimberly and Goodwin, 2000). The study examined

the cost of exporting surplus poultry litter from the

ESW watershed by using an accounting framework.

Competition from other, closer sources of litter put

ESW at a competitive disadvantage to those other

areas. The total spread costs for ESW litter ($17 to $26

per ton) were greater than the market price for litter in

destination watersheds ($15 per ton) because of transportation costs.

National-level modeling has been limited. FAPRI

(2001) used a national economic model to assess the

financial impact of EPA’s proposed CAFO regulations

on the livestock and poultry sector. Costs estimated by

EPA for the implementation of the proposed regulations were used as inputs in the model, although specific waste management technologies were not modeled. Instead, industry costs for meeting effluent limit

guidelines and for meeting a land application standard

were aggregated and assessed for different-sized animal feeding operations in different regions. The

authors showed that the added costs associated with

regulatory compliance would eventually be reflected

in higher prices within the respective livestock sectors.

Farm numbers were also found to decrease, with

smaller producers facing the greatest financial stress.

In summary, the literature on managing manure with a

consideration of environmental impacts hits on several recurring themes. Animal manure is costly to move

relative to its nutrient value, limiting the area to

which it can be economically applied. Large operations generally do not consider the nutrient value of

manure in making livestock management decisions,

thus treating manure as a waste. This leads to overapplication of manure on land nearest to the facility.

Restrictions on manure applications in order to meet

environmental goals will increase the cost of raising

animals by increasing the amount of land that is used

for spreading manure and the distance that manure

must be hauled.
14 • Manure Management for Water Quality USDA/Economic Research Service

The EPA regulations for manure nutrients applied to

land according to a nutrient-based standard affect individual livestock and poultry farms. Meeting these standards may be difficult and costly if a farm has inadequate land and manure must be moved to other crop

and pasture land. Many factors influence how high (or

low) these costs might be.

We used data from the 1998 hog Agricultural Resource

Management Survey (ARMS) and the 2000 dairy

ARMS (USDA, ERS, 2002a) to demonstrate how the

nutrient management goals of EPA and USDA might

affect a particular livestock sector. For each sector, we

examine the consistency of current land application

decisions (referred to as the baseline) against nutrient

standards that are based on agronomic needs. We then

use a land application cost model to estimate the cost

of spreading manure according to a nutrient standard

while considering the availability of cropland and the

willingness of non-livestock producers to accept

manure as a source of nutrients.

We consider both nitrogen-based and phosphorus-based

standards, as either might be required or recommended

at any given location based on the phosphorus content

of the soil (see box, “Nutrient Standards,” p. 38). In the

case of phosphorus-based standards, we assume a strict

interpretation where the standard must be met every

year on every acre receiving manure. This approach is

very site specific, and we did not have the data necessary to fairly assess the costs of intermediate options

that would fall between the nitrogen-based standard

and the stricter phosphorus standard.

Net Costs of Meeting a 

Nutrient Standard for Hogs

The hog industry illustrates the changes in scale, structure, and location that have occurred in the confined

animal sector since the 1960s. In 1982, there were

175,284 farms with confined hogs, totaling 6.3 million

animals (USDA, ERS, 2002b). In 1997, the number of

farms had shrunk to 63,723 (down 64 percent), while

the number of hogs had increased to 8.2 million

(USDA, ERS, 2002b) with many more hogs on large

facilities. An estimated 51 percent of the recoverable

nitrogen (nitrogen remaining after collection and storage) in hog manure and 64 percent of phosphorus was

in excess of crop needs at the farm level in 1997

(Gollehon et al., 2001). Nutrient application standards

for animal feeding operations are intended to address

these excess nutrients.

We grouped the survey data into five multistate

regions: Eastern Corn Belt (IL, IN, MI, OH, WI);

Western Corn Belt (IA, KS, MN, MO, NE, SD); MidAtlantic (NC, SC, VA); South (AL, AR, GA, KY,

TN); and West (CO, OK, UT) (fig. 3-1). We looked at

three size classes based on EPA’s definition of animal

units (where one AU is 2.5 hogs weighing more than

55 pounds): small operations (<300 AU), medium

operations (300 - 1,000 AU) and large operations

(>1,000 AU).

How Many Farms Are Potentially Meeting a 

Nutrient Standard?

How many farmers are spreading manure on enough

land in the baseline scenario (1998) to meet a nutrientbased standard? We estimated the standard for each

farm given the recoverable nutrients in the manure

generated on the farm and the types of crops grown on

the farm (see box, “Calculating the Nutrient

Application Rate Under Nutrient Standards”). Even

though the survey data are for hog farms, they include

information on other types of animals raised on the

farm as well. A nutrient standard will apply to all the

manure on the farm, not just the manure from hogs, so

we made our calculations accordingly. The standardbased nutrient application rate determined the amount

of land needed for spreading the manure generated by

the farm. We compared this estimate with the amount

of land each farm reported on the ARMS survey as

receiving manure.

Less than half the farms in any one size class were

estimated to be meeting a nitrogen (N)-based standard

in 1998 (table 3-1). Small farms had the highest percentage meeting an N-standard (45.8 percent) and

large farms the lowest (18.0 percent). This was true

across all five regions. The two Corn Belt regions had

the highest percentage of farms meeting the standard

in each size class. These results imply that most large

farms will have to alter their manure disposal practices

in order to comply with the new EPA regulations.

Large hog farms in the Corn Belt would be better off,

Chapter 3—Farm-Level Analysis:

Nutrient Management and the Need for Land
USDA/Economic Research Service Manure Management for Water Quality • 15

Figure 3-1

Hog and dairy production regions used in this analysis

Dairy Survey Regions

South

North

Dairy

Hogs

Eastern Corn Belt

Western Corn Belt

Mid-Atlantic

South

West
16 • Manure Management for Water Quality USDA/Economic Research Service

but more than three-quarters would still have to make

adjustments. While most small and medium farms are

not directly affected by the EPA regulations, more than

half might benefit from a more efficient use of the

nutrients available to them. Apparent “wasting” of

manure nutrients on these farms may be due to ignorance of the nutrient value of manure or to the greater

costs of spreading manure on additional land versus

commercial fertilizer costs.

Fewer farms are spreading manure on cropland to

meet a phosphorus (P)-based standard, since the high

P content of manure relative to crop needs significantly reduces the quantity of manure that can be applied

on an acre of land. No large farms in the Eastern Corn

Belt, Mid-Atlantic, or West met the P-based standard,

and only 12.8 percent of all small farms did so (table

3-1). Given this, a P-based standard would affect many

more farms than an N-based standard. These estimates

consider the fact that some farms currently add the

enzyme phytase to feed to reduce manure’s phosphorus content.

Farms applying manure at rates greater than a nutrient

standard are not fully utilizing the nutrients in their

manure. Somewhat surprisingly, most hog farms indicated on the ARMS survey that they had additional

land on which manure could be spread. This is consistent with reports that large, specialized animal feeding

operations treat manure as a waste rather than a valuable resource. The percentage of farms estimated to

meet N- or P-based standards increases substantially

when all land on each farm suitable for receiving

manure is used for spreading. If all suitable land were

used, about twice as many farms would be meeting an

N-based standard (table 3-1). Nevertheless, more than

half of all large farms still could not meet an N-based

standard, and about 80 percent could not meet a Pbased standard. A higher percentage of farms in the

Corn Belt can meet N- or P-based standards using

their own land than in any other region, across all 

size classes.

One pattern that emerges from these results is that

farms in the two Corn Belt regions seem better able to

meet a nutrient application standard than farms in

other regions. For one, average hog densities, in terms

of AUs per acre currently being used for spreading

manure and AUs per acre of available land, differed

significantly between the regions (table 3-2).4

Densities on land receiving manure in the MidAtlantic region were about 5 times those in the two

Corn Belt regions. A similar difference exists for land

operated by the farm that could receive manure. Hog

farms in the Corn Belt tend to be more integrated with

crop production than in other regions, so they generally have more cropland available on the farm for

spreading manure (McBride and Key, 2003).

Another reason for the Corn Belt’s relative advantage

in meeting regulations is the difference in application

standards compared with the other regions (at the 5-

percent level of significance) (table 3-2). Its mix of

crops grown and differences in crop yields enable a

higher nutrient application rate. Thus, more manure

can be applied to an acre of land in the Corn Belt, and

less land is needed to meet a given standard.

The apparent ability of hog farms in the Corn Belt

regions to meet an N-based or P-based application

standard using available land is more dramatic when

One of the key computations made by all three empirical procedures—farm-level, regional, and national—is determining

the quantity of manure nutrients (nitrogen or phosphorus) that could be applied to suitable agricultural land without soil

nutrients building up and threatening water quality. Minimizing nutrient loss is the standard that farms are to meet in

applying manure and other nutrients, either voluntarily or as a result of regulation. The maximum nutrient application rate

(in pounds per acre) that can meet this standard depends on the animal species, the manure handling and storage system,

the manure application system, and the type of crops receiving manure. We calculated rates that were tailored to the geographic scale of each analysis.

Calculating the nutrient application rate starts with the nutrients contained in the harvested portion of the crops grown.

The amount of a nutrient (N or P) removed by harvest for each of 24 crops was calculated using an average nutrient content per unit of crop output and the production level as outlined in Kellogg et al. (2000). The amount of P removed by harvest becomes the P application standard that farmers are assumed to meet. To account for unavoidable losses in the soil

that make some nitrogen unavailable to plants, a "nutrient recommendation" was calculated by multiplying nitrogen

removed in harvest by 1.43 (Kellogg et al., 2000). This becomes the N application standard.

Calculating the Nutrient Application Rate Under Nutrient Standards

4 This difference is statistically significant at the 5-percent level.

Specifically, the joint hypothesis test of equal uptake in all regions was

rejected with a 95-percent probability.
USDA/Economic Research Service Manure Management for Water Quality • 17

Table 3-1—Percentage of hog farms meeting N-based and P-based standards, by region and size, 1998

Farms with Farms with 

Farms with Farms meeting Farms meeting adequate land adequate land

confined N-based P-based for N-based for P-based 

Region hogs standard standard standard standard

Number Percent

Eastern Corn Belt

<300 AU 5,891 44.5 16.4 85.1 66.7

300–1,000 AU 2,658 34.8 7.3 84.4 59.0

>1,000 AU 1,110 20.1 0 56.1 25.1

Western Corn Belt

<300 AU 10,903 50.1 11.8 92.1 72.1

300–1,000 AU 7,744 37.9 9.9 82.0 48.9

>1,000 AU 2,025 26.9 8.8 66.5 31.0

Mid-Atlantic

< 300 AU 423 15.4 1.1 54.9 46.9

300–1,000 AU 582 14.1 0 23.0 10.8

>1,000 AU 1,214 4.5 0 17.3 2.4

South

<300 AU 1,236 32.5 11.2 81.7 68.6

300–1,000 AU 488 21.7 0.6 67.3 43.8

>1,000 AU 177 13.3 7.9 32.0 16.6

West

<300 AU 393 19.2 7.6 28.2 25.4

300–1,000 AU 108 0 0 0 0

>1,000 AU 174 0 0 29.4 0

Nation

<300 AU 18,846 45.8 12.8 87.1 68.7

300–1,000 AU 11,580 35.0 8.3 78.2 48.7

>1,000 AU 4,700 18.0 4.1 48.8 20.6

Eastern Corn Belt includes IL, IN, MI, OH, WI. Western Corn Belt includes IA, KS, MN, MO, NE, SD. Mid-Atlantic includes NC, SC, VA.

South includes AL, AR, GA, KY, TN. West includes CO, OK, UT.

Source: 1998 ARMS hog survey.

Table 3-2—Manure storage system, hog density, and nutrient application standard, by region

Animal units Animal Average Average

Percentage of per receiving units per nitrogen phosphorus

farms using (manure) acre application application

Region using lagoons* acre operated (lbs/acre) (lbs/acre)

Eastern Corn Belt 18.2 8.4 3.7 152.6 41.7

Western Corn Belt 24.5 7.2 2.5 154.0 42.6

Mid-Atlantic 97.7 41.4 32.4 123.8 38.8

South 79.8 10.8 5.8 98.8 39.0

West 89.1 28.2 7.6 92.2 32.6

*Remainder are slurry systems.

Eastern Corn Belt includes IL, IN, MI, OH, WI. Western Corn Belt includes IA, KS, MN, MO, NE, SD. Mid-Atlantic includes NC, SC, VA. South

includes AL, AR, GA, KY, TN. West includes CO, OK, UT.
18 • Manure Management for Water Quality USDA/Economic Research Service

one considers the dominant waste handling technologies in each region. Slurry systems are prevalent in the

Corn Belt regions, while lagoons dominate elsewhere

(table 3-2). Slurry systems preserve more of the nutrients in manure than do lagoon systems, which lose a

significant amount of nitrogen to the atmosphere and

phosphorus to the sludge at the bottom. More land

would therefore be needed per animal under a slurry

system than a lagoon system to meet a nutrient standard. However, Corn Belt hog farms generally had

more than enough land to compensate for differences

in manure storage.

How Much More Land Would Be Needed To Meet

Nutrient Standards?

We used the 1998 hog ARMS data to estimate the

amount of additional land each farm would need to

meet N- and P-based standards. This indicates how

costly it may be for hog farms to meet the standards.

The acreage needed to assimilate manure produced on

the farm was compared with the acreage reported as

receiving manure and with the total acreage operated

by the farm deemed suitable for receiving manure.

Farms not meeting the standard will have to spread on

a larger area, which may necessitate moving manure

off the farm to cropland and pasture operated by other

farmers.

Additional acreage needed to meet an N-based standard is greatest for large farms (209.4 acres on average, or 393.6 acres minus 184.2 acres, or an increase

of 114 percent) (table 3-3). Small farms, on average,

are spreading on enough land. Medium farms would

need, on average, to spread on an additional 36 acres

(33 percent). Large farms in the West would need to

spread on the most additional acres (600 acres, or 428

percent). In contrast, large farms in the Western Corn

Belt would need to spread on an additional 106 acres

(40 percent).

If a phosphorus-based standard is required, producers

will have to spread on even more land. Large farms,

on average, would have to spread on over 1,000 additional acres of land to meet a P-based standard. Even

small and medium farms would have to increase

receiving land significantly to meet a P-based standard. As with N-based plans, large farms in the West

would have to increase the amount of land receiving

their manure the most (1,853 acres on average, or over

1,300 percent). In contrast, large farms in the South

would have to spread on an additional 693 acres, on

average, or 396 percent.

Many farms have additional land on which to spread

manure. This is important because manure management costs could increase greatly if much manure has

to be moved off the farm and if other cropland operators willing to use manure must be found. Additional

land on farms suitable for spreading manure enables

the average farm for most regions and size classes to

meet an N-based standard. Large farms in the MidAtlantic (150 acres, or 61 percent), South (302 acres,

or 109 percent), and West (478 acres, or 185 percent)

would have to spread on the most off-farm acres to

meet the standard. Farms in the Corn Belt regions,

where integrated livestock/crop production is more

prevalent, have a distinct advantage in this regard.

The additional land available on farms will have less

impact in meeting a P-based standard because of the

amount of land such a standard requires. Farms in the

Corn Belt regions and the South benefit most from

having additional land that could be used for spreading

manure. Large farms in the West would still need an

additional 1,734 acres, on average, and large farms in

the Mid-Atlantic an additional 918 acres.

One way to reduce the phosphorus content of manure

and the amount of land needed for spreading is to use

reformulated feed containing the enzyme phytase (see

box, “Reducing Manure Nutrients Through Feed

Management”). Phytase enables nonruminants (such as

hogs) to better utilize phosphorus in grain, thus reducing the need to add di-calcium phosphate or other inorganic phosphorus additives common in hog feed mixes.

The addition of phytase to poultry and hog feed can

reduce the phosphorus content of manure by up to 45

percent (Harper, 2000). We assumed the phosphorus

content of manure would be reduced by 30 percent on

those farms indicating in the ARMS survey that they

used feed containing phytase. Few farms indicated they

used phytase—3.5 percent of small farms, 9.7 percent

of medium farms, and 15.6 percent of large farms. If

all farms used phytase to reduce the phosphorus content of manure, about 26 percent less land would be

needed to meet a P-based standard (table 3-3).

What Are the Net Costs of Meeting the Standard?

The cost of spreading manure on additional land bears

heavily on how the operation might adjust to new regulatory requirements. Assuming no other technologies

are implemented for reducing the amount of surplus

manure nutrients on the farm, the costs would include

developing a nutrient plan to meet the standard, testing

manure for its nutrient content, testing the soil on

fields receiving manure, and transporting and applying

manure to the necessary land base. Since animal

manure has value as a crop fertilizer, the extent to

which animal manure replaces commercial fertilizer on
USDA/Economic Research Service Manure Management for Water Quality • 19

Table 3-3—Average acreage being used for spreading and average acreage needed to meet nutrient standard on hog farms, by region and size, 1998

Acres Acres needed

Acres available N-based P-based P-based

being on the standard standard, standard, all

Region used farm1 baseline phytase phytase 

Eastern Corn Belt Acres

<300 AU 66.6 365.2 53.8 193.9 140.1

300-1000 AU 110.7 705.2 145.0 466.6 352.4

>1,000 AU 179.6 756.7 349.0 1,143.5 863.7

Western Corn Belt

<300 AU 75.9 451.4 61.6 229.2 161.9

300-1,000 AU 119.4 535.5 147.4 493.2 355.2

>1,000 AU 262.8 789.5 368.7 1,206.8 882.0

Mid-Atlantic

<300 AU 16.1 144.0 57.6 172.3 135.5

300-1,000 AU 39.2 134.5 151.7 331.1 242.7

>1,000 AU 68.7 247.3 397.9 1,166.0 851.5

South

<300 AU 39.5 342.3 49.8 115.3 82.2

300-1,000 AU 57.6 688.2 127.7 366.4 266.0

>1,000 AU 139.7 276.7 578.8 833.1 693.3

West

<300 AU 40.7 163.0 127.5 170.7 120.2

300-1,000 AU 59.2 5.7 138.6 272.3 218.9

>1,000 AU 139.4 258.6 736.6 1,992.6 1395.2

Nation

<300 AU 68.5 404.5 59.6 208.2 148.4

300-1,000 AU 110.2 556.9 146.2 471.5 344.0

>1,000 AU 184.2 603.5 393.6 1,196.9 882.1

1Acres owned or leased suitable for receiving manure. Eastern Corn Belt includes IL, IN, MI, OH, WI. Western Corn Belt includes IA, KS, MN,

MO, NE, SD. Mid-Atlantic includes NC, SC, VA. South includes AL, AR, GA, KY, TN. West includes CO, OK, UT.

Source: 1998 ARMS hog survey.

Animal diet modification to reduce the nitrogen and phosphorous content of excreted manure offers an additional way of

helping producers to meet nutrient standards for land application. Researchers have made key advances during the past

decade, although most of these measures have not been widely implemented due primarily to technical and economic reasons. Least-cost diet formulation typically has not incorporated ingredients to decrease nutrient excretion as there has been

little or no economic (or regulatory) incentive to do so (CAST, 2002).

There are a number of interrelated approaches for reducing manure nutrients through diet modification. While some of

these approaches are more relevant for certain species, feed management can reduce nutrients in all animal types.1

Approaches include:

• Developing more accurate nutrient requirements of animals by sex and by growth phase;

• Accounting for the digestibility of nutrients in feed;

• Feeding the most digestible ingredients economically possible (increase feed efficiency);

• Increasing phase-feeding, which alters the diet with increasing age of animals;

• Minimizing safety margins for feed nutrient content that have traditionally been high; 

• Substituting phytase and synthetic amino acids for alternative ration components. 

1 Current research findings identify potential nutrient reductions by animal type: poultry - 40-percent N and P; swine - 50-percent N and 60-percent P; dairy - 35-percent N and

50-percent P; and cattle - 30-percent N and 50-percent P. However, reductions that can be obtained in full production systems have not been fully assessed (CAST, 2002).

Reducing Manure Nutrients Through Feed Management
20 • Manure Management for Water Quality USDA/Economic Research Service

cropland constitutes a cost saving from land application. For this analysis, we assume that animal producers pay for the transportation of manure off the farm,

and that they receive a payment from the crop operator

equal to the nutrient value of the manure. We assume

that hog producers do not pay a fee for being able to

spread manure on cropland operators’ fields. Total

costs minus nutrient benefits are the net costs of

spreading manure. 

We used a model developed by Fleming et al. (1998)

to estimate the change in net land application costs

associated with meeting a nutrient standard (see

appendix 3-A). This model estimates the net costs of

spreading manure while accounting for the economic

benefit of replacing commercial fertilizer with manure

nutrients and for the availability of suitable land in the

surrounding countryside. We first estimated a baseline

net cost, using the acreage reported in the survey as

receiving manure.5 We then estimated the net cost of

applying manure to the land required by an N- or Pbased standard. The difference between the net cost of

spreading on required acreage and net cost of spreading on baseline acreage is the net cost of meeting the

nutrient standard. To this we added the costs of developing a nutrient management plan, testing manure, and

testing the soil. The net costs we report are those

attributable only to hogs. Net costs of handling manure

from other animal types on the farm are factored out,

based on their share of total farm manure nutrients. All

farms bear the cost of developing a nutrient management plan and conducting nutrient tests, even if they

were spreading on an adequate amount of land in the

baseline.

A particularly attractive feature of the model is that it

accounts for land use in the surrounding area and the

willingness of cropland operators to use manure as a

source of crop nutrients. Both factors influence the

distance that manure must be hauled to reach an adequate amount of land. There is little basis for choosing

a level of willingness-to-accept-manure (WTAM).

Currently, cropland operators supplement commercial

fertilizer with manure as part of their crop fertilization

regime on 17 percent of corn acreage and 2-9 percent

of soybean acreage (USDA, ERS 2000a, p. 36). We

examined net costs over a WTAM range between 10

percent and 80 percent (see box, “Willingness to

Accept Manure”).

Nitrogen. At any given level of WTAM, the net cost of

meeting an N-based application standard would generally be highest (on an animal unit basis) for small

operations (fig. 3-2). This result is surprising if one

considers only manure hauling and application costs,

since almost half of small farms were already meeting

the N-based standard. However, plan development and

testing costs, which are independent of the number of

animals, are higher (on an animal unit basis) for small

operations than for larger operations. Net unit costs are

therefore relatively high. Medium operations enjoy

lowest unit costs, since plan and testing costs are

spread over more animals and fewer farms have to

move manure off the farm. Net unit costs for large

operations are higher than for medium operations.

Even though the plan and testing costs per AU are

lower, hauling costs increase greatly due to the need to

move more manure off the farm.

Crop producer willingness to accept manure has a profound impact on net costs. The cost of hauling manure

to suitable land decreases as more cropland operators

are willing to take manure. The effect is greatest when

farms must move significant amounts of manure off

the farm. This is why the Corn Belt regions do not see

as great a decrease in net costs as the Mid-Atlantic or

West as willingness-to-accept increases. A larger share

of land needed to meet an N-based plan is located on

the farm in the Corn Belt than other regions.

In some scenarios (primarily for the Corn Belt

regions), the average net costs of meeting an N-standard are negative, meaning that the benefits from

replacing commercial fertilizer with manure nutrients

outweigh the costs of testing, hauling manure to the

field, and applying it. Nutrients applied in excess of

crop needs have no value because they are not beneficial to the crop. By reducing excess application, more

commercial nutrients are replaced by manure nutrients

and the value of manure increases. When a farm has

enough of its own land for spreading, the nutrient

value may outweigh the additional manure management costs.

This result begs the question of why farmers do not

currently increase net returns by making better use of

manure nutrients. There are several possible reasons.

Farmers may not know the nutrient value of manure,

which can only be determined through testing. There

may be other constraints or costs to using manure,

including uncertainty, storage, labor, and equipment.

These costs are not accounted for in the simulation

model. The literature cited in chapter 2 indicated that

some animal operations (primarily larger ones) treat

manure more as a disposal item rather than a resource

with value and apply it to land closest to the facility

without regard to its nutrient value. Determining 

5 We assume that land on the farm is in a contiguous block. This assumption results in an underestimation of the cost of hauling manure on the farm.
USDA/Economic Research Service Manure Management for Water Quality • 21

whether a change in application rates actually increases a particular farm’s net returns would require further

analysis.

Net costs in the Corn Belt regions are consistently

lower than net costs in other regions across all sizes

and all levels of willingness-to-accept (fig. 3-2). Three

reasons explain this result. First, hog operations in the

Eastern and Western Corn Belt tend to be more integrated with grain production than in other regions, so

there is generally more land available per animal unit

on the operation for all size classes (as demonstrated

in tables 3-1 and 3-3). Second, grain production is a

more pervasive land use in these regions, so availability of suitable land off the farm is much higher than in

other regions, reducing the distance manure must travel. For example, NRI data indicate that 78 percent of

the land in counties containing confined hog operations in the Corn Belt regions is suitable for spreading

(cropland and pasture), compared with only 20 percent

of the land in the Mid-Atlantic. Third, allowable nutrient application rates are generally higher in the Corn

Belt regions because a large share of the crops grown

use significant amounts of nitrogen (notably corn), and

crop yields tend to be higher (table 3-2).

Phosphorus. For most levels of WTAM, large and

medium hog farms would have to pay a higher net cost

per AU for meeting a phosphorus-based nutrient standard than a nitrogen-based standard (fig. 3-3). More

land is needed for spreading manure, which increases

the number of farms needing to spread off the farm as

well as average hauling distance relative to the N-standard. However, small farms in all regions but the MidAtlantic and South would see lower net costs relative

to the N-standard. Small farms, on average, had

enough land to meet the P-based standard. Spreading

manure according to a P-based standard does not oversupply N or P, meaning that all manure nutrients are

fully valued. The resulting nutrient benefits outweigh

the costs of spreading on more land, as well as the

fixed costs of developing and implementing a nutrient

plan. Only in the Mid-Atlantic would small farms generally have to look off the farm for land, and net costs

would increase under a P-based standard. The slight

increase in net costs for small farms in the South is

probably due to the mix of crops grown and the availability of suitable cropland off the farm.

Large farms would generally face higher net costs per

AU than either small or medium farms under a Pbased standard, reflecting the large amounts of land

that would be needed off the farm and the steep

increase in hauling costs. Contrast this to what would

happen under the N-based standard, where small farms

would tend to bear a higher net cost. However, this

result depends on the willingness of landowners to

accept manure. Increasing willingness to accept

manure benefits large farms the most. At high acceptance levels, large farms in most regions would have

lower unit net costs than small farms (fig. 3.3).

The two Corn Belt regions would meet the P-based

standard for the lowest net costs, just as they did the

N-based standard. The availability of land on and off

the farm gives these regions an advantage over the

others in implementing a P-based standard.

Farms can reduce their hauling and application costs

by using phytase-treated feed. The cost of phytase is

mostly covered by the decreased need for phosphorus

supplements (Bosch et al., 1998). Large operations

would benefit most if phytase were used to reduce the

phosphorus content of manure (fig. 3-4). For example,

the average net cost for a large operation in the MidAtlantic facing a willingness-to-accept of 10 percent

When onfarm manure production is greater than the capacity of the farm to utilize it, manure must be moved off the operations where it is produced in order to meet nutrient standards. Most will move to nearby crop farms that will accept the

manure for its nutrient value and soil enhancing properties. The number of crop farms that lie within a feasible transportation range depends on the type of manure, its water content, and each farmer's perception of the value of manure. The willingness of neighboring crop farms to accept manure will have an important bearing on the animal industry, both in terms of

the availability of land for manure spreading and the transportation expense to access a needed amount of land. 

There are several potential drawbacks to land application of manure that could discourage greater use on cropland. These

factors include uncertainty associated with the nutrient content and availability, high transportation and handling costs relative to commercial fertilizer, soil compaction from spreading equipment, dispersion of weed seeds, concerns about added

regulatory oversight, and public perception regarding odor and pathogen issues (Risse et al., 2001). The willingness of

crop producers to accept manure will depend on each farmer's weighting of the benefits of a natural source of nutrients and

organic matter against the costs of manure application. 

Willingness To Accept Manure
22 • Manure Management for Water Quality USDA/Economic Research Service

>1,000 AU

-5

0

5

10

15

0 20 40 60 80 100

Willingness to accept manure (percent)

Net cost ($) per AU

<300 AU

0

5

10

15

20

0 20 40 60 80 100

Willingness to accept manure (percent)

Net cost ($) per AU

Figure 3-2

Average net cost of applying manure from hog farms following a nitrogen standard, by region

 300-1,000 AU

-5

0

5

10

15

20

0 20 40 60 80 100

Willingness to accept manure (percent)

Net cost ($) per AU

E. Corn Belt

W. Corn Belt

Mid-Atlantic

South

West 

E. Corn Belt

W. Corn Belt

Mid-Atlantic

South

West 

E. Corn Belt

W. Corn Belt

Mid-Atlantic

South

West 
USDA/Economic Research Service Manure Management for Water Quality • 23

Net cost ($) per AU

Net cost ($) per AU

Figure 3-3

Average net cost of spreading manure from hog farms following a phosphorus standard, 

baseline phtyase use, by region

Net cost ($) per AU

<300 AU

-5

0

5

10

15

20

0 20 40 60 80 100

Willingness to accept manure (percent)

300-1,000 AU

-5

0

5

10

15

20

25

0 20 40 60 80 100

Willingness to accept manure (percent)

>1,000 AU

-10

-5

0

5

10

15

20

25

30

0 20 40 60 80 100

Willingness to accept manure (percent)

E. Corn Belt

W. Corn Belt

Mid-Atlantic

South

West 

E. Corn Belt

W. Corn Belt

Mid-Atlantic

South

West 

E. Corn Belt

W. Corn Belt

Mid-Atlantic

South

West 
24 • Manure Management for Water Quality USDA/Economic Research Service

>1,000 AU Net cost ($) per AU

Net cost ($) per AU <300 AU

Figure 3-4

Net cost of spreading manure from hog farms following a phosphorus standard with all farms

using phytase, by region 

 300-1,000 AU

Willingness to accept manure (percent)

Net cost ($) per AU

-2

0

2

4

6

8

10

12

14

16

18

0 20 40 60 80 100

-5

0

5

10

15

20

0 20 40 60 80 100

-5

0

5

10

15

20

25

0 20 40 60 80 100

Willingness to accept manure (percent)

Willingness to accept manure (percent)

E. Corn Belt

W. Corn Belt

Mid-Atlantic

South

West 

E. Corn Belt

W. Corn Belt

Mid-Atlantic

South

West 

E. Corn Belt

W. Corn Belt

Mid-Atlantic

South

West 
USDA/Economic Research Service Manure Management for Water Quality • 25

would decline from about $22.40 to $17.90 per AU

(20 percent). Operations with adequate land for meeting a P-based standard would benefit the least. In

some cases, manure application costs would actually

increase because reducing manure’s phosphorus content reduces its nutrient value. The benefits from phytase would also decrease as off-farm willingness to

accept manure increases.

Cost Considerations in Context

Now that we’ve examined manure management costs

for farms of different sizes and regions, how do estimated compliance costs compare to hog production

costs, or transport/application costs compare to plan

development/testing costs? Data from the 1998 hog

ARMS survey indicate that hog production costs

(operating costs plus allocated overhead) ranged from

$360 to nearly $1,000 per animal unit, depending on

the region, size of operation, and type of operation

(farrow-to-finish, farrow-to-feeder, etc.). At a high

WTAM (80 percent) the production costs for meeting

either an N- or P-based standard would increase 1 percent or less across regions, sizes, and type of standard.

At lower WTAM (10 -20 percent), production costs for

large hog operations are noticeably higher than for

small and medium operations in some regions.

Under an N-based standard with a WTAM of 20 percent, the impact on production costs decreases with

operation size in the Corn Belt regions, where land is

generally more plentiful on and off the farm (fig. 3-5).

For large farms, the impact on production costs is negligible. In the other three regions, percentage increases

in production costs decline with size from small to

medium farms as fixed costs are spread over more animals, but increase greatly for large farms due to higher

transportation costs as manure is moved off the farm.

The greatest impact on production costs is in the

South, with a 2.1-percent increase for large farms.

Meeting a P-based plan pushes costs up in all settings.

Increases in production costs are still generally 1 percent or less for high levels of WTAM (80 percent). At

a WTAM of 20 percent, the impacts on costs are again

smallest in the Corn Belt regions (fig. 3-5). As with

the N-based plan, small farms would see the greatest

impact on production costs. The impact on production

costs for large farms in the Corn Belt regions are negligible. In the other three regions, costs increase significantly between medium and large farms. Production

costs increase the most in the West (3.5 percent), and

more than 2 percent in the Mid-Atlantic and South.

Costs are higher still if WTAM is less than 20 percent.

Spreading manure to meet a nutrient standard entails

two broad categories of costs: hauling/application

costs and plan costs. The latter consist of developing a

nutrient management plan, testing manure nutrients,

and testing the soil. Hauling and application costs

dominate the costs of spreading on adequate land to

meet a nutrient standard, for all size classes, regions,

and assumptions about willingness to accept manure.

Plan costs take on greater importance for small farms.

With a very high willingness-to-accept-manure of 80

percent, 26 percent of the costs of meeting an N-based

plan for small farms in the Eastern Corn Belt were

plan costs (the highest observed). Plan costs are less

than 10 percent of the costs of meeting a nutrient standard for medium and large operations in all regions

and all levels of WTAM.

Net Costs of Meeting a

Nutrient Standard for Dairy

Dairy proves an interesting comparison to the hog sector. The dairy sector has not seen the same degree of

concentration as in the hog industry. In 1982, there

were 161,563 farms containing 11.4 million confined

dairy cows (USDA, ERS, 2002b). By 1987, the number of confined dairy farms had fallen by nearly half to

86,354. However, unlike the increase in hog numbers,

the number of confined dairy cows dropped to 9.9 million (13.1 percent) (USDA, ERS, 2002b). Excess

nutrients do not appear to be as much of a problem for

dairy as for hogs, on average. About 22 percent of

dairy manure nitrogen (34 percent of dairy manure

phosphorus) that could be applied to cropland was in

excess of crop needs, versus 51 percent N and 64 percent P for hogs.

The dairy ARMS data were divided into two regions,

North and South (fig. 3-1). We examined three size

classes based on EPA’s definition of animal unit (one

AU is 0.7 mature dairy cow): small (<300), medium

(300-1,000 AU), and large (>1,000). Small dairies

dominate the North, while dairies in the South are distributed fairly evenly between the three size classes

(table 3-4).

How Many Farms Are Potentially Meeting 

a Nutrient Standard?

Nationally, 23 percent of dairies with more than 1,000

AUs were applying manure on an adequate amount of

land to meet an N-based nutrient standard (table 3-4).

The percentage of medium-sized farms meeting an Nbased standard was slightly higher at 27.5 percent,

while over 70 percent of small farms were meeting the
26 • Manure Management for Water Quality USDA/Economic Research Service

standard. A higher percentage of dairies in the North

was meeting an N-based standard for all size classes.

Fewer farms were spreading manure at rates consistent

with a P-based standard. Nationally, less than 1 percent of large dairy farms were applying manure to

enough land to meet a P-based standard (table 3-4).

Medium farms (6 percent) and small farms (27 percent) did a little better, but a large share of farms

would have to increase the amount of land used for

spreading manure to meet a P-based standard. None of

the large operations in the North or medium operations

in the South were meeting a P-based standard.

As with hogs, dairy farmers were not generally using

all their suitable land to spread manure. Using this

additional land would greatly help dairy farms, particularly small ones, to meet nutrient standards (table 3-

4). Many large farms, however, would still need to

find additional land off the farm to meet either an Nbased or P-based plan. Small and medium-size northern dairies are much better able to meet nutrient appliFigure 3-5

Increase in production costs for hog farms under a nutrient standard with a 

willingness-to-accept-manure of 20 percent, by size

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

<300 300-1000 >1000

Operation size (AU)

Percent change in production costs

Operation size (AU)

P-based standard 

-1.0

0

1.0

2.0

3.0

4.0

<300 300-1000 >1000

N-based standard 

E. Corn Belt

W. Corn Belt

Mid-Atlantic

South

West 

E. Corn Belt

W. Corn Belt

Mid-Atlantic

South

West 

Percent change in production costs
USDA/Economic Research Service Manure Management for Water Quality • 27

cation standards on their own land than in the South,

where most farms could not meet either standard even

if all available cropland were used. 

Differences in dairy farm characteristics explain some

of our findings. Dairy densities, in terms of both AUs

per acre used for spreading and AUs per acre of cropland operated by the dairy farm, are significantly higher in the South (at the 5-percent level of statistical significance) (table 3-5). This probably reflects the dominance of small operations (which tend to have more

land per animal) in the North. Both nitrogen and phosphorus uptake rates were significantly higher in the

South, reflecting crop mix and yields (at the 5-percent

level) (table 3-5). 

Manure storage systems again affect both the nutrients

available for crops/pasture and the amount of land

required to meet a nutrient standard. About two-thirds

of the dairies in the South use liquid systems (lagoons)

for storing manure, while about two-thirds in the

North use solid manure storage systems (table 3-6).

Manure from a solid system has a higher nutrient content per unit or volume.

How Much More Land Would Be Needed?

Nationally, large farms would have to increase the

amount of land used to spread manure the most (about

314 acres for N-based standards or almost 100 percent) (table 3-7). In the South, small (91 acres or 173

percent), medium (214 acres or 166 percent), and large

farms (351 acres or 113 percent) would all have to

spread manure on additional land to meet an N-standard. Farms in the North are using more land for

spreading, on average, and do not need as many additional acres (no increase for small farms, 3 percent for

medium, and 70 percent for large). Having to meet a

phosphorus-based plan would require farms, especially

large ones, in each region to increase the amount of

land used for spreading manure.

Using all suitable onfarm land would meet the manure

disposal needs of many farms, primarily in the North.

Only the large farms in this region would need to find

land off the farm to meet an N-based standard. On

average, farms of each size class in the South would

need to move manure off the farm to meet an N-based

standard. Land needs increase 87 percent for small

farms, 200 percent for medium farms, and 107 percent

for large farms (table 3-7).

If farms are required to meet a P-based standard, the

amount of land needed off the farm would increase

substantially. Large farms in the South would have to

locate an additional 1,681 acres off the farm (526-

percent increase), on average, and large farms in the

North an additional 1,588 acres (405 percent). 

What Are the Net Costs of Spreading 

on Adequate Land?

Net costs of meeting an N-based manure application

standard would be highest for medium-sized dairies

(fig. 3-6).6 Small operations would have the lowest

net costs for most levels of willingness-to-acceptTable 3-4—Percentage of dairy farms meeting N-based and P-based standards, by region and size, 2000

Farms Farms Farms with Farms with

Farms with meeting meeting adequate land adequate land

confined N-based P-based for N-based for P-based 

Region dairy cows standard standard standard standard

Number Percent

South

<300 AU 1,998 19.5 4.8 33.2 18.4

300–1,000 AU 1,921 5.7 0 8.5 1.1

>1,000 AU 1,268 21.3 1.0 26.6 2.6

North

<300 AU 55,622 72.1 27.3 91.2 66.4

300–1,000 AU 1,893 46.4 10.9 66.2 31.6

>1,000 AU 603 26.5 0 26.5 0

Nation

<300 AU 57,620 70.8 26.7 89.8 65.3

300–1,000 AU 3,814 27.5 5.8 39.4 17.5

>1,000 AU 1,871 23.0 0.7 26.6 1.8

South includes AZ, CA, FL, GA, NM, TX. North includes ID, IL, IN, IA, KY, MI, MN, MO, NY, OH, PA, TN, VA, VT, WA, WI.

Source: 2000 dairy ARMS.

6 Net costs per animal unit for dairies are higher than net costs per animal

unit for hogs. The main reason is that more manure is produced by one

dairy AU than one hog AU. This is a consequence of EPA not using a

weight-based criterion for defining animal units.
28 • Manure Management for Water Quality USDA/Economic Research Service

manure. Northern dairies would have lower net costs

in most cases, but only for small dairies is the difference notable (e.g., $39 vs. $19 at 10-percent willingness-to-accept). Many more small southern dairies

would have to haul manure off the farm to meet the Nbased standard (67 percent in South vs. 9 percent in

North). The difference in net costs for all dairy farms

decreases sharply as willingness-to-accept increases

and off-farm hauling costs decrease. At no point does

the average net cost of manure become negative as it

did for hogs.

Meeting a P-based standard would increase the net

costs of spreading manure for all size classes and

regions because of the increase in the amount of land

needed for spreading (fig. 3-7). Large and medium

farms in both the North and South have similar net

unit costs that are higher than those for small farms.

As with N, increased willingness to accept manure

would significantly reduce the net cost of spreading

manure.

Table 3-5—Cow density and average nutrient application standard, by region, 200

Average Average

Animal units nitrogen phosphorus

per receiving Animal units application application

(manure) per acre standard standard

Region acre owned (lbs/acre) (lbs/acre)

South 7.4 4.6 223.1 67.8

North 1.9 0.8 185.5 54.5

South includes AZ, CA, FL, GA, NM, TX. North includes ID, IL, IN, IA, KY, MI, MN, MO, NY, OH, PA, TN, VA, VT, WA, WI.

Source: 2000 dairy ARMS.

Table 3-6—Dairy manure storage technology, by region, 2000

Farms using Farms using Farms using

Region liquid systems solid systems mixed systems

Percent

South 66.4 12.5 21.1

North 29.2 64.5 6.3

South includes: AZ, CA, FL, GA, NM, TX. North includes: ID, IL, IN, IA, KY, MI, MN, MO, NY, OH, PA, TN, VA, VT, WA, WI.

Source: 2000 dairy ARMS.

Table 3-7—Estimated acreage being used for spreading and acreage needed to meet nutrient standard on

dairy farms, by region and size, 2000

Acres Own Acres needed

being available N-based P-based

Region used acres1 standard standard

South Acres

<300 AU 52.6 76.5 143.4 262.0

300-1,000 AU 129.4 114.8 343.8 795.3

>1,000 AU 310.4 319.6 661.3 2001.0

North

<300 AU 100.7 207.0 63.6 147.2

300-1,000 AU 328.3 584.0 338.8 756.8

>1,000 AU 330.9 391.4 564.2 1,979.0

Nation

<300 AU 99.5 203.8 65.6 150.1

300-1,000 AU 235.9 366.0 341.1 774.6

>1,000 AU 316.9 342.4 630.5 1,994.0

1Acres owned or leased suitable for receiving manure.

South includes AZ, CA, FL, GA, NM, TX. North includes ID, IL, IN, IA, KY, MI, MN, MO, NY, OH, PA, TN, VA, VT, WA, WI.

Source: 2000 dairy ARMS.
USDA/Economic Research Service Manure Management for Water Quality • 29

<300 AU Net cost ($) per AU

Figure 3-6

Average cost of applying manure from dairy farms following a nitrogen-based standard, by region

0

10

20

30

40

0 20 40 60 80 100

South

North

Willingness to accept manure (percent)

300 - 1,000 AU

0

20

40

60

0 20 40 60 80 100

South

North

Net cost ($) per AU

Willingness to accept manure (percent)

Net cost ($) per AU >1,000 AU

0

10

20

30

40

50

0 20 40 60 80 100

South

North

Willingness to accept manure (percent)
30 • Manure Management for Water Quality USDA/Economic Research Service

<300 AU Net cost ($) per AU

Figure 3-7

Net cost of spreading manure from dairy farms following a phosphorus-based standard, by region

Net cost ($) per AU

Net cost ($) per AU

Willingness to accept manure (percent)

0

10

20

30

40

50

60

0 20 40 60 80 100

South

North

300 - 1,000 AU

Willingness to accept manure (percent)

0

10

20

30

40

50

60

70

80

90

0 20 40 60 80 100

South

North

Willingness to accept manure (percent)

>1,000

0

20

40

60

80

100

0 20 40 60 80

South

North

100
USDA/Economic Research Service Manure Management for Water Quality • 31

Cost Considerations in Context

Applying manure to meet a nutrient standard would

have a smaller impact on production costs in dairy

than it would for hogs, on an animal unit basis. Based

on the 2000 dairy ARMS, average dairy production

costs (operating costs plus allocated overhead) ranged

from about $1,400 to $2,700 per animal unit per year,

depending on the size of the operation and the region.

With high willingness-to-accept-manure (80 percent),

impacts of a manure nutrient application standard on

production costs would be about 1 percent or less for

all regions and size classes. 

At lower levels of WTAM, percentage increases in

production costs would be greater, but still of small

consequence. At a WTAM of 20 percent, meeting an

N-based plan would increase large dairies’ costs by

about 1.5 percent in each region (fig. 3-8). Small operations would see the smallest increases, ranging from

0.5 to 1 percent. Production cost increases would be

slightly higher in the South across all size classes. 

Meeting a P-based standard with a WTAM of 20 percent would increase production costs more than meeting an N-based standard. Costs would increase about

3.25 percent for large operations in each region and

for medium farms in the South. Cost increases for

small farms would range from 0.5 percent in the North

to 1.5 percent in the South. 

Hauling costs are much more important than plan

development/testing costs when a nutrient standard is

imposed. Hauling costs constitute more than 90 percent

of the costs of meeting a nutrient standard for all size

classes, regions, and assumptions about willingness-toaccept-manure. This is a bit higher than for hogs, due

to dairy’s higher manure output per animal unit.

Summary

Proposed manure management restrictions on nitrogen

and phosphorus applications would require many large

swine and dairy operations to seek additional land for

manure spreading. Most small operations (87 percent

for hog farms and 90 percent for dairies) have enough

land to spread their own manure on and meet a nitrogen standard. In contrast, large farms have less land

per animal unit than small farms, so a smaller percentage has adequate land to meet a nitrogen standard (49

percent for hog farms and 27 percent for dairies).

Costs for meeting a standard are closely related to how

much manure must be moved off the farm to surrounding cropland.

Fewer farms have enough land if a phosphorus standard must be met, because manure application rates

are lower than for a nitrogen-based plan. A majority 

of small farms have enough land (69 percent for hog

farms and 65 percent for dairies). However, only 21

percent of large hog farms and 2 percent of large

dairies have enough land to meet a phosphorus 

standard.

Implementing a nutrient management plan for meeting

a standard (plan development and testing) and hauling/applying manure to fields both add to the cost of

producing animals. These costs will vary by species, by

the size of the operation, and by region. The average

costs of meeting a standard (per animal unit) across

farm sizes and regions range from -$4/AU to $27.3/AU

for hogs, and $0.2/AU to $88.3/AU for dairy. 

Large farms, those typically designated as CAFOs by

EPA, would generally see greater percentage increases

in production costs from meeting nutrient standards

than would smaller farms. At low levels of willingnessto-accept-manure (10 percent), production costs can

increase more than 5 percent for large hog producers in

some regions if a P-standard is enforced (costs ranging

from $1.6/AU to $27.3/AU). Costs are lower in the

Corn Belt regions where land to receive manure is more

readily available both on and off the farm. Similar

results are seen for large dairies—costs range across

regions from $74.1/AU (North) to $88.2/AU (South)

with a WTAM of 10 percent. For small operations, production costs generally increase less than 1 percent at

any level of WTAM (costs ranging across regions from

$1/AU to $17.6/AU for hog farms and $23.4/AU to

$52/AU for dairies with a WTAM of 10 percent).

Willingness of cropland operators to accept manure

greatly influences the net costs to livestock and poultry

producers of meeting any nutrient standard. For example, the average cost of meeting an N-standard for

large hog farms in the Mid-Atlantic would drop from

$11.20 per AU to $0.50 per AU (96-percent decrease)

if WTAM increases from 10 percent to 80 percent.

Manure transportation costs decline as crop producers

are more accepting of manure. Research on their

acceptance of manure as a nutrient source would identify constraints that might be overcome through technical assistance, financial assistance, and education.

Our results do not reflect changes in management

other than spreading manure on additional acres.

Incorporating other management changes would likely

lead to a different set of results. For example, farmers

might grow crops that take up more nutrients, change

manure handling systems, and reduce herd size. These
32 • Manure Management for Water Quality USDA/Economic Research Service

changes would occur over time, and at some expense.

The results reported here can be viewed as an initial

adjustment that might foster further changes, as farmers evaluate the net costs of manure spreading and

consider alternative or additional changes.

The farm-level analysis assumed that the only factor

constraining farmers from spreading on cropland off 

the farm is the willingness of cropland operators to

accept manure. In regions where animal concentrations

are particularly high, animal operations may be in

competition with each other for available cropland.

This would drive up the costs of spreading manure, as

animal operations are forced to transport manure

longer distances. Such regional issues are addressed in

the following chapter.

Figure 3-8

Increase in production costs for meeting a nutrient standard with a willingness-to-accept-manure of 

20 percent for dairy farms, by size

Percent change in production costs

N-based standard

0

0.5

1.0

1.5

2.0

2.5

<300 300-1,000 >1,000

Size of operation (AU)

South

North

Percent change in production costs

P-based standard

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

<300 300-1,000 >1,000

Size of operation (AU)

South

North
USDA/Economic Research Service Manure Management for Water Quality • 33

Appendix 3-A

Fleming Model for Estimating Net Costs of Following a Nutrient Standard

Costs of Transporting and Spreading Manure

The Fleming model has two components. The first component estimates the cost of transporting and spreading the

manure to receiving land. To estimate costs, the model requires three types of information: (a) a base charge (for

mixing, loading, and applying manure); (b) a mileage charge (for transporting the manure); and (c) the number of

miles manure is hauled. Charges reflect those used by custom applicators. We assume that time and equipment

would be the same for farmers applying manure themselves. For solid manure or slurry that is directly applied

without being stored in lagoons, the mileage charge represents driving time from the production facility to the

field. For lagoon liquids that are sprayed on cropland, the mileage charge represents the cost for the assembly and

use of any additional equipment needed to deliver wastes to the field.

The cost equation is:

(1)

DC = delivery and application cost

Q = quantity of manure hauled per head (gallons)

H = number of animals

rA = unit mile charge (dollars per gallon per mile)

rB = base charge (dollars per gallon)

Z = 2 for slurry systems (round trip for hauling vehicle), 1 for liquid waste (no return trip required) 

NC = nutrient standard for limiting nutrient (N or P, depending on which nutrient the standard is 

based on) (pounds per acre)

NM = nutrient content of manure (pounds per gallon) for target nutrient (N or P)

α = proportion of surrounding land that is cropland or pasture

β = proportion of cropland that is suitable for receiving manure

γ = proportion of crop acres where manure is accepted by farmers

The term is the required acreage (RA) for spreading the waste at a rate that meets the nutrient standard. 

Fleming et al. point out that acreage suitable for receiving manure is rarely available adjacent to the site where animals are produced, and that some amount of “searching” for suitable cropland will be required. We assume that

manure is only applied to cropland or pasture. Only a portion of surrounding land will be cropland or pasture (α).

The rest will be in other land uses, such as forest or rangeland. In addition, only a portion of cropland will be suitable for receiving manure (β) (hereafter referred to as “spreadable land”). We assume that vegetable crops and

some pastureland does not receive manure.

Only a portion of spreadable land will actually be available because not all landowners will be willing to take animal manure (γ) (see box, “Willingness To Accept Manure,” p. 21). The less willing landowners are to use manure,

the more costly it will be to find available spreadable land. 

DC H = + 



 



 



 



















 Q Q

r r

N

N B A

M

C

Z H

640

1

1 2

αβγ

/
34 • Manure Management for Water Quality USDA/Economic Research Service

The equation thus defines the “searchable area” (SA).

Fleming et al. developed an algorithm for estimating the average distance traveled to spread manure in the searchable area. The searchable area is assumed to be a square, contiguous block. Within this area one or more crop fields

are randomly selected for manure applications. Fields are assumed to be of the same size. Thus, a grid is formed

where the outside edge defines the searchable area, and the cells are the individual fields.

Given this grid, it is possible to calculate average distance by measuring the distance from each point to each other

point, sum these distances up, and divide by the number of points in the grid. The shortest possible distance traveled will be 0. The greatest distance will be traveled when the entrance to a receiving field is on the perimeter of

SA opposite the source. Maximum one-way mileage is two times the square root of SA divided by 640 (acres in a

square mile). 

As SA is divided into smaller and smaller fields, the distribution of mileage traveled approaches a normal curve.

From statistics, the median point of a distribution will approach the mean as that distribution converges to the

shape of a normal curve. Hence, the median distance, the sum of the minimum and maximum distance traveled

divided by two, is a good approximation of average distance traveled and is easier to calculate (Fleming et al.,

1998). Therefore, average distance traveled to spread manure over spreadable land that accepts manure is 

.

Generally, the first mile is included in the base charge, so this distance is subtracted from average distance when

the mileage cost is calculated.

Benefits from Replacing Commercial Fertilizer

Manure nutrients have value if they replace commercial fertilizer on cropland. The equation for calculating this

benefit is:

(2)

PM,i = price of commercial fertilizer for nitrogen (n) and phosphorus (p)

NM,i = nutrient content of manure for n and p

a = commercial fertilizer application cost (expressed in dollars per acre)

RA = required acreage for spreading

ART = application rate for manure (gallons per acre) based on the target nutrient T

In this equation, nutrients in manure are valued at the price of commercial fertilizer only to the extent that the plant

uses the nutrient. If a nutrient is applied beyond plant needs, the over-application has zero value. We assume that

spreadable land not receiving manure is receiving commercial fertilizer at agronomic rates. The elimination of the

cost of applying commercial fertilizer is only considered a benefit if all the crops’ nutrient needs are met by

manure and commercial fertilizer is no longer applied. If one nutrient in manure is not sufficient to cover crop

needs, then commercial fertilizer must be applied to make up the deficit, and the application cost must be paid.

The difference between costs of spreading manure on acceptable acres and benefits from reduced fertilizer costs

are the net costs of spreading manure at agronomic rates. We used data from USDA’s Agricultural Resource

Management Survey (ARMS) to estimate the net cost of land-applying manure for each farm in the survey. ARMS

provided data on the county in which a farm is located, the number of animals (H), the type of manure storage system, whether manure was surface applied or incorporated, the total amount of cropland on the operation, the crops

N QH

N

M

αβγ C

TB QH P RA

N N

N N

M,i

i=n,p,k

M,i T Ci ,

M,i T Ci

= +

≤= =

= <=

∑ a

a

AR for T n or p and i n p

if AR for i n p

,

0 ,

(

N MQH

640 NC

)

1/ 2

αβγ
USDA/Economic Research Service Manure Management for Water Quality • 35

grown, and crop yields. Quantity of manure or lagoon liquid hauled per animal (Q), hauling and application

charges (rA and rB), nutrient content of manure or lagoon liquid (Nm), fertilizer prices (Pm), and fertilizer application cost (α) were obtained from published sources (Kellogg et al., 2000, Iowa State Extension, 1995; Jones and

Sutton; Sutton et al.). 

Spreadable area for each operation was divided into two components: land available on the farm and land available

on surrounding land in the county. We assumed that animal operators would spread manure on their own cropland

first, the amount of which was available from ARMS. We assume the operator’s willingness to accept (γ) for his or

her own land to be 100 percent. We also assume that the farm’s land is in a contiguous block. This assumption

probably results in an underestimate of baseline hauling costs. Once their own land is fully used, farmers are

assumed to spread manure on surrounding land in the county. We assume that the percentage of surrounding land

that was suitable for receiving manure is the same as for the entire county in which the farm is located. We use

data from the 1997 National Resources Inventory to estimate the percentage of searchable area off the farm that is

cropland or pasture (α) and the percentage of cropland or pasture actually suitable for receiving manure (β).

Manure and cost coefficients used in the model are summarized in table A-1.

Table A-1—Coefficients and prices used in cost model

Hogs Dairy

Volume of manure:

Lagoon 5.98 gal./lb liveweight/yr.

Slurry pit Feeder pigs - 73 gal./head/yr.

Market hogs - 438 gal./head/yr.

Breeder sows - 584 gal./head/yr.

Solid 100.52 lb/1000lb. liveweight/day

Nutrient content:

Lagoon nitrogen 0.004 lbs./gal. Slurry and lagoon concentrations for each

farm are determined by estimating volume

Lagoon phosphorus 0.003 lbs./gal. of manure, nutrient content of solid waste,

and volume of wastewater. Wastewater is

Slurry pit nitrogen Feeder pigs - 0.035 lbs./gal. estimated with a function that includes

Market hogs - 0.070 lbs./gal. precipitation, wash water, slab runoff,

Breeder sows - 0.025 lbs./gal. and reported manure storage system.

Slurry pit Feeder pigs - 0.020 lbs./gal.

phosphorus Market hogs - 0.035 lbs./gal.

Breeder sows - 0.025 lbs./gal.

Solid storage Milk cow - 0.580 lb/day/AU

nitrogen Dry cow - 0.360 lb/day/AU

Heifer/calves - 0.307 lb/day/AU

Solid storage Milk cow - 0.131 lb/day/AU

phosphorus Dry cow - 0.048 lb/day/AU

Heifer/calves - 0.041 lb/day/AU

Costs:

Unit mile charge Hauled - $0.00123/gallon-mile Hauled - $0.00123/gallon-mile

Pumped - $0.001025/gal. Pumped - $0.001025/gal.

Solid - $0.13/ton-mile

Base manure Slurry hauled - $0.0079/gal. Slurry hauled - $0.0079/gal.

handling charge Incorporated - $0.0088/gal. incorporated - $0.0088/gal.

Lagoon liquid pumped - $0.0057/gal. Lagoon liquid pumped - $0.0057/gal.

Incorporated - $0.0071/gal. incorporated - $0.0071/gal.

Solid - $6.00/ton

Fertilizer $5.75/acre $5.75/acre

application cost

Fertilizer prices Nitrogen - $0.185/lb. Nitrogen - $0.185/lb.

Phosphate - $0.13/lb. Phosphate - $0.13/lb.

AU = animal unit
36 • Manure Management for Water Quality USDA/Economic Research Service

The costs associated with meeting USDA goals and

EPA regulations for improved manure management

depend not only on individual farm conditions—

addressed in our farm-level analysis (chapter 3)—but

on the interaction among animal operations, within the

broader context of off-farm resource conditions. The

farm-level analysis implicitly assumes that there are no

other sources of manure in the area surrounding the

surveyed farms that might also need land for spreading. This chapter addresses manure management from

a regional perspective, focusing on the challenges all

animal feeding operations (AFOs) may face in finding

suitable land for manure application when there are

many producers in the same region needing to apply

manure off the farm.

The geographic distribution of animal manure and land

available for manure application varies significantly

across the Nation. Kellogg et al. (2000) and Gollehon

et al. (2001) identified areas where confined animals

produce more manure nutrients than can be assimilated

on cropland and pastureland in the county of production, when applied at agronomic rates. Notable among

these areas were several county clusters within the

Chesapeake Bay watershed (fig. 4-1).

The Chesapeake Bay is among the largest and most

biologically rich estuaries in the world. The declining

health of this ecosystem in recent decades has prompted Federal and State initiatives to reduce nutrient loading from tributaries that drain the watershed. Nutrient

loads to waters in the region have resulted in eutrophication and related ecological shifts that harm wildlife

and aquatic resources (Preston and Brakebill, 1999).

The Chesapeake Bay watershed (CBW) spans over

160 counties in 6 States, and includes 66,600 farms

with an estimated 8.5 million acres of land available to

receive manure. The CBW included approximately

15,900 farms with confined animals in 1997, with an

average daily inventory of about 1.6 billion pounds of

feedlot beef, dairy, swine, and poultry (USDA, 1999).

These animals produce roughly 93,000 tons of recoverable manure nitrogen and 44,000 tons of recoverable

manure phosphorus annually. Even if confined animal

operations fully utilized the crop and pasture land

under their control for manure application (and data

from the farm-level analysis suggest they do not) only

about 40 percent of the manure nitrogen and 30 percent of the manure phosphorus produced could be

assimilated onfarm. Clearly, applying manure at agronomic rates would require moving significant quantities of manure off animal production farms.

In areas of the Chesapeake Bay watershed where confined animal production is concentrated, implementation of EPA and USDA manure policies poses tremendous challenges. If the manure produced exceeds

potential local use, producers may choose to: (1) transport the manure ever-greater distances until enough

land can be found for application, (2) alter feed management to reduce nutrient output, or (3) apply technologies that transform the manure to a value-added

product that is more readily transportable and usable.

Beyond this, the only recourse is to reduce the number

of animals in the watershed. Florida recently reduced

its numbers via a Dairy Buyout Program to slow nutrient runoff from dairy farms in the Lake Okeechobee

watershed (Schmitz et al., 1995).

In this chapter, we present an analysis based on a

regional model of manure management that accounts

for the competition for spreadable land among animal

producers in the Chesapeake Bay watershed (CBW).

We assume that all AFOs are trying to meet the nutrient management goals laid out in the USDA-EPA

Unified Strategy. The model and its results reflect a

regional planning perspective emphasizing the cost

determinants and feasibility of alternative strategies at

the watershed scale.

Modeling Manure Management in

the Chesapeake Bay Watershed

We first evaluate the feasibility of a land application

strategy, allowing for out-of-county transport and considering alternative levels of willingness of landowners to use manure. Our model is designed to minimize

the total regional costs of manure management, transport, and application for use on agricultural lands in

the CBW, given the existing structure and scale of the

animal industry and existing manure storage technology. The regional specification captures the element of

competition by modeling access to spreadable land,

ensuring adequate area for land application of all

Chapter 4—Regional Analysis:

Costs and Distribution of Manure Management
USDA/Economic Research Service Manure Management for Water Quality • 37

manure produced in the region, and computing the

associated hauling costs. Explicit modeling of competition for land on which to spread manure differentiates the model from existing farm-level models.

The model was developed to: (1) provide a mechanism

to track manure and related nutrient flows within the

basin, from AFOs to site application and use; (2) compute the regional costs of applying manure to land,

given the manure movement dictated by the nutrient

flow; and (3) provide a framework for evaluating proposed land application regulations and alternative

nutrient management policies (see box, “Nutrient

Standards”).

The county is the primary modeling unit. The countylevel specification provides consistency with Census

of Agriculture data and other data, and permits differentiation of institutions and regulatory conditions

across county and State political boundaries within the

watershed. County and local data are used to capture

heterogeneity in technologies and land quality conditions across the region, though our model may not represent the conditions on any particular farm. Details

of the model are in Appendix 4-A, “Modeling Manure

Management in the Chesapeake Bay Watershed.” 

Applying Manure to Land in the

Chesapeake Bay Watershed 

Feasibility of Land Application

Land application of manure under a nitrogen (N)-standard would require about 2.5 million acres of crop and

pasture land in the CBW and surrounding counties, or

almost 40 percent of the 6.6-million-acre agricultural

(crop and pasture) land base. A phosphorus (P)-standard would require about 4.8 million acres of crop and

pasture land, or almost three-fourths of the agricultural

land base.

Confined animal farms in the CBW having to meet

either an N or a P standard would run out of land on

which to spread manure within the modeled transportation radius if WTAM falls below certain thresholds (bar chart portion of figure 4-2).7 The willing75% to100%

Greater than 100%

County manure phosphorus as a percent 

of county assimilative capacity

Designates Chesapeake Bay Watershed 

Source: Gollehon, et al., 2001

Figure 4-1

The Chesapeake Bay Watershed with manure phosphorus relative to county assimilative

capacity for modeled counties, with counties outside the watershed used for manure application

25% to 50%

50% to 75%

Less than 25%

7 The structure of the model necessitated identifying the allowable transport options by specifying the counties available for receiving manure from

each county that could possibly export manure. Counties within a 60-km

radius of the county boundary were identified in most areas. In areas with

high manure production, a 150-km radius was used. The actual transport

distance is generally greater since the distance within both the source and

destination county is considered and adjustments are made to convert

radius distance to road distance. 
38 • Manure Management for Water Quality USDA/Economic Research Service

ness-to-accept-manure (WTAM) threshold at which

available land reaches its capacity for assimilating

manure nutrients is estimated at 60 percent for a Pstandard and 20 percent for an N-standard. Current

use of manure on field crops is in the 10- to 20-percent

range nationally. Several options exist for disposal of

surplus manure that cannot be absorbed on available

land:

•Increasing landowner willingness to accept manure

through technical and financial assistance can

expand the spreadable area while reducing hauling

distances.

•Greater reliance on off-farm processing to create

manure-based products both reduces the quantity of

manure requiring agricultural land application and

USDA's Natural Resources Conservation Service (NRCS) has devised policy and developed a conservation practice standard for nutrient management that address the requirements for land application of manure nutrients (USDA, NRCS,

1999a). Land application is the preferred method of utilizing manure because these materials can supply large amounts of

nutrients for crop growth, thereby reducing the need to apply commercial fertilizers. Nutrient management criteria are

established by the NRCS conservation practice standard to provide adequate nutrients for crop growth and to minimize the

potential for adverse environmental effects.

NRCS' nutrient management policy and conservation practice standard criteria are implemented by animal feeding operations through the development and implementation of site-specific nutrient management plans, as defined in the NRCS

General Manual, Title 190, Part 402 (1999c); and the NRCS Conservation Practice Standard, Nutrient Management

(Code 590) (1999a). The primary criteria within these policy documents are that land application rates of nutrients be

based upon Land Grant University nutrient application recommendations. NRCS policy permits manure application rates

that are determined using either a nitrogen or phosphorus standard. Manure application rates that are based on a nitrogen

standard would supply all the nitrogen recommended for the crop. Manure applied at a nitrogen standard will usually

result in overapplication of phosphorus. NRCS policy permits use of the nitrogen standard on sites for which there is a

recommendation to apply phosphorus, or when the use of a risk assessment tool has determined that the site has acceptable risk for offsite transport of phosphorus. (The Phosphorus Index is currently the most widely used risk assessment

tool for this purpose.) 

Manure application rates that are based on a phosphorus standard supply only the amount of phosphorus that is recommended, based on current soil tests or a function of the phosphorus content of plant biomass removed at harvest. Manure

applied based on the phosphorus standard will not usually supply the recommended amount of nitrogen, necessitating the

application of additional nitrogen from other sources. When using the phosphorus standard, NRCS policy permits an

application of phosphorus equal to the amount of phosphorus contained in the biomass of multiple years of crops grown

on the site, provided that the nitrogen recommendation rate for the first year is not exceeded. This allows farms that have

enough land to continue to apply manure on the basis of a nitrogen standard, but rotate manure applications to other sites

so that a single site receives manure infrequently. Consequently, operations with sufficient land can meet nutrient management criteria without actually applying manure at rates based on a phosphorus standard. This generally is advantageous to

the producer because it can be difficult to achieve a phosphorus rate of application with existing manure application

equipment. Operations without sufficient land, however, will eventually need to apply manure based on a phosphorus

standard on all available onfarm acres as the phosphorus levels in the soil build up. Alternatively, producers may export

the manure off-farm for land application or alternative use. For the model results in this report, nutrient management criteria were represented by two scenarios: application at N-standard rates for all farms and application at P-standard rates for

all farms. Neither is intended to reflect expected implementation strategies, because in practice there will be some farms

that can meet criteria with N-standard rates and others that will need to adopt the more restrictive P-standard rates. In a

related study on the costs of implementing comprehensive nutrient management plans, NRCS estimated that about 30 percent of livestock operations would need to use P-standard rates to meet nutrient management criteria; the remaining 70

percent have sufficient land available to apply manure based on a nitrogen standard. We did not have the data on soil

characteristics and historical land use to determine in our analyses the share of land that would need to meet a P-standard.

The two scenarios used in the present study are intended to establish upper and lower bounds on the costs associated with

implementing nutrient management plans. 

Nutrient Standards
USDA/Economic Research Service Manure Management for Water Quality • 39

expands the spreadable area to nonagricultural

lands, such as golf courses and lawns.

•Farms in the region can increase manure-nutrient

uptake through both cropping pattern adjustments

and yield enhancements from improved management and technologies, such as irrigation.

•Animal producers can reduce the nutrient content of

manure through improved rations and the use of

additives, enabling increased manure applications

per acre for a given nutrient standard (see box

“Reducing Manure Nutrients Through Feed

Management,” p. 19).

•Changes in animal industry structure, such as

reductions in the number of animals and plant relocations, can directly reduce the quantity of manure

that exceeds land application levels.

The total cost of manure disposal in the CBW represents the cost of applying manure to land (addressed in

our model) plus costs of managing manure that cannot

be land applied under assumed hauling distance limits.

Our focus on land application here expands to include

options like off-farm processing and feed ration adjustments. Other options—involving incentives to

increase WTAM and adjust cropping patterns—will

require additional programs of research.

Finally, reductions in manure via a smaller animal sector will require careful evaluation from both a producer and rural economy perspective. The national sector

analysis in this report (see chapter 5) does estimate the

potential loss in returns to agricultural producers from

reductions in animal numbers, although these estimates do not consider impacts on the associated rural

economy. Reducing animal stocks such that all

manure could be land applied lowers projected net

returns in the CBW by $47 million (15 percent of total

returns to the animal industry in the CBW) under an

N-standard and $164 million (51 percent) under a Pstandard, assuming a 10-percent WTAM. This estimate is based on net return estimates from the national

sector analysis (chapter 5). Actual costs to address the

manure that cannot be land applied will depend on the

combination of options utilized in the region.

Regional Costs

Regional costs considered in this analysis—consistent

with the farm-level analysis in chapter 3—include

selected nutrient management costs (plan development, soil testing, and manure testing), manure transport (onfarm and off-farm), and application (field

spreading and incorporation). We also estimated the

savings from reduced chemical fertilizer purchases and

application to compute a net regional cost of manure

land application. 

The total regional cost for management, transport, and

application under an N-standard was estimated at $134

million at a WTAM of 20 percent (current national levels for select crops are believed to be between 10 and

20 percent) (fig. 4-2). At the 20-percent WTAM level,

2 percent of manure would exceed approved land

application levels. Costs decline as WTAM increases,

falling to $123 million under an N-standard with all

crop and pastureland available for spreading (WTAM =

100 percent). If WTAM is less than 20 percent, the

share of manure exceeding land application limits

increases, and the costs for management, transport and

application would decline. These estimates do not

include disposal costs for manure that is in excess of

what can be applied to crop and pasture land in the

modeled area.

The total costs of management, transport, and application under a P-standard follow a pattern similar to the

N-standard. However, costs under the P-standard

would be greater and would peak at a substantially

higher WTAM due to the lower per-acre application

rates and increased hauling distances (fig. 4-2). At a

WTAM of 20 percent, about 40 percent of manure production would be in excess of available land’s ability to

assimilate phosphorus. It is not until WTAM reaches

60 percent that almost all manure produced in the

watershed can be land applied. Estimated management, transport, and application costs peak at $155 million with a WTAM of 70 percent (no excess manure).

At a WTAM of 100 percent, land application costs

would total $143 million. At WTAM levels below 60

percent the quantity of manure in excess of land application increases, and the cost of manure management,

transport, and application associated with crop and pasture land use declines. Clearly, at lower WTAM levels,

much of the full regional cost of addressing manure

nutrients will depend on the disposition of the manure

that is not land applied within the CBW.

8 Savings in chemical fertilizer were based on nutrient costs of nitrogen and

phosphorus in the region’s most common commercial form and are sensitive

to assumptions on fertilizer prices, forms, and application efficiencies. Only

the manure nutrients that could be utilized by crops were assigned value. In

meeting a N-standard, adequate phosphorus would also be applied and the

value of a reduced field operation was credited as “savings.” However,

nitrogen requirements are not met under a P-standard. It was assumed that

additional commercial nitrogen would be applied, so the chemical fertilizer

savings when meeting a P-standard included no savings in field operations.

There is currently little data on either the current level of substitution of

manure for chemical fertilizer or the degree to which potential benefits of

improved manure management may already be captured.
40 • Manure Management for Water Quality USDA/Economic Research Service

0

20

40

60

80

100

120

140

160

180

10 20 30 40 50 60 70 80 90 100

Willingness to accept manure (Percent)

0

500

1,000

1,500

2,000

2,500

N-Standard

 Cost ($ Million) Manure not land applied (1,000 tons)

Dashed line represents land application costs

where all manure cannot be land applied

Total cost

Net cost

Manure quantities exceeding land application levels

Figure 4-2

Effect of willingness-to-accept manure on manure exceeding land application levels, net and total land

application costs in the Chesapeake Bay Watershed

0

20

40

60

80

100

120

140

160

180

10 20 30 40 50 60 70 80 90 100

0

500

1,000

1,500

2,000

2,500

Willingness to accept manure (Percent)

P-Standard

Cost ($ Million) Manure not land applied (1,000 tons)

Manure quantities exceeding land application levels

Dashed line represents land application costs

where all manure cannot be land applied Total cost

Net cost
USDA/Economic Research Service Manure Management for Water Quality • 41

Net land application costs are the estimated costs of

management, transport, and application for land-applying manure, less the savings from reduced chemical

fertilizer purchases and reduced fertilizer application

costs.8 Chemical fertilizer savings were substantial,

offsetting 45-55 percent of the total costs of land

application for nitrogen and 40-47 percent of the total

costs for phosphorus (fig. 4-2).

Regional Cost Components

An analysis of regional manure management must

consider costs that occur off-farm, including out-ofcounty, which may represent a major share of the costs

associated with meeting nutrient standards on AFOs.

This information may help inform programs that compensate producers for specific cost components, such

as transport.

Transporting manure for land application—both

onfarm and off-farm—represents the largest component of total costs for manure management, transport,

and application in the Chesapeake Bay watershed.

Transport costs account for 64 to 67 percent of total

costs ($78-$89 million) under an N-standard, and 63 to

67 percent ($90-$102 million) under a P-standard

(table 4-1).9 Application costs were fairly constant

across WTAM levels, at near $34 million (25-27 percent) for an N-standard. For a P-standard, application

costs were near $40 million, or about 28 percent of

total costs. Manure management costs (quasi-fixed

costs of plan development, nutrient testing, etc.) were

between 7 and 9 percent of total costs for both an Nand P-standard.

Regional costs of land application can also be reported

by the location of receiving lands—onfarm, off-farm

within the farm’s county, or off-farm and out-of-county. Onfarm transport and application costs of manure

represent the largest component of total costs in the

watershed. Onfarm costs account for between 65 and

75 percent of costs, or about $85 million, under an Nstandard (fig. 4-3). Onfarm costs were fairly constant

across WTAM levels, since nearly all land on farms

with confined animals was used for manure application regardless of the WTAM level of crop producers.10 Confined animal farms were assumed to have a

WTAM for their own manure of 100 percent.

Off-farm manure transfers to suitable crop and pasture

land account for 25 percent of the transport and application costs at a WTAM level of 100 percent. The

costs devoted to off-farm transfers would increase

from $28 million to $43 million (25 to 35 percent) as

the WTAM declines, with a shift from mainly withincounty costs to primarily out-of-county costs (fig. 4-

3). Few counties in the CBW need to transport

manure out of county (see fig. 4-1).

A regional presentation masks many of the local cost

conditions; most of the region’s total out-of-county

costs may occur in relatively few counties. For example, in one major exporting county, off-farm transfers

accounted for 80 percent of total costs, with out-ofcounty hauls accounting for 76 percent of the total

county cost. Within-county transport costs would

decline from $19 million to $10 million while intercounty transport costs would increase from $9 million

to $32 million if WTAM dropped from 100 percent to

10 percent, clearly underscoring the importance of

willingness to accept manure on the transport patterns

and associated costs. 

The distribution of on- and off-farm transport costs for

the P-standard follows a similar pattern to the N-standard, except that modeled costs peak at a WTAM level

of 70 percent (fig. 4-4). Onfarm costs of transport and

application were about $80 million (60 percent of total

costs) over the WTAM range of 70 to 100 percent.

Intracounty costs would decline as WTAM declines.

In contrast, intercounty costs increase from $36 million to $54 million as WTAM falls from 100 to 60 percent (fig. 4-4). Out-of-county transport costs for a Pstandard are greater even at a 100-percent WTAM than

for an N-standard at a 20-percent WTAM. This difference is rooted in the lower allowable per-acre application rate for P, so that fewer tons of manure can be

applied on land in the county. This results in lower

costs for intracounty hauling but higher intercounty

costs. At the lower application rate, more acres are

required in total and suitable land will be farther from

the manure-producing farm. 

One of the major impacts of a reduced willingness to

accept manure is the need to move manure farther.

The average distance that manure would be transported on manure-producing farms in the CBW is estimated at 0.35 miles.11 The average distance a farm’s

excess manure would be transported off the farm, but

within-county, ranged between 3.8 miles and 7.3 miles

9 These costs do not include the capital improvement costs that may be

desirable or necessary to improve onfarm manure storage and handling systems to meet policy goals.

10 While onfarm use of manure nutrients is roughly constant across scenarios, onfarm costs decline with lower WTAM levels when all manure cannot

be land applied. This is attributable to the increased onfarm use of higher

nutrient and lower cost forms of manure under the regional cost-minimization framework.

11 The method used to compute onfarm transportation distance likely

understates the actual distance, because the algorithm assumes the farm’s

acres are in a conterminous, square block. Some farms manage separate

land parcels spread over large areas.
42 • Manure Management for Water Quality USDA/Economic Research Service Table 4-1—Total and net land application costs in the Chesapeake Bay watershed, by nutrient standard and willingness to accept manure Nutrient Willingness to accept manure standard Cost category 10 20 30 40 50 50 70 80 90 100 Nitrogen $ Million Transport costs -- 89.23 88.19 86.02 84.36 83.08 82.17 80.45 79.65 78.87 Application & Incorporation costs -- 34.24 35.01 34.32 33.98 33.59 33.6 33.88 33.61 33.19 Management costs -- 10.41 10.43 10.45 10.46 10.45 10.46 10.49 10.5 10.49 Total land application costs -- 133.88 133.63 130.79 128.8 127.12 126.23 124.82 123.76 122.55 Less: Chemical fertilizer savings -- -60.77 -62.55 -64.22 -64.78 -64.45 -65.58 -67.21 -67.55 -67.71 Net land application cost -- 73.11 71.08 66.57 64.02 62.67 60.65 57.61 56.21 54.84 Percent of total costs Transport costs -- 66.6 66.0 65.8 65.5 65.4 65.1 64.5 64.4 64.4 Application & Incorporation costs -- 25.6 26.2 26.2 26.4 26.4 26.6 27.1 27.2 27.1 Management costs -- 7.8 7.8 8.0 8.1 8.2 8.3 8.4 8.5 8.6 Total land application costs -- 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Less: Chemical fertilizer savings -- -45.4 -46.8 -49.1 -50.3 -50.7 -52.0 -53.8 -54.6 -55.3 Net land application cost -- 54.6 53.2 50.9 49.7 49.3 48.0 46.2 45.4 44.7 Phosphorus $ Million Transport costs -- -- -- -- -- 102.04 101.90 94.03 91.51 89.98 Application & Incorporation costs -- -- -- -- -- 39.52 42.01 41.1 41.39 41.25 Management costs -- -- -- -- -- 11.24 11.34 11.38 11.41 11.42 Total land application costs -- -- -- -- -- 152.8 155.25 146.51 144.31 142.65 Less: Chemical fertilizer savings -- -- -- -- -- -61.77 -65.62 -69.43 -68.38 -67.62 Net land application cost -- -- -- -- -- 91.03 89.63 77.08 75.93 75.03 Percent of total costs Transport costs -- -- -- -- -- 66.8 65.6 64.2 63.4 63.1 Application & Incorporation costs -- -- -- -- -- 25.9 27.1 28.1 28.7 28.9 Management costs -- -- -- -- -- 7.4 7.3 7.8 7.9 8.0 Total land application costs -- -- -- -- -- 100.0 100.0 100.0 100.0 100.0 Less: Chemical fertilizer savings -- -- -- -- -- -40.4 -42.3 -47.4 -47.4 -46.7 Net land application cost -- -- -- -- -- 59.6 57.7 52.6 52.6 53.3 -- indicates that more than 5 percent of manure could not be land applied. The resulting cost distribution is not a realistic reflection of likely costs.
USDA/Economic Research Service Manure Management for Water Quality • 43

Cost ($ Million) N-Standard

0

20

40

60

80

100

120

140

10 20 30 40 50 60 70 80 90 100

Willingness to accept manure (Percent)

Onfarm Off-farm, within county Off-farm, out-of-county

Figure 4-3

Effect of willingness to accept manure on costs of applying manure to land in the Chesapeake Bay

Watershed, by location of land receiving manure 

Cost ($ Million)

Willingness to accept manure (Percent)

Figure 4-4

Effect of willingness to accept manure on costs of applying manure to land in the Chesapeake Bay

Watershed, by location of land receiving manure 

P-Standard

0

20

40

60

80

100

120

140

160

10 20 30 40 50 60 70 80 90 100

Onfarm Off-farm, within county Off-farm, out-of-county
44 • Manure Management for Water Quality USDA/Economic Research Service

for both an N- and P-standard. Out-of-county transport distances are substantially greater, with significant

differences between N- and P- standards. Under an Nstandard with WTAM of 100 percent, the average

intercounty hauling distance was 23 miles. Average

intercounty transport distance would increase to near

75 miles at a WTAM of 20 percent. Average intercounty transport distances under a P-standard, at about

40 miles under a WTAM of 100 percent, is almost

double that of the N-standard. Average intercounty

transport distance would increase to near 120 miles at

a 60-percent WTAM.

Our regional model is able to track the relationship

between distance and the land that is potentially available for manure application. As farms utilize all of the

nearby land for manure application, competition for

receiving land intensifies and increases the average

distance manure must be moved. The farm-level

analysis (chapter 3) estimated that the average distance

a large hog farm in the Mid-Atlantic region (which

includes most of the Chesapeake Bay watershed)

would have to transport manure to reach enough suitable land was about 2.6 miles under an N-standard

with a WTAM of 20 percent. The maximum transport

distance for any one farm was 21 miles (without considering other farms in the same area also needing land

for manure application). Compare this with the average intercounty distance of 75 miles from the regional

CBW model. When the needs of all confined animal

farms are considered simultaneously, the transport distance can increase considerably.

This analysis presumes a working mechanism that

allows manure to move from AFOs to crop producers

who can use the manure. This could be a manure broker who collects manure from farms and sells it to

crop producers, or simple agreements between individual animal producers and their neighbors. Increasing

the manure transport distance beyond a producer’s

own farm and nearby lands highlights the importance

of having a manure of consistent nutrient composition

that can be delivered and applied in a timely fashion.

A market system that will allow the level of manure

transfers needed to land apply all the manure in the

CBW does not currently exist. Such a system may

emerge to link manure producers with manure recipients once the new regulations are implemented and

farms meet nutrient application standards.

Additional Cost of Meeting Phosphorus Standard

While the regional costs of applying manure to land

were greater under the more stringent P-standard, the

cost of shifting from an N- to a P-standard depends on

the WTAM level assumed. At a WTAM of 100 percent, the regional costs to meet a P-standard would be

about $20 million more than the N-standard. The

additional costs to meet a P-standard would increase as

the WTAM declines, with total costs about $26 million

greater than under an N-standard at a WTAM of 60

percent. At WTAM levels below 60 percent, the

increased costs cannot be determined because of the

growing quantity of manure that is in excess of land

application capacity. 

The higher costs of meeting a P-standard are mostly

from the greater costs for off-farm manure transport.

Off-farm transport costs under a P-standard would be

$25 million higher at 100-percent WTAM, growing to

$35 million at a 60-percent WTAM. Costs of

increased movement of manure off-farm are partially

offset by the reduced costs for manure utilized onfarm,

since less manure could be applied onfarm. Also

potentially reducing the costs of adopting a P-standard

are reductions in the costs of applying manure. When

soil phosphorus threshold values are acceptable,

NRCS policy permits producers to apply multiple

years of manure-P in a single-season application (see

box, “Nutrient Standards,” p. 38). Such flexibility in

implementation of nutrient management policy could

reduce the acres receiving manure in any given year.

Curtailing manure spreading operations to meet the Pstandard more flexibly could reduce costs relative to

our estimates by as much as $6 million, or 30 percent

of the total cost of shifting from an N- to a P-standard,

assuming all receiving acreage is eligible based on soil

phosphorus thresholds.

Regional Manure Disposition

Costs of meeting the nutrient standards largely reflect

the transport distances associated with the quantities of

manure applied onfarm, within-county, and out-ofcounty. Under an N-standard, just over half the

manure would be applied onfarm, 37 percent in the

farms’ county, and the remaining 12 percent to land

outside the farms’ county at a 100-percent WTAM

(fig. 4-5). As the WTAM declines, manure moved off

the farm would be transported farther—as reflected by

the increased share transported to farms outside the

county—reaching 24 percent at a WTAM level of 30

percent. At a WTAM level of 20 percent, about 2 percent of manure in the watershed would be in excess of

land application capacity, given the transportation limits in the model.

Meeting a P-standard would decrease the quantity of

manure applied onfarm (relative to an N-standard) to

less than 40 percent of total manure. The share of
USDA/Economic Research Service Manure Management for Water Quality • 45

manure applied in the farms’ county would also

decline to 24 percent. As expected, the share of

manure transported out of the farms’ county would

increase substantially, with 37 percent of the manure

transported to land outside the farms’ county under a

100-percent WTAM (fig. 4-6). The share of manure

transported across county lines would continue to

increase as the WTAM level declines, reaching 41 percent of manure produced at a 60-percent WTAM. 

The growing share of intercounty manure transport as

well as the increasing distance for average intercounty

movement is shown spatially in figure 4-7. At a

WTAM level of 100 percent, three areas of manure

export prevail—the Shenandoah Valley of Virginia and

West Virginia; the Delmarva Peninsula area of

Delaware, Maryland, and Virginia; and areas of southcentral Pennsylvania, especially Lancaster County. The

composition of manure export counties remains fairly

constant as WTAM levels decline, though the number

of counties that are net importers of manure increase,

as does their distance from the export counties. 

Manure produced in the region is not uniform, but

varies in quality depending on the animal type 

and manure system (see box, “Manure Handling

Systems,” p. 47). Manure characteristics influence

where manure is applied because the standards are

nutrient based and high-water manure adds weight and

cost. One would expect that manure with a high water

content (“wetter” manure) would be transported a

shorter distance than “dryer” manure, all else being

equal. In the CBW, lagoon waste is the wettest form

of manure, while poultry litter is the driest. Slurry is

intermediate in terms of water content.

Generally, the wetter the manure, the more likely it

would be used onfarm (fig. 4-8). (The model is

responding to the cost per ton of material and minimizing the transport of water long distances.) Over

half of the dry manure would be transported off the

farm under all WTAM levels under both an N- and Pstandard. Another outcome of cost-minimizing is that

when available land capacity for receiving manure is

reached, manure transported is that with the lowest

water content. 

Alternatives to Land Application

Numerous alternatives to spreading manure on land—

broadly classified as “output-using” or “supply-reducing”—exist or are under development, but their applicability varies with animal species, region, and stage

of development. Output-using technologies redirect

the manure off-farm as an input for industrial uses.

These technologies may transform the manure into a

Percent of manure

Willingness to accept manure (Percent)

Figure 4-5

Effect of the willingness to accept manure on its disposition in the Chesapeake Bay Watershed, 

including excess manure

N-Standard

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90 100

Onfarm use Within-county use Out-of-county use Excess of land applications
46 • Manure Management for Water Quality USDA/Economic Research Service

Percent of manure

Willingness to accept manure (Percent)

Figure 4-6

Effect of the willingness to accept manure on its disposition in the Chesapeake Bay Watershed, 

including excess manure

P-Standard

Onfarm use Within-county use Out-of-county use Excess of land applications

0

20

40

60

80

100

10 20 30 40 50 60 70 80 90 100

100% WTA

60% WTA

Inter-county manure movement

1,000 dry tons of net transfer

-60 to -40

-40 to -20

-20 to -5

-5 to 5

5 to 35

35 to 140

140 to 355

Imports

Exports

70% WTA

90% WTA 80% WTA

Figure 4-7

Effect of willingness to accept manure on its spatial distribution under a P-standard, 1997
USDA/Economic Research Service Manure Management for Water Quality • 47

more homogeneous and stabilized fertilizer product, or

may burn manure for power generation. Manure with

relatively low moisture content, such as broiler litter,

is generally better suited for use in industrial processes

than “wetter” manure from lagoon and slurry systems.

A supply-reducing technology reduces the amount of

nutrients excreted per unit of animal output, resulting

in fewer pounds of nutrients needing disposition. This

can be achieved through dietary modifications.

Output-Using Technology

Industrial uses of manure in the Chesapeake Bay watershed have historically focused on composting poultry

litter. The amount of poultry litter in the CBW

processed by industrial facilities has increased significantly with the recent construction of two large-scale

industrial facilities using poultry litter,

PerdueAgriRecycleTM and Harmony Farms

Shenandoah Valley (HSV).12 These two operations

transform litter into pelletized organic fertilizer, blended

fertilizer products, and energy for use in fertilizer manufacturing. Other industrial processes that could divert

litter from land spreading are in the planning or construction stage (see box, “Industrial Processes for Using

Manure,” p. 50). For example, a large-scale, capitalintensive project to generate electricity by burning poultry litter has been proposed, but its high cost and other

issues have thus far prevented its development. 

PerdueAgriRecycleTM, in Seaford, Delaware, is permitted to process 94,000 tons of litter annually into

pelletized organic fertilizer for agricultural and landscaping uses. HSV, in the Shenandoah Valley of

Virginia, is designed to process 60-65,000 tons per

year of poultry litter as both an energy source and a

feedstock in the manufacture of a blended organicinorganic fertilizer for the golf course and landscaping

markets. Manure diverted to plants such as these

would no longer be in competition for land, reducing

the total regional costs of applying manure to land. 

Based on proposed alternatives, we estimate that the

diversion of poultry litter to industrial alternatives

would be 200,000 tons per year in the near term

(2002-2004) and 376,000 tons within 5 years, or 0.30

and 0.65 percent of the manure produced in the

region.13 Near-term estimates include the two new

plants and existing composting facilities. Future estimates reflect projected growth in composting operations, full use of existing plants’ capacity, and the

completion of industrial uses currently in the planning

or construction stage.

Diverting poultry litter to industrial uses would reduce

total land application costs under an N-standard in the

CBW by $2-$3 million per year in the near term, and

$3.6-$4.8 million per year as additional projects are

completed, for a total drop in regional costs of 5-6

percent depending on the WTAM level. Processing

litter into fertilizer and energy would reduce total

regional costs by $10-$15 per ton, mostly due to savings in off-farm transport and land application.

However, factoring in the value of nutrients in manure

not going to the land, savings are reduced to $0.55-

$5.75 per ton (table 4-2).

Under the more stringent P standard, total land application costs would decline by $4.6 million to $7.3 million (3 to 4 percent) per year depending on the quantity of poultry litter diverted to industrial facilities at the

12 No endorsement by USDA of the process or product is implied or

inferred.

13 Quantity estimates of poultry litter production based on the Agricultural

Census are 710,000 tons in the Delmarva area (Lichtenberg et al., 2002) and

550,000 tons in the Shenandoah Valley (Pelletier et al., 2001).

Alternative manure handling systems play an important role in the regional model. The systems were the basis for the estimation of the wet manure transport weight and associated costs. Systems also formed the basis for the different ways

manure can be transported and applied (truck, tractor and spreader, or irrigation system). Three alternative manure handling systems were included in the regional model: lagoon systems (open, uncovered storage), slurry systems (covered storage), and dry systems (primarily poultry in the CBW). All poultry in the CBW were assumed to use a dry litter system.

The manure handling systems for swine and dairy in the CBW were determined from the systems reported in the ARMS

for those animal types (USDA, 2002a). Feedlot beef was assigned the same system proportions as dairy. Manure handling

systems were linked to an animal type and were not allowed to adjust in the current regional model.

Manure waste from lagoon systems was specified as 99 percent water; slurry systems - 95 percent water; poultry dry systems - 30 percent water, and dry systems for other livestock types - 50 percent water (USDA, NRCS, 1999b). An additional bedding adjustment, representing tons of bedding per ton of dry manure, was included for some dairy (30 percent of

manure) and all poultry (10 percent of manure) production. The share of dairy systems utilizing bedding was based on

ARMS data.

Manure Handling Systems
48 • Manure Management for Water Quality USDA/Economic Research Service

N-Standard P-Standard

0

10,000

20,000

30,000

40,000

50,000

Figure 4-8

Disposition of manure in the Chesapeake Bay Watershed, by manure handling system and 

willingness-to-accept, 1997 

0

1,000

2,000

3,000

4,000

5,000

6,000

0

1,000

2,000

3,000

4,000

5,000

6,000

30 60 90 30 60 90

Willingness to accept manure (Percent)

Litter/Dry (1,000 tons)

Slurry (1,000 tons)

Lagoon (1,000 tons)

30 60 90 30 60 90

30 60 90 30 60 90

Onfarm use Within-county use Out-of-county use Excess of land applications
USDA/Economic Research Service Manure Management for Water Quality • 49

90-percent WTAM level. Processing litter into fertilizer and energy would reduce total costs by $20-$23 per

ton, from savings in transport and application costs.

Net cost savings are $8-$11.50 per ton after accounting for the value of manure nutrients no longer being

applied to land in the CBW (table 4-3). 

The estimates of manure diverted to industrial uses at

a WTAM level of 60 percent absorbed enough manure

to enable land application of all remaining manure.

However, some of the costs actually increase because

more manure was applied than without industrial alternatives, and wetter manure is being transported greater

distances due to the diversion of poultry litter to industrial options. At the current industrial level, costs

increase but the region is able to spread all manure not

sent to an industrial alternative at a 60-percent

WTAM. With expanded industrial capacity, there was

a cost savings of $7 per ton in transport costs ($6 considering fertilizer value adjustments). The transport

cost savings at a 60-percent WTAM are about half

those at 90-percent WTAM, since wetter manure has

to travel longer distances. 

The capital costs for the PerdueAgriRecycleTM and

Harmony Farms Shenandoah Valley (HSV) facilities

were $13.5 million and $10 million. Using these two

industrial operations as a guide, the amortized capital

costs were estimated to be $1.20-$2.10 per ton of raw

litter used, depending upon the type of operation, capital cost, and percent of operating capacity utilized.14

In comparison, the reduction in net land application

costs due to a diversion of manure to industrial uses is

estimated at $0.50-$5.75 per ton with the N-standard

and $8-$33 per ton with a P-standard, depending on

the WTAM level.

Our analysis thus indicates that the use of industrial

options in the CBW can reduce aggregate manure disposition costs by offering an alternative to hauling

manure over greater distances. Animal producers

would benefit by not having to incur application costs,

and may pay reduced hauling costs. Unless enough

industrial capacity was built to use more than the

excess amount of manure, crop producers would still

need to use the same amount of manure nutrients.

Land application cost savings varied considerably with

the assumptions made regarding the nutrient standard

and willingness to accept manure, but in general they

are large enough to warrant further investigation of

industrial options. We estimated the potential savings

in net land application costs to be nearly $2 million

with an N-standard and $3 million with a P-standard

(tables 4-2, 4-3).

While this study does not address whether the industrial operations will be profitable and become viable over

the long term (data on variable costs for industrial uses

were not available), the analysis indicates that the

annualized cost of building industrial facilities is often

less than the cost of applying manure to land, particularly when meeting a P-standard. While projected

industrial use of manure represents less than 1 percent

of total CBW manure, potential savings could greatly

benefit areas with concentrated animal production and

inadequate land for manure application.

Supply-Reducing Technology 

Supply-reducing technology is designed to reduce the

amount of nutrients excreted in manure, primarily

through modification of the diet fed to livestock and

poultry.15 The potential for changing animal diets to

reduce nutrient outputs and helping to alleviate potential pollution from nitrogen and phosphorus is widely

recognized (CAST, 2002) (see box, “Reducing Manure

Nutrients Through Feed Management,” p. 19).

Possibilities for improving dietary efficiency and

reducing nutrient excretion include substituting phytase and synthetic amino acids for other dietary components.

Using the regional model, we estimate the impact of

adding phytase to broiler and swine rations on the

costs of applying manure to land under a P-standard.

Based on the literature, we assumed the addition of

phytase to all swine and poultry diets in the CBW

would reduce the phosphorus content of their manure

by 30 percent.

The addition of phytase to poultry and swine diets

with a 90-percent WTAM, where all manure can be

applied to land, reduces the regional costs of manure

management, transport, and application by almost $7

million per year (5 percent of no-phytase costs), with

almost 70 percent of the savings in reduced transport

costs. Net land application costs would decline by

about 4 percent (table 4-3).

At a 60-percent WTAM, adding phytase enables the

region to achieve a P-standard, given the land available and the model’s transportation limits. Since the

14 These estimates assume a capital cost of $10-$14 million, a life of 20

years, and an interest rate of 10 percent.

15 Other supply-reducing alternatives include adjustment in mix of animals

or changes in genetic stock.
50 • Manure Management for Water Quality USDA/Economic Research Service

model shifts from a “no-phytase” alternative with

154,000 tons of excess manure to a “with-phytase”

case with all manure applied to land, the cost savings

are difficult to interpret. While the total costs of

manure management, transport, and application

decline by about 3 percent of the no-phytase costs, net

land application costs declined about 11 percent, or

$10 million. The application of manure that could not

be spread under the P-standard case increased the

chemical fertilizer savings with phytase. The manure

management, transport, and application cost savings

would have been greater if not for the additional

154,000 tons of manure that can be land applied with

phytase. Clearly, the use of supply reduction technoloConcerns over increased supplies and concentration of livestock and poultry manure have resulted in numerous proposed

manure management solutions beyond land application. However, many of these proposed solutions are still theoretical or

experimental. The feasibility of industrial processing varies between livestock species due to differences in manure composition and handling characteristics. Within the Chesapeake Bay watershed, the development of industrial options has been

encouraged by the concentration of poultry production and the resulting manure that is relatively dry and amenable to industrial processes.

Several small-scale composting and other processes have been used in the Chesapeake Bay watershed for some time, but

only recently have two large-scale industrial solutions for poultry litter have only recently become operational realities.

Additional information on alternative uses of poultry litter and other manure is available elsewhere (Lichtenberg et al.,

2002; Christensen, 1999).

Perdue AgriRecycleTM

Several processes have been developed to make the nutrients and organic matter in manure more uniform, manageable, and

marketable. One of these uses a pelletizing technology and process developed by AgriRecycle1 to transform raw poultry litter into value-added organic fertilizer. This process was implemented through a joint venture with Perdue Farms as a way

to manage surplus poultry litter in the Delmarva area. Perdue AgriRecycleTM began operations in 2001 in Suffolk County

Delaware, the largest broiler-producing county in the U.S. The plant's capacity is 94,000 tons of litter annually, with permits to expand to 150,000 tons as markets for final product develop. The final product is a pasteurized organic fertilizer

granule or pellet, with a nutrient blend (phosphorus, nitrogen, potassium ratio) of 3-4-3, especially designed for precision

agriculture applications. It is a certified organic fertilizer, approved by the Organic Materials Review Institute for organic

crop production. 

Harmony Farms Shenandoah Valley 

Harmony Farms Shenandoah Valley (HSV), in Harrisonburg, VA, uses a fertilizer manufacturing technology to convert litter, primarily turkey litter, into energy and an enriched granular product that can be readily transported and applied to land.

The process uses a gasification technology that produces thermal energy, coupled with a mixing and blending process using

a liquid urea binder. The HSV plant capacity is about 60,000 tons of litter annually. About 10-15 percent of the incoming

poultry litter is used to generate energy to run the plant. The remainder is processed and blended with commercial nutrients

to produce enriched organic fertilizers for the golf course, landscape, and home garden markets with the nutrient blends

varying from 5-5-3 to 14-3-6. 

Large-Scale Use of Manure as Biomass Fuel

Manure can used as a biomass fuel to generate electricity. However, the high moisture content of the manure is a limiting

factor. The English company Fibrowatt Limited has proposed to build a large-scale power plant in the Delmarva area similar to what they built in England. The plant would burn biomass (poultry litter and wood products) to produce electric

power and a granular fertilizer product from the ash. The proposal has not been accepted for the Delmarva area, primarily

because of the high capital and production costs. Energy from litter is estimated to cost 3-4 times the energy from conventional power plants.2 Even so, Fibrowatt is designing and building a smaller plant in Minnesota to generate power from

turkey litter.

1 No endorsement of any of these processes or commercial entities by USDA is implied.

2 Broiler litter has about half the caloric value of coal.

Industrial Processes for Using Manure
USDA/Economic Research Service Manure Management for Water Quality • 51 Table 4-2—Total and net land application costs to meet an N-standard in the Chesapeake Bay Watershed, by willingness-to-accept-manure and level of industrial use Current Expanded Changes from industrial industrial N-standard Changes per ton Cost category N-standard (CI) (EI) (CI) (EI) (CI) (EI) WTAM = 90 percent $ million $ Transport costs 79.65 78.16 77.14 1.49 2.51 7.49 6.68 Application/incorporation costs 33.61 33.01 32.54 0.60 1.07 3.02 2.85 Management costs 10.5 10.48 10.47 0.02 0.03 0.10 0.08 Total land application costs 123.76 121.65 120.15 2.11 3.61 10.60 9.60 Less: Chemical fertilizer savings -67.55 -65.55 -64.24 -2.00 -3.31 -10.05 -8.80 Net land application cost 56.21 56.10 55.91 0.11 0.30 0.55 0.80 WTAM = 60 percent Transport costs 83.08 81.33 80.04 1.75 3.04 8.79 8.09 Application/incorporation costs 33.59 33.07 32.75 0.52 0.84 2.61 2.23 Management costs 10.45 10.44 10.44 0.01 0.01 0.05 0.03 Total land application costs 127.12 124.84 123.23 2.28 3.89 11.46 10.35 Less: Chemical fertilizer savings -64.45 -62.70 -61.6 -1.75 -2.85 -8.79 -7.58 Net land application cost 62.67 62.14 61.63 0.53 1.04 2.66 2.77 WTAM = 30 percent Transport costs 88.19 86.18 84.76 2.01 3.43 10.10 9.12 Application/incorporation costs 35.01 33.96 33.61 1.05 1.40 5.28 3.72 Management costs 10.43 10.42 10.42 0.01 0.01 0.05 0.03 Total land application costs 133.63 130.56 128.79 3.07 4.84 15.43 12.87 Less: Chemical fertilizer savings -62.55 -60.62 -59.74 -1.93 -2.81 -9.70 -7.47 Net land application cost 71.08 69.94 69.05 1.14 2.03 5.73 5.40
52 • Manure Management for Water Quality USDA/Economic Research Service Table 4-3—Total and net land application costs to meet a P-standard in the Chesapeake Bay Watershed, by willingness-to-accept-manure, level of industrial use, and addition of phytase to feed Current Expanded Changes from Changes industrial industrial N-standard per ton Cost category N-standard (CI) (EI) Phytase (CI) (EI) Phytase (CI) (EI) WTAM = 90 percent $ Million $ Transport costs 91.51 88.37 86.60 87.36 3.14 4.91 4.15 15.78 13.06 Application/incorporation costs 41.39 40.01 39.10 39.04 1.38 2.29 2.35 6.93 6.09 Management costs 11.41 11.34 11.27 11.17 0.07 0.14 0.24 0.35 0.37 Total land application costs 144.31 139.72 136.97 137.57 4.59 7.34 6.74 23.07 19.52 Less: Chemical fertilizer savings -68.38 -66.08 -63.97 -67.30 -2.3 -4.41 -1.08 -11.56 -11.73 Net land application cost 75.93 73.64 73.00 70.27 2.29 2.93 5.66 11.51 7.79 Excess manure (1000 tons) 0 0 0 0 WTAM = 60 percent Transport costs 102.04 103.72 99.24 97.07 -1.68 2.80 4.97 -8.44 7.45 Application/incorporation costs 39.52 40.53 39.85 39.48 -1.01 -0.33 0.04 -5.08 -0.88 Management costs 11.24 11.24 11.19 11.10 0 0.05 0.14 0.00 0.13 Total land application costs 152.80 155.49 150.28 147.65 -2.69 2.52 5.15 -13.52 6.70 Less: Chemical fertilizer savings -61.77 -63.09 -61.62 -66.63 1.32 -0.15 4.86 6.63 -0.40 Net land application cost 91.03 92.40 88.66 81.02 -1.37 2.37 10.01 -6.88 6.30 Excess manure (1,000 tons) 154 0 0 0 -154 -154 -154
USDA/Economic Research Service Manure Management for Water Quality • 53

gy has greater potential for cost savings at lower

WTAM levels.

Phytase also significantly reduces the amount of

excess manure at lower WTAM levels. At 30-percent

WTAM, the use of phytase reduced the manure in

excess of land application capacity by about 45 percent, enabling an additional 500,000 tons of manure to

be spread.

Summary

Management of livestock manure is crucial to the

Chesapeake Bay watershed (CBW), given its concentration of animal production and the State/Federal

commitment to protect the bay’s resources. New policies on the handling of animal manure are likely to

have a significant impact on the livestock and poultry

sectors. This is particularly true in the CBW, where

counties rank among the highest in the Nation in concentrations of surplus manure nutrients.

The willingness of crop producers to accept manure on

eligible acres is an important consideration. In fact,

our results indicate that this could be the most important consideration in determining whether land application as a stand-alone strategy is feasible in the CBW.

We find that, at willingness-to-accept-manure

(WTAM) levels of 60 percent or lower, there is an

insufficient land base to apply all the manure under a

P-standard, given the modeled transportation radius

and no change in land use, crop mix, or animal location. Similarly, all manure cannot be land applied

under an N-standard at WTAM levels of 20 percent or

lower. Current data suggest that between 10 and 20

percent of cropland receives manure.

Holding animal production constant, the estimated

total cost for land application of manure was $123 million to $155 million per year over the set of solutions

in which all manure may be land applied. This is a

high proportion of annual total net returns to animal

production in the CBW ($313 million). The model

cannot estimate land application costs when long-distance hauling would involve transporting the manure

beyond the modeled transportation radius of roughly

150 km. Over 60 percent of manure disposition costs

were for transport, and less than 30 percent for application/incorporation. By location, onfarm hauling

and distribution of manure accounted for up to 75 percent of the total costs, but the costs tended to be constant in dollar amount over the range of WTAM levels

where all manure could be land applied. Most of the

cost increases from reduced WTAM levels were associated with off-farm movement of manure. Out-ofcounty transportation, application, and incorporation

costs were estimated to range between $9 million and

$55 million, depending on which nutrient standard was

in effect and the willingness of crop producers to

accept manure.

The net costs of manure management in the CBW

depend not only on the total land application cost but

also on the potential savings in commercial fertilizer

by more efficiently using manure nutrients, as well as

on the costs of addressing the manure that could not be

land applied due to model transportation limits. The

potential savings in commercial fertilizer purchases

and application costs were estimated at $60-$68 million, which offset 40-55 percent of the total costs of

applying manure to land. The extent to which the

potential nutrient savings are translated into farm

returns will influence not only the net manure disposal

costs but also a producer’s willingness to accept

manure. Moreover, some portion of those savings will

be felt as reduced revenues to fertilizer suppliers. 

Finally, significant quantities of manure under the Pstandard were not land applied in our modeling framework at many WTAM levels. The disposition of this

manure remains a challenge, perhaps an expensive

challenge, for manure management in the CBW. 

The annual cost savings from shifting manure from

land application to industrial uses compare favorably to

the annualized capital costs of recently constructed

industrial litter processing facilities. A P-standard

issued cost savings of $2-$7 million by shifting manure

to an industrial plant rather than hauling it to a distant

site for land application, depending on the region’s

willingness to accept manure for land application.

These cost savings are concentrated primarily in areas

with high animal numbers and limited land for manure

application. Similarly, the addition of phytase to the

diet of swine and poultry reduced land application

costs by $6-$10 million. Phytase also enables the

application of much more manure to the region’s land

base, particularly important for meeting a P-standard

when WTAM is not high. These preliminary values

provide a starting point for an indepth investigation of

industrial options and their potential for the CBW’s

agricultural economy. 

The need to transport manure over longer distances

has structural implications for the agricultural sector.

Moving manure to a location that is miles away from

the manure source presumes that a marketing structure

is in place and that a consistent, standardized product

is shipped to the destination. It is likely that a more

formal marketing system will develop over time to satisfy this need, spurred on by the new policy.
54 • Manure Management for Water Quality USDA/Economic Research Service

Appendix 4-A

Modeling Manure Management in the Chesapeake Bay Watershed

The model is designed to minimize total regional costs of applied manure, including manure transport, land application, and selected nutrient management plan costs in the Chesapeake Bay watershed, given 1997 animal production levels. The model was developed to (1) provide a mechanism that tracks manure and related nutrient flows

within the watershed, from manure source to site application and use, (2) estimate the regional costs of applying

manure to land, and (3) provide a framework for evaluating proposed land-application regulations and alternative

nutrient management policies. The regional model specification captures the competition for land on which to

spread manure by endogenizing access to spreadable land and associated hauling costs. Explicit modeling of competition for land in areas with significant animal concentrations is a central feature of the regional model that is not

reflected in existing farm-level models.

Regional Model Structure

The county serves as the primary modeling unit for the regional model. The county-level specification provides

consistency with Census of Agriculture data and other county-level data, while permitting differentiation in animal

production, nutrient uptake, waste technologies, institutions, and regulatory conditions across county and State

boundaries within the watershed.

Manure is produced in a “source” county (ct) and land applied (or otherwise disposed of) in a “destination” county

(ct2). “Model” counties include 160 non-municipality counties with farmland in the Chesapeake Bay watershed.

“Sink” counties refer to destination counties outside the modeled area that could serve as potential destinations for

manure exported from the watershed. Model counties may be both source and destination counties; sink counties

are destination counties only. The potential level of out-of-basin exports depends on net assimilative capacity of

the sink counties after accounting for county manure applications. There are 104 sink counties included in the full

watershed model, comprising non-municipality counties within 60 kilometers (37 miles) of cropland in a model

county. Model solution values for “edge” counties, or those that straddle the watershed boundary, are apportioned

by share of farmland within the watershed to more accurately account for manure disposition at the basin level. 

The optimization model is designed to minimize the regional cost of applied manure, subject to total manure produced, land availability for manure applications, and other disposal options. The model allocates manure flows

across the watershed and neighboring sink counties to minimize the objective function expression:

(1)

Costs include manure hauling and application costs (HAC), land incorporation costs (INC), and nutrient management plan charges for source (NM1) and destination (NM2) counties. A penalty cost for manure levels exceeding

land application (ELA) capacity is included to ensure that all manure is land applied subject to available land (this

cost is removed from reported costs). Aggregate costs are further adjusted to reflect cost savings from reduced

purchase and application costs for chemical fertilizers (FS).

In-county and out-of-county transfers of manure are the primary activities in the model. Potential county-to-county

transfers were developed based on an assumed maximum radial distance of 60 kilometers (37 miles), or 150 kilometers (93 miles) for the largest manure-surplus counties (10 percent of total), measured from the outer edge of the

source county’s cropland base. There are 4,060 county-level transfer possibilities in the full watershed model,

including in-county and out-of-county transfer combinations. Manure transfers are further disaggregated by subcounty grid location, manure system type, and distance interval, resulting in over 300,000 transfer alternatives.

The primary decision variables in the model represent the quantity of manure transferred (M_TRN), acres used for

manure spreading (AC_SPR), and manure hauling distance (DST). Model equations include (1) balance equations

that track stocks and flows of manure and manure nutrients, (2) constraints on land availability, distribution of confined animal farms (manure sources), and manure nutrient use, and (3) cost accounting equations. In general, wet

manure quantities form the basis of model hauling and application costs, while manure nutrient content and uptake

rates determine the volume and direction of manure flows.

[ ] HAC NM NM ELA FS ct, ct

ct ct2

∑∑ 2 ++ +− 1 2 ct ct2 ct ct2
USDA/Economic Research Service Manure Management for Water Quality • 55

Primary manure transfer equations are as follows:

(2)

(3)

(4)

(5)

where N* represents N-standard and P* represents P-standard, gr is county grid location, sy is manure system

(lagoon, slurry, dry; see box, “Manure Handling Systems,” p. 47), and ds is hauling distance interval in miles.

Onfarm hauling distance is set based on estimated average county distance. Off-farm hauling distance is derived

endogenously, falling within one of three intervals (0.5-2, 2-10, >10) used to calculate hauling costs.

In Equation (2), dry manure tons by county transfer (M_TRAN) is defined as the product of per acre manure application rate (M_AP) by county transfer—weighted by the acreage share under an N-standard (SH_N) and acreage

share under a P-standard (1- SH_N)—and receiving acres (AC_SPR) in the destination county. Manure application

rate is estimated for each individual in-county and out-of-county transfer, based on: (1) average nutrient content of

manure from the source county; (2) average nutrient removal rates for N and P in the destination county, weighted

across cropland and pastureland for each of three farm types (non-animal farms, non-confined animal farms, and

confined animal farms); (3) nitrogen volatilization factors, with and without incorporation; and 4) the nutrient standard in effect.16 Data specification by county and farm type allows the model to capture potential variation in

assimilative capacity due to differences in cropping pattern, land in pasture, and crop yield.

Equation (3) restricts applied manure from all potential source counties to total spreadable acreage (A) in the destination county. Assumptions on land operator willingness to accept manure (see box, “Willingness to Accept

Manure,” p. 21) are reflected in automated adjustments in both the quantity of spreadable acreage and slope of

“area-to-distance” functions, or hauling distance required to access a given spreadable area. Values for levels of

willingness to accept manure on non-animal farms and nonconfined animal farms range from 10 percent to 100

percent; all acreage on confined animal farms is assumed available for manure spreading. Equation (4) sets aggregate county-level manure transfers (M_TRAN) equal to the sum of manure transfers by source-county grid location

(gr), system type (sy), and distance interval (ds). Equation (5) bounds manure transfers by the share (SH_M) of

total county-level manure production (M_PRD) across system type (sy) and grid (gr), based on allocation procedures followed in the GIS.

Equations (6) through (8) are used to balance manure production, use, surplus, and quantity of manure 

exceeding land application capacity at the county level.

(6)

(7)

(8)

Equation (6) sets surplus manure (M_SRP) as manure production (M_PROD) less that used onfarm (M_ONFRM)

in the source county. Equation (7) fixes manure use (M_USE) as onfarm manure use plus that quantity obtained

from off-farm sources (M_TRAN) in the destination county. Equation (8) sets the manure that exceeds land application capacity (M_ELA) due to insufficient assimilative capacity within the transport radius equal to the manure

surplus in the source county, less the sum of industrial uses (M_IND) and the sum of manure transfers out of county. Manure used for industrial purposes is defined exogenously by county and waste-system type (i.e., dry poultry

* _ AC SPRct, ct2

M TRAN M AP SH N M AP SH N _ (( _ * _ ) ( _ *( _ ))) ct, ct2 ct, ct2, N ct2 ct, ct2, P ct2 = +− * * 1

AC SPR A WTA _ * ct, ct2 ct2 ct2

ct

∑ ≤

M TRN M TRN _ _ ct, ct2

sy ds

ct, gr, ct2, sy, ds

gr

= ∑ ∑∑

ds

∑ M TRN M PRD SH M _ _ *_ ct, gr, ct2, sy, d ct, ct2 ct, gr, ct2, sy s ≤

M SRP M PROD M ONFRM __ _ ct ct ct = −

M USE M ONFRM M TRAN __ _ ct2 ct2 ct, ct2

ct2

= +∑

M ELA M SRP M IND M TRAN __ _ _ ct ct ct, sy ct, ct2

sy ct2

=− − ∑ ∑

16 Manure application rates may be modified to reflect adjustments in nutrient content (i.e., due to changes in feed supplements or animal mix) and nutrient

uptake rates (i.e., due to changes in cropping patterns or yields), as well as county-level acreage shares by nutrient standard, for cropland and pastureland.
56 • Manure Management for Water Quality USDA/Economic Research Service

litter) and converted to dry-ton equivalents for use in the model. Quantities of ELA manure are minimized in the

model through the use of a penalty cost parameter that assigns a high cost to manure that is not land applied. 

Hauling distances are computed based on Equations (9) – (11).

(9)

(10)

(11)

In Equation (9), average hauling distance (DS) from source county (ct) and grid location (gr) is calculated as a

function of onfarm and off-farm spreadable acres in the destination county (ct2), based on α and β coefficients

from the GIS-derived linear regression estimates. The intercept term, representing linear hauling distance from the

source farm for out-of-county transfers, is adjusted (δ 1) for selected county-to-county transfers due to natural barriers (e.g., large bodies of water). In addition, a circuity parameter (δ 2) is used to convert linear distance to road

miles (USDC, 1978). In Equation (10), average hauling distance represents a weighted average of hauling distances (DST) by manure-system type (sy) and distance interval (ds). Minimum (D_MN) and maximum (D_MX)

distance is specified by distance interval in Equation (11).

Stocks and flows of manure nutrients (np)—nitrogen (n) and phosphorus (p)—are tied to manure quantities 

as follows:

(12)

(13)

(14)

Total excess nutrients (NP_EXC) are obtained from farm-level Census data on manure production and onfarm

assimilative capacity aggregated to the county level. Equation (12) calculates surplus manure (M_SRP) based on

excess N or excess P, depending on the nutrient standard in effect (N* or P*) and county-average nutrient content

per dry ton of manure (NP_M). In Equation (13), onfarm manure nutrients (NP_ONF) reflect the quantity

(M_ONFRM) and composition of manure produced and used on confined animal feeding operations. In Equation

(14), manure nutrients transferred (NP_TRN) reflects manure land-applied off the farm. 

(15)

(16)

In Equation (15), manure hauling and application costs (HAC) are computed for onfarm and off-farm transfers

based on loading, unloading, and application costs per ton hauled (C1), hauling cost per ton-mile (C2), distance

hauled (DST), and quantity of manure hauled in dry tons (M_TRN), adjusted for moisture content (MS) and bedding (BED). Hauling and application costs vary across animal-waste systems due to differences in manure moisture content and equipment used, by species and system type. The model simulates a stepwise cost function for

manure hauling/application cost, with cost coefficients defined by manure system type and distance interval hauled.

Incorporation costs (INC) (incorporating manure into the soil) are computed in Equation (16) based on per acre

cost (C3), share of acres incorporating (SH_I), total onfarm and off-farm acres using manure, and share of acres in

cropland (as manure is not generally incorporated on pastureland).

DS AC ONF AC SPR ct, gr, ct2 ct, gr, ct2 ct, ct2 ct, ct2 ct ct, ct2 ct2

ct

=+ + {( * ) ( *( _ _ ))]* α δβ δ ∑ 1 2

DS M TRN DST M TRN ct, gr, ct2 ct, gr, ct2 ct, gr, ct2, sy, ds ct, gr, ct2, sy, ds

sy ds

*_ ( *_ ) = ∑∑

D MN DST D MX _ _ ds ct, gr, ct2, sy, ds ds ≤ ≤

M SRP NP EXC NP M _ _ /_ ct ct, np ct, np =

NP ONF M ONFRM NP M _ _ *_ ct2, np ct2 ct, np = where ct = ct2

NP TRN M TRAN NP M _ _ *_ ct, ct2, np ct, ct2 ct, np =

HAC C DST

M TRN MS BED

ct, ct2 sy, ds sy, ds ct, gr, ct2, sy, ds

gr sy ds

ct, gr, ct2, sy, ds sy sy

= +

− +

∑∑∑[C ( * )]

* _ ( ( )]

1 2

/ 1

INC C SH I AC ONF AC SPR SH C ct2 ct2 ct2 ct, ct2 ct2

ct

= + ( * _ *( _ _ )* _ ) 3 ∑
USDA/Economic Research Service Manure Management for Water Quality • 57

(17)

(18)

Selected nutrient management plan costs related to land application are identified for manure source farms and

receiving farms. Equation (17) computes source-county costs (NM1) for manure testing and plan development

costs, based on a representative cost (M_TST and C_NMP) applied to the number of confined animal-feeding operations (AFO) in the source county. Equation (18) computes destination county costs (NM2) for soil testing, based

on representative costs (S_TST) per acre of land receiving manure.17 Structural costs associated with manure processing and storage are not considered in this study, although capital costs to improve manure storage and handling

may be required to accomplish the extent of land application addressed in the study.

(19)

(20)

(21)

Fertilizer cost savings (FSV) are calculated differently, depending on the nutrient standard in effect. In Equation

(19), savings calculated under an N-standard reflect (1) reduced chemical fertilizer purchases, computed based on

the price (PR) of nutrients N and P and the quantity of manure nutrient offset—adjusted to capture that portion of P

(P_PCT) that is beneficially used by the crop over the growing season, and (2) savings from reduced field application costs, as applied manure satisfies the full crop-nutrient requirement. In Equation (20), savings calculated

under the P-standard reflect the value of the manure nutrient offset only; field application costs for chemical fertilizer are required as manure-N is insufficient to meet full crop needs.18 Equation (21) computes an acreage-weighted fertilizer cost savings (FS), based on the share of acres permitted to land-apply manure at the less-stringent Nstandard.

Model Data 

The Chesapeake Bay Watershed model relies on two primary data sources: the 1997 Census of Agriculture and the

National Land Cover Dataset from the U.S. Geological Survey (USGS). Farm-level Census data are used to generate county-level measures of animal operations and animal units, total manure production, surplus recoverable

manure, manure-nutrient content, and potential assimilative capacity of the land for applied manure nutrients. The

National Land Cover Dataset was used to define the spatial pattern of land available for manure spreading and to

simulate the spatial distribution of animal operations. Cost data and other information reflecting conditions in the

CBW/Mid-Atlantic region were obtained from various sources, including the USDA’s Natural Resources

Conservation Service (NRCS) Cost and Capabilities Assessment (USDA, NRCS, 2003), ARMS data (USDA, ERS,

2002a), published literature, and subject matter specialists within the government and various universities.

NM M TST C NMP AFO 1ct ct = + ( _ _ )*

NM S TST AC ONF AC SPR 2ct2 ct2 ct, ct2

ct

= + _ *( _ _ ) ∑

FSV PR NP ONF NP TRN

PR NP ONF NP TRN P PCT

C AP AC ONF AC SPR

ct2, N n ct2, n ct, ct2, n

c

p ct2, p ct, ct2, p ct2

ct

ct2 ct, ct2

ct

* ( *( _ _ ))

( *( _ _ )* _

( _ *( _ _ ))

= +

+ +

+ +

∑

∑

∑

t

FSV PR NP ONF NP TRN

PR NP ONF NP TRN

ct2, P n ct2, n ct, ct2, n

ct

p ct2, p ct, ct2, p

ct

* ( *( _ _ ))

( *( _ _ ))

= +

+ +

∑

∑

FS FSV SG N FSV SH N ct2 ct2, N * ct ct2, P ct = +− ( * _ ) ( *( _ )) * 1

17 Nutrient management plan costs involving record keeping and visual inspection were not specifically related to manure land application, and were not

addressed here. Costs for training and certification for manure application, and calibration of manure spreader, were assumed to be incorporated within reported application costs per ton of manure hauled.

18 For purposes of this analysis, it is assumed that chemical nutrients are applied at strict agronomic rates, that manure nutrients directly offset nutrients

obtained from chemical fertilizers, that per-acre field application costs are fixed regardless of the level of applied chemical fertilizer, and that producers are not

permitted to “bank” phosphorus (over-apply for use over multiple years) to minimize annual field application costs under the P-standard. A multi-year P-standard, permitted by NRCS under certain soil conditions, may be modeled by adjusting for savings in the application cost of chemical fertilizer during the treatment year of a multi-year manure rotation.
58 • Manure Management for Water Quality USDA/Economic Research Service

Agricultural Census Data 

Using data collected for the 1997 Census of Agriculture (USDA, 1999), we estimate manure-nutrient surpluses by

applying farm-level measures of manure-nutrient production relative to the farm’s potential to use nutrients for

crop production. For modeling purposes, results from the farm-level calculations are aggregated to the county

level.19 Manure-nutrient production, potential manure nutrient use by farms with animals, surplus recoverable

manure nutrients, and potential assimilative capacity of farms by farm type are computed following procedures in

Gollehon et al. (2001) and Kellogg et al. (2000). Manure-nutrient production—nitrogen and phosphorus—is estimated using Census-reported end-of-year inventory and annual sales data, based on coefficients of manure production by animal type. Additional information on manure system shares by animal type is obtained from ARMS data

(USDA, ERS, and 2000b). Nutrient content of manure reflects a composite nutrient content by county, based on

county-level distributions of animal species from the Census of Agriculture. Potential manure-nutrient use is estimated across farm types based on reported yields and acreage for 24 major field crops and pasture. Excess recoverable manure nutrients are calculated as those that exceed the onfarm assimilative capacity of confined feeding

operations, based on the amount of land controlled by the farms with the animals.

The farmland base available for surplus manure spreading is defined in the model to include all cropland and pastureland on non-animal farms and some portion of acreage on nonconfined animal operations (adjusting for nonrecoverable N available) and confined animal operations (from those farms with surplus acreage capacity). The

model incorporates adjustments in total farmland base to reflect alternative assumptions on the willingness of

landowners to accept manure, expressed as a share of total acreage (10 to 100 percent). Other land-adjustment factors not explicitly addressed in the model—including crop-type considerations, stream buffer provisions, and use of

municipal sludge—may also affect availability of land for manure spreading. Crop and pastureland acreage in sink

counties is assumed available for manure from the watershed, after adjusting for application of locally produced

manure within the sink county.

Manure-hauling weights are based on dry tons of manure, adjusted for moisture and bedding content by manure

system and species type (USDA, NRCS, 1999c; Barker et al., 2001) (see box, “Manure Handling Systems,” p. 47).

Manure application rates are calculated based on manure-nutrient composition (source county) and aggregate nutrient uptake (destination county) from Census calculations (USDA, NRCS, 1999c). Separate onfarm application

rates are derived for confined animal farms, reflecting differences in cropping patterns and yields.20 Since reliable

data on the share of land likely to adhere to a phosphorus standard are not available, model scenarios are specified

as if all acres would apply manure according to an N-standard or to an annual P-standard, thus covering the full

range of possible results (see box, “Nutrient Standards,” p. 38).

Spatial Land and Distance Data 

To assess the spatial pattern of spreadable land for manure application, we use the USGS National Land Cover

Dataset. This dataset is based on 1992 Landsat thematic mapper imagery at 30-meter resolution, classified into 21

land-use categories. By combining cropland and pastureland categories, we capture the spatial distribution of the

spreadable land base for counties within the study region.

To estimate hauling-distance requirements for off-farm manure spreading, a GIS creates “area-to-distance” functions for each county and county-to-county transfer in the CBW.21 These functions are a central component of the

optimization model, linking the area used for manure spreading in the destination county with the average transport

distance required to reach all of the land. 

The number, location, and size of confined animal operations will influence the degree of competition for available

acreage on which to spread manure. With greater concentrations of animal production, the nearby spreadable

acreage is more fully used, resulting in increasing transport distances and greater potential for out-of-county

manure exports. The number and average size of confined feeding operations is available by county from the

19 Our analysis meets all respondent confidentiality requirements of the published Census of Agriculture values.

20 Model application rates assume a base nitrogen adjustment due to normal field loss of 30 percent. This base N loss factor is further adjusted downward 

by 5 percent for systems with soil incorporation and 30 percent for systems without incorporation (Fleming et. al., 1998, and Kellogg et al., 2000). 

21 Onfarm hauling distances by county are fixed in the model based on data obtained through the NRCS Cost and Capabilities Assessment (USDA,

NRCS, 2003).
USDA/Economic Research Service Manure Management for Water Quality • 59

Census, although the specific location of these operations within the county is unknown. Using the GIS, animal

operations are randomly assigned by county grid location within cropland and pastureland areas of the county.22

Area-to-distance functions are estimated for all in-county and out-of-county transfer possibilities in the model,

based on the spatial relationship between manure source and the location and density of spreadable area. In-county

transfers reflect the average hauling distance from confined feeding operations within a given county to spreadable

land in that county, both onfarm and off-farm. With small amounts of surplus manure, spreadable land is relatively

accessible and hauling distances are generally short. As surplus manure increases, so, too, does the land needed for

spreading manure, increasing the transport distance to access needed acreage.

23 Depicted graphically, the relationship between the spreadable acreage requirement and average distance hauled is upward sloping and fairly linear

along much of the observed range (fig. 4-A-1).

Out-of-county functions reflect hauling distances for confined feeding operations in the source county to spreadable acreage in the destination counties. A two-stage process is used to generate area-to-distance functions for outof-county transfers. First, distance is measured from each confined animal farm in a source county to the edge of

spreadable acreage in a destination county; this distance represents the intercept term of the area-to-distance function. Second, the slope of the distance function is generated by calculating hauling distance required for a given

area of spreadable acreage in the destination county, measured from the direction of the source county.

The slope of the area-to-distance functions reflects the spatial pattern of farmland relative to the number and location of confined feeding operations from a given source county. Competition for spreadable land is, in part, a function of the spatial distribution of cropland and pastureland. Where farmland is scattered, a higher slope coefficient

reflects relatively long average hauls within the destination county to access a given spreadable area. Where farmland distribution is more dense, a lower slope coefficient reflects comparatively shorter hauls to access a given

acreage. The degree of competition will depend on both spatial distribution of the spreadable land base and the

quantity and proximity of competing manure sources across counties. 

Integration of GIS data within the optimization framework represents a key component of the model. Regression

coefficients for the area-to-distance functions are incorporated as model parameters for within- and out-of-county

transfers. A unique set of slope coefficients is produced for each within-county function and for each county-tocounty transfer, representing distance hauling requirements within the destination county. In addition, out-of-county

functions involve separate intercept terms by source farm-grid location for every possible destination-county option,

representing linear distance from the farm to the edge of the landbase within the destination county. County-tocounty transfer possibilities include all counties within an assumed 60-kilometer (km) radius of a given source county; the radius for source farms in the 16 counties with highest concentrations of surplus manure was expanded to 150

km (93 miles).

24 To reduce the number of manure source and destination combinations, animal operations were

aggregated (binned) into 12-km grids across the watershed area. Although the binning procedure reduces the precision of intercept terms for intercounty functions, this was necessary to keep the model optimization reasonably within the bounds posed by our computer hardware. In addition, the distance functions estimated from the GIS are linearized for modeling purposes by truncating the upper and lower tails of the distribution (10 percent of acreage

respectively) and fitting a linear function to the nearly linear 80 percent of the midrange observations (fig. 4-A-1).

Production Cost Data 

The NRCS Cost and Capabilities Assessment was the primary source of cost data for nutrient management plan

components (USDA, NRCS, 2003). Cost components for manure management addressed in this study include

nutrient management planning ($1.67 per acre receiving manure), manure testing ($200 per farm), and soil testing

($0.40 per acre receiving manure).

22 Although animal operations may be separated from arable land as animal production is not as sensitive to soil conditions, the majority of operations tend to

be located in proximity to cropland and pasture land. While the random farm location assumption is regarded as reasonable at the watershed scale, it likely

yields somewhat conservative estimates of actual hauling distances due to observed clustering of animal operations, in some cases increasing competition for

adjacent land resources.

23 The actual area of available spreadable acreage used for manure application in a given county is determined endogenously in the optimization model.

24 Individual hauling distances in the model may exceed the maximum radial distance assumed for county transfer selection (150 km) due to (1) additional

hauling requirements within the destination county, and (2) parameters that translate linear distance to road miles. The maximum radial distance assumption

of 150 kms could be relaxed but at a cost of model dimensionality.
60 • Manure Management for Water Quality USDA/Economic Research Service

Manure hauling and application charges were based on published literature (Pease et al., 2001; Fleming et al.,

1998), supplemented with data from the NRCS Cost and Capabilities Assessment. Transportation charges reflect a

base rate per wet ton (loading/unloading and application) and hauling cost per ton-mile, by hauling mode and distance interval (table 4-A-1).25 Application costs are incorporated within hauling charges for lagoon and slurry systems; an additional charge of $4.00 was included for dry manure application. Manure incorporation costs assume a

cost of $6.00 per acre (Iowa State Farm Survey, 2001), with 40 percent of acres incorporating regionally based on

information from the ARMS hog and dairy surveys.

Chemical fertilizer costs are based on reported 1997 prices by USDA’s National Agricultural Statistics Service

(NASS), based on representative fertilizer products for the Northeastern U.S. (USDA, NASS, 2001). Nitrogen

price reflects the U.S. average price ($160 per ton) for a nitrogen solution of 30 percent N, or a price per active

ingredient of $0.27 per lb.-N. (The 30-percent nitrogen solution is selected as a representative form of N because it

was the lowest priced form of N with adequate use for NASS to record region prices for both the Northeastern and

Southeastern U.S. regions.) Phosphorus price reflects the price per ton of triple superphosphate (45 percent P),

averaged across the Northeastern and Southeastern regions ($267 per ton), or an active ingredient price of $0.30

per lb.-P. Cost-savings for reduced field application costs (under an N-standard) of $5 per acre were from Fleming,

1998. While the model provides for the pricing of manure, revenue received for manure is currently set to zero.

Prices paid for manure will not affect total regional cost, but would have distributional implications across areas of

the watershed. 

25 While not addressed in this analysis, adjustments may be incorporated to reflect lower hauling charges with backhauls, public cost-sharing for manure hauling, allocation of costs across manure providers and recipients, and manure pricing.

0 200 400 600 800 1000

3000

2500

2000

1500

1000

500

0

Distance (meters)

Figure 4-A-1

Representative area-to-distance function

Acres
USDA/Economic Research Service Manure Management for Water Quality • 61

Table 4-A-1—Manure hauling costs by system type 

Distance

charge,

System Distance Base Distance with

type interval Hauling mode charge1 charge backhaul2

Miles $/ton $/mile $/mile

Lagoon onfarm Pump/spray field 1.25 .25

0.5-2.0 Truck mounted liquid sprayer 2.00 .30

2.0-10.0 Truck mounted liquid sprayer 2.00 .30

Slurry onfarm Tractor/spreader (honey wagon) 2.00 .30

0.5-2.0 Truck mounted liquid sprayer 2.00 .30

2.0-10.0 Tanker truck 2.00 .30

>10.0 Tanker truck 2.00 .30

Dry onfarm Spreader truck 6.00 .50

0 .5-2.0 Spreader truck 6.00 .50

2.0-10.0 Truck 10.00 .11

>10.0 Truck 10.00 .11 .07

1Includes cost of hauling and unloading. Application costs are reflected for lagoon and slurry manure; an additional application charge of $4.00

per ton-not reflected in the table-is included in the model for dry manure. Manure incorporation costs are estimated at $6.00 per acre, with

acreage shares set to 40 percent in the base model.

2A cost adjustment for backhauling may be applied to long-distance hauls for dry manure, although the base model assumes 0% backhauling.

Sources: NRCS, 2003; Fleming et al., 1998; Pease et. al., 2001; Borton et al., 1995.
62 • Manure Management for Water Quality USDA/Economic Research Service

Changes in manure management will likely have

broader effects than those captured in farm-level and

regional analyses. In this chapter, we examine

changes in the livestock and poultry sectors throughout the United States that would result from the adoption of nutrient standards by animal feeding operations. Adherence to a nutrient application standard by

all AFOs, or even just the largest, is likely to affect the

prices received by producers and prices paid by consumers. How would prices for crops and

livestock/poultry products be affected by nutrient standards? How would the spatial distribution of agricultural sectors change under nutrient standards? And

how much would nutrient standards reduce the amount

of manure nutrients produced across the Nation? 

The farm-level and regional analyses demonstrated

that nutrient standards are likely to increase the cost of

production for those operations required to adhere to

them. The magnitude of these cost increases depends

on a number of factors, including the amount of

manure that would require transporting off the farm,

the availability of cropland for the application of

manure nutrients, and the willingness of cropland

operators to substitute manure nutrients for commercial fertilizer. Increased production costs in the animal

sector could be transferred through supply and demand

interactions to livestock and poultry producers, cropland operators, and consumers (see Appendix 5-A,

“Market Interaction Primer,” for a graphical presentation of these interactions).

We use the U.S. Regional Agricultural Sector Model

(USMP) to investigate several possible scenarios for

the adoption of nutrient standards by livestock and

poultry producers in the United States (see appendix 2

in Claassen et al., 2001). The USMP is a spatial and

market equilibrium model designed for general-purpose economic and policy analysis of the U.S. agricultural sector. The economic units analyzed within

USMP include products, inputs, geographic areas, and

supply/demand markets.

We modify the basic model to evaluate how equilibrium conditions will change in response to nutrient

application standards. First, we calculate the generation of livestock and poultry manure nutrients by

region and species. The base costs and mileage costs

to transport this manure to available cropland are

endogenously determined using the Fleming et al.

(1998) formulation in conjunction with regional and

species-specific cost coefficients from the literature

(Borton et al., 1995; Pease et al., 2001). The costs to

develop a nutrient management plan, for periodic testing of manure nutrient composition, and for periodic

testing of soil nutrient content are also included using

USDA estimates (USDA, NRCS, 2003). Furthermore,

using current market values for commercial nitrogen

and phosphorus, we calculate the savings from substituting manure nutrients for commercial fertilizers.

The costs of using manure nutrients are assumed to be

covered by the livestock sectors. The savings to cropping enterprises are then incorporated into the regional

cropping acreage activities.

The nutrient constraints are chosen to represent likely

policy scenarios. Essentially, the adoption of manurenutrient application standards forces manure production and crop production within a geographic area to

be in balance. That is, the aggregate generation of

affected manure nutrients in a region is constrained to

be no greater than the agronomic nutrient demands of

accepting cropland, with no allowance for noncrop

use. Manure generation is calculated according to

Kellogg et al. (2000) and crop nutrient demands are

calculated using the Environmental Policy Integrated

Climate Model (EPIC; Mitchell et al., 1998). A region

is out of balance if it has more (or less) manure nutrients than can be assimilated by available cropland.

Several changes can occur within the model to allow a

region to return to balance. If demand for nutrients is

in excess of manure nutrients, commercial fertilizer

makes up the difference. If manure nutrients exceed

demand, the composition of cropping or

livestock/poultry production could change to alter the

amount of manure nutrients demanded or supplied. For

example, broilers produce manure with higher phosphorus-to-nitrogen ratio than do dairy cows. A region

that is generating excess phosphorus relative to the

plant needs on manure-receiving cropland could

reduce broiler production and increase dairy production. Similarly, different crops utilize nutrients at different rates. For example, hay utilizes more phosphorus than corn, so a region that is generating excess

phosphorus could substitute hay acres for corn. The

model finds the combination of crop and animal

Chapter 5—National Analysis:

Industry Effects of Manure Management
changes across the regions that minimize the net cost

to society.

We use this model to evaluate the implementation of

nutrient standards by animal feeding operations

defined by EPA as CAFOs on the basis of size (CAFO

scenario) and by all animal feeding operations (AFO

scenario). EPA regulations directly affect only

CAFOs. We evaluate the implications of all AFOs

meeting a nutrient standard because that is the longterm goal of USDA. While the adoption of nutrient

management practices for non-CAFOs would be voluntary, the AFO scenarios indicate of how much the

poultry and livestock sectors might gain or lose by

such a change. 

We evaluate the impacts on the animal sector across a

range of assumptions about the willingness of cropland

operators to substitute manure nutrients for commercial

fertilizer, paralleling the willingness-to-accept-manure

(WTAM) assumptions used in the previous analyses

(see box, “Willingness to Accept Manure,” p. 21).

However, because the national analysis cannot replicate

farm-level decisions, we represent WTAM differently

here. We define WTAM as the percentage of a region’s

agronomic demand for nitrogen and phosphorus (based

upon crop requirements in that region) that is met by

manure nutrients. In other words, as the willingness of

cropland operators to accept manure nutrients increases, so does the percentage of each region’s nutrient

demand that is met by substituting manure nutrients for

commercial fertilizers. Therefore, throughout this chapter we will refer to “willingness-to-substitute” rates, or

simply substitution rates. 

Currently, cropland operators supplement commercial

fertilizer with manure as part of their crop fertilization

regime on 17 percent of corn acreage and 2-9 percent

of soybean acreage (most commonly grown crops)

(USDA, ERS 2000a, p. 36). It is unclear to what

extent these rates would change as nutrient standards

become more integral in livestock and poultry production. We consider four scenarios based on the rate at

which manure nutrients are substituted for commercial

fertilizer on cultivated crops in each region: 20 percent, 30 percent, 40 percent, and 80 percent. These are

compared with the baseline case of no standards/no

substitution. The results from these scenarios are compared with the USDA 2010 baseline, when it is

assumed that the agricultural sector will have fully

adjusted to the adoption of nutrient standards.

Unlike the preceding chapters, we evaluate only a single nutrient standard in this chapter. Because each

region in the model is large, there is sufficient land to

assimilate manure nitrogen at all of the substitution

rates, leaving production decisions for the most part

unchanged. However, in many cases, the constraint

that manure phosphorus generation be no greater than

agronomic phosphorus demand was binding.

Therefore, while we impose a nitrogen and phosphorus

application standard, the changes resulting from our

policy scenarios are for the most part driven by the

phosphorus constraint. 

Manure Nutrient Restrictions 

at the National Level

The eight scenarios that we examine (CAFO20,

CAFO30, CAFO40, CAFO80, AFO20, AFO30,

AFO40, and AFO80) correspond to which livestock

and poultry operations adopt manure application constraints (e.g., just CAFOs or all AFOs) and the degree

to which cropland operators substitute manure nutrients for commercial fertilizers (20, 30, 40, or 80 percent). As noted earlier, new water quality regulations

require that the largest livestock and poultry facilities

meet manure nutrient application standards, and the

current rates of manure nutrient substitution average

between 10 and 20 percent. Therefore, we might

expect the CAFO20 scenario to most accurately illustrate the potential changes to the agricultural sector as

a response to meeting these nutrient standards without

any increases in manure use by cropland operators. 

The findings from policy simulations are expressed in

terms of changes in animal units produced, crop

acreage planted, and costs, savings and net returns

across sectors. The national results illustrate the aggregate impacts of these scenarios. For example, CAFOs

are only 4.5 percent of the total AFOs in the U.S.

(table 5-1). However, the quantity of manure generated by these facilities exceeds 200 million tons, more

than 46 percent of the U.S. total and 65 percent of

excess nutrients, indicating the substantial differences

in the quantities of manure regulated under our CAFO

and AFO policies. Disaggregating these results illustrates how the regional cropping, livestock, and poultry sectors may react to manure nutrient standards.

Following from our earlier example, the Corn Belt has

the greatest number of CAFOs, but those operations

generate less than 40 percent of Corn Belt manure.

On the other hand, CAFOs generate more than 60 percent of the manure in the Northern Plains, Appalachia,

Mountain, and Pacific regions. Clearly, these regions

will be affected differently under the various policy

scenarios considered. Regional impacts are evaluated

across the USDA Farm Production Regions (fig. 5-1). 

USDA/Economic Research Service Manure Management for Water Quality • 63
64 • Manure Management for Water Quality USDA/Economic Research Service

Agricultural Prices and Supplies

Results suggest that animal production in general

would decrease with nutrient standards when substitution rates remain at or near current levels (table 5-2).

(Those operations in the farm-level analysis with the

greatest production cost increases are the most likely

to leave the industry.) However, under the CAFO20

and CAFO30 scenarios, these production changes are

generally less than 2 percent. Two notable exceptions

are production of broilers and turkeys, which fall by

more than 7 percent when substitution rates remain at

or near current levels. Under both scenarios, there is a

slight increase in the production of veal. Under the

AFO scenarios, production falls more, especially at the

lowest substitution rate. When substitution rates

exceed 40 percent, there are essentially no changes in

production under the CAFO scenarios and only marginal changes under the AFO scenarios. 

Table 5-1—Operations with confined livestock/poultry and manure distribution

Operations Manure generated

Share of Share of

Region AFOs CAFOs CAFOs CAFO AFOs CAFOs

Number Percent Million tons Percent

Northeast 31,350 499 1.59 39 6 15.42

Lake 52,498 861 1.64 59 15 25.10

Corn Belt 71,252 2,264 3.18 73 29 39.55

Northern Plains 26,087 1,245 4.77 65 42 64.01

Appalachia 22,776 1,698 7.46 66 41 62.69

Southeast 12,635 1,386 10.97 23 10 43.31

Delta 12,252 917 7.48 19 7 39.04

Southern Plains 10,500 735 7.00 46 18 38.22

Mountain 7,780 656 8.43 33 23 69.31

Pacific 7,654 1,137 14.85 40 24 60.55

Total 254,784 11,398 4.47 462 214 46.36

Source: 1997 U.S. Census of Agriculture (USDA-NASS, 1997).

Figure 5-1

USDA Farm Production Regions

Southeast

Appalachia

Northeast

Lake

Corn Belt

Northern

Plains

Mountain

Pacific

Southern

Plains

Delta
USDA/Economic Research Service Manure Management for Water Quality • 65

With less supply, the prices received by most livestock

and poultry producers and those paid by consumers for

animal products (milk, eggs, cheese) would increase

(table 5-3) when manure-fertilizer substitution remains

at or near current levels. Under the CAFO20 and

CAFO30 scenarios, most price increases are minimal

(less than 2 percent), except for poultry. Price changes

would be greatest when all AFOs must meet nutrient

standards and the least amount of manure nutrients is

substituted for commercial fertilizer. Price changes

are negligible when nutrient substitution exceeds 40

percent. 

Impacts may spill over into the crop sectors, driven by

the demand for land to assimilate manure nutrients and

the demand for feed in the more stringent scenarios

(tables 5-4 and 5-5). The changes in crop production

vary by crop under the various scenarios. However,

under the CAFO20 scenario (again, the most “immediate”), acreage planted to corn, barley, and oats falls

and production of sorghum, wheat, rice, soybeans, cotton, silage, and hay increases. Most of these changes

are small and the net change in total acreage is less

than 1 percent. At the lower substitution rates, prices

generally fall (with the exception of silage) under both

the CAFO and AFO scenarios. At the higher substitution rates, prices generally increase by less than 0.5

percent. 

National Net Returns

The analyses in the previous chapters assumed prices

remain constant, so the costs of meeting a nutrient

standard are borne fully by animal operations. In this

analysis, price increases can mitigate some of the

implementation costs to operations that remain in proTable 5-2—Change in product supply under manure nutrient standard 

Baseline AFO CAFO

Commodity quantities 20% 30% 40% 80% 20% 30% 40% 80%

Million Percent change

Fed beef (Cwt) 149.66 -12.12 -4.39 -1.68 -0.01 -0.51 -0.15 0.00 -0.01

Broilers (Carcass lbs.) 34,942.99 -27.56 -18.55 -9.09 -0.01 -7.57 -1.92 0.00 -0.01

Turkey (Carcass lbs.) 5,950.01 -23.04 -13.97 -8.19 0.00 -7.22 -1.80 0.00 0.00

Manufactured milk (Cwt) 884.62 -3.38 -1.09 -0.48 0.00 -0.54 -0.16 0.00 0.00

Veal (Cwt) 1.34 -2.19 -0.30 -0.01 0.00 0.22 0.07 0.00 0.00

Pork (Cwt) 189.82 -6.61 -2.34 -0.80 0.00 -1.52 0.01 0.00 0.00

Eggs (Dozen) 7,585.81 -1.63 -0.66 -0.32 0.00 -0.35 -0.10 0.00 0.00

Butter (Lbs.) 1,360.34 -5.45 -1.76 -0.78 0.00 -0.87 -0.26 0.00 0.00

American cheese (Lbs.) 2,776.93 -3.35 -1.08 -0.48 0.00 -0.54 -0.16 0.00 0.00

Ice cream (lbs.) 1,193.10 -1.38 -0.45 -0.20 0.00 -0.22 -0.07 0.00 0.00

Table 5-3—Change in product prices

Baseline AFO CAFO

Commodity price 20% 30% 40% 80% 20% 30% 40% 80%

Dollars Percent change

Baseline

Fed beef (Cwt) 335.42 3.00 1.09 0.42 0.00 0.13 0.04 0.00 0.00

Broilers (Carcass lbs.) 0.36 24.64 7.38 3.62 0.00 3.02 0.76 0.00 0.00

Turkey (Carcass lbs.) 0.39 37.35 14.34 0.06 0.00 5.00 1.25 0.00 0.00

Manufactured milk (Cwt) 11.98 11.12 3.59 1.59 0.00 1.78 0.54 0.00 0.00

Veal (Cwt) 562.61 1.65 0.22 0.01 0.00 -0.16 -0.05 0.00 0.00

Pork (Cwt) 263.00 3.09 1.09 0.37 0.00 0.71 0.00 0.00 0.00

Eggs (Dozen) 0.69 29.10 11.69 5.72 0.01 6.33 1.78 0.00 0.01

Butter (Lbs.) 1.07 19.30 6.23 2.76 0.00 3.09 0.93 0.00 0.00

American cheese (Lbs.) 1.34 9.17 2.96 1.31 0.00 1.47 0.44 0.00 0.00

Ice cream (lbs.) 1.38 11.44 3.69 1.64 0.00 1.83 0.55 0.00 0.00
66 • Manure Management for Water Quality USDA/Economic Research Service

duction. However, these results do not account for

other costs that would accompany the passage of new

CAFO regulations, such as additional storage, handling, and relocation costs. The aggregate effects on

net returns of meeting manure nutrient standards vary

across agricultural sectors.

The net effect on the livestock and poultry sectors

when only CAFOs meet nutrient standards range from

a gain of $89 million (0.3 percent) at the lowest nutrient substitution rate to a loss of over $1 billion (3.2

percent) at the highest substitution rate. Under the

more stringent AFO scenarios, net returns to the livestock and poultry sector would increase nearly $5 billion (14.4 percent) under the lowest substitution rate,

and decrease nearly $2.5 billion (7.3 percent) under

the highest substitution rate. The increase in net

returns at low substitution rates is due to the expansion

effect of prices responding to supply changes. This

holds true for both the AFO and CAFO scenarios.

These results might be surprising to some because the

cost of nutrient standards would be greatest at lower

substitution rates (as shown in the farm-level analysis).

However, increases in prices for animal products, due

to the exit from the industry of high-cost producers

and thus lower supply, are able to compensate for cost

increases. As shown in the Market Interaction Primer

(Appendix 5-A), net returns can actually increase if

prices for livestock and poultry products in both the

domestic and export markets are assumed to be very

responsive to changes in production. Those producers

able to remain in production are the ones that benefit.

If prices are less responsive than assumed in the

model, net returns in the livestock and poultry sector

would decline.

Table 5-4—Change in crop production

Baseline AFO CAFO

Commodity quantities 20% 30% 40% 80% 20% 30% 40% 80%

Million Percent change

Corn (Bu) 11,235.38 -2.10 -1.26 -0.60 -0.02 -0.49 -0.11 -0.01 -0.02

Sorghum (Bu) 668.50 10.07 3.01 1.60 -0.07 0.22 0.05 -0.03 -0.07

Barley (Bu) 365.10 3.60 -1.04 -0.06 -0.04 -0.20 0.21 -0.02 -0.04

Oats (Bu) 149.89 -7.25 -5.23 -1.89 -0.03 -1.96 -0.27 -0.01 -0.03

Wheat (Bu) 2,545.09 4.18 1.65 0.81 -0.03 0.35 0.04 -0.02 -0.03

Rice (Cwt) 194.20 16.44 10.16 3.17 -0.11 3.42 1.43 -0.05 -0.11

Soybeans (Bu) 3,245.04 3.52 1.71 0.75 -0.04 0.82 0.09 -0.01 -0.04

Cotton (Bale) 17.50 2.11 1.04 0.48 -0.01 0.25 0.07 -0.01 -0.01

Silage (Ton) 95.60 3.89 1.42 0.72 -0.01 0.66 0.14 0.00 -0.01

Hay (Ton) 155.60 7.48 2.40 1.30 -0.03 1.36 0.48 -0.01 -0.03

Total crop acres 337.42 3.66 1.42 0.67 -0.04 0.51 0.10 -0.02 -0.04

Table 5-5—Change in crop prices

Baseline AFO CAFO

Commodity price 20% 30% 40% 80% 20% 30% 40% 80%

Dollars Percent change

Corn (Bu) 2.60 -6.03 -2.70 -1.29 0.03 -1.09 -0.21 0.01 0.03

Sorghum (Bu) 2.35 -4.34 -1.61 -0.73 0.01 -0.39 -0.06 0.01 0.01

Barley (Bu) 2.40 -2.22 -0.48 -0.27 0.01 -0.22 -0.08 0.00 0.01

Oats (Bu) 1.45 -13.12 -7.25 -3.34 0.03 -3.34 -0.43 0.02 0.03

Wheat (Bu) 3.70 -1.56 -0.62 -0.30 0.01 -0.13 -0.02 0.01 0.01

Rice (Cwt) 7.71 -1.65 -1.02 -0.32 0.01 -0.34 -0.14 0.01 0.01

Soybeans (Bu) 6.30 -3.54 -1.88 -0.88 0.02 -0.85 -0.14 0.02 0.02

Cotton (Bale) 312.00 -1.58 -0.78 -0.36 0.01 -0.19 -0.05 0.00 0.01

Silage (Ton) 21.73 -1.38 -0.12 -0.03 0.00 0.02 0.02 0.00 0.00

Hay (Ton) 60.66 -4.36 -1.47 -0.71 0.01 -0.67 -0.22 0.00 0.01
USDA/Economic Research Service Manure Management for Water Quality • 67

A composite of potential net returns to livestock and

poultry sectors and manure production highlights the

differences between the AFO and CAFO scenarios and

the influence that willingness to substitute manure

nutrients has on the economic performance of the U.S.

livestock and poultry sectors (fig. 5-2). As the willingness of cropland operators to substitute manure nutrients for commercial fertilizer decreases, manure production decreases and net returns to livestock and

poultry producers increase. The reduction in manure

reflects a reduction in the number of animals as marginal production costs increase and high-cost producers leave the industry. The impacts to the animal sector are generally smaller when only CAFOs are

required to meet a nutrient standard.

The net effect on returns to the U.S. agricultural sector

(crops and animals) under the CAFO scenarios is predicted to range from a loss of $201 million (0.3 percent from baseline estimates of net returns) when substitution rates remain at or near current levels to a loss

of $644 million at high substitution rates (1.0 percent)

(table 5-6). When all AFOs must meet nutrient standards, effects range from a loss of $1.6 billion (2.4

percent loss relative to the baseline) at high substitution rates to a gain of $2.1 billion (3.2 percent) at low

manure-fertilizer substitution rates. In this latter case,

the percentage increase in prices under the most stringent scenario (AFO20) is greater than the percentage

decrease in supply, resulting in greater net producer

returns. The reductions in animal numbers reduce the

demand for feed, thereby reducing income for crop

producers. Generally, when returns to the livestock

and poultry sectors increase, returns to crop sectors

fall. The aggregate effect on net returns to the entire

agricultural sector from imposition of nutrient standards would be negative, except at low manure substitution rates. 

At high manure substitution rates, there are few

changes in livestock and poultry production and

prices, because there is sufficient cropland for spreading manure nutrients at agronomic rates (tables 5-2, 5-

3). However, livestock and poultry producers still

incur additional costs in transporting manure, developing a nutrient plan, and performing the necessary

nutrient tests. Similarly, there are few changes in the

production levels and prices for crops at high substitution rates (tables 5-4, 5-5). Returns to cropland operators would increase due to savings from substituting

manure nutrients for commercial fertilizer. These savings at high nutrient substitution rates do not fully

compensate for the increasing costs to the livestock

and poultry sectors, resulting in net losses to the agricultural sector as a whole (table 5-6).

Projected quantity and price changes for crop, livestock, and poultry sectors would be the greatest with

300

320

340

360

380

400

20% 30% 40% 80%

Rate of substiution

380

400

420

440

460

480

Net Returns-AFO

Net Returns-CAFO

Manure-AFO

Manure-CAFO

Net returns ($100 million Manure (million tons)

National level net returns and manure generation

Figure 5-2
68 • Manure Management for Water Quality USDA/Economic Research Service

manure substitution rates at or near current levels.

Livestock and poultry production would decline in

general to meet manure nutrient standards, and animal

product prices would increase. Incentives would arise

for land to come into crop production to meet an

increased demand for cropland on which to spread

manure. Coupled with decreasing demand for livestock and poultry feed, this effect would result in

decreasing prices and increasing quantities for the crop

sector. In the most restrictive scenario, where all confined animal operations adopt manure nutrient application standards (AFO scenario) and where relatively

few acres are available for manure spreading, the

expansion effect in the livestock and poultry sectors

would more than offset losses in the cropping sectors,

resulting in a net increase in returns to agriculture

($2.1 billion).

While these potential effects of nutrient standards are

described in aggregate, individual sectors would experience a range of changes depending on the extent to

which livestock and poultry producers adopt nutrient

standards and the extent to which cropland operators

are willing to substitute manure nutrients. For example, the poultry sector under the most restrictive scenario (AFO20) shows a nearly $2.1 billion increase in

net returns. However, at high substitution rates (e.g.,

80 percent), the land constraints on manure use would

not be binding, even when all AFOs meet the standard.

With sufficient land in each region for spreading

manure, there would be no decrease in poultry production or increase in prices for poultry products.

Consequently, net returns in the poultry sector would

fall, due to the higher fixed and variable costs associated with the adoption of nutrient standards. 

Consider the likely scenario of CAFO20. Net returns

increase in the poultry, swine, and dairy sectors, and

decrease in the corn, soybean, and beef sectors. The

aggregate effect is positive for the livestock and poultry sectors and negative for the crop sector. This illustrates the importance of disentangling aggregate

effects to reveal the potential impacts on individual

sectors.

National Welfare

Changes in net returns in the agriculture sector (livestock/poultry and crops) are only part of the impacts

on the economy. Consumers are affected as prices of

commodities change. An aggregate measure of how

consumers and producers fare under the alternative

policy scenarios expands our analysis even wider (fig.

5-3). As substitution rates decline from 80 percent to

20 percent, manure management costs increase and the

net benefits to U.S. agricultural consumers and producers decline (at most, approximately $1.1 billion

under CAFO scenarios and $5.2 billion under AFO

scenarios). This result suggests that consumers and

cropland operators bear the losses when the substitution rate is low, given that the declines in net benefits

exceed the increases in net returns to livestock and

poultry producers (shown in table 5-6). The opposite

can be seen at higher substitution rates. Specifically,

under CAFO80, net benefits to U.S. agricultural consumers and producers decline $650 million, yet net

returns for cropland operators increase $432 million.

Consumers and livestock/poultry producers bear the

losses.

These losses could be viewed as the cost for improving U.S. water quality by reducing the amount of

manure and redistributing it to regions that can best

utilize its potential for crop fertilization. We have not

tried to assess the value of environmental benefits

from improved water quality, nor have we included

Table 5-6—Change in net returns 

AFO CAFO

Sector 20% 30% 40% 80% 20% 30% 40% 80%

$ Million

Corn -1,702.2 -697.4 -231.2 194.0 -272.1 17.4 86.5 90.3

Soybeans -2,332.7 -935.0 -206.3 399.7 -350.5 90.9 180.7 184.2

All crops -2,749.2 -814.7 68.7 901.7 -289.9 262.3 426.8 432.2

Dairy 1,250.7 -172.7 -571.4 -889.7 97.7 -125.3 -216.9 -220.2

Swine 1,385.8 401.6 -9.6 -274.1 290.2 -102.0 -117.7 -132.4

Beef 123.1 -284.8 -603.6 -821.1 -378.6 -486.6 -495.3 -506.4

Poultry 2,118.6 -62.3 -255.5 -491.1 79.5 -127.0 -214.9 -216.7

All animals 4,878.3 -118.2 -1,440.1 -2,476.0 88.9 -841.0 -1,044.7 -1,075.7

Total 2,129.1 -932.9 -1,371.4 -1,574.3 -201.0 -578.8 -617.9 -643.5
USDA/Economic Research Service Manure Management for Water Quality • 69

alternative options for disposing of manure. Industrial

technologies may be able to use manure nutrients as

inputs in a value-added product. For example, in our

most restrictive scenario, the cost of restricting an

additional pound of phosphorus from being land

applied approaches $30 per pound in the Pacific and

Southeast regions, but is less than $5 per pound in the

Mountain, Northern Plains, and Corn Belt regions. As

such, industrial options that cost less than $30 per

pound to reduce phosphorus supply would enhance

overall welfare in the Pacific and Southeast regions,

but might not be as advantageous in regions with relatively abundant land for manure applications.

Regional View

Because national results may mask regional impacts,

we compare performances across the 10 USDA Farm

Production Regions. Discerning patterns from these

results is sometimes difficult because they are the

result of many simultaneous economic forces. It is

useful to recall what meeting nutrient standards

implies for regional production decisions; i.e., how

might a region balance manure nutrient production and

agronomic nutrient demands.

Regional Animal Production

The most noticeable changes in animal production levels would occur when substitution rates remain at or

near current levels (i.e., when manure nutrients replace

only 20 percent of commercial fertilizer). At 20-percent substitution, widespread spatial shifts in production are readily observed. Noticeable changes in the

livestock, poultry, and crop sectors are observed at 40

percent. At a substitution rate of 80 percent, only

minor changes occur because most areas would have

sufficient cropland for spreading manure.

When only CAFOs must meet nutrient standards,

changes are generally small (fig. 5-4a). However, animal numbers drop more than 20 percent in the

Appalachia, Pacific, and Southeast regions under the

CAFO20 scenario. Other regions increase production.

Under the AFO scenarios, where all operations adopt

nutrient standards, production declines occur in all the

regions except for the Corn Belt, Mountain, Lake, and

Northern Plains (fig. 5-4b). Reductions are greatest

when the substitution of manure for commercial fertilizer is lowest.

Crop Acreage

Overall, crop acreage changes little (0.5 percent or

less) when only CAFOs adhere to a nutrient standard

(fig. 5-5a). When all AFOs meet a nutrient standard,

changes in crop acreage are slightly greater (0 to 3.7

percent) (fig. 5-5b). Acreage increases could occur in

those regions where the demand for land to spread

manure is high. These increases allow at least some of

460

461

462

463

464

465

466

467

468

20 30 40 80

Rate of substiution (Percent)

CAFO

AFO

Baseline = $467.6

Net benefits ($ Billion)

Figure 5-3

Net benefits to consumers and agricultural producers, by substitution rate and CAFO/AFO standard
70 • Manure Management for Water Quality USDA/Economic Research Service

the livestock and poultry production at the margin to

remain viable, particularly in the Appalachia,

Southeast, and Pacific regions. The Corn Belt is the

only region to show noticeable declines in crop

acreage.

Transportation Costs

Transportation costs for hauling manure are a large

contributor to the costs of meeting a manure-nutrient

application standard. Hauling costs differ between

regions because each region has different amounts of

land available for spreading manure, different mixes of 

0

5

10

15

20

Northeast Lake Corn Belt Northern

Plains

Appalachia Southeast Delta Southern

Plains

Mountain Pacific

Animal Units (1,000,000)

Baseline

CAFO20

CAFO30

CAFO40

CAFO80

Animal production when only CAFOs meet nutrient standards

Figure 5-4a

Animal Units (million)

Baseline

AFO20

AFO30

AFO40

AFO80

Animal production when all AFOs meet nutrient standards

Figure 5-4b

0

5

10

15

20

Northeast Lake Corn Belt Northern

Plains

Appalachia Southeast Delta Southern

Plains

Mountain Pacific
USDA/Economic Research Service Manure Management for Water Quality • 71

predominant crops, and different quantities of manure

that need to be spread. Changes in transportation costs

generally move in concert with changes in the number

of animals.

Transportation costs remain fairly constant across the

CAFO scenarios (fig. 5-6a). Under the CAFO20 scenario, estimated transportation costs range from $33.4

million per year in the Northeast to $237 million in the

Northern Plains, where the most animals are produced.

Transportation costs can also be viewed in terms of

dollars per ton of manure transported. Under the

CAFO20 scenario, these costs range from $2.46 per

ton in Appalachia to $6.05 in the Pacific region. 

Greater changes in transportation costs (relative to the

baseline) are seen when all AFOs adhere to the nutrient standard (fig. 5-6b) Transportation costs are highMillion acres

Baseline

CAFO20

CAFO30

CAFO40

CAFO80

Crop acreage when only CAFOs meet nutrient standards

Figure 5-5a

Northeast Lake Corn Belt Northern

Plains

Appalachia Southeast Delta Southern

Plains

Mountain Pacific

0

25

50

75

100

Million acres

Baseline

AFO20

AFO30

AFO40

AFO80

Crop acreage when only AFOs meet nutrient standards

Figure 5-5b

Northeast Lake Corn Belt Northern

Plains

Appalachia Southeast Delta Southern

Plains

Mountain Pacific

0

25

50

75

100
72 • Manure Management for Water Quality USDA/Economic Research Service

est in the Lake, Corn Belt, and Northern Plains regions

and typically fall as substitution rates increase.

However, in the Southern Plains, Pacific, Appalachia,

and Southeast regions, transportation costs are greatest

when substitution of manure nutrients is high, and

decline noticeably when the willingness of cropland

operators to use manure nutrients declines. This result

mirrors changes in animal production shown in figure

5-4b.

Fertilizer Savings

Throughout our analysis, we assume that substituting

manure nutrients for commercial fertilizer would generate savings for cropland operators (Lazarus and

Koehler, 2002). Savings would closely follow the

regional quantities of manure generated and the

assumed willingness of cropland operators to use

manure (table 5-1). Nationally, savings for cropland

Transportation costs ($ Million)

CAFO20

CAFO80

Manure transportation costs when only CAFOs meet nutrient standards

Figure 5-6a

Northeast Lake Corn Belt Northern

Plains

Appalachia Southeast Delta Southern

Plains

Mountain Pacific

0

50

100

150

200

250

300

350

400

450

CAFO30

CAFO40

Transportation costs ($ Million)

AFO20

AFO80

Manure transportation costs when all AFOs meet nutrient standards

Figure 5-6b

Northeast Lake Corn Belt Northern

Plains

Appalachia Southeast Delta Southern

Plains

Mountain Pacific

AFO30

AFO40

0

50

100

150

200

250

300

350

400

450
USDA/Economic Research Service Manure Management for Water Quality • 73

operators would increase as more livestock and poultry

operations meet standards and as more manure nutrients are substituted by cropland operators. When all

AFOs meet standards and 80 percent of cropland operators substitute manure nutrients, savings would total

$887 million (assuming no change in the price of commercial fertilizer). When only CAFOs meet standards

and only 20 percent of cropland operators substitute

manure, nutrient savings would fall to $393 million as

animal production decreases in order to balance

manure nutrients with available cropland.

Regionally, the story is more complex. When only

CAFOs meet standards, the region showing the greatest savings at higher substitution rates (30 percent, 40

percent, and 80 percent) would be Appalachia ($70

million) (fig. 5-7a). Even though CAFOs in

Appalachia would not generate as much manure as

those in the Northern Plains, the manure content

would be more valuable (a higher phosphorus-to-nitrogen ratio), reflecting the larger concentration of poultry producers. However, at low substitution rates (e.g.,

20 percent), the nutrient standards would become more

binding in Appalachia and animal production would

decrease. Consequently, at the 20-percent substitution

rate, the potential savings from manure nutrients

would be greatest in the Northern Plains ($70 million). 

When all AFOs meet standards and the substitution

rate is low (e.g., 20 percent), the greatest savings to

cropland operators would occur in the Corn Belt, totaling more than $201 million (fig. 5-7b). This region has

an abundance of animals and cropland and, as expected, savings would be substantial. However, as substitution rates increase, savings in the Corn Belt would

decrease to $133 million. These changes are correlated to the changes in the numbers of animals produced

under the different scenarios. 

Net Returns

Changes in net returns to livestock and poultry production vary between regions for many reasons, including

availability of cropland and mix of animal types.

Under both AFO and CAFO scenarios, net returns

would increase in most regions under assumed current

nutrient substitution rates (about 20 percent). When

only CAFOs meet nutrient standards, net returns in the

Corn Belt would increase the most ($502 million or 14

percent). Plentiful land for spreading manure keeps

the costs of meeting a standard down in this region, so

it benefits most from the price increases (for animal

products) that occur. Overall production in the livestock and poultry sector also increases. In contrast,

net returns would decrease in the Southeast and Pacific

regions (about 24-percent reduction in net returns

each), where land suitable for spreading manure is relatively scarce (fig. 5-8a). If all AFOs must meet nutrient standards, the impacts on net returns are magnified. Net returns in all but three regions would

increase, with the largest again in the Corn Belt ($3.8

billion or 105 percent). Net returns decrease in the

Southeast, Southern Plains, and Pacific (fig. 5-8b).

As nutrient substitution rates increase, the expansion

effect is reduced so price increases do not compensate

as much for higher manure management costs. Net

returns decrease in all regions under both AFO and

CAFO scenarios when the substitution rate is 80 percent. Percentage reductions are greatest in the

Northern Plains in both the CAFO (7.4 percent) and

AFO (11 percent) scenarios.

Implications for Individual Sectors

We report results for the three principal livestock sectors (beef, dairy, and swine), the poultry sector, and the

corn and soybean sectors. In general, when constraints

from nutrient standards are not binding or marginally

binding (i.e., greater than an 80-percent substitution

rate), there would be small decreases in returns to all

the regional livestock and poultry sectors because of

the cost of meeting nutrient standards. There would

be little to no corresponding price effect because, for

the most part, no decreases in production would occur.

However, changes in the various agricultural sectors

would be larger when nutrient constraints become

more binding (more livestock/poultry operations having to meet nutrient standards and fewer cropland

operators substituting manure nutrients for commercial

fertilizers).

Beef Sector

Changes to net returns in the beef sector vary widely

between regions and manure substitution rates (table

5-7). Under the CAFO20 scenario, net returns to the

beef sector fall in most regions (-5.1 percent nationally), approaching $290 million (-54.5 percent) in the

Pacific region. Increases in net returns occur in the

Northeast, Southeast, Southern Plains, and Mountain

regions. As manure nutrient substitution increases,

losses are reduced in the Pacific, but greatly increase

in the Northern Plains to $218 million (-9.5 percent). 

The greatest changes in net returns would occur if all

AFOs met a nutrient standard and only 20 percent of

commercial fertilizer were replaced by manure nutrients. Six regions would suffer declines in net returns,

although national returns would increase by $123 million (1.7 percent). Some regions benefit greatly. The
74 • Manure Management for Water Quality USDA/Economic Research Service

Northern Plains would enjoy an increase of $986 million (42.8 percent). In contrast, the Southern Plains

would suffer a $988 million loss (more than 45.0 percent). As substitution rates increase, the magnitude of

the impacts is greatly reduced. When the manure

nutrient substitution rate is 80 percent, all but one

region suffer losses in net returns, with the greatest

loss in the Northern Plains ($291 million). 

Dairy Sector

Returns to dairy production would follow a different

pattern than seen in the beef sector (table 5-8). When

only CAFOs adhere to a nutrient standard, net returns

actually increase for most regions (0.7 percent) with

substitution near or at current levels. However losses

occur in the Southeast and Pacific regions ($3.5 million

Savings ($ Million)

CAFO20

CAFO30

CAFO40

CAFO80

Savings from manure use when only CAFOs meet nutrient standards

Figure 5-7a

Northeast Lake Corn Belt Northern

Plains

Appalachia Southeast Delta Southern

Plains

Mountain Pacific

0

50

100

150

Savings ($ Million)

AFO20

AFO30

AFO40

AFO80

Savings from manure use when all AFOs meet nutrient standards

Figure 5-7b

Northeast Lake Corn Belt Northern

Plains

Appalachia Southeast Delta Southern

Plains

Mountain Pacific

0

40

80

120

160

200
USDA/Economic Research Service Manure Management for Water Quality • 75

and $474 million ). At higher manure nutrient substitution rates, all regions suffer losses in net returns, with

the largest loss in the Pacific ($102 million).

Net returns would increase in most regions if all operations met nutrient standards and substitution rates

remain at or near current levels. Net returns for the

dairy sector as a whole would increase over $1.2 billion (9.4 percent). The largest increases would occur

in the Lake States ($655 million) and Corn Belt ($495

million). The Pacific, however, would see large losses, approaching $625 million (-19.3 percent). As the

substitution of manure nutrients for commercial fertilizer increases, the dairy sector as a whole suffers

increasingly larger net losses. When manure nutrients

substitute for 80 percent of commercial fertilizer, all

Net returns ($ Million)

Net returns to livestock/poultry production when only CAFOs meet nutrient standards

Figure 5-8a

Northeast Lake Corn Belt Northern

Plains

Appalachia Southeast Delta Southern

Plains

Mountain Pacific

0

1,000

2,000

3,000

4,000

5,000

6,000

Baseline

AFO20

AFO30

AFO40

AFO80

Net returns ($ Million)

Net returns to livestock/poultry production when all AFOs meet nutrient standards

Figure 5-8b

Northeast Lake Corn Belt Northern

Plains

Appalachia Southeast Delta Southern

Plains

Mountain Pacific

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Baseline

AFO20

AFO30

AFO40

AFO80
76 • Manure Management for Water Quality USDA/Economic Research Service

regions suffer losses, with the largest in the Lake

States ($250 million, or -7.8 percent).

Poultry Sector

The poultry sector in most regions shows increases in

net returns (AFO and CAFO) with a 20-percent nutrient substitution assumption (table 5-9). If only

CAFOs meet a nutrient standard, net returns for the

sector would increase by $79.5 million (0.7 percent)

when substitution rates remain at or near current levels, with all but two regions seeing increases. The

Southeast would suffer the greatest losses ($749 million or -28.1 percent). As more manure nutrients are

substituted for commercial fertilizer, sector losses start

to mount, until all regions suffer losses in net returns. 

When all AFOs must meet nutrient standards, the

poultry sector realizes a large gain in net returns when

nutrient substitution is most limited ($2.1 billion or

nearly 20 percent). The Corn Belt in particular would

benefit, enjoying an increase of $1.9 billion. In contrast, the Southeast would suffer a loss of over $1.4

billion. As the substitution assumption is relaxed, the

number of regions with losses increases. When 80

percent of commercial fertilizer is replaced by manure

nutrients, net returns decline in all regions, with the

largest still occurring in the Southeast ($116 million).

Total sector losses reach $491 million (5 percent).

Swine Sector

Net returns to swine production increase relative to the

baseline. Under the CAFO20 scenario, most regions

benefit (13.5-percent increase nationally), with the

largest increase in the Corn Belt ($192 million or 26.6

percent) (table 5-10). As the substitution rate increases

to 80 percent, all regions suffer relatively small losses.

Table 5-8—Change in net returns to the dairy sector 

AFO CAFO

Region 20% 30% 40% 80% 20% 30% 40% 80%

$ Million

Northeast 123.1 77.3 -23.6 -181.7 167.4 43.1 -7.9 -8.3

Lake States 654.6 197.2 -53.5 -250.4 188.1 33.8 -29.7 -30.6

Corn Belt 495.5 90.8 -11.0 -90.7 71.5 9.3 -16.2 -16.5

Northern Plains 145.2 31.8 -2.8 -29.8 21.7 0.4 -8.3 -8.3

Appalachia 135.4 -15.5 -31.4 -57.0 44.8 10.0 -6.9 -6.9

Southeast -12.9 -41.5 -38.4 -9.2 -3.5 -1.6 -2.0 -2.4

Delta States 30.8 12.6 7.3 -5.4 12.5 3.2 -0.5 -0.7

Southern Plains 28.8 -22.7 -7.2 -10.7 37.3 9.3 -2.8 -2.8

Mountain 275.3 64.2 -21.0 -87.2 32.1 -19.9 -41.0 -41.1

Pacific -625.1 -566.9 -389.8 -167.5 -474.2 -212.9 -101.7 -102.5

U.S. 1,250.7 -172.7 -571.4 -889.7 97.7 -125.3 -216.9 -220.2

Table 5-7—Change in net returns to the beef sector 

AFO CAFO

Region 20% 30% 40% 80% 20% 30% 40% 80%

$ Million

Northeast -59.8 -5.0 -0.8 -4.6 1.9 -3.0 -4.5 -4.8

Lake States -64.3 -8.4 -28.3 -41.2 -3.4 -16.4 -20.3 -22.2

Corn Belt 254.4 11.5 -62.8 -112.0 -22.1 -46.9 -54.8 -57.8

Northern Plains 986.3 361.0 -29.5 -290.6 -82.5 -173.6 -216.3 -218.5

Appalachia -31.6 -24.0 -17.0 -14.2 -23.8 -12.0 -13.8 -13.9

Southeast 33.5 12.2 5.1 0.0 7.3 1.6 0.0 0.0

Delta States -43.5 -13.4 -6.4 -10.2 -2.7 -7.2 -8.6 -9.7

Southern Plains -987.7 -617.5 -312.3 -199.0 24.6 -24.3 -67.9 -68.8

Mountain 526.6 316.8 77.0 -105.2 12.6 -52.0 -89.0 -89.9

Pacific -490.7 -318.0 -228.8 -43.9 -290.4 -152.9 -20.2 -20.7

U.S. 123.1 -284.8 -603.6 -821.1 -378.6 -486.6 -495.3 -506.4
USDA/Economic Research Service Manure Management for Water Quality • 77

The largest occurs in the Appalachia region ($50 million, or 7.4 percent).

Under the AFO scenario at the lowest substitution rate,

hog returns would decline in 6 of the 10 regions, but

national net returns would increase $1.4 billion (more

than 64 percent). This is in large part due to the $1.1-

billion increase in the Corn Belt. At the highest nutrient substitution rate, net returns decline in all regions,

with the largest loss in the Corn Belt ($110 million). 

Corn and Soybean Sectors 

Balancing manure nutrient production with nutrient

uptake in each region can result in shifts in the acreage

of various crops and in crop prices (tables 5-11 and 5-

12). (We assume that livestock and poultry producers

do not pay cropland operators to receive manure.) If

CAFOs are the only operations adhering to a nutrient

standard, net returns to corn producers decrease in

most regions (and -1.7 percent nationally) at 20-percent substitution. Increased willingness to substitute

manure nutrients for commercial fertilizer quickly

reverses the impacts so that all regions enjoy increases

in net returns. If all animal operations met nutrient

standards, net returns to corn producers would decline

everywhere except in the Pacific region (and -10.6

percent nationally) under low substitution rates. Net

returns would decline by over $1 billion (nearly 11

percent) in the Corn Belt, driven by the large volume

of corn grown there and the projected declines in crop

prices given production increases throughout the

United States. At the highest rates of substitution, net

returns increase in all regions, with the Corn Belt seeing the largest increase ($60 million or 0.6 percent).

Price changes in this scenario are negligible, so the

results reflect savings in fertilizer expenditures.

Table 5-9—Change in net returns to the poultry sector 

AFO CAFO

Region 20% 30% 40% 80% 20% 30% 40% 80%

$ Million

Northeast 355.5 318.7 176.7 -44.5 198.4 37.5 -16.9 -17.1

Lake States 574.6 247.2 91.0 -18.2 98.4 17.9 -8.6 -8.7

Corn Belt 1,916.8 592.2 232.6 -51.2 260.7 44.2 -29.9 -30.0

Northern Plains 232.9 86.4 34.1 -6.6 41.9 9.5 -1.7 -1.7

Appalachia 595.0 33.9 39.0 -91.0 133.5 42.9 -27.8 -28.0

Southeast -1,456.1 -1,245.2 -933.7 -115.7 -749.4 -229.9 -52.9 -53.4

Delta States 255.3 269.5 271.5 -92.0 290.0 46.5 -32.1 -32.7

Southern Plains -36.8 -125.7 -24.8 -38.2 117.2 17.9 -20.8 -20.9

Mountain 74.5 33.1 14.1 -1.9 17.6 4.4 -0.2 -0.2

Pacific -393.2 -272.4 -156.0 -31.7 -328.7 -118.0 -23.9 -23.9

U.S. 2,118.6 -62.3 -255.5 -491.1 79.5 -127.0 -214.9 -216.7

Table 5-10—Change in net returns to the swine sector 

AFO CAFO

Region 20% 30% 40% 80% 20% 30% 40% 80%

$ Million

Northeast -59.7 5.2 -0.4 -11.8 15.1 -3.3 -4.1 -5.4

Lake States 114.0 89.7 6.2 -40.0 60.6 -12.0 -14.8 -18.0

Corn Belt 1,108.6 280.0 28.3 -109.5 192.3 -26.3 -33.5 -38.2

Northern Plains 400.8 146.7 34.6 -25.5 90.7 -5.7 -8.5 -8.8

Appalachia -113.3 -76.5 -45.8 -68.1 -69.4 -39.2 -46.9 -50.0

Southeast -22.3 -22.7 -17.1 -4.6 -10.1 -4.8 -1.4 -1.9

Delta States -17.7 -0.2 -0.2 -6.1 6.3 -1.8 -2.3 -3.5

Southern Plains -36.1 -24.4 -9.2 -3.7 6.6 -2.6 -2.9 -3.1

Mountain 23.1 15.7 3.1 -3.7 8.2 -2.6 -2.9 -2.9

Pacific -11.7 -11.7 -9.2 -1.2 -10.0 -3.9 -0.6 -0.6

U.S. 1,385.8 401.6 -9.6 -274.1 290.2 -102.0 -117.7 -132.4
78 • Manure Management for Water Quality USDA/Economic Research Service

A similar story emerges for soybeans. When only

CAFOs meet nutrient standards, most regions would

see reduction in net returns (-4.5 percent relative to the

baseline) at 20-percent substitution. When 30 percent

and more of commercial fertilizer is replaced by

manure nutrients, net returns increase in all regions

(2.4 percent for the sector with 80-percent substitution). The greatest losses (nearly 30 percent nationally)

would occur if all operations met nutrient standards

and if manure nutrients replaced only 20 percent of

commercial fertilizer. Net returns would decrease in

almost all regions, with the largest loss occurring in

the Corn Belt ($403 million). In contrast, net returns

to soybeans would increase in all regions (5.2 percent

nationally) if 80 percent of commercial fertilizer were

replaced with manure.

Summary

The new CAFO regulations could have many possible

outcomes. As in the previous two chapters, we have

focused on only one aspect of this proposed rule: the

adoption of nutrient standards by confined animal

feeding operations. However, while chapter 3 focused

on farm-level implications and chapter 4 considered

regional costs for the Chesapeake Bay watershed, this

analysis considers the U.S. agriculture sector holistically. To do this, we model eight possible scenarios

based on adoption and substitution rates for implementing nutrient standards for various sectors of U.S.

agriculture, with the most likely scenarios being substitution rates of 20 percent (CAFO20) and 30 percent

(CAFO30). The eight scenarios also vary in scope.

Four scenarios consider implications of CAFO-only

requirements, while the other four are more extreme,

Table 5-11—Change in net returns to the corn sector 

AFO CAFO

Region 20% 30% 40% 80% 20% 30% 40% 80%

$ Million

Northeast -29.5 -12.1 1.0 17.4 -9.9 1.4 4.3 4.4

Lake States -182.3 -74.2 -20.3 30.8 -34.8 0.0 9.0 9.5

Corn Belt -1,054.4 -453.2 -188.9 59.8 -183.7 -16.1 27.3 29.3

Northern Plains -306.7 -158.5 -67.0 22.2 -63.0 -2.5 13.9 14.9

Appalachia -74.3 -11.8 12.6 32.6 1.4 12.9 17.2 17.3

Southeast -12.2 12.2 22.7 21.8 15.6 13.4 10.0 10.1

Delta States -12.6 -2.1 -0.8 2.3 -1.8 0.4 0.9 0.9

Southern Plains -11.4 2.3 3.0 2.9 -4.2 -0.1 1.2 1.3

Mountain -26.5 -12.6 -5.2 1.8 -4.7 0.0 1.2 1.3

Pacific 7.7 12.7 11.6 2.3 13.1 8.0 1.4 1.5

U.S. -1,702.2 -697.4 -231.2 194.0 -272.1 17.4 86.5 90.3

Table 5-12—Change in net returns to the soybean sector 

AFO CAFO

Region 20% 30% 40% 80% 20% 30% 40% 80%

$ Million

Northeast -1.4 1.4 3.5 5.7 -0.9 1.0 1.5 1.4

Lake States -58.9 -18.1 2.3 21.0 -12.3 2.9 6.3 6.4

Corn Belt -403.1 -196.4 -65.9 52.6 -90.4 3.7 25.0 24.7

Northern Plains -59.6 -31.6 -8.0 12.8 -12.2 4.5 8.3 8.3

Appalachia -43.1 -3.9 24.0 39.8 2.5 19.2 21.1 21.1

Southeast 5.6 20.9 31.5 35.7 19.1 20.6 16.4 16.4

Delta States -75.8 -22.2 25.5 34.8 3.0 13.2 13.7 13.8

Southern Plains -1.8 -0.5 0.4 1.0 -0.2 0.3 0.4 0.4

Mountain na na na na na na na na

Pacific na na na na na na na na

U.S. -2,332.7 -935.0 -206.3 399.7 -350.5 90.9 180.7 184.2

na = Not applicable (crop not grown).
USDA/Economic Research Service Manure Management for Water Quality • 79

requiring all AFOs to meet nutrient application standards. The results from these scenarios are compared

with the USDA 2010 baseline, a year when it is

assumed that the agricultural sector will have adjusted

to the adoption of nutrient standards.

The imposition of nutrient standards on animal feeding

operations is estimated to result in net economic gains

of $89 million (or a 0.3-percent increase in net returns)

for the livestock and poultry sectors under CAFO20,

though individual producers may gain or lose. The

price increases that result in an overall increase in net

returns are the result of a reduction in the number of

animals being produced. Benefits are realized only by

those operations that remain in production. However,

the livestock and poultry sector suffers economic losses of $841 million (2.5-percent decrease) under

CAFO30. This swing is attributed to the livestock

supply-dampening and price-enhancing effects

observed in the CAFO20 scenario. Economic losses

to consumers (higher prices) plus producers are $1.1

billion (-0.23 percent) and $0.66 billion (-0.14 percent

decrease) under the CAFO20 and CAFO30 scenarios.

This analysis also showed that requiring all AFOs to

meet a nutrient standard would greatly increase the

magnitude of national impacts. As of now, only

CAFOs are required to meet a nutrient standard. If

there is a cost to operations other than CAFOs for

meeting a nutrient standard, then they would not voluntarily alter their manure management practices and

the estimated price changes would not occur.

There are significant variations in economic impacts

between animal types and regions that are hidden by

national aggregate results. Within a single scenario,

some regions and sectors gain while others lose. For

example, while animal feeding operations in aggregate

would realize a net gain of $89 million under the

CAFO20 scenario, the beef sector would suffer a net

loss of $379 million. Furthermore, within the beef

sector, the Southern Plains would realize a net gain of

$25 million while the Pacific would see a net loss of

$290 million. The wide range of results makes it

exceedingly difficult to generalize the impacts of the

nutrient application restrictions.

This analysis cannot reveal how individual operations

would be affected by the standards. What can be said

is that the livestock, poultry, and cropping sectors

would undergo changes under all scenarios considered.

The livestock and poultry sectors would benefit in

some cases, possibly at the sacrifice of some individual operations, but net returns to the U.S. agriculture

sector, including impacts on the cropping sectors, generally fall. However, these losses must be weighed

against improved surface and ground water (from

reduced nutrient loadings), the benefits of which are

not estimated in this analysis. 

Changes to agricultural sectors in response to manure

nutrient application standards will not occur in a vacuum. Other technologies for treating manure nutrients

might develop over time. In regions where cropland

for spreading manure nutrients is scarce, it is likely

that other nonagricultural lands (such as on timber

plantations) would be used for assimilating manure

nutrients. Similarly, other agri-environmental policies

may bear on these issues. For example, the 2002 Farm

Act provides a large increase in funds intended to help

livestock and poultry producers to comply with

Federal and State water quality regulations and to

encourage the adoption of practices such as nutrient

management. These policies could alter the changes in

production arising from the adoption of nutrient standards. Specifically, the Environmental Quality

Incentives Program (EQIP) is authorized to fund $9

billion of manure management and conservation

efforts by crop, livestock, and poultry producers over

the next 10 years (USDA, NRCS, 2002). This amount

exceeds total agricultural losses under five of the eight

scenarios we analyzed. While implementation of

EQIP will reduce farmer costs of responding to CAFO

regulations—indeed it is designed to do so—we did

not explicitly analyze this option. Instead, we raise

this as a topic to be addressed in future research.
80 • Manure Management for Water Quality USDA/Economic Research Service

Appendix 5-A

Market Interaction Primer

If animal feeding operations (AFO) adopt land application restrictions for manure nutrients, the marketplace could

react in several ways (fig. 5-A-1). In figure 5-A-1-A, the intersection of initial supply (S0) and demand (D) for

livestock and poultry products establishes the market clearing quantity and price for exchange (Q0, P0). If AFOs

adopt nutrient standards, production would decline as a result of increased costs of production. Decreased production would result in a shift in the supply of livestock and poultry products (a movement from S0 to S1 and a corresponding change in quantity supplied to Qc, as shown in figure 5-A-1-B). A new market-clearing quantity would

then be established at a higher price, re-equilibrating supply and demand (i.e., at Q1, P1). Note that the slope of the

demand curve will determine the extent to which prices increase. For instance, if the demand curve were horizontal

(an extreme assumption), the effect would be contraction but not price changes.

Two inferences can be gleaned from this example. First, assuming downward sloping demand curves, consumers

would purchase fewer livestock and poultry products at the higher price. Second, producers would reduce the supply of livestock and poultry products but would receive a higher price for their products. Clearly, consumers would

be worse off. The potential loss to consumers is shown by the dark red and brown shaded areas in figure 5-A-1-C.

The situation for the industry is less certain and would ultimately depend on the interaction between production

changes, price changes, and increased production costs. These interactions would, in turn, depend on the responsiveness of prices for livestock and poultry products in both the domestic and export markets following changes in

the cost of production. If the increased returns to producers depicted by the dark red shaded area exceeds the lost

returns (the tan shaded area) then the industry, as a whole, would benefit even though individual producers with

relatively higher costs may exit the industry.

We would expect the responses of AFOs to the standards to vary regionally. As noted, increased costs would initially result in reduced livestock and poultry production. However, under nutrient standards, some regions would

face greater increases in the cost of production than others, due to such factors as available land for manure spreading. This was clearly shown in the farm level analysis in chapter 3. Figure 5-A-2 use hypothetical supply and

demand curves to depict two heterogeneous regions. The contraction in supply due to nutrient standards is shown

for the two regions by a movement from s0 to s1. A corresponding expansion effect, or positive supply response

due to increased livestock and poultry prices, accompanies this contraction (Silberberg, 1990). The national market-clearing price would increase from P0 to P1. We assume that regional markets are price takers and thus the

demand curve is depicted by the horizontal line equivalent to the prevailing price. In Region A, where the supply

shift would be relatively small, production increases overall due to the supply response to the new higher price.

Figure 5-A-1

U.S. supply and demand for livestock and poultry products

Q

P

D

S0

P0

Q0 Q

P

D

S0

S1

P0

P1

Q0 Q1 Qc Q

P

D

S0

S

1

P0

P1

Q0 Q1

Contraction effect

Expansion effect

A B C
USDA/Economic Research Service Manure Management for Water Quality • 81

Region A experiences increased net returns arising from the implementation of nutrient standards throughout the

United States. This region’s operators would produce more and receive a higher price for their products even

though they face greater costs of production. In Region B, the supply shift is relatively large and the price response

does not compensate for the increased production costs. Consequently, production falls in Region B due to the

increased cost of production brought about by the change in production practices.

q

P

s

s 0 1

q2 q1

Region A

q

P

s0

s

1

P1

q2 q1

P0

Region B

qc qc

P1

P0

Figure 5-A-2

Heterogeneous production shifts resulting from nutrient standards
82 • Manure Management for Water Quality USDA/Economic Research Service

Livestock and poultry manure can provide valuable

organic material and nutrients for crop and pasture

growth. However, nutrients contained in animal

manure can degrade water quality if they are overapplied to land and enter water resources. The nutrients

of greatest water quality concern are nitrogen and

phosphorus. Animal waste is a source of both. A shift

in the livestock and poultry industry over the past several decades toward fewer, larger operations has

prompted public concern over the utilization and disposal of animal manure and the potential degradation

of water quality. 

EPA recently developed new regulations under the

Clean Water Act to address this problem. Under these

regulations, operations designated Concentrated

Animal Feeding Operations (generally the largest animal feeding operations) are required to meet a nutrient

application standard when applying animal manure to

land. In addition, all other animal feeding operations

are being encouraged by USDA to voluntarily meet

these standards by adopting nutrient management

plans. Education, technical, and financial assistance

are available to all operations through USDA conservation programs. These policies for encouraging or

requiring animal feeding operations to meet a nutrient

application standard when applying animal manure to

land will raise the cost of producing livestock and

poultry, and may affect prices throughout the agricultural sector.

Under the EPA regulations, some livestock and poultry

producers would have to meet either a nitrogen-based

or phosphorus-based application standard, depending

on local soil conditions. For most animal operations

to meet a nutrient standard, they will have to spread

manure on more land than they are currently using.

Generally, more land is needed to meet a phosphorus

standard because manure contains more phosphorus

relative to plant needs than nitrogen. The cost of hauling manure and applying it to a larger land base is the

primary source of higher production costs. Some

additional costs of meeting a nutrient standard include

nutrient testing, soil testing, and plan development.

We examine the impacts of these costs on the animal

sector and the rest of the economy through analyses

conducted at the farm, regional, and national levels.

The new CAFO regulations’ impacts on manure disposal costs depend greatly on how willing cropland

operators are to use manure as a source of nutrients.

The higher the willingness to accept manure, the less

distance manure will have to be moved, and the smaller the increase in production costs. Currently, 20 percent or less of cropland is receiving manure. We do

not know how much this would increase if animal

operations actively seek additional land off their own

farms to spread manure. We assume here, for presentation sake, that up to 40 percent of cropland would

receive manure after nutrient application standards are

implemented. (A wider range is considered in the

chapter results). Under this scenario, the overall economic impacts to consumers and producers from

CAFOs meeting nutrient standards are a loss of $625.2

million (0.13 percent) in national economic welfare.

The added costs of meeting a nutrient standard reduce

net returns to the livestock and poultry sectors by

$1.04 billion (3.1 percent). This loss is partially offset

by gains to the crop sector of $427 million.

Consumers see a small reduction in welfare from

slightly higher prices for animal products. These estimates do not include the value of improved water

quality, nor do they consider lost revenue to the commercial fertilizer industry.

These aggregate results mask the fact that the impacts

vary widely between sectors and regions. Costs to the

animal sector range from a reduction in net returns of

1.6 percent in the dairy sector ($217 million) to a

reduction of 6.7 percent in the beef sector ($495 million). Regional costs range from a reduction in net

returns of 7.3 percent in the Northern Plains ($235

million) to a reduction in net returns of less than 1 percent in the Northeast ($33.4 million). These differences are due to availability of land for spreading

manure, baseline production costs, and regional animal

and crop mix.

Regulations on animal waste spill over into the crop

sector for two reasons. Manure nutrients become a

cheap source of fertilizer that replaces more expensive

commercial forms, reducing production costs.

Feedgrains (primarily corn and soybeans) are an

import source of animal feed, so changes in the number of animals affect the demand for feed. These

sometimes conflicting influences result in increases in

net returns in all regions for both corn and soybeans.

With a 40-percent substitution between manure nutrients and commercial fertilizer, increases in net returns

range from $27 million for corn in the Corn Belt (0.3

Chapter 6—Summary and Implications 

for Policy and Research
USDA/Economic Research Service Manure Management for Water Quality • 83

percent) to $0.4 million for soybeans in the Southern

Plains (16 percent). Most regional changes are less

than 5 percent.

While EPA’s regulations affect only operations designated as CAFOs, USDA is actively promoting efficient

nutrient management for all animal feeding operations.

Our analyses show that if all AFOs were to meet a

nutrient standard, the magnitude of the impacts to

costs, production, and prices would be greatly

increased. For example, reductions in net returns in

the livestock and poultry sector are about 37 percent

greater under an all-AFO requirement than a CAFOonly requirement, with a willingness-to-accept-manure

of 40 percent ($1.4 billion vs. $1.0 billion). National

economic welfare for producers and consumers

declines almost $2 billion (0.43 percent).

Again, this is a hypothetical scenario; operations other

than CAFOs are not required to meet a nutrient standard. It is a goal of USDA that these operations adopt

nutrient management plans voluntarily. The reduction

in net returns when all AFOs meet a nutrient standard

is an indication that many will incur costs to do so. If

those not designated a CAFO face a cost for meeting a

nutrient standard, then they probably would not voluntarily alter their manure management practices without

financial assistance, and the estimated economic

impacts would not occur.

Potential changes to agricultural sectors in response to

manure nutrient standards will not occur in a vacuum.

New technologies for treating manure nutrients might

develop over time, particularly in areas with high concentrations of animals relative to cropland, such as

Delmarva, eastern North Carolina, and southeastern

Pennsylvania. In regions where cropland for spreading manure nutrients is scarce, it is likely that other,

nonagricultural lands (such as timber plantations)

would be used for assimilating manure nutrients.

Similarly, other agri-environmental policies may bear

on these issues. For example, the 2002 Farm Act provides a large increase in funds intended to help livestock and poultry producers comply with Federal and

State water quality regulations, to encourage the adoption of nutrient management practices, and to assist

them to move manure off their farms to other

landowners. Specifically, the budget for the

Environmental Quality Incentives Program (EQIP;

NRCS, 2002) is authorized to fund $9 billion in conservation efforts by crop, livestock, and poultry producers over the next 10 years. This amount exceeds

agricultural losses under many of the scenarios we

evaluated.

How individual farms adjust to nutrient application

standards depends on several factors, including the

number of animals on the farm, amount of land available on the farm for spreading manure, availability of

land off the farm, willingness of cropland operators to

accept manure, type of crops grown (providing different nutrient uptake), and type of nutrient standard the

farm must meet (nitrogen-based or phosphorus-based).

We looked at how these factors affect hog and dairy

farms across the country. While many farms (primarily small and medium-sized) control enough land to

meet nutrient standards, most are not using all of their

cropland, thereby over-applying manure nutrients on

the portion that receives manure. Only 18 percent of

large hog farms and 23 percent of large dairies are currently applying manure on enough land to meet a

nitrogen standard. On average, large hog and dairy

farms would have to increase the acreage receiving

manure by 114 percent and 99 percent to meet an Nbased standard. If a P-based plan is required (which

generally requires more land), the increase in acreage

would have to be 550 percent for hogs and 529 percent

for dairies. Smaller operations also have to increase

the amount of land for spreading, but to a lesser

degree.

Spreading manure on additional land raises hauling

and application costs, which can be partially offset by

reduced commercial fertilizer costs. Farms that don’t

control enough land to meet a nutrient standard (primarily large farms and all farms in some areas) must

find land off the farm if applying manure to land is the

only option, greatly increasing hauling costs. The

impacts on large hog farms for meeting a nitrogenbased standard with a willingness-to-accept-manure of

40 percent would range from a net benefit of $3.20 per

animal unit, on average, in the Eastern Corn Belt to a

net cost of $4.20 in the South (assuming no changes in

prices or number of animals). The availability of

cropland both on and off the farm in the Eastern Corn

Belt results in the fertilizer benefit from manure outweighing the additional transportation costs. The

results in the South reflect a relative scarcity of cropland both on and off the farm.

Impacts to large dairy farms range from a net cost of

$8.10 per animal unit in the North to $11.80 in the

South. Generally, costs increase the greater the percentage of manure that must be moved off the farm,

the smaller the percentage of surrounding land that is

in crops that can use manure, and the smaller the nutrient uptake of predominant crops. Consistent with the

three analyses, costs are higher with a lower willingness-to-accept-manure.
84 • Manure Management for Water Quality USDA/Economic Research Service

The relative importance of higher manure management

costs to the farm can be indicated by comparing them

to production costs. Meeting nitrogen application

standards would raise hog production costs on large

farms in the South by 1.2 percent with a willingnessto-accept-manure of 40 percent, assuming no other

changes are made to the operation. Production costs

increase 0.6 percent or less in the other regions. This

is an average, and costs to individual farms could be

higher (or lower). Manure management costs would

be about 75 percent higher if willingness-to-acceptmanure does not increase beyond 20 percent.

The results are similar for large dairies. Meeting a

nitrogen application standard would raise production

costs between 0.6 and 0.7 percent with a willingnessto-accept-manure of 40 percent. Manure management

costs double if willingness-to-accept-manure does not

increase beyond 20 percent.

If a farm must meet a P-based standard, costs would

generally be greater because more land would be

required for spreading manure. In the Mid-Atlantic,

for example, hog production costs would rise 1.5 percent under a P-standard, compared with an increase of

0.5 percent under an N-based standard. Dairies would

see similar increases in production costs if a P-standard is to be met.

Expanding nutrient management requirements to all

AFOs would affect numerous small and medium-sized

farms. Nearly 90 percent of small hog and dairy farms

control adequate cropland to meet the needs of a nitrogen standard, so they would generally not incur the

cost of moving manure off the farm. In contrast, less

than half of large hog farms and only 25 percent of

large dairy farms can make this claim. Nutrient plan

development and testing costs tend to be more important to these operations than to larger farms because

the costs are spread over fewer animals. The additional manure management costs generally increase production costs 1 percent or less for small and medium

hog and dairy farms. Again, costs are higher if willingness-to-accept-manure is lower.

While the costs to small and medium-size AFOs for

meeting a nutrient standard are relatively low, the benefits from reducing manure runoff are also low.

Raising production costs on the 94 percent of AFOs

that are small and medium-sized to reduce the 35 percent of all excess nutrients they produce may not be a

cost-effective means of improving water quality. This

is a major reason why EPA focused its regulations on

large AFOs.

While we did not analyze other sectors at the farm

level, it is likely that the results would be similar.

Poultry in particular is produced on large operations

that have relatively little land for spreading manure.

However, poultry manure is drier than other types, so

it can be economically transported longer distances.

A factor that can greatly increase the cost an individual

farm may face in meeting a nutrient standard is the

regional concentration of animals. As noted in chapter

2, in some regions the amount of manure nutrients

generated exceeds all that region’s crop nutrient needs.

In this setting, finding adequate land for spreading

may be more costly than elsewhere because of competition for land. The Chesapeake Bay watershed

(CBW) is one example; it contains counties with concentrations of surplus manure nutrients that rank

among the highest in the Nation.

Using a model of the CBW that accounts for competition for land on which to apply manure, we estimate

that net land application costs for meeting an N-based

standard increase by $66.6 million per year under a

40-percent willingness-to-accept-manure assumption

(21 percent of total net revenues from animal production). The average distance manure would have to

hauled is greater than that estimated in the farm-level

analysis, where competition for land was not considered. The farm-level analysis for hog farms in the

Mid-Atlantic region, which includes most of the CBW,

found that the average distance manure would have to

be hauled is 1.4 miles, with a maximum for any one

farm of 14 miles. In contrast, the average distance

manure would have to be hauled in the CBW is 2.3

miles (on farm and off). Some manure would have to

be hauled more than 50 miles to other counties.

If a phosphorus-based plan is required in the CBW

(with a willingness-to-accept-manure of 40 percent),

about 20 percent of manure would be in excess of

what the accessible land in the watershed could assimilate. This manure would have to be hauled more than

90 miles, or a nonland-based solution would have to

be found. Willingness-to-accept-manure would have

to be greater than 60 percent for the watershed’s

manure to be spread agronomically within 90 miles of

manure producing areas within the watershed.

One way of coping with a regional excess of manure is

to find alternatives to land application. The cost of

building an industrial facility that uses manure to produce a fertilizer product compares favorably to the

cost savings from shifting manure from land application to industrial uses. For example, shifting manure

to an industrial plant rather than hauling it to a distant
USDA/Economic Research Service Manure Management for Water Quality • 85

site for land application would save $2-$7 million in

land application costs per year under a P-standard,

depending on the region’s willingness-to-acceptmanure.

Another way to reduce the amount of land required for

spreading manure is to reduce the nutrient content of

manure. Advances in feed and nutrition management

are starting to offer some options to farmers for doing

just this. Phytase is an enzyme currently being used in

some swine and poultry feed. Adding phytase to the

diet of swine and poultry in the Chesapeake Bay

watershed could reduce land application costs by $6-

$10 million.

The need to transport manure over longer distances

has structural implications for the agricultural sector.

Moving manure many miles from its source presumes

that a marketing structure is in place and that a consistent, standardized product is shipped to the destination.

It is likely that a more formal marketing system will

develop over time to satisfy this need. The recently

adopted USDA policy and EPA regulations could well

spur a growth in these markets. The fertilizer industry

could recoup some its losses in fertilizer sales by using

manure as a source of raw materials (e.g. the Harmony

Farms Shenandoah Valley fertilizer plant), organizing

and operating regional manure markets, and providing

manure nutrient management services to farmers.

Another structural issue is what happens to the economic advantages of vertical integration seen in the

poultry and swine sectors. There are significant economic benefits to this structure, but one of its consequences is regional concentration. Our results indicate

that the large production units typical of this structure

would generally have the largest costs per animal unit

for applying manure to meet a nutrient standard.

Thus, the benefits of integration might be reduced

because of manure management regulations.

Manure nutrient standards have been shown to affect

regions differently, largely because of the availability

of cropland for spreading manure. Animal feeding

operations in regions with abundant cropland would

generally have lower costs than other regions, giving

them a competitive advantage. These regional differences can spur shifts in production between regions, as

demonstrated in the national-level analysis. Large animal feeding operations looking to expand would likely

consider the availability of spreadable land when making a decision.

Implications for Policy 

and Research

The analysis presented here is only a first step in fully

evaluating the implications of environmental policies

on animal feeding operations. Several issues deserve

further research.

Advances in feed management may soon increase the

options available to farmers for reducing nutrients in

manure (CAST, 2002). While we study how phytase

use reduces phosphorus in manure and affects manure

spreading costs under a P-based plan, other feed management options include optimizing the amino acid

content of feed, thereby reducing manure nitrogen.

Optimizing feed for nitrogen excretion is more difficult to manage than for phosphorus, but it may play a

future role in reducing excess nitrogen on animal

farms. Further economic analyses could indicate the

potential for such advances to reduce overall manure

management costs.

The willingness of cropland owners to accept manure

was found to be an important variable in all three

analyses. Impediments to using manure are well

known. However, the willingness to accept manure

has not been directly studied. Survey data indicate

that less than 20 percent of cropland in major crops

currently receives manure. Whether this reflects willingness-to-accept-manure is unknown. It might be

that agricultural land currently receiving manure is on

operations that have animals. A study of the willingness of cropland operators who don’t have livestock to

use manure in place of commercial fertilizer would

indicate the potential of using land application of

manure as the principal manure disposal method, and

it could identify areas for education and extension that

might reduce cropland operators’ reluctance. Financial

assistance through programs such as the EQIP could

be used to encourage crop operators to use manure as

a fertilizer and soil amendment. Animal producers

might be able to increase willingness-to-acceptmanure by paying crop farmers to take manure.

Savings in manure hauling costs by increasing willingness-to-accept-manure could make this worthwhile.

The farm and regional analyses took a short-term

view, not considering farm-level changes in animal

numbers and manure handling that might be made if a

nutrient standard is met. The national analysis also

took a short-term view in that it did not take into

account structural changes on the farm or induced

technological change. Analyses using optimization

models that allow for all inputs on the farm to adjust

would help indicate the longer run impacts on the
86 • Manure Management for Water Quality USDA/Economic Research Service

industry. The impacts of manure management costs on

the nature of production contracts and on the structure

of the industry are of significant interest. 

The results of the national analysis reflect in part the

responsiveness of consumers, domestic producers, and

foreign suppliers of livestock and poultry to U.S. price

changes. The greater the responsiveness of supply and

demand to price changes (also known as elasticities of

supply and demand), the smaller the price shocks from

increased production costs. Smaller price shocks are

beneficial to consumers, but reduce the ability of market prices to compensate animal operators for higher

manure management costs. Research on how changes

in international trade patterns and consumer preferences affect price elasticities for livestock and poultry

products— and the eventual costs to consumers and

the agriculture sector from enhanced manure management—would provide additional depth to the analysis.

Our analysis only provides a first look at how alternative uses for manure might alleviate some of the costs

of land application. Further assessment of the potential for manure products such as compost, fertilizer,

and energy would be helpful. Such markets, if they

develop, can be expected to have impacts on the cost

of meeting regulations, and thus on location and structure of animal operations.
USDA/Economic Research Service Manure Management for Water Quality • 87

References

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The Cost of Regulating Hog Manure Storage Facilities

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Barker, James C., Joseph P. Zublena, F.R. Walls. 

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Characterization,” North Carolina State University,

Cooperative Extension Service, Raleigh, NC.

www.bae.ncsu.edu/people/faculty/barker/a&pmp&c/ta

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Borton, L.R., C.A. Rotz, H.L. Person, T.M. Harrigan,

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