The seeding rate, fertility program and yields are expected to be the same under both tillage systems. These corn budgets indicate that switching to no- tillage will probably have little effect on the per acre and per bushel cost of producing corn. However, farmers adopting no-tillage are likely to experience greater cash flow differences than cost of production differences. Along with an increase in herbicide costs is a small increase in interest in operating capital. This small increase in operating capital is the first indication that, though total cost of production decreases slightly when adopting no-tillage, cash costs actually increase.
Labor is a cash cost that helps offset the increased costs mentioned above.
If salaried or self- employed labor is involved, the cost is a fixed cost and a decrease is not necessarily realized. The number of hours and acres over which equipment will be used also decreases with a switch to no-tillage production. The per acre tax and insurance cost will decrease only if the adoption of no-tillage is accompanied by selling some equipment or farming more acres. No property tax reduction is associated with tractors because none were sold. Again, it is assumed that the chisel plow and disk were sold, resulting in a decrease in equipment depreciation and interest.