Economically Raising Nitrogen Use Efficiency

1. Economically Raising Nitrogen Use Efficiency By: Paul Hodgen

2. So What did we learn :

3. A few things we did learn • NUE is currently 33% for Cereal Grains. • Proven that Variability is at a very small scale in the field. • Current Precision Ag technology does not address Variability at this level during the growing season.

4. What is the Current Topic about Precision Ag. Technology?

5. Does the cost of this Technology Pay? • Is the applicator a fixed cost or variable cost? • Fixed. • What does basic Accounting Say about determining feasibility of a process? • Figure out if the return covers the Variable Cost. Never use Fixed costs to decide to produce or not too.

6. Problem with this • The Producer will never have enough acres to justify the fixed cost. • Coop’s do!! • Do we actually know what the return is for the Fertilizer dollar spent? • Yes!!

7. What is the Current Return for 40 bu/acre Yield Goal of Winter Wheat? • If Anhydrous Ammonia cost $400/ton. • That is 0.25 cents per lb of actual Nitrogen. • 40 bushel wheat calls for 80 lbs of Nitrogen. • That is $19.50/acre for Nitrogen. • If only 33 % gets used, then that means our return on Nitrogen is $6.50/acre for winter wheat.

8. Basically What does this mean? Bad business on the Producers part. Great Business for the Fertilizer Industry.

9. So what can be done to increase this. • Currently Oklahoma State is trying to bring technology to the Oklahoma wheat producer that will address the variability at the 1 meter squared level, in the growing season. • But does this mean that our profit margin per acre will increase?

10. NO it does not

11. So why does this Technology not raise Profit margin? • Nitrogen is a mobile in the soil and in the plant. • This means that the Economic law of Diminishing Returns is applied. • What is this Law? • Basically it states that the amount of unit output increases at a decreasing for each additional unit of input.

12. How does that translate into anything? • We can predict the yield for winter wheat at Feekes 5, and will apply a prescribed rate of Fertilizer for that 1 m2 field element size. • But does the crop use that Fertilizer then? • Not necessarily so!!

13. Crop Response • Long term research at Oklahoma State and at Nebraska, have shown that after 30 years the check (No Nitrogen) yield 80% of the maximum Nitrogen rate. • Magruder Plots after over 100 years of no Nitrogen wheat still produces an average of 16.1 bushel/acre while the NPK plus lime averaged 33. • This means that some of the Nitrogen was not utilized by the crop!

14. Mineralization • Climate conditions that favored mineralization of the Organic Material • The soil supplied the nutrients. • Can we predict what the response index will be at Harvest at Feekes 5? • OSU is working on that very problem.

15. So How will Knowing the Response Index help? • Means that for the first time producers will have a reliable method to determine the economic return on fertilizer. • Then the producer can apply fertilizer only where he can maximize profit margins. • What does this mean for yields?

16. Yield effects • Using a response index might lower yield per acre, because there is not enough of a return. The fertilizer will not pay for it’s self. • Could raise yield, apply fertilizer where the crop will respond, Maximize the good areas, and limit loss on the poor areas.

17. The bottom line • Either way, the profit margin will increase. • This is the bottom line, producers will only use methods that increase profit margins. Otherwise, it is bad business. • Production Agriculture must be treated as a business and nothing else. It is an Industry. It is time that we (the Agriculture Industry) start acting like it.

18. Questions? • Yes, Dr. Raun?