Balance fertilizer rate, grain prices for optimal returns

Producers considering reduced nitrogen rates this spring because of lower commodity prices should not reduce rates by the same percentage that they expect prices to fall.

The Manitoba Nitrogen Rate of Return Calculator makes this crystal clear.

Using multiples of 10 to simplify the example, let’s start with wheat at $10 per bushel grown with 100 pounds of nitrogen per acre.

If the price drops by 50 percent to $5 per bu., it would not be smart to drop nitrogen rates by 50 lb. Rather, the calculator would recommend an 80 lb rate.

“The N calculator is not gospel. It is very important information, but I consider it to be just a guide,” said John Heard, fertility specialist for Manitoba Agriculture.

“This year, the calculator is telling us we shouldn’t over-react to high nitrogen prices or falling grain prices. You don’t cut your nitrogen rate in proportion to the drop in grain prices.”

Tom Jensen of the International Plant Nutrition Institute used the calculator to show the optimum N rates and net returns for these two periods in time.

“In January 2013, the spring wheat price was $7.80 per bu. with granular urea cost at $570 per tonne, and the potential net return was $106 per acre. The calculated optimum N rate was 100 lb. per acre,” said Jensen.

“As of January 2014, the spring wheat price has decreased to $5.62 per bu., a 28 percent decrease, but the optimum nitrogen rate only lowered to 90 lb. per acre, a 10 percent decrease. Admittedly, net returns decreased to $66 per acre. Even though farmer projected net returns decreased 38 percent with the drop in grain prices, it still pays to not lower fertilizer nitrogen rates in direct proportion to decreases in grain prices.”

Jensen said the relationship between cost of fertilizer and grain price is not a linear one.

“You need fertilizer to build yield, but there are economic limits and farmers need to be aware of them,” he said.

Heard said the calculator is soil specific to Manitoba and eastern Saskatchewan, but it is also used by producers in western Saskatchewan.

“It’s based on soils that are pretty water charged, so it’s also relevant in western Saskatchewan in a year when they have lots of water,” he said.

“In fact, I’m getting more phone calls from Saskatchewan than from Manitoba this year.”

For more information, visit www.gov.mb.ca/ or phone John Heard at 204-745-8093 or Tom Jensen at 306-652-3467.

Web extra

Check out Montana State University’s spring wheat N calculator here.

North Dakota State University’s N rate calculator for corn can be found here.