Grain prices are up, but so are fertilizer prices. Producers are beginning to ask whether it’s worth it to apply fertilizer at the levels recommended by agrologists and by soil analysis.
“We’re getting calls from farmers wondering if the investment in added fertilizer makes sense in light of the runup in grain prices. It’s a complicated question,” said Tom Jensen of the International Plant Nutrition Institute in Saskatoon. IPNI represents fertilizer manufacturers from across the globe.
Fertilizer prices have jumped more than other crop inputs such as fuel and pesticides.
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“Despite higher prices for grain, fertilizer recommendations haven’t changed much,” said Jensen.
Agrologist Ken Coles of the Southern Alberta Research Association said producers attending field days this summer were asking more questions about the benefits of higher rates of fertilization and soil sampling.
“Higher prices for both grain and fertilizer are causing farmers to think longer and harder about their investment in the crop and the potential profits,” he said.
He responded that “if there are ever times to reduce (fertilizer inputs) it might be, in only some cases, when grain prices are at the bottom, not when they’re in the other direction.
“It still starts with soil sampling, knowing what you’ve got to begin with,” he said.
Farmers are sending more samples to soil test labs in Western Canada, Jensen noted.
There are steps producers can take to maximize fertilizer investment and manage risks.
- Sample fields and have them analyzed for available nutrients.
- Time fertilizer applications to meet each crop’s needs during the season.
- Band nitrogen fertilizer into the soil to reduce losses and avoid early-season surface broadcasting of the fertilizer.
- Place the appropriate starter fertilizer blend near or, when right for the crop, in the seed row.
- Use coated or controlled-release fertilizers that deliver well timed nutrients while avoiding volatilization and associated losses.
- Seek advice from agrologists, certified crop advisers and consultants. The price of these services is the one production cost that hasn’t risen dramatically in the past two years.
“Advice can yield big dividends through reduced waste and increased production at these prices,” Jensen said.
He sought advice from Keith Mills, a certified crop adviser in southern Alberta.
“His computer-based crop planning tool allowed me to take a look at one crop under irrigation, but the same ideas apply to dryland crops, cereals, pulses, oilseeds,” Jensen said.
The crop planning tool’s data reaches back to 2005, allowing Jensen to compare 2008’s market conditions.
He compared a durum crop under irrigation in southern Alberta. Yields and fertilizer recommendations remained static over the four years he examined.
Because it was an irrigated field, inputs and yields were higher than in a dryland model, but the principles are the same.
On a per acre basis, the durum crop was predicted to require 120 pounds of nitrogen, 55 lb. of phosphorus and 10 lb. of potassium. A 90-bushel-per-acre yield was expected in each year. Market prices rose from $4.27 a bu. in 2005 to $9 in 2008. Fertilizer costs nearly tripled in that time while other operating costs increased by 50 percent.
Fertilizer as a percentage of operating costs jumped from 29 percent in 2005, to 33 in 2006, 37 in 2007 and 48 percent in 2008.
Comparing 2006 to 2008, fertilizer costs rose 121 percent. But margins increased 202 percent, jumping to $456 per acre from $151.
Does applying recommended rates of fertilizer pay at current prices? Yes.
Will it always? Jensen and other agrologists say it depends on the prices paid by farmers for inputs and those received from their crop.
“For most of this crop that is going into the bins now, farmers paid 2007 fertilizer prices. The 2008 prices will really cause them to look hard at the investment in the coming crop.”
Mills, an agrologist with Viterra in southern Alberta, said whenever producers use predictive tools they need to be realistic about their own farms’ productive capacity.
“Costs and prices are pretty easy to get close numbers for and they apply to everybody. It’s yield that is specific to each farm and farmer,” he said.
On-line planning calculators can assist growers in getting a handle on the change in costs and income.
Crop Planner is an Excel spreadsheet from Saskatchewan Agriculture that producers can download from the provincial website at www.agriculture.gov.sk.ca/Financial-Planning.
Alberta’s agriculture department has two calculators on its website, Crop Enterprise and Crop Choice$. They can be found at www.agric.gov.ab.ca/app21/ldcalc.
Manitoba also has a downloadable application, Crop Plan XP, at www.gov.mb.ca/agriculture/financial/farm/software.html.
