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Maximum versus optimum economic yield

Agronomy Management: Often, aiming for maximum yield doesn’t give you the maximum bottom line profit

Is your farm most profitable when you achieve maximum yield or optimum economic yield?

There can be substantial differences in the amount of inputs needed for maximum crop yield compared to the economic optimum yield. Applying a higher level of inputs may give you maximum yield but often won’t provide the greatest profit per acre. I am far more interested in achieving maximum profit per acre versus maximum yield per acre.

Many farmers struggle to decide which inputs are essential versus “might be needed.” When input suppliers promote micronutrient fertilizers and crop protection products, often the probability of economical response information is lacking. The agronomist might think it is a good idea, but will the extra input give an economic yield increase?

Nitrogen (N) fertilizer is frequently needed for your cereal and oilseed crops. But, what is the optimum economic rate? The graph shows a generalized N crop fertilizer response curve. The maximum yield is at 130 pounds of N per acre. However, the optimum economic yield would occur at 100 lbs./ac. of N. Spending a little less money on would give a higher economic return per acre. Fertilizing to maximum yield can have negative economic and environment results. From an environmental standpoint, the reduced crop recovery of N fertilizer at rates in excess of optimum yield can result in a greater potential N losses.

Many agronomists use target crop yields and nutrient removal to estimate crop N fertilizer requirements. But developing best N fertilizer recommendations is not always that simple! Soil test N level, soil mineralization rate of N, stored soil moisture conditions and N fertilizer uptake efficiency all must be considered. I also want to consider N fertilizer price and crop value at harvest.

This becomes an even greater problem for farmers using variable rate fertilizer application. Considerable time, effort and money is spent to develop different fertilizer management zones for each field. But how do you then determine the economical optimum N fertilizer rate for each fertilizer management zone?

Ideally, I prefer estimating N fertilizer requirements by using up-to-date regional N fertilizer response curves, if available, for your region. When N fertilizer rate trials are conducted with the newest crop varieties, response curves to N fertilizer can be developed. Crop yield response curves that are developed on typical soils in your region are ideally the best way to estimate N fertilizer needed. Up-to-date curves take into account soil mineralization, efficiency of fertilizer application and moisture conditions. Over several years, good average curves can be developed. The big benefit is you can then do economic analysis.

Looking at the numbers

There has been research across Alberta in the past to develop and update N response curves in the various soil and climatic regions of the province. The table shows irrigated spring wheat yield increase, with increasing rates of N fertilizer. This work was done by Alberta Agriculture from 2006 to 2011 at about 20 irrigated locations.

This table shows predicted yield for irrigated hard and red spring wheat in southern Alberta
photo: Source: Alberta Agriculture

The second table (see further down) uses this information to calculate the economic return when soil test nitrogen is 40 lbs./ac. in the zero- to 24-inch depth.

Rather than look at a predicted yield, this method looks at predicted yield increase with increasing N fertilizer rates. The second row in Table 2 shows the estimated yield increase with 10 lbs./ac. increments of N fertilizer. As N rate increases, the incremental increase in yield gradually decreases.

In Scenario 1, assume N fertilizer costs 65¢/lb. or $6.50 for each 10 lbs./ac. increment of N fertilizer, and wheat is worth $8/bu. The 2:1 ratio of crop value to fertilizer cost occurs between 140 and 150 lbs./ac. of N. This means for the last dollar spent on N fertilizer, the yield increase returns about two dollars.

Scenario 2 assumes a N cost of 80¢/lb. or $8 for each 10 lbs./ac. increment of fertilizer and a lower wheat value, $5/bu. The 2:1 ratio of crop value to fertilizer cost is between 100 and 110 lbs./ac. of N.

In Scenario 1 about 140 to 150 lbs./ac. of N would be economical and in Scenario 2 about 100 to 110 lbs./ac. of N would be economical.

In both scenarios, the soil test N level is the same and the same crop is grown — the difference in N fertilizer required is based on N fertilizer price and value of the crop.

The first and second row of this table show estimated spring wheat yields with increasing amounts of N applied (based on a soil test N level of 40 lbs./ac.). The third row shows the expected yield increase achieved with an additional 10 pounds of N. In scenario No. 1, the assumed fertilizer cost is 65¢/lb. or $6.50 for each 10 lbs./ac. increment of fertilizer. The price of wheat is $8/bu. To achieve a 2:1 ratio of crop value to fertilizer cost, you would need to apply between 140 and 150 lbs./ac. of N. In scenario No. 2, the assumed fertilizer cost is 80¢/lb. or $8 for each 10 lbs./ac. increment of fertilizer. The wheat value is $5/bu. The 2:1 ratio of crop value to fertilizer cost is between 100 and 110 lbs./ac. of N.
photo: Les Henry

We don’t worry about estimating soil N mineralization or fertilizer efficiency, as this is built into the N fertilizer response curve information. Ideally, I prefer to use this method to determine N fertilizer rates versus using a calculated method, provided you have access to up-to-date N fertilizer response curves for the crops grown in your region.

Building your own tables

Using up-to-date regional N yield increase information to economically determine the optimum N fertilizer required is ideally the best approach. However, many areas of the Prairies do not have current, up-to-date response information. Unfortunately, this type of research just isn’t being done. Many farmers must determine N fertilizer requirements using a simplistic calculation method that may not be the economic optimum.

One option is to develop your own information using on-farm trialing. On your farm, you could have five N fertilizer rates applied in adjacent long narrow strips to measure increasing yield benefit on your important crops. For example, you could apply zero, 25, 50, 75 and 100 lbs. N/ac. on your wheat to measure the yield and yield increase with increasing N rates to develop your own response information. If you do this in several fields every year, you can develop your own on-farm information to fine-tune and optimize economical N fertilizer application.

For Alberta farmers, a computer program called Alberta Farm Fertilizer Information Recommendation Manager (AFFIRM) was developed with all available N fertilizer response curves for the various agro-ecological areas of Alberta. Unfortunately, the program was last updated in 2007. Sadly, Alberta Agriculture has not been very supportive to maintain this excellent fertilizer management tool.

New calibration curves for a number of irrigated crops and for dryland wheat, barley and canola for all Alberta soil zones is being updated in the program. Hopefully, Alberta Agriculture will update the program and have available for free download from their web site. This would be the preferred method to economically determine optimum N fertilizer rates and can be used for other nutrients as well.

The big unknown every year is environmental conditions, particularly moisture, that will occur during the growing season, after most or all of the N fertilizer is applied. We don’t know ahead of time if we will have a wetter, drier or near normal year. I usually suggest being cautious and fertilize for economic optimum.

About the author

Columnist

Ross H. McKenzie, PhD, P. Ag., is a former agronomy research scientist. He conducted soil and crop research with Alberta Agriculture for 38 years. He has also been an adjunct professor at the University of Lethbridge since 1993, teaching four-year soil management and irrigation science courses.

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