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November 29, 2018
Potential homeowners delve into many aspects of a property before buying or renting. University of Missouri agronomy specialist Pat Miller questions why farmers are not doing the same before they settle on land.
"The land's potential to grow crops can vary from shack to mansion," Miller says. He says farmers can easily tell if the land has deep soil bottomland or shallow sandy hilltop, but farmers need to go deeper than that.
In a recent MU Ag in Focus newsletter, Miller questioned how often farmers consider the fertility level of the land, if it needs lime and how much, or has the ground been mined to the point it will cost a small fortune to build it up to a good level?
His answer: "A soil test will tell you."
Miller says with fertilizer prices climbing, profit potential can vary greatly on what the soil needs in lime and fertilizer. He compared a poor field to a better field for clover/grass hay and for corn.
The pH salt of the first test was 5.0, the phosphorous level was 5 pounds and potassium was 130 pounds per acre. The better field has a pH salt of 6.5, a phosphorous level of 45 pounds and 250 pounds of potassium per acre.
Miller looked at cost if a farmer wanted to grow 3 tons of clover/grass mix hay. The difference between the poor and good field for phosphate and potash fertilizer was $52.50 per acre per year, and lime costs were $32 per acre.
The fertilizer cost would be every year for eight years to build up the soil in the poor field to a good level, or $682. Add that to the one-time lime cost, it would be $715 difference between the two fields.
"If the good field also had a good stand of clover and the other does not," Miller adds, "you would have to add in nitrogen costs until you got clover established, adding about $45." The lime and fertilizer difference between the two fields would be about $760 over eight years.
Because the pH and phosphorous and potassium were so low to start, it would likely reduce yields. Miller estimates from 4 to 8 tons over the eight years. "At $80 per ton of hay, that would be another $320 to $640 over the eight years," he finds. "That means you are looking at over a thousand dollars difference between the two fields."
For farmers wanting to grow 180-bushel corn, the fertilizer difference between the poor and good field is $47 per acre per year, and lime cost was a $32 per acre difference. Eight years of the increased fertilizer and the lime would be $431.
"When you include a yield difference of maybe 200 to 400 bushels over eight years at $3.50 per bushel corn, resulting in $700 to $1,400 less income on the poor field," Miller says. "That plus the fertilizer and lime difference would be about $1,500 over the eight years."
Determining land value
Are these two fields worth the same price to purchase or rent? It comes down to a dollar difference. For farmers and ranchers, investigating the land and its condition is important before entering negotiations for purchasing or renting property. Those willing to invest more, especially for rent, may find some relief in rates.
"From the property owner’s perspective, it becomes important to have a renter who takes care of the land and not just think about $10 per acre more rent," Miller says. "In the long term, you want a renter who is maintaining the value of the land."
Source: University of Missouri Extension
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