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Corn+Soybean Digest

Insurance Nitrogen Doesn't Pay

Last spring's sky-high nitrogen prices may have had a positive side. Farmers who had tended to apply “insurance” nitrogen back when N prices were cheaper probably reduced their rates somewhat. And chances are good it won't hurt yields a bit.

An on-farm project sponsored by the Macon County, IL, Soil and Water Conservation District (SWCD) compared university-recommended N rates with rates 25% above those levels. Results from the 2000 study showed that university-recommended N rates are high enough to optimize net profit. In fact, one farm operation participating in the project saved $20.54/acre by applying 13% less N than university guidelines called for.

One factor that prompted the Macon County project was high nitrate levels in Lake Decatur, the drinking water source for the city of Decatur, IL, with its 85,000 residents. Nitrate levels in that lake have exceeded the maximum of 10 parts per million (ppm) at certain times of the year. Farm-applied nitrogen was seen as one of the causes.

“We invited producers to participate in a supervised research verification project designed to demonstrate to the public that we are able to manage nitrogen responsibly,” explains Shannon Allen, SWCD watershed specialist. “We also wanted to show producers that a nitrogen rate which exceeds recommended levels means money down the drain.”

Six farm operations took part in the comparisons.

The University of Illinois (U of I) recommends 1.2 total pounds of N/acre for each bushel of corn yield goal. That includes N credits for a preceding soybean or alfalfa crop, for manure, starter fertilizer, nitrogen solutions added to herbicides and DAP (diammonium phosphate).

“To verify that the recommended rate is the economic optimum, we asked participants to set up a check strip and overfertilize it by 25%,” says Allen. “We chose 25% because an Illinois EPA survey showed 33% of farmers were overapplying N by 20 lbs/acre or more. The 25% would cover that.

“We agreed to compensate any farmer who did not make as much or more net profit from the recommended rate. The higher rate might produce somewhat more yield but not necessarily more net profit.”

As it turned out, four of the farmers showed economic advantages by using the recommended N rates (or less) vs. the 25% higher rate. Their savings were $2.29, $7.48, $10.55 and $20.54/acre. That was based on a 20¢/unit cost for N and $2.50/bu corn.

The fifth farmer had too much downed corn for an accurate yield check, so the entry was voided. The sixth participant showed a better net return for the higher N rate, but a harvesting complication skewed results.

Three of the farmers who showed economic advantages from the recommended N rate had basically the same yield with both rates.

Ted Shambaugh and his son, T.J., Oakley, IL, applied 13% less than the U of I recommended rate and produced a 6.6-bu/acre higher yield (188.9 vs. 182.3). That gave them a $20.54/acre savings compared to the recommended rate.

If the Shambaughs had overapplied by 25%, their N cost would have been $8.70/acre more than with the U of I rate. It's assumed their yield would have been no higher than with the U of I rate. Therefore, their income with the 13% underapplication would have been $29.24/acre greater than with a 25% overapplication.

In the Macon County nitrogen project, the Shambaughs applied 174 lbs of N/acre for the U of I recommended rate. They compared that with an underapplied rate of 154 lbs of N/acre. (The overapplied rate would have been 217.5 lbs of N/acre.) As cited earlier, the underapplied rate produced a 6.6 bu/acre higher yield than the U of I rate.

Why did they choose to underapply?

“The 154-lb rate was actually more in line with what we are applying on most of our ground,” Ted explains. “Over the years we've conducted our own nitrogen comparison plots. That's helped us fine-tune our N rates. We've found we can optimize net profit on both specialty corns and conventional hybrids with moderate rates.”

As a result of their on-farm testing, the Shambaughs, in a corn-soybean rotation, now apply 100-110 lbs/acre actual N in late winter or early spring as a base. They then sidedress what they believe is needed in addition, based on soil productivity and growing conditions.

“Our total applied N can range from 120 to 140 lbs under average conditions up to 180 lbs on real top ground under good growing conditions,” says Ted.

In a good year, the Shambaughs' corn yields run within 5% or better of the maximum yield for the area.

There is considerable farmer interest in continuing the Macon County nitrogen verification project, reports SWCD's Allen. “We've had a number of farmers and bank managers who want to join the project.

“At this point we are trying to raise money to put in a fund to compensate any farmer who happened to lose net profit by using the recommended N rates. But based on what we've learned so far, and based on computer analysis of our data, we'd have to pay out only once every 10 years. That would be a year of exceptionally good growing conditions when a higher N rate might help.”

Allen points out that the N verification project was conducted in 2000, when N prices were about 20¢/unit. “With the much higher nitrogen prices we have today, farmers will save even more money by applying recommended rates versus overapplying,” he emphasizes.

“From an environmental standpoint,” says Allen, “if all farmers in our watershed applied no more than the U of I recommended rates, we hope it would help reduce nitrate levels in Lake Decatur to well within national drinking water standards.”

Russell Consulting Group

5243 Panorama Terrace
Panora, Iowa 50216-8606
Phone 1-877-333-6135
Fax 515-755-2326

Russell Consulting Group combines the skills of Moe, Terry and other professionals with similar skills to help farmers manage risk. They look at a client's financial situation and develop a marketing plan to achieve gross dollars per acre their clients will need in today's market. By working weekly with your marketing plan, they help you reach your goals. They enhance your competitive advantage by providing you access to decision making software other agribusiness firms use.

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