Profits count in nutrition calculations

Image of Dr Imma Farre

Dr Imma Farre has developed a simple framework to help growers and advisers make better fertiliser decisions.

PHOTO: Peter Maloney, DAFWA

A simple framework has been developed to help growers and advisers make better fertiliser decisions based on maximising profits, rather than crop yields.

While some WA growers adjust nutrient rates – especially nitrogen – according to seasonal conditions and expected crop yields, it can be equally if not more important to consider fluctuations in the price of nitrogen relative to wheat prices.

This is the advice from Department of Agriculture and Food WA (DAFWA) Grains Industry soil productivity researcher Dr Imma Farre.

Her analyses of nitrogen and wheat prices during the past decade indicate gross margins are optimised when growers and advisers can predict the yield response to a wide range of nutrient rates, rather than those typically used for the expected yield.

This enables them to make more profitable decisions in light of current nitrogen:wheat price ratios.

Dr Farre has developed the analysis framework through the GRDC-funded More Profit from Crop Nutrition (MPCN) II project with Amir Abadi, of the Centre for Crop Disease Management.

They have developed several key indicators, including:

  • economically optimal nutrient rates (EONR) – the rate of nutrient that produces a yield that maximises a crop’s net return, not necessarily the highest yield;
  • gross margin maximising grain yield (GM) – derived from the EONR and taking into account crop yield, fertiliser rate and grain/fertiliser prices (among other variables); and
  • break-even ratio (BER) – ratio of price of nutrient to price of grain.

Dr Farre says EONR occurs when marginal revenue from grain production equals marginal cost of the nutrient applied in the fertiliser, and this is the most profitable yield and nutrient rate.

“For this to be successful, knowledge of expected yield response to a wide range of nitrogen rates is needed,” she says.

Nitrogen response curves can be generated by agronomists through nitrogen response models, such as Select Your Nitrogen, N Broadacre and more detailed time-step models, such as Yield Prophet®.

Dr Farre says during the past 15 years in WA, the BER for nitrogen in urea and wheat price has ranged from four in 2015 to almost eight in 2008.

“This means that in 2008, for example, for one unit of nitrogen you have to expect eight units of yield to make that investment cost-effective,” she says.

“For the same expected yield of 2 tonnes per hectare and a background soil nitrogen of 50 kilograms of N/ha, the EONR for nitrogen would be 70kg N/ha in 2015 and 25kg N/ha in 2008 because of the huge difference in BER between these two years.

Dr Farre says there is always uncertainty about growing-season rainfall and this will influence post-sowing nutrient applications.

Line chart comparing yield and gross margin on nutrient rates

Figure 1 Calculating economically optimal nutrient rates.

SOURCE: DAFWA

She says maximum wheat gross margin does not usually occur at the nitrogen rate that produces maximum yield (Figure 1).

Dr Farre says when BER is high (nitrogen was expensive), extra nitrogen has to give at least as much more grain yield to compensate.

“As you go up in the curve, the slope decreases and each extra kilogram of nitrogen gives less grain yield – and so is not cost-effective.

“When BER is low (nitrogen is cheap and/or grain prices are high), the point in the curve where the slope equals the BER is further along the curve – indicating EONR is at a higher nitrogen rate.”

Dr Farre says to get the best information from the profitable fertiliser framework, growers and advisers need good underlying soil-test data that estimates soil nutrient supplies and an understanding of in-season mineralisation of nitrogen from soil organic matter.

She says any factors limiting uptake of soil nitrogen, such as soil constraints and seasonal conditions and/or a dry finish, also need to be accounted for.

More information:

Dr Imma Farre,
08 9363 4164,

immaculada.farre@agric.wa.gov.au

Useful resources:

GRDC Wheat GrowNotes
N Broadacre app – nitrogen calculator

Ground Cover Supplements:
'More Profit from Crop Nutrition' – January–February 2014 issue

'More Profit from Crop Nutrition II' – with this issue – July–August 2016

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Diverse tactics for soil constraints

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WA growers adapt to changing rainfall patterns

GRDC Project Code CSA00036

Region West