Economics of Variable-Rate Fertilizer Application

 

Introduction

Site-specific farming is gaining in popularity in the corn belt of the U.S.  A concern expressed by many Kentucky producers is whether the same technology is profitable on their land. Site-specific management differs from traditional practices in that soil fertility levels are geographically referenced, and the frequency of sampling is substantially increased.  Many service providers are recommending sampling grid sizes as small as 0.4 ha (1.0 ac.).  Fertilizer and lime application rates are then adjusted as these inputs are applied to match the production goals and existing fertility for that region or cell of the field.  Field-average techniques, the traditional approach, treat all areas within a field the same--without regard to variability.  With the field-average approach a representative fertility level is established by pulling multiple soil cores that are composited into one sample.  Laboratory analysis of this single sample is used to make fertilizer recommendations for an entire field.

 Kentucky grain producers and agricultural services providers see the potential for the site-specific management approach and  are concerned about the profitability.  This new approach will require investments in hardware and increased management skills. Therefore, the work reported in this manuscript was initiated to address these concerns.  The primary objective of the work was to assess the potential economics of site-specific fertility management in Central Kentucky.  Specific objectives were:

 1.         Detect existing fertility levels and the degree of variability within fields in the Outer Bluegrass Region via extensive grid sampling.

 2.         Model corn, wheat and soybean yield potential reductions for areas with low fertility levels.

 3.         Compare the economics of field-average versus site-specific nutrient management practices.

 

Previous Work

The subject of soil sampling and soil parameter variation within fields has long been an important topic in the agronomic community.  For example, Reed and Rigney (1946) studied the sampling procedures required to determine various soil properties to within a given limit of accuracy.  They concluded that greater precision is used in laboratory analysis and therefore field-sampling techniques are the limiting factor.  Beckett and Webster (1971) presented a review of lateral variability of soil properties.  They found up to one-half of the variance within a field may be present in as little as one square meter of land.  Bonmati, et al. (1991) investigated the variability of urase, phosphatase, casein-hydrolysing activities, organic carbon and total nitrogen.  Strong correlations were found between total nitrogen and organic carbon.  Similar correlations were found between phosphatase and total nitrogen, and with total carbon. 

   Recognition of this variability and the advent of the Global Positioning Systems (GPS) has prompted many researchers, service providers, and grain producers to consider managing this variability.  The missing link of this scenario was the cost-effective availability of positioning services such as GPS.  Carr, et al. (1991) suggested "farming soils, not fields."  Their study was initiated to measure crop yield differences between contrasting soils within a field, and to compare the economics varying nutrient application by contrasting soils with the traditional practice of field -average application.  Returns to farming soils were generally greater than when farming fields.  However, the researchers noted that it was essential to establish appropriate crop yield goals, conduct accurate soil tests, and utilize reliable fertilizer recommendations to generate greater returns when managing nutrients. 

   Fixen and Reetz (1995) used a model termed PKMAN, developed by the Potash and Phosphate Institute of Norcross, Georgia, to estimate long-term profitability of site-specific nutrient management.  This model included elements such as yield potential, crop price, nutrient uptake by crop, crop removal, nutrient recovery, acceptable return on investment, interest rate, and others.  They concluded from this work that site-specific interpretations should consider both soil and producer characteristics, and that continued information feedback and soil-test calibration will cause site-specific management to continuously improve over time.

    The subject of selecting an optimum grid or cell size to describe variability is of interest to many potential users of this technology.  The following examples address cell size selection from a statistical perspective.   Han, et al. (1992a) used mean correlation distance (MCD) to specify the upper limit of cell size for site-specific management of agricultural lands.  The MCD was obtained by fitting either a linear or spherical model to semivariograms, a common geostatistical approach.  Han, et al. (1992b) also used the concept of data blocking procedures to convert soil sample data into a best-fit data set.  A nonparametric statistical technique was used to select the best value to represent the soil property of a particular cell.  They compared the results of this approach with the more traditional approach of  kriging, and found their new approach to produce similar estimation errors.  However, the new procedure was much faster.

 

Methodology

    Four fields located in Shelby County, Kentucky were selected to represent grain producing lands of the Outer Bluegrass physiographic region.  These fields were located in the northern portion of the county and consisted primarily of Lowell-Nicholson soils.  The relief for this area is described as undulating ridges and rolling side slopes.  The Lowell-Nicholson soils are deep and well drained to moderately drained.   Soil types include Lowell-C, Nicholson-B, Shelbyville-B and C, and Nolin.

    During the 1995 cropping season the fields were grid sampled to assess the variability of soil parameters affecting inputs to crop production.  A cell size of 36.6 m (120 ft.) was selected in part because of the 18.3 m (60 ft.) spread width of commercial fertilizer application equipment.  A second limiting factor was the availability of resources.  This cell size resulted in seven point samples per hectare (3 samples/ac).  Gridding of each field was accomplished by using a fiberglass tape, range poles and flags.  The origin of the grid was established by located a flag 18.3 m (120 ft.) from the field boundaries in one corner.  

    Composite soil samples were collected at each grid point.  Five soil cores were extracted to a depth of 17 cm (6.7 in.).  The five cores were collected equidistance round the periphery of a 9 m (15 ft.) diameter circle, centered at the grid point.  This sampling technique minimized errors associated with true point sampling practices by averaging soil parameters over an area that coincided with grid point.

    Soil samples were air dried and prepared for analysis.  Organic matter content was determined using Carbon Determinator methodology.  Samples were then submitted to the Kentucky Agricultural Experiment Station, Division of Regulatory Services for analysis of pH, phosphorus and potassium.  Regulatory Services uses the Mehlich III extraction procedure to determine phosphorus and potassium content.  A buffered pH was also determined using a modification of the Shoemaker, McLean and Pratt method.  The buffered pH was reported for all samples having a water pH below 7.0 for the Lexington laboratory.

 

Analysis

    The justification for this work was to assess the potential for site-specific management of croplands in Central Kentucky.  The variability that exists suggests that variable-rate application of fertilizer and chemicals may result in reduced production costs and increased yield.   Quantification of the cost-effectiveness of site-specific management is a major concern of practitioners of this technology.  Long-term there must be productivity gains to offset increased management costs.  In the short-term producers will demand evidence of cost effectiveness.  Therefore, the intent of this manuscript is to assess the potential savings accrued by not applying nutrients or adjusting pH in those regions of a field where levels are appropriate.

    Soil testing revealed current levels of available phosphorus and exchangeable potassium, and the acidity/alkalinity or pH of the soil.  Fertility management practices for phosphate and potassium are different from nitrogen in that the former nutrients are relatively stable, and do not volatilize or move within the soil profile.  Changes in fertility levels for these nutrients are gradual.  Management practices must be followed for several years to change levels within the soil.  While pH changes that result from liming may be rapid when using hydrated lime, for limestone the reaction time may require up to four years.

    Fertilizer and liming recommendations used in this investigation were obtained from University of Kentucky (1996).  For corn, soybeans and wheat this publication recommends a pH of 6.4.  Table 1 is a summary of liming rates for agricultural limestone as a function of water pH and buffered pH.  These rates are reduced 33% for hydrated lime.  Tables 2 and 3 provide recommended application rates for phosphorus and potassium, respectively, for a corn and wheat with double-cropped soybean rotation.  Recommendations are made in kg/ha of P2O5 and K2O, on an oxide basis.

    Yield reduction resulting from low nutrient levels is perhaps the most difficult issue to address.  The mobility of nitrogen and potential in some soils for denitrofication to occur encourages producers to apply nitrogen at the stage of growth when the plant can most effectively utilize this nutrient.  Split application on corn and wheat is a practice that is growing in acceptance.  In addition P and K levels have been found to limit crop growth.  OCES (1988) provides two figures that show the relationships between relative yield and available P and exchangeable K, respectively.  The curves from these two figures are reproduced in Figures 1 and 2.   Jones, et al. (1991) provides a function for describing the effect of soil-P buffering capacity on residual fertilizer-P effectiveness in which the soil response curve is exponential,

where f(x) is the yield response, a is the maximum expected yield, b is the relative response to P, c is the curvature coefficient, and x represents the level of available P in the soil.  This equation was recast in a slightly different form and then used to describe the data contained in Figures 1 and 2.  Available-P was expressed in units of kg/ha.  R-squared values for this relationship fit to the wheat, corn, and soybeans data in Figure 1 were 0.9912, 0.9981 and 0.9881, respectively.  Applying the same relationship to K yielded similar results.  Here the R-squared value for corn and wheat was 0.9985, and for soybeans was 0.9987.  These relationships were used to estimate yield reductions for those areas of the field where one or the other nutrient level was limiting.

 To assess the economics of variable-rate fertilizer and lime application, the following assumptions were used in the analysis:

  1. Crop rotation for the study area is corn followed by wheat with double cropped soybean for four growing seasons.

  2. Grid sampling of the soil will be conducted once every four years.

  3. Adjustment of soil pH will occur in the first year via the application of agricultural lime.  Application rates will coincide with the recommendations of University of Kentucky (1996)

  4. Phosphorus and potassium application rates will be determined using University of Kentucky (1996).  For the double crop years the phosphate recommendation for small grains will be used and the potash rates will come from the soybean recommendations.

  5. The cost of soil sample collection and analysis is $7.00 per sample.

  6. Agricultural lime will cost $14.30 per metric ton ($13.00 per ton).

  7. Murate of potash (0-0-60) will serve as the source of potassium and will cost $144.40 per metric ton ($131.00 per ton).

  8. Diammonium phosphate (18-46-0) will serve as the source of phosphorus and will cost $196.20 per metric ton ($178.00 per ton).

  9. Constant-rate fertilizer and lime application will cost $8.72 per hectare ($3.50 per acre).

  10. Variable-rate fertilizer and lime application will cost $17.44 per hectare ($7.00 per acre).  

  11. Field-average conditions will be determined by averaging all grid point sample results together, and using the mean value to represent existing fertility levels within a field.  

  12. Field-average application will be compared to variable-rate application using a grid of 36.6m (120 ft.).

  13. Yield reductions coincide with the limiting nutrient level at each grid point (i.e., P or K).  

  14. The value of grain will be $165/Mg, $177/Mg, and $239/Mg ($4.50/bu, $4.50/bu, and $6.50/bu) for wheat, corn and soybeans, respectively.

  15. Maximum yield potential for each field will be determined by selecting the predominant soil type and slope of a particular field, and then reviewing the yield potential as listed in the USDA-SCS Soil Survey of Shelby County, Kentucky (USDA-SCS, 1990).  

  16. The maximum yield potential for soybeans as published in USDA-SCS (1980) is reduced by 33% to represent double-cropped soybean following wheat.

  17. Yield reductions will decrease by 25% each year for the site-specific management approach as soil fertility increases in deficient areas by the guidelines of University of Kentucky (1996).

 

Results and Discussion

    Soil test summary results are presented in Table 4 for each field.  For a field-average management approach the test result averages suggest that pH is not a major concern in any of the fields.  In all cases except Field 22, the pH is at or above the preferred 6.4.  For Field 22 lime application was determined using Table 1, a rate of 0.91 Mg/ha (1.0 ton/ac).  The available phosphorus levels were well above the 67 kg/ha (60 lb/ac) level, thereby alleviating the concern for the need to add phosphate.   For Fields 23 and 25 the exchangeable  potassium was well below the high fertility level as suggested by University of Kentucky (1996).  Using Tables 2 and 3, potash application levels of 67 kg/ha (60 lb/ac) and 45 kg/ha (40 lb/ac) were recommended for Fields 23 and 25, respectively, for corn.  For years when wheat was followed by double cropped soybeans the application levels were reduced to 56 kg/ha (50 lb/ac) and 34 kg/ha (30 lb/ac), respectively.

   Fertilizer and lime recommendations made for site-specific management on a 0.134 ha (0.331 ac) cell basis revealed a slightly different need.  Tables 5 and 6 were generated to summarize total lime and fertilizer qualities under either management style.  Entries in Table 5 are sparse when compared with Table 6.  Table 6 indicates the need for adjustment of pH and phosphorus and potassium levels in all fields.  Fields 23, 25 and 26 will require pH adjustments with the sight-specific approach.  Similarly all four fields will require the application of phosphate.  Although, it might be argued that application of 0.34 Mg (0.38 tons) to Field 22 is so minor that it is not economically feasible.  In general the quantities of fertilizer to be applied are about the same under either management approach, if application is warranted under the field-average approach.  Most notable is the site-specific approach for those fields where the field-average management approach would suggest no additional nutrients.  For example, the potash recommendation for Field 22 calls for no fertilizer application for the four years.  The site-specific approach suggests applying a total of 9.8 Mg (10.82 tons) over four years.  The overall difference between the management approaches for all four fields results in the additional application of 32.3 Mg (35.6 tons) of lime, 11.3 Mg (12.5 tons) of phosphate, and 14.3 Mg (15.8 tons) of potash.

    Perhaps the most important question is if the return on investment in site-specific management practices is justification for increased management costs.  Table 7 summarizes the returns for both management practices.  The site-specific management approach can be expected to return $13,218.20 more in the way of increased yield over four years.  Notably the increased return for Field 22 and 23 at $4675.53 and $5702.58, respectively.  Contributing to the returns for Field 22 was the increase in potash application whereas most of the return on Field 23 came from the application of phosphate.  Under the field-average management approach elevated phosphorus levels in the back of the field masked deficiencies in the front.  Approximately one-half to two-thirds of this field had low phosphorus levels.

    When looking at the overall economics a much different conclusion may be drawn (Table 8).  To implement site-specific management using a 36.7m (120ft) grid will cost the grain producer $2760.14 in potential profit over the 4-year production cycle.  This is compared to a $511.68 loss using the field average technique.  For Fields 22, 25, and 26, neither management approach results in a substantial increase in profit.  For Field 23 the situation is much different.  In this instance there is the potential to increase profits by $797.94 and $1980.48, respectively for field-average and site-specific management approaches.

    Results of this investigation suggest that site-specific management offers potential in situations where field-average soil testing indicates the need for adjustment of soil fertility, and where there is a high degree of variability for the soil parameters of interest.

Figures Available Soon!

Figure 1:           Available phosphorus levels in Field 23 at the Worth and Dee Ellis Farm in Shelby County, Kentucky during 1995.  

Figure 2:           Exchangeable potassium levels in Field 23 at the Worth and Dee Ellis Farm in Shelby County, Kentucky during 1995.

Figure 3:           Wheat, corn and soybean response to available phosphorus (adapted from Miller, et al., 1988).

Figure 4:           Wheat, corn and soybean response to exchangeable potassium (adapted from Miller, et al., 1988). 

Figure 5:           Corn yield potential for Field 23 at the Worth and Dee Ellis Farm in Shelby County, Kentucky during 1995.

Figure 6:           Wheat yield potential for Field 23 at the Worth and Dee Ellis Farm in Shelby County, Kentucky during 1995.

Conclusion

 1.         Site-specific management of soil fertility has the potential to be profitable in the Outer Bluegrass Region where field-average soil sampling indicates the need for fertility level adjustments.

 2.         A high degree of variability for some soil parameters may mask potential production deficiencies where high levels skew the mean for that parameter.  In these instances site-specific management is more appropriate. 

 3.         Grid sampling at higher resolutions than current practices dictate may be practical and profitable.

   

Future Work

    Conclusions reached in this manuscript were based on the assumption that phosphorus or potassium was the limiting nutrient, and that yield reductions were consistent with the data presented by Miller et.al. (1988).  Yield monitoring has been implemented for Fields 22, 23, 25, and 26.  This data, along with verification of VRT application of lime and fertilizer, will be used to adjust the response curves for yield potential to better represent the soils of the Outer Bluegrass Region.


References

 Beckett, P. H. T., and R. Webster.  1971.  Soils and fertilizers.  Soil Variability: A Review.  34 (1): 1-15.

Bonmati, M., B. Ceccanti, and P. Nanniperi.  1991.  Spatial variability of phosphateas, urease, protease, organic carbon and total nitrogen in soil.  Soil Biology and Biochemistry.   Pergamon Press.  23(4): 391-396.

Carr, P. M., G. R. Carlson, J. S. Jacobsen, G. A. Nielsen, and E. O. Skogley.  1991.  Farming soils, not fields: a strategy for increasing fertilizer profitability.  Journal of  Production Agriculture.  4(1): 57-61.

Fixen, P.E. and H.F. Reetz, Jr.  1995.  Site-specific soil test interpretation incorporating soil and farmer characteristics.  Appearing in the Proceedings of Site-Specific Management for Agricultural Systems.  Edited by P.C. Robert, R.H. Rust, and W.E. Larson.   Minneapolis, Minnesota.  27-30 March.

Han S., C.E. Goering, J.W. Hummel, and M.D. Cahn.  1992a.  Selection of cell size for site-specific crop management.  An ASAE Meeting Presentation No. 927007.  St. Joseph, Michigan.

Han S., C. E. Goering, J. W. Hummel, and M. D. Cahn.  1992b.  Blocking of spatial soil data for site-specific crop management.  An ASAE Meeting Presentation No. 927008.  St. Joseph, Michigan.

Jones, C.A., Sharpley, A.N., and J.R. Williams. 1991.  Modeling phosphorus dynamics in the soil-plant systems.  Modeling Plant and Soil Systems  No. 31.  Edited by  J. Hanks and J.T. Ritchie.  ASA-CSSA-SSSA:  Madison, Wisconsin.

Miller, F., J. Beuerlein, J. Johnson, M. Loux, J. Street, W. Schmidt and J. Underwood.  1988.  Ohio Agronomy Guide, 12th Edition.  Ohio Cooperative Extension Service, Bulletin 472, Ohio State University.

Reed, J.F., and J.A. Rigney.  Soil sampling from fields of uniform and nonuniform appearance and soil types.  Journal of the American Society of Agronomy.   pp. 26-40.

University of Kentucky.  1996.  1996-1997 Lime and Fertilizer Recommendations.  Cooperative Extension Service, University of Kentucky, College of Agriculture.

USDA/SCS.  1980.  Soil Survey of Shelby County, Kentucky.  United States Department of Agriculture Soil Conservation Service in cooperation with the Kentucky Agricultural Experiment Station and the Department for Natural Resources and Environmental Protection.