Assessing the Relative Value of Soil Testing and Nutrient Accounting

Assessing the Relative Value of Soil Testing and Nutrient Accounting

March 7, 2008

Using the proper fertilizer rate is more important than ever. Applying too much – or too little – can result in substantial economic loss.

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One place to not cut back this year is soil sampling. Because of increased fertilizer cost, the relative cost of accurate fertilizer recommendations based on soil tests is actually less than in previous years. Since fertilizer costs and grain value have both increased, it is still profitable to apply recommended rates of fertilizer, even though the up-front investment is higher.

It is more important than ever that the proper fertilizer rate be used. Applying too much - or too little - fertilizer can result in substantial economic loss.

Over the last two years the cost of soil sampling has not increased much, if any. One analytical laboratory in Nebraska indicated their soil analyses fees have increased by 10% in that period. Table 1 illustrates the cost of doing a good job of soil testing a field is still relatively inexpensive, particularly when compared to the investment in fertilizer and the value of the crop. In this example, soil testing cost 61 cents an acre in 2006 and 67 cents an acre in 2008. Expressed another way, soil testing cost 88 cents per $100 fertilizer investment in 2006, but only 52 cents per $100 fertilizer investment in 2008.

Table 1. Comparison of nitrogen and phosphorus costs and value for corn in 2006 and 2008.
 
Field Description
 
Expected yield = 220 bu/acre
Soil organic matter = 2.2%
Residual nitrate-N = 5 ppm
Bray-1 phosphorus = 13 ppm
Corn after corn

 

 

2006

2008

Soil Sampling

4 samples

$57.60

$64.00

 

2.5 hr labor

$27.50

$30.00

 

Subtotal

$85.10

$94.00

 

 

 

 

Nitrogen ($/lb N)

 

$0.32

$0.50

Phosphate ($/ lb P2O5)

 

$0.27

$0.58

Corn Value ($/bu)

 

$2.25

$5.00

Corn ($/bu)/N ($/lb)

 

7:1

10:1

 

 

 

 

UNL N Recommendation (lb N/acre)

182

210

N Cost ($/acre)

 

$58.24

$105.00

 

 

 

 

UNL P Recommendation (lb P2O5/acre)

40

40

P Cost ($/acre)

 

$10.80

$23.20

 

 

 

 

Fertilizer Cost ($/acre)

 

$69.04

$128.20

Total fertilizer cost ($/140 acres)

$9,666

$17,948

 

 

 

 

Accounting Costs

$/acre

$0.61

$0.67

 

($/$100 fertilizer)

$0.88

$0.52

For many years, the University of Nebraska-Lincoln has stressed the value of soil testing as a tool to determine the most profitable fertilizer rate. Most of our fertilizer recommendations rely on an accurate soil sample, in some cases coupled with the knowledge of cropping history, area of the state, yield potential, and other supporting information. With current crop and fertilizer prices it is more important than ever that fertilizer rates be based on good soil test information. Table 1 illustrates this point by comparing current prices to those two years ago. In this example, a fertilizer recommendation is made for corn on a 140-acre, center-pivot irrigated field. A soil test for the field indicates that, on average, soil organic matter is 2.2%, and Bray-1 phosphorus is 13 ppm. Residual nitrate levels are low, at 5 ppm.

Currently, corn is selling for over $5/bushel. Two years ago, the price was closer to $2.25/bushel. At the same time, fertilizer prices have almost doubled in some cases. Currently, nitrogen costs $0.40/lb to $0.70/lb, and phosphate fertilizer (P2O5) costs $0.40/lb to $0.65/lb, depending on the source and area of the state. Two years ago, nitrogen was typically $0.32/lb, and phosphate was $0.27/lb.

With the same soil test information and current economics, the UNL recommended nitrogen rate for corn will likely be the same or even higher for 2008 than 2006. Table 1 illustrates this point. With a corn:N price ratio of 7:1 in 2006, compared to a corn:N price ratio of 10:1 in 2008, the recommended rate is 28 lb N/acre higher in 2008 – 210 lb N/acre compared to 182 lb N/acre in 2006 (see story on the Nitrogen Calculator for Corn). The nitrogen fertilizer cost per acre is $105 in 2008, substantially higher than the $58.24 in 2006.

Phosphorus fertilizer recommendations do not vary with the cost of fertilizer or value of the crop, at least with current prices, so the recommended rate is unchanged – 40 lb P2O5/acre. The cost per acre for phosphorus, in this example, is more than doubled, from $10.80 to $23.20, since the price of phosphorus fertilizer has more than doubled from 2006 to 2008.

The total cost of fertilizer for the field has increased by 85% – from $9,666 to $17,948. The economic risk of using the wrong fertilizer recommendation also has increased. For example, applying 30 lb N/acre too much fertilizer may cost you $5-$15/acre, or $700-$2100 for a 140-acre field, assuming rates are at or above the point where the yield increase pays for additional fertilizer. On the other hand, applying 50 lb N/acre below the economic optimum rate could reduce yield by 15-20 bu/acre, reducing income on the field by $10,500 to $14,000.

Another important factor to consider when determining optimal fertilizer rates is proper crediting for other nutrient sources, such as legumes, manure, and irrigation water. If fertilizer prices have doubled in the last couple of years, so has the value of credits from these sources. In the example above, the previous crop was corn. If the previous crop had been soybean, the standard N credit for corn following soybean would be 45 lb/acre or $22.50. The cost to collect and analyze water samples for nitrate content, or manure samples for a range of nutrients, has increased little, while the value of the nutrients these resources contain has gone up substantially.

The thought of investing $15,000 or more in a single field for fertilizer can be intimidating. However, with current crop prices, such an investment can be profitable. It is critical, though, that investments of this size be made with the best information possible, based on careful soil testing, and after accounting for all sources of nutrients.

Richard B. Ferguson
Charles A. Shapiro
Extension Soils Specialists