Lon Swanson, Wells Fargo Sector Manager, Crop Inputs and Feed
Chris Eggerman, Wells Fargo Sector Analyst, Crop Inputs and Feed (research contributor)
My golf game would be considered poor at best, although once in a while I get lucky and hit a phenomenal shot. In charity golf events, a scramble format is normally incorporated, so that each player on the team plays from the best shot, thereby allowing the strength of each player to lower the overall team score. In effect, with this format, you are maximizing the available resources.
With respect to agriculture, the United States hit the lottery in terms of natural resources. We have led the world in productivity by pushing crop yields to record levels. A critical piece of the success of the U.S. is based on the fertilizer that provides needed nutrients to the crops. The following chart shows U.S. corn yields dating back to the 1860s.
In the early days, fertilizer was only supplied through manure produced by farm livestock, as well as residue from the previous crop. However, these were inefficient, limited sources to replenish the soil and feed the crop, thus the trend in yields was relatively flat until the 1930s.
Technology and economics have combined to steadily improve productivity since then. According to Bob Nielsen, agronomy professor at Purdue University, rapid adoption of hybrid corn led to increasing yields from the late 1930s through the mid-1950s.1 He further indicated that yields have risen even faster since then, due to continued improvement in crop genetics, increasing adoption of nitrogen fertilizer and chemical pesticides, and agricultural mechanization.1
Primary nutrients of N-nitrogen, P-phosphorus, and K-potassium can be supplied through fertilizers made with natural resources other than livestock manure, such as minerals extracted through mining and natural gas.
The chart below illustrates the relationship between fertilizer costs and corn prices. As the grain prices and grower margins have declined, so have the prices of fertilizer due to supply/demand dynamics and the inability of farmers to pay as much for inputs as they could when corn prices were high.
In conjunction with the economic aspects of fertilizer application, farmers have always been good stewards of the land. Because farmers are directly impacted by water and air contamination, it is in their best interest to limit applications to amounts that can be used by the plants. The business aspect dovetails into these decisions as farmers try to lower their costs of production while maximizing yields.
Similar to a golf scramble utilizing the team’s best shots, it is this combination of economic and conservation goals that have led to the 4R Nutrient Stewardship Certification Program that is widely used by crop input suppliers as well as farmers. The 4R concept translates to:
The right fertilizer source at the right rate, at the right time, and the right place
The overall goals of the 4R Program are to increase production, increase farmer profitability, enhance environmental protection, and improve sustainability.
How is the 4R Program implemented? Crop input retail outlets voluntarily enter the 4R Program, composed of three sections:
- Initial Training and Ongoing Education
- Monitoring 4R Implementation
- Nutrient Recommendations and Application
A few requirements of the program include:
- Nutrient recommendations consistent with the state’s land grant university’s nutrient recommendations
- A certified professional review of the nutrient recommendations made
- Nutrient service providers’ (retail outlets’) staff understanding the 4Rs of Nutrient Stewardship
The program can also be tailored to specific geographic regions with a focus on issues and goals. For example, there is a three-year requirement guide specifically for nutrient service providers in the Lake Erie Watershed.
The 4R Program encompasses not only the volume of fertilizer applied, but also encourages technological advances. These include processes such as controlled release fertilizer, multiple applications, and product placement. Controlled release utilizes a process to coat fertilizers with a polymer film that acts as a barrier to moisture. Variable rate technology (VRT) has been utilized for years, but a renewed focus is now in place given lower commodity prices and a continual equipment upgrade. In addition, seed companies are developing more efficient varieties of plants by applying a higher percentage of nutrients to the soil where they are grown.
Importantly, the program goals are designed to benefit three different constituencies, with each reaping reward for overall program success. Teamwork among crop input suppliers, farmers, and consumers allows all three groups to benefit through improvements in crop yields, sustainability, and environmental protection.