Is Increased Production Worth the Cost of the Fertilizer?

I recently had the pleasure of hosting a pasture walk for a group of University students, young people who wanted to chat about plants, animals, grazing, fencing, water…in other words, all the things I am constantly talking about. Our conversation included bits of philosophy too, and some thoughts about the direction of our industry. Somewhere in there I described my model as being extremely low-input, with no tillage, no seeding, and no chemical fertilizer. “I am seeking to operate on sunshine, rain, and management” –  my mantra, it seems.

After an hour or two of highly stimulating conversation we headed back toward the parking area. As we approached the gate, the leader of the group asked a question that I had not quite prepared for:

“John, why is there such a cultural bias that prevents so many American ranchers from adopting common practices that could improve the quality and quantity of their forages? Why is there such resistance to improving the soil or the sward or increasing production?”

What he was talking about was applying fertilizer.

Honestly, I was a bit taken aback. We had just spent an hour or more wandering around looking at what I considered to be pretty good looking fall pasture. Earlier, we had received some fall rains that had awakened the perennial grass from its summer slumber, and there was a group of calves grazing that regrowth, calves that looked like they were doing very well. Still, my pastures were certainly not dazzling. I had to think about the question for a few moments, finally responding in a non-scientific voice:

“Well, in my case, I guess I notice that all of the ranches that seek production over profit tend to go broke. All that equipment and fertilizer and seed, well, those things have to be paid for by calves that only bring $600 at market.”

What I was really thinking about was Stan Parsons’ voice echoing in my brain. Stan was the founder of Ranch Management Consultants and what I learned from him is one of the prime reasons I’m profitable today. Stan always said, “A farm may be able to support a ranch, but a ranch will never support a farm.”

I do have a bias, a paradigm or an absolute belief system really, founded on the idea that we must absolutely limit inputs because inputs are not economically viable if all we are producing is grass.

Grass is a low-value product. Cattle are most economically efficient when we are using them to harvest (scavenge) forage that no one else can use, forages that are grown on soil no one else can navigate.

Let me say right here, my feelings weren’t hurt, but I was somewhat…stimulated, put in a state of mind to spend some time and energy looking for data that would guide me in going forward. After all, I want to be doing the smart and profitable thing, right? To make smart decisions about fertilizer use, I need to know how much the fertilizer costs, how much forage it produces, and what the value of that extra forage is.

So, I did the math.

The Cost of Nitrogen vs the Value of Forage

Question #1: what does Nitrogen cost?

I made a few  calls to local suppliers and found that having Urea delivered and spread on my pastures will cost about $400 per ton. Assuming an application rate of 100 pounds of product (46 pounds of N)  per acre this works out to $20 per acre.

Question #2: how much additional forage will be produced?

There are many variables that affect outcomes in different locations, but I find many references to the idea that one pound of N produces about 20 pounds of forage (dry matter). So, the 46 pounds of N that we applied above will produce about 920 pounds of forage (dry matter) per acre.

Question #3: what is the value of the additional forage we produced?

There are several ways to calculate this, but my training says that the value of grass is determined by how much you could sell it to your neighbor for, or perhaps how much you might pay to buy it from your neighbor.

If you are letting a 1,000 pound cow (1 Standard Animal Unit or SAU) eat this forage and we assume that a bovine eats 3% of her weight each day, then that 920 pounds is remarkably close to the amount that 1 SAU cow would eat in a month.

Question #4: how much would you sell one SAU of forage for? Or perhaps, how much would you pay for a SAU of forage?

To answer this, I made a list of rental properties we manage and made some quick calculations to find how much I pay for an SAU (month) of forage. I also looked at the rates I am charging my custom-grazing clients. In the end, it appears that I am paying around $10 per SAU per month  for rental ground. If I were young and aggressive and expanding, I believe that over time I could continue to find more rental ground at that cost. And of course, each of those properties comes with some degree of labor overheads. This makes calculating their true value a bit squishy. But generally speaking, I believe I can rent land (buy grass) for about half the cost of producing grass with Nitrogen fertilizer.

Conclusions

At the risk of being harsh, it appears to me that increasing production of forage through the addition of Nitrogen fertilizer is economically unsupportable, for me at least. Of course fertilizer “works”, but the cost of production is simply too high if the only thing we are growing is grass. Maybe things are different if you are growing strawberries or almonds or cantaloupe, but if all you have is grass pasture, I would encourage producers sharpen their pencils and do the math before calling the fertilizer truck.

Best wishes and Happy Grazing to all of you in 2021!

For more on nitrogen as a fertilizer, check out this week’s article.