How High Fuel, Fertilizer and Commodity Prices Affect Manure Management Decisions

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How High Fuel, Fertilizer and Commodity Prices Affect Manure Management Decisions John A. Lory, Plant Science Ray Massey, Agricultural Economics Marcia Shannon, Animal Science Peter Scharf, Plant Science Charles Fulhage, Agricultural Engineering

Outline Effect of high fertilizer prices on optimum N rate. Getting a grip on manure value. Fuel effects Feed effects Integrating manure value into feed management decisions.

N Price Effect on Fertilizer Rate Commodity Price ($) 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 Corn ($/bushel) Urea ($/10 lbs N) 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Source: NASS Based on April prices for MO corn and National fertilizer prices

Return from N Fertilizer ($/acre) 300 250 200 150 100 50 0 N Price Effect on Fertilizer Rate 1996 Corn: $4.26/bu N: $0.30/lb Ratio: 14.0:1 2005 Corn: $2.03/bu N: $0.36/lb Ratio: 5.6:1 0 60 120 180 240 Fertilizer N Rate (lbs/acre)

N Price Effect on Fertilizer Rate Commodity Price ($) 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 Corn ($/bushel) Urea ($/10 lbs N) 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Source: NASS Based on April prices for MO corn and National fertilizer prices

Return from N Fertilizer ($/acre) N Price Effect on Fertilizer Rate $300 $250 2008 2002 Corn: $5.30/bu N: $0.60/lb Ratio: 8.8:1 Corn: $1.93/bu N: $0.21/lb Ratio: 9.3:1 $200 $150 $100 $50 $0 0 60 120 180 240 Fertilizer N Rate (lbs/acre)

N Price Effect on Fertilizer Rate The price of making a N fertilizer mistake: 40 lbs/ac low 40 lbs/ac high ---$/acre --- 2002 (low prices) $7.00 $0.70 2008 (high prices) $18.40 $2.80

N Price Effect on Fertilizer Rate Optimum rates have not changed much. Value of good management has increased.

Getting a Grip on Manure Value Commodity Price ($/lb) 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 Urea-N Phosphate Potash 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: NASS Based on national April fertilizer prices

Getting a Grip on Manure Value Fertilizer Value ($) 120 100 80 60 40 20 Poultry Litter ($/wet ton) Hog Slurry ($/1000 gal) Ungitated Hog Effluent ($/1000 gal.) 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Based on national April fertilizer prices Poultry litter (lbs/ton) TKN (45) PAN (29) P 2 O 5 (75) K 2 O (55) Hog Slurry (lbs/1000 gal) TKN (21) PAN (15) P2O5 (12) K2O (12) Unagitated Hog Effluent (lbs/1000 gal) TKN (6.5) PAN (5.9) P2O5 (0.9) K2O (7.6)

Getting a Grip on Manure Value Fuel effects Feed effects Storage effects

Commodity Price ($) 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 Getting a Grip on Manure Value: Fuel effect Diesel ($/gal) Urea-N ($/lb) Phosphate ($/lb) Potash ($/lb) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Fertilizer price based on NASS April fertilizer prices. Fuel price national #2 diesel price as reported by Energy Information Administration

Getting a Grip on Manure Value Fertilizer:Diesel Price Ratio 40 35 30 25 20 15 10 5 0 Poultry Litter Hog Slurry Ungitated Hog Effluent 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Based on April NASS fertilizer prices. Fuel price national #2 diesel price as reported by Energy Information Administration.

Getting a Grip on Manure Value: Fuel effect Fertilizer value of manure increasing as fast or faster than fuel costs. Higher fuel prices have not reduce breakeven hauling distance if your returns from manure reflect current fertilizer trends.

Getting a Grip on Manure Value: Feed Effect We keep getting more efficient at raising pigs. Lower nutrient concentrations in feed Higher feed efficiency in pigs

Getting a Grip on Manure Value: Feed Effect We keep getting more efficient at raising pigs. F/G ADG CP P K Diet (lb/d) (%) (%) (%) Early 2000 3.24 1.8 15.5 0.61 0.55 2007 KSU, phytase added 2.85 1.7 15.0 0.44 0.55 2008 MU, phytase added 2.89 1.7 13.7 0.36 0.55

Getting a Grip on Manure Value: Feed Effect We keep getting more efficient at raising pigs. Diet Early 2000 N (lb/pig) 13.8 Excreted Nutrients P 2 O 5 (lb/pig) 8.1 K 2 O (lb/pig) 4.8 2007 KSU, phytase added 11.0 4.3 4.3 2008 MU, phytase added 9.7 3.2 4.3

Availability of Excreted Nutrients: Slurry Systems ~ 30% N loss from barns and storage as ammonia. 100% of phosphate and potash land applied.

Photo by Dave Stephens Availability of Excreted Nutrients: Slurry Systems ~ 55-70% of land applied N available to the crop. 100% of manure phosphate and potash available to the crop.

Getting a Grip on Manure Value: Feed Effect We keep getting more efficient at raising pigs. Diet Early 2000 Fertilizer Value As Excreted Injected Slurry ($/pig) ($/pig) 17.55 12.50-13.45 2007 KSU, phytase added 12.20 8.20 8.95 2008 MU, phytase added 10.55 7.00 7.65

Getting a Grip on Manure Value: Feed Effect We keep getting more efficient at raising pigs. Loss of income for contract operations using manure as a fertilizer on their farm. Impact on independent operations? Good news for land limited operations. Other operations need to evaluate relative impact of fertilizer and feed costs.

Integrating fertilizer value into feed management decisions. Forces affecting diet decisions. High grain prices Economics of byproduct feeds. Low hog and chicken prices. Should fertilizer value of manure affect feed decisions?

Integrating fertilizer value into feed management decisions. An example: Supplemental feed for beef cattle. Should I buy corn or high quality hay to supplement short pasture? Parameter Cost ($/ton) Dry Matter (%) Total Digestible Nutrients (%TDN) Tons feed/ton TDN Corn 190 84.5 90 1.3 Hay 135 90 60 1.9

Integrating fertilizer value into feed management decisions. An example: Supplemental feed for beef cattle. Should I buy corn or high quality hay to supplement short pasture? Parameter Cost per ton TDN ($/ton TDN) Fertilizer value per ton TDN ($/ton TDN) Net cost per ton TDN ($/ton TDN) Corn 250 26 224 Hay 250 90 160

All values on a 100% DM basis. Based on Belyea et al., 2004 Clevenger et al., 2001 Integrating fertilizer value into feed management decisions. Impact of Dried Distillers Grains on Manure Management Corn Grain - - - - - % - - - - - DDGS Crude Protein 9.0 31.3 Phosphorus 0.29 0.86 Potassium 0.36 1.21 Sulfur 0.13 0.58

Integrating fertilizer value into feed management decisions. Impact of Dried Distillers Grains on Manure Management Crude Protein Phosphorus Potassium Ration STD DDGS STD DDGS STD DDGS - - % - - - - % - - - - % - - Pig grower 1 18.2 19.4 0.8 0.8 0.8 0.8 Dairy lactating 2 17.0 17.0 0.36 0.37 1.4 1.3 Beef finish 3 13.0 16.1 0.32 0.44 0.60 0.67 1 Grower pig ration with 10% inclusion rate. 2 Lactating cow ration with 20% inclusion rate (Anderson et al., 2006). 4 Beef finish ration with 30% inclusion rate (Al-Suwaiegh et al., 2002)

Integrating fertilizer value into feed management decisions. Impact of Dried Distillers Grains on Manure Management Pig Grower Dairy lactating Beef finish Diet component STD DDGS STD DDGS STD DDGS - - % - - - - % - - - - % - - Corn grain 69.7 61.8 35.6 26.7 84 54 Corn silage - - 25.0 25.0 - - Soybean meal 23.7 24.7 12.5 1.6 - - Alfalfa - - 25.0 25.0 7.5 7.5 DDGS 0 10.0 0 20.0 0 30 Dical 2.35 2.09 0.22 0 - -

Integrating fertilizer value into feed management decisions. Impact of Dried Distillers Grains on Manure Management Beef Will increase manure nutrients and manure value. Dairy Pigs Higher inclusion rates will increase nutrients and manure value. Will have limited impact on manure nutrients.

Maximizing Manure Value Apply where there is a demand for N, P and K. Injection increases reliability of N in most liquid manure. Obtain a quality manure analysis. Estimate nutrient availability. Calibrate manure applicators. Uniform application pattern.

Summary High commodity prices currently offset the impact of high fertilizer and fuel prices on manure management. Progress in feed formulation is reducing manure value. Value of manure can affect feed selection in some situations.

Questions?

Fuel Price Effect on Manure Value Commodity Price 7 6 5 4 3 2 1 0 Corn ($/acre) Urea ($/10 lbs N) Regular Gas ($/gallon) 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Source: NASS Based on April prices for MO corn and National fertilizer prices

Getting a Grip on Manure Value Fertilizer Value ($/wet ton) 120 100 80 60 40 20 0 Poultry Litter Hog Slurry Ungitated Hog Effluent Nutrient concentration 8.0% 0.5% 0.2% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Based on national April fertilizer prices Poultry litter (lbs/ton) TKN (45) PAN (29) P 2 O 5 (75) K 2 O (55) Hog Slurry (lbs/1000 gal) TKN (21) PAN (15) P2O5 (12) K2O (12) Unagitated Hog Effluent (lbs/1000 gal) TKN (6.5) PAN (5.9) P2O5 (0.9) K2O (7.6)

Fertilizer:Diesel Price Ratio 40 35 30 25 20 15 10 5 0 Getting a Grip on Manure Value: Fuel effect Poultry Litter Hog Slurry Ungitated Hog Effluent 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Based on April NASS fertilizer prices. Fuel price national #2 diesel price as reported by Energy Information Administration.

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