How Do We Know If VR Nitrogen Can Pay?

A question often asked about variable-rate applications, whether it is nitrogen, phosphorus, potassium, lime or seed, is “will this pay off better than flat-rate applications?”  Ever since the first variable-rate equipment came on the market 30+ years ago, there has been an underlying question of whether all the efforts to build and apply a script were worth it. 

We do know that, with a few exceptions, corn responds to nitrogen fertilizer application.  Over time, typically the farmer develops a “nominal” rate of nitrogen to be applied that appears to provide suitable yields at a reasonable price.  Being rational, the farmer knows that there are some years this means an over-application is being applied, but they also know that under-applying nitrogen may lead to greater economic losses than the cost of over-application. 

We know that nitrogen rates can be fine-tuned based on field trials.  Sentinel’s tools have been built and refined over years of field data collection and experience.  A solid set of correlating data between satellite-based biomass reflection and nitrogen sufficiency has been built. 

Sometimes, however, the range of nitrogen rates that provide the level of sufficiency may be wider, or it may be narrower, depending on the environment (soils x weather).  Further, the economic response to a range of nitrogen rates may create different patterns. 

In economic terms, a flat-payoff function is one where a wide range of values on a continuous curve may provide almost similar outcomes.  It comes about when there’s an almost 1 for 1 tradeoff between the cost of nitrogen and the value of the extra yield the crop is producing. 

Here’s an example: 

Suppose you have a nitrogen rate strip trial in your field.  You have 4 nitrogen rates applied randomly with 3 replications.  You harvest each strip and weigh it, calculating the yield.  You then calculate the gross profit of each strip (yield times market price) and subtract the nitrogen cost from each to determine a Partial Net Profit. 

You then plot the relationship of Applied N (lbs/ac) on the X axis with Partial Net Profit ($/acre) on the Y axis.  Using some simple graphing tools in Excel, you fit a quadratic curve to the data points.  It may look something like this: 

Graph 1: A broad response of Partial Net Profit to Nitrogen Rate

In this graph, the Economic Optimum Rate (the point at which Partial Net Profit is maximized) is around 201 pounds of nitrogen per acre.  However, it can be determined that if a nitrogen rate was applied at 30 pounds/acre greater or less than the EONR, the net profit would be about $20/acre less than the EONR’s net profit.  As you can see, there’s a broad tradeoff between Partial Net Profit and Nitrogen Rate.

Consider this graph:

Graph 2: A narrower response between Partial Net Profit and Nitrogen Rate

In this scenario, the Partial Net Profit maximizes around 160 pounds of N per acre and decreases with additional nitrogen.  There’s a looser fit of the quadratic formula than in the previous graph.  Due to this, the calculated EONR is 195 pounds of N per acre.  But note the sharper curve than in Scenario 1: the slope of the curve greater, and thus the response is more crucial.  In this situation, it was calculated that the Partial Net Profit loss of being 30 pounds of nitrogen per acre higher or lower than EONR was $43/acre, more than twice the loss as Scenario 1.

These two graphs and scenarios illustrate how the sensitivity of the nitrogen rate can be determined.  In Scenario 1 there’s more flexibility in hitting the “perfect’ nitrogen rate; Sure, no one wants to lose $20/ac from the optimal rate, but because we don’t know what the EONR will be ahead of time, being in the “ballpark” is suitable.

In Scenario 2, it becomes more crucial to be at or close to the EONR.  This may be due to the environment (soils x weather), nitrogen form, or placement method.  There’s a bigger penalty of not getting it right as compared to Scenario 1.  This makes Scenario 2 a better candidate for informed variable-rate nitrogen application.

How can you determine this for yourself on your farm?  Start with simple replicated strip applications of varying nitrogen rates.  If your application and harvest equipment is matched for width, the process should be simple.  Do this in relatively uniform locations across multiple fields.  Record the data, add the economics, and plot the results.  If the curves are broad and flat, it means that VR nitrogen may not be as necessary as you might have thought.  However, if the curve responses are sharper, especially in certain soils and conditions, then variable-rate capabilities are important to driving profitability. 

Using a process like this will help you know if variable-rate is worth it.

If “the juice is worth the squeeze”.