Crop Observation and Recommendation Network
provided by the Agronomic Crops Team

Getting The Most From Your 2001 Nitrogen Dollars

R.G. Hoeft and E.D. Nafziger, Department of Crop Sciences
University of Illinois
January 2001

It is almost certain that nitrogen fertilizer prices will be higher for the 2001 crop year, and in some places, supplies may not be adequate to meet the needs. These problems are coming about because of rapidly escalating natural gas prices. Over the past 10 years, natural gas price to North American ammonia producers was around $2.00 per MMBtu, but this price has climbed in 2000, averaging about $4.00 for January through October, and reaching $6.00 in November, with projections for the price to be in the $8.00 range in January 2001.

Natural gas is used as a feedstock - a source of both energy and of the hydrogen to combine with nitrogen from the air to form ammonia (NH3) in the production of anhydrous ammonia. Each ton of ammonia requires about 33.5 MMBtu of natural gas for the hydrogen source, plus additional energy for the manufacturing, storing, and shipping processes. At $8.00 per MMBtu of gas, the raw product cost of ammonia would be $270 per ton. Adding costs of manufacturing, storing, and shipping, the price to a Midwestern farmer could reach $400 per ton, or $0.24 per pound of N. This compares to an average figure over the last 10 years of $230 per ton, or $0.14 per pound of N. Since all other nitrogen fertilizers (urea, urea-ammonium nitrate solutions, and ammonium nitrate) are produced from ammonia, one can expect prices for these products to increase as well. Some of these other products are also imported, and other countries have not increased gas prices as much, so their relative increases in price may be less.

Another concern will be the potential spot shortages of nitrogen fertilizers. At the end of 2000, over one-third of the potential ammonia production capacity was idle because of high natural gas prices, and other plants were running at less than capacity. If gas prices remain high, ammonia supply could fall 10 percent short of last year's supply. Shortage of other products will probably be less, since they are provided in part by imports.

Dealing with higher N prices

Illinois N Response Curves

Figure 1. Nitrogen response curves for corn in Illinois.

  
Figure 2. Changes in optimum N rate and corn yield as N prices increase, for corn following soybean.

Table 1 has the same data as Figure 2, for corn at $1.90 per bushel, and for corn following corn and for corn following soybean. These data suggest a reduction of about 6 to 7 lb of N per acre for each 5-cent increase in the price of N per pound, which is equivalent to an increase of $82.00 per ton of ammonia. In both rotations, adjusting the N rate downward to accommodate a 5-cent increase in the cost of a pound of N will result in a yield decrease of only about one bushel per acre.

Table 1.  Effect of changing nitrogen price on rate of N needed to attain economic optimum yield and the effect on yield of changing the N rate.¹

¹ Since the locations used in the continuous corn studies were not all the same as those used for the corn-soybean studies, one cannot use the data in this table to determine the N reduction appropriate for corn after soybeans.

This does not mean that profit will not change as N costs increase: a price move from $230 per ton of ammonia to $394 per ton would mean a reduction in N rate from 146 to 131 lb for corn following soybean, but the cost of N per acre would rise from $20.44 to $31.44, or by $11.00 per acre, and the yield would drop by 2 bushels per acre, for a loss in income of $3.80, totaling a drop in net revenue of $14.80 per acre. For corn following corn, the comparable figures would be an increase in N cost from $22.54 to $35.76 and a decrease in yield of about 1 bushel, for a decrease in income per acre to nitrogen of about $15.12 per acre.

Limited N supplies

If you are unable to obtain the total amount of fertilizer nitrogen that you need for all your acres, consider each of the following suggestions in planning your nitrogen program.

• Allocate fertilizer across all corn acres:  Since the yield response to applied N is greatest for the first units of N applied, allocate the available supply across all fields as a percentage of the amount of product available.  As shown above, reductions in application rates of 10 and often as much as 20 percent will have minimal impact on yield. However, not applying any nitrogen fertilizer in the experiments shown in Table 1 resulted in yields of 106 and 83 bushel per acre, respectively, for the corn-soybean and continuous corn rotations.
• Take credit for homegrown nitrogen:  Corn yield is almost always better for corn following another crop, especially a legume, and the nitrogen requirement is less for corn following a legume than for corn following corn or grass. Reduce the N application by at least 40 pounds per acre for corn following soybean. Many studies have shown that corn following a good stand of alfalfa needs no additional fertilizer nitrogen. At the very least, reduce nitrogen application by 100 pounds per acre for corn following alfalfa.
• Use alternative sources of nitrogen:  Utilize livestock manure, whether your own or from a neighbor, as a nitrogen source. Consider using sewage sludge from a local municipality. The municipality will have information on the availability of nitrogen from the sludge and on the regulations associated with its use.
• By-product fertilizers, such as urea or ammonium sulfate solutions, may be available from industries. Liquid urea should be incorporated to avoid volatilization loss.
• Change crop rotation:  In the unlikely event that you are not able to get any nitrogen, consider shifting a large part of the acreage to a legume such as soybean. Our best information indicates that soybean following soybean will yield about 10 percent (4-5 bushel) less than soybean following corn. Growing second year soybeans will increase the potential for disease and nematode problems, so use care in selecting varieties.
• Use proven crop production practices: Nitrogen use efficiency will be optimized when soil pH is maintained above 6.0, and soil P and K tests are maintained at the optimum level for your soil type.Use proven practices to control weeds, insects and diseases; and plant adapted, high yielding varieties for your area.