Economic analysis is being used to assess the risk and value of different nutrition strategies in different agro-ecological regions, according to the Australian Government Grains Research and Development Corporation.
How economically risky is your nitrogen fertiliser strategy? Are growers in low-rainfall cropping regions under-fertilising? How sensitive to soil type is the economic response to fertiliser inputs? These are just some of the questions we aim to answer using detailed economic risk analysis.
The presence of input and commodity price instability and variable climatic conditions has resulted in such questions being asked more frequently.
Using the model, we are investigating how more adaptive fertiliser strategies that relate fertiliser rates and application timing to soil type and season affect the risk of producing a net return. We are also assessing the economic benefits and risk associated with reduced input strategies for phosphorus. This modelling will relate these outcomes to a grower’s degree of risk tolerance.
By the end of the project in June 2012, we hope to be able to provide a more detailed picture of the management actions that reduce the risk and increase the profitability of fertiliser inputs.
Building the Model
Wheat has been used as the target crop for this investigation as it is an important commodity in all production regions.
Historical farm-gate price datasets for wheat and fertiliser have been collected from a range of sources. These include AWB historical pool returns, Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) commodity statistics and farm-gate budget guides.
The first stage of the research was conducted using soil-characterisation data for three soil types at Karoonda in the South Australian Mallee. By completion, the project will have conducted analyses for a selection of representative soil types in each GRDC region.
Each site that will be simulated has been selected to be co-located with nitrogen-response trials, in order to allow validation of the modelling output.
The significance of residual nitrogen and the value of soil testing prior to seeding are being assessed for riskiness and returns at each site. Two types of application strategies, single or split nitrogen, are being assessed, the latter being based on seasonal conditions.
A set of rules for in-season application of nitrogen (N) that are used in the simulations have been established in collaboration with local agronomists. For example, a second application of nitrogen at Karoonda would require 10 millimetres of rainfall to be received over three days when the crop is between growth stage 31 and 39, and the soil nitrogen in the top metre of soil must be less than 100 kilograms a hectare.
The performance of each nitrogen-management strategy is compared for each year of a 60-year climate record. Net returns are calculated based on simulated wheat yields, as well as grain and nitrogen price distributions that incorporate the riskiness of these variables.
Initial analyses on the Karoonda sites show considerable differences between fertiliser strategies with respect to net returns and variability of returns.
On the common mid-slope soil type for the region – a sandy topsoil with clay loam at depth – the use of tactical in-crop nitrogen application can achieve both increases in returns and reductions in variability of returns when compared with the district practice of 15 to 30kg N/ha all applied at sowing. An example of a tactical nitrogen application that was assessed was 60kg N/ha applied at sowing, with an additional 15kg N/ha applied in seasons where the in-season parameters were met.
In comparison, inputs of higher rates of nitrogen on the sandy dune soil types demonstrated some opportunity for very large returns, but only in a small number of high-rainfall seasons. However, such a strategy was high risk when applied consistently and the use of such a strategy would need to be in response to very specific season types.
This highlights the importance of investigating nitrogen-management strategies on a range of soil types, as the economic returns and risk associated with each can vary.
Analyses are now underway for other southern region, western region and northern region sites.
To evaluate the riskiness of reduced phosphorus inputs requires a slightly different approach as the crop growth model is not fully developed for response to phosphorus in Australian conditions.
Topsoil tests for phosphorus across the wheat-growing regions indicate that phosphorus levels have increased beyond critical levels for wheat yield response to additional phosphorus. Increasingly, growers are considering reduced or zero phosphorus inputs, particularly in conditions of dry seasons or high prices.
First, we plan to evaluate the risk around this strategy using analysis of field trial data to see when phosphorus reserves run down with reduced inputs. Second, we plan to assess the risk aversion that comes from knowing that the soil phosphorus reserve is above the critical value for requiring more inputs. This may be valuable information to support a decision of reduced input and avoid the risk of running down phosphorus reserves.
The findings will be communicated widely through the GRDC Updates, Ground Cover and field days.
Questioning district practice and applying fertiliser strategies that are more adaptive to the season and commodity prices could produce a better net return. Photo: Emma Leonard