Risky Business: Bermudagrass Fertilization
Bermudagrass forage is important for livestock production in southern Oklahoma and north Texas. Because of its hardiness and drought tolerance, the grass has been heavily relied upon for grazeable forage through the summer and hay through the winter. It is adapted to most soil types and is reliable year after year.
Two limiting factors associated with bermudagrass production are soil moisture and fertility levels. Production volume is determined by the amount of rainfall received through the growing season, March to September. Nitrogen and rainfall are closely related because of their mobility in the soil: as water moves through the soil for plant uptake, nitrogen moves with it. We know that forage production increases as the nitrogen rate increases, so one could say that sufficient fertility increases water use efficiency.
Why is it important to fertilize bermudagrass pasture? Proper soil fertility helps maintain desirable forage species; without it, bermudagrass pasture declines and becomes less competitive. Less desirable plant species then begin to encroach, reducing forage production and quality. Added fertilizer increases forage production, allowing producers to carry additional livestock without increasing acreage. Nitrogen fertilizer also increases the forage's nutritive value. As available nitrogen increases, crude protein percentage increases.
With all of this said, have you ever thought about the risk associated with bermudagrass fertilization? It takes a great deal of faith for people to pull a fertilizer spreader full of money and throw $25 on every acre of bermudagrass they own. That is what forage producers do when they apply 100 pounds of nitrogen per acre. Why would anyone just throw money on the ground? Probably for the same reason people roll dice in Las Vegas. They take the risk in the hope of getting more money back than they lay on the table or throw on the ground.
A basic economic principle states that risk and profit are directly related. More risk exposure means the potential for higher profit, and vice versa. A good example of this principle is certificates of deposit (CDs) versus stocks or bonds. What is the difference in the potential rate of return of the two? You risk losing very little with a CD, and therefore you get a relatively low rate of return. Depending on its size and term, a CD may yield 6 percent, no more, no less. On the other hand, you risk losing a lot with stock, but it offers the potential for greater profit: a 10 to 20 percent return annually.
The dice roller in Las Vegas can put down $1 at one table and hope to win $2. At another table, he can put down $10 and hope to win $20. Both tables offer the chance of doubling the money, but one table returns $1, and the other returns $10. Risk is ten times higher at the $10 table. Forage producers managing bermudagrass have a similar choice: risking no money on fertilizer or applying fertilizer. In other words, they can spend $25 per acre for the chance to make more than that per acre.
The first and probably biggest risk of applying fertilizer is drought. In the July issue of News and Views, Wadell Altom wrote about rainfall and forage yield. His data demonstrated a relationship between the two. Below-average rainfall produced less forage, while above-average rainfall produced more. Have you ever compared the per-pound cost of forage produced in a dry year with that produced in a wet year? In other words, have you determined the profit potential for your nitrogen fertilizer investment in a dry year compared with that in a wet year? Between 1963 and 1995, the Noble Research Institute recorded bermudagrass yield data for ten of the thirty-three years, using various rates of nitrogen fertilizer (table 1). All data were produced in Ardmore, Oklahoma. Total rainfall for the growing season in 1972 was only 15.04 inches. The yield was 772 pounds of forage per acre when no nitrogen was applied (check). When 100 pounds of nitrogen was applied, the yield was 1,944 pounds of forage per acre, an increase of 1,172 pounds of forage per acre. Assuming a pound of nitrogen fertilizer cost $0.25, each of the 1,172 extra pounds of forage produced cost $0.021, ($0.25 x 100) ÷ 1,172. Rainfall in 1973 was well above normal. As a result, the check yielded 2,061 pounds of forage per acre. Yield increased to 6,833 pounds of forage per acre when 100 pounds of nitrogen was applied, a difference of 4,772 pounds. This extra forage cost $0.005 per pound, or $0.016 less than the extra forage produced in 1972.
We realize that soil type plays a role in forage production potential and fertilizer efficiency. Even though soil type varied, a lesson can still be learned from the relationship between rainfall and the cost of production when nitrogen fertilizer is applied. From 1963 to 1995, the average rainfall received during the growing season was 26.65 inches. The cost of each pound of forage produced per pound of nitrogen applied during this period varied from $0.005 to $0.021. In seven of the ten years shown, when rainfall was above average, a pound of nitrogen produced 31.3 more pounds of forage than the check, at a cost of $0.008 per pound. During the three years when rainfall was below average, a pound of fertilizer produced 13.1 more pounds of forage than the check, at a cost of $0.019 per pound. These data simply confirm what we already knew: fertilizer is much more efficient when it rains (Table 1).
That still leaves the question, When is it profitable to apply 100 pounds of nitrogen per acre? The economist's standard answer is, It depends. The sale price of the forage plays a role. Cows consume much of the bermudagrass forage produced in the Noble Research Institute work area, each cow eating approximately 10,000 pounds of forage per year. It is not uncommon for a landowner to rent his pasture to a cow owner for $100 per cow yearly. The forage sold through a cow is worth $0.01 per pound ($100 ÷ 10,000 pounds = $0.01 per pound). During years with below-average rainfall, the per-acre value of forage is less than the $25 investment in nitrogen fertilizer per acre. The nitrogen cost per pound of forage was $0.019, and the forage was worth only $0.01 per pound. However, 70 percent of the time rainfall was above average. In those years, a livestock producer could have sold his grass at a profit even though he applied nitrogen fertilizer. Rainfall during the ten-year period reported (table 1) is not representative of the total thirty- three-year span. It was above average only fifteen years, or 45 percent of the time. During the other eighteen years, rainfall was below average.
There are other ways of marketing bermudagrass forage, such as through stocker cattle. Often they can be cared for on a custom basis for $0.25 per pound of gain throughout the summer. It is generally accepted that 10 pounds of forage will produce 1 pound of beef. In years of below-average rainfall, fertilizer application remains profitable if the grass is sold through custom-care cattle. The forage cost would be $0.19 (10 pounds of forage x $0.019 = $0.19), and the value of a pound of gain would be $0.25. Each forage producer would need to determine if he could cover the other costs of production for $0.06 per pound. If he owned the stocker cattle, gain could be worth as much as $0.50 per pound, depending on the buy-sell price margin.
Hay is another marketing alternative. A 1,000-pound bale sold in a drought year has a break-even price of $33, just enough to cover its nitrogen fertilizer ($19) and baling costs ($14). These numbers are calculated by multiplying the cost of the extra forage yield ($0.019) by the number of pounds of forage in a round bale (1,000). During drought, bales of bermudagrass hay can often be sold for more than $33. If other essential plant nutrients such as phosphorus and potassium were considered for hay production, the break-even price would be higher.
Applying nitrogen to stands of bermudagrass improves forage quality and productivity. As is the case with other inputs on the farm or ranch, the owner or manager must decide if the investment will be profitable. When bermudagrass forage is sold through beef cattle, marketing risks must also be considered. In the end, any profit is the return associated with taking risks. Producers must decide how much risk they are comfortable with in their operation.