According to the United States Department of Agriculture (USDA), the price of nitrogen (N) fertilizer increased more than 120 percent between 2000 and 2007. More alarming are the unexpected periods when the price of nitrogen spikes well above the trend price. For instance, between 1972 and 1974, the price of nitrogen increased by more than 150 percent. A similar price spike occurred between 2006 and 2008. Interestingly, these price spikes typically last for about two years and then revert back to trend levels. The USDA also reports that farmers respond to nitrogen price spikes by reducing the quantity of fertilizer they purchase and apply to their crops and pastures. This often leads to reductions in yields and grazing duration, even during periods of favorable growing conditions.
To address this issue, data from a scientific grazing study conducted at the Noble Research Institute on wheat forage was used to determine how stocker cattle are expected to perform economically when they have access to soybean hulls as both a feed supplement and as a potential substitute for nitrogen fertilizer. Four different grazing treatments were evaluated in the study, including a conventional farmer practice of applying 150 pounds per acre of nitrogen (N150); an application of only 50 pounds per acre of nitrogen (N50); a system that applies 50 pounds per acre of nitrogen and provides stocker cattle access to soybean hulls at a rate of 0.75 percent of their body weight per day (N50/SBH); and a system that applies 150 pounds per acre of nitrogen and access to soybean hull pellets at a rate 0.75 percent of cattle body weight per day (N150/SBH).
Estimates for gross revenue for each system were calculated assuming that farmers would receive a value of gain for all cattle for all systems equal to $1 per pound. Estimates of net return were calculated for a number of nitrogen and soybean hull market price scenarios, ranging from favorable to unfavorable. The current market prices for south-central Oklahoma are 70 cents per pound of nitrogen and 13 cents per pound of soybean hulls.
Animal performance measures and economic results are reported in Table 1. Notice that for the current local market price scenario (SC5), the results indicate that producers would earn the greatest net return by applying 150 pounds of nitrogen per acre, which is what the typical conventional practice is for the Southern Great Plains region. In cases where the market price of nitrogen and soybean hulls is most attractive (SC1), producers would earn the greatest net return by applying 150 pounds of nitrogen and providing soybean hulls to their stocker cattle. For a market scenario that represents a nitrogen price spike above the current trend price, the most economical system depends greatly on the price of soybean hulls. In a case where soybean hulls can be purchased for $100 per ton or less, the best system is to apply only 50 pounds of nitrogen and supply soybean hull pellets. Conversely, in situations where soybean hulls are priced at $260 per ton or greater, the best system would be to apply the conventional rate of 150 pounds of nitrogen per acre.
Additional years of animal performance data are required to have more certainty regarding the economic results. However, preliminary results suggest that a producer would only benefit from substituting soybean hulls for nitrogen fertilizer during nitrogen price spike periods when they are at a price of $100 per ton (5 cents per pound).