Maximum Return To Nitrogen: Application To Idaho Potatoes

Published online: Mar 28, 2023 Fertilizer Pat Hatzenbuehler, Assistant Professor, Extension Specialist - Crop Economics, University of Idaho
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The Maximum Return to Nitrogen (MRTN) is a useful concept that has emerged over the past several years. It’s associated with the development of the “Corn Nitrogen Rate Calculator” (http://cnrc.agron.iastate.edu/) by seven Midwestern land grant universities to help guide Midwestern corn growers with their nitrogen application rate decisions.

The developed online calculator combines agronomic information (namely nitrogen response curves, which map combinations of yields) with associated levels of nitrogen, and with corn and nitrogen prices to estimate the profitability of nitrogen application choices. In essence, the MRTN approach highlights the inherent trade-offs regarding potential increased/decreased revenues and costs under different nutrient application and market scenarios.

In this article, I apply the MRTN concept to production of Idaho potatoes. Investigating the MRTN approach is important for potato production because nitrogen can account for over one-third of total fertilizer costs. For an 800-acre potato farm, these costs can amount to over $100,000 annually. Additionally, since February 2021, global nitrogen prices have risen to historical highs and have come down only slightly from their peak levels reached in May 2022.

Potato prices were also higher in 2022 than 2021. Higher potato prices imply there is greater revenue at risk for any yield losses due to excess nitrogen application or other causes. Thus, paying attention to nitrogen application rates is particularly important in this period of historically high nitrogen and potato prices.

Let’s first start with a couple of definitions. The Return to Nitrogen (RTN) is the amount of profit obtained due to an application of nitrogen. In other words, the RTN equals the revenue change from additional nitrogen minus the costs of the additional nitrogen. Note that the revenue change (change in yield times crop price) can be negative if yield changes are negative. Next, if RTN is calculated across a full nitrogen response curve, then the MRTN is the highest value of RTN across combinations of revenue and cost at different yield and nitrogen application rates.

These definitions provide the types of data and information needed to estimate the MRTN for Idaho potatoes – nitrogen response curves, nitrogen prices and potato prices.

The nitrogen response curves used here were obtained from a report by Atkinson et al. from the 2003 Western Nutrient Management Conference based on field trials in Southern Idaho from 1999-2002. These nitrogen response curves have maximum yield rates of 336 cwt/acre, which are more than 100 cwt below those of common potato yields in Idaho in recent years.

However, the shapes of the nitrogen response curves are expected to be similar, so these were used and scaled up to have peak yields near the current norm. These nitrogen response curves were adapted to reflect current conditions for an east Idaho farm as reflected in the “Potato Cost of Production Report for 2021” by Eborn and Greenway (2022). This report implies typical Russet Burbank yields of 415 cwt/acre. Figure 1 shows the results of this updated nitrogen response curve in which the peak acreage is 415 cwt/acre with an associated nitrogen application rate of 247 lbs/acre (note that the referenced nitrogen application was 2/3 pre-plant and 1/3 during the growing season). The other points on the curve were determined by identifying the corresponding yield changes and nitrogen application rates at 5 percent relative yield intervals.

The obtained values for yields near the peak and associated nitrogen rates are in Table 1. There are two primary things to note about Table 1. First, the nitrogen change needed to obtain the yield change moving from 394 cwt/acre to 415 cwt/acre was much larger (75 lbs/acre) than that to move from 374 cwt/acre to 394 cwt/acre (29 lbs/acre). This reflects that the nitrogen response curve is “steeper,” or there is greater yield response per unit of nitrogen, at lower quantities of nitrogen. Second, the yield change becomes negative somewhere between nitrogen application rates of 247 lbs/acre and 316 lbs/acre. This is the key interval of focus for utilizing the MRTN approach because when the yields turn negative, a producer is not only losing the value of the potato that could have been sold but is also paying for the additional Nitrogen applied.

Table 1. Nitrogen response curve values obtained by adapting the Atkinson et al. (2003) Russet Burbank response curve to yield values from Eborn and Greenway (2022)

Nitrogen fertilizer (lbs/acre)

Nitrogen change (lbs/acre)

Inferred yields (cwt/acre)

Yield change (cwt/acre)

144

58

374

20.75

173

29

394

20.75

247

75

415

20.75

316

69

394

-20.75

The values in Table 1 were next used to calculate the RTN values for 2021 and 2022 using nitrogen price and potato price estimates from Eborn and Greenway (2022) for 2021 and adapting those for 2022 using market data for that year. The specific nitrogen prices used were $0.70/lb and $1.16/lb and those for potatoes were $8.85/cwt and $16.07/cwt for 2021 and 2022, respectively. These calculated RTN values are shown in Table 2.

Table 2. Calculated Returns to Nitrogen (RTN) for East Idaho Russet Burbank Potatoes for 2021 and 2022

Nitrogen fertilizer (lbs/acre)

Potato value change

(Yield change x potato price)

 

(a)

Nitrogen cost change (Nitrogen change x Nitrogen price)

 

(b)

RTN

 

 

 

(a) – (b)

2021

144

183.64

40.25

143.39

173

183.64

20.13

163.51

247

183.64

52.33

131.31

316

-183.64

48.30

-231.94

2022

144

333.45

66.61

266.84

173

333.45

33.31

300.15

247

333.45

86.59

246.86

316

-333.45

79.93

-413.39

Regarding the information in Table 2, the higher nitrogen and potato prices in 2022 relative to 2021 correspond with both higher potato values and nitrogen costs, and, accordingly, much higher RTN values in 2022 than 2021. Thus, the “costs” of applying excess nitrogen are substantially higher in years when potato prices and/or nitrogen prices are relatively high. This implies that paying close attention to nitrogen application rates is particularly important during years of higher-than-normal potato prices and/or nitrogen prices.

To summarize, the main point of this article is that the MRTN decision-making approach can likely help potato producers obtain the most production value relative to the costs from their nitrogen application decisions. Using this framework to guide actual nutrient applications in the field requires pre-application soil testing to determine baseline soil nutrient levels and keeping updated data and records on yields, nitrogen applications rates and prices, and potato sales prices.

Since there is commonly substantial variation across fields, within fields, and over time in the same fields, it is plausible that individual RTN calculations would be needed for each field or sections of fields.

Complete references are available from the author upon request. You can contact Hatzenbuehler at phatzenbuehler@uidaho.edu or (208) 736-3607.