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Early Season Nitrogen Fertilizer Application for Pastures

John Hanchar, Farm Business Management
Northwest New York Dairy, Livestock & Field Crops

April 1, 2013

Summary

  • Mid April nitrogen fertilizer applications can be expected to increase the amount of forage available to pastured dairy cows during the early part of the grazing season - for example, through early June.
  • Expected increases in profit associated with additional early season nitrogen fertilizer applications are dependent upon the extent to which the producer can convert increased forage availability attributed to early nitrogen fertilizer application into reduced total mixed ration (TMR) purchased.
  • Expected changes in profit are sensitive to the expected reduction in TMR purchased, expected TMR price, expected nitrogen needed, and expected price of nitrogen, suggesting that producers develop analyses specific to the farm business.

A Question for Analysis
The following question resulted from producer interest in identifying the optimal mix of stored and pasture sourced feeds. Stored feeds include those grown and/ or purchased, including, for example, a purchased TMR.

Does it make sense to produce additional forage to be grazed in pastures early in the grazing season via an early season application of nitrogen fertilizer given milk production goals, and given that feed needs are to be met using the optimal mix of pasture sourced feed and purchased TMR?

Partial Budgeting
One measure that producers use to evaluate possible changes in practices is the expected change in profit. Profit equals the total value of production minus the costs of inputs used in production. Expected change in profit equals the expected change in total value of production minus the expected change in costs. Analysts construct a partial budget to estimate the expected change in profit associated with a proposed change in the farm business, for example, early season application of nitrogen fertilizer to pastures.

Selected Assumptions
  • Number of cows - constant for proposed and current: 65
  • Acres of pasture for May and early June - constant for proposed and current: 90
  • Number of days grazed for analysis - constant for proposed and current: 35
  • Production target (lbs. of milk per cow per day) - constant for proposed and current: 50 to 60
  • Fall freshening - constant for proposed and current
  • Average future year, before tax, marginal analysis
  • Initial expected reduction in purchased TMR (lbs. as fed per animal per day): 20
  • Initial Purchased TMR costs ($ per lb. as fed): 0.09
  • Initial additional pounds of nitrogen applied per acre in mid April: 50
  • Initial price per pound of nitrogen ($): 0.81
  • Machinery operating costs, and labor cost for nitrogen application ($ per acre): 7

Results

Table 1. Expected Change in Profit Associated with a Proposed Change in the Farm Business -- Proposed: Mid April Nitrogen Fertilizer Application on Pastures Vs. Current: No Mid April Nitrogen Fertilizer Application on Pastures.

Note: Results reflect initial assumptions.

Analysts acknowledge that they are more comfortable with some assumptions than others with respect to values and their uncertainty. Analysts employ sensitivity analysis to evaluate possible impacts of different assumptions on results (Please see Tables 2 and 3).

Table 2. Expected Change in Profit by Expected Reduction in TMR Purchased by Expected Nitrogen Application Needed.

Table 3. Expected Change in Profit by Expected TMR Price by Expected Nitrogen Price.

To place the results in Tables 1 through 3 in context, consider that net farm income without appreciation per cow, a measure of profit, was $648 and $696 for the same 24 intensive grazing dairy farms in 2010 and 2011, respectively (2012. DFBS: Intensive Grazing Farms New York 2011.). Recall that the analyses above assumed a herd size of 65 cows.

Alternative Analyses

One alternative analysis would examine the situation where increased forage availability from pastures displaces grown feeds assuming milk production goals remain constant. Costs of production associated with grown feeds will be key factors.

A second analysis would examine the situation where increased forage availability from pastures translates to increased milk production assuming TMR feeding for the proposed and current remains constant. Expected increases in milk sold and any related costs will be key factors.

Partial budgeting would still be used, but the analyses would look different from the analysis reported here.

If you are interested in learning more about this topic, including developing analysis for your farm business, then please contact John Hanchar.



Table 1: Expected Changes in Total Value of Production (pdf; 86KB)


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Announcements

USDA Announces New Decision Tool for New Dairy Margin Coverage Program

WASHINGTON, April 30, 2019 ? Agriculture Secretary Sonny Perdue announced today the availability of a new web-based tool - developed in partnership with the University of Wisconsin - to help dairy producers evaluate various scenarios using different coverage levels through the new Dairy Margin Coverage (DMC) program.

The 2018 Farm Bill authorized
DMC, a voluntary risk management program that offers financial protection to dairy producers when the difference between the all milk price and the average feed cost (the margin) falls below a certain dollar amount selected by the producer. It replaces the program previously known as the Margin Protection Program for Dairy. Sign up for this USDA Farm Service Agency (FSA) program opens on June 17.

"With sign-up for the
DMC program just weeks away, we encourage producers to use this new support tool to help make decisions on participation in the program," Secretary Perdue said. "Dairy producers have faced tough challenges over the years, but the DMC program should help producers better weather the ups and downs in the industry."

The University of Wisconsin launched the decision support tool in cooperation with FSA and funded through a cooperative agreement with the USDA Office of the Chief Economist. The tool was designed to help producers determine the level of coverage under a variety of conditions that will provide them with the strongest financial safety net. It allows farmers to simplify their coverage level selection by combining operation data and other key variables to calculate coverage needs based on price projections.

The decision tool assists producers with calculating total premiums costs and administrative fees associated with participation in
DMC. It also forecasts payments that will be made during the coverage year.

"
The new Dairy Margin Coverage program offers very appealing options for all dairy farmers to reduce their net income risk due to volatility in milk or feed prices," said Dr. Mark Stephenson, Director of Dairy Policy Analysis, University of Wisconsin, Madison. "Higher coverage levels, monthly payments, and more flexible production coverage options are especially helpful for the sizable majority of farms who can cover much of their milk production with the new five million pound maximum for Tier 1 premiums. This program deserves the careful consideration of all dairy farmers."

For more information, access the tool at fsa.usda.gov/dmc-tool. For
DMC sign up, eligibility and related program information, visit fsa.usda.gov or contact your local USDA Service Center. To locate your local FSA office, visit farmers.gov/service-locator.


New Guidance for Mortality Disposal Issued

NYS Department of Ag and Markets has posted guidelines on disposal of livestock carcasses, in response to reports that some rendering companies have halted pickups from farms.

https://nwnyteam.cce.cornell.edu/submission.php?id=761&crumb=dairy|1

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