Agronomist Notes
Spring is here! (A bold statement, I know. At least it’s here this week.) The mild temperatures have done away with the snow and even the winter wheat is starting to show a nice green tinge to it. I bet some of my clients might be scratching the ground within 30 days. After all the fog last month, everyone keeps talking about a wet spring but I suspect for that reason, it’ll be dry.
This week we’ll be comparing the net returns generated through precision farming versus economies of scale. Next, we’ll look at some excellent research that identifies when deep ripping works to control soil compaction. My friend Mike Solari from New Zealand just broke his own Guinness World record wheat yield last week and I have the details. As always, we’ll end with fundamental and technical grain market news. Have a great week.
Agronomy
Can precision farming match the profit gains from economies of scale?
Producers often struggle with justifying the return on investment from precision equipment. Like any business, farms to need to grow and become more efficient to continue generating profit. Some producers have taken the scale route and have become more efficient with fixed costs by farming more land. Other producers have chosen to become more efficient with variable costs and increase production through precision farming technologies. So which method is better? Is it possible to make the same net return using precision technologies compared to farming more land? Let's do the math on a theoretical example.
Background
Rock Farms is a 3,000 acre farm that nets roughly $30 an acre on average or $90,000 per year. They rotate 1,000 acres of canola, 1,000 acres of wheat and 1,000 acres of barley each year.
Option 1: Rock Farms increases land base to 5,000 acres with the same machinery and gains $20 an acre by spreading machinery costs over more land. Rock Farms now nets $50 an acre over 5,000 acres bringing a total net return of $250,000.
Option 2: Rock Farms maintains the same 3,000 acre land base and employs precision technologies to increase profits. In order to match the same net revenue generated by Option 1, Rock Farms will have to net a return of $83.00 an acre or $250,000 annually.
Uncovering the numbers
Now the question, what would it take to increase net revenue by $63 ($83 less $20) an acre using precision technologies? This is a very difficult question to ask when each farm and each field experiences different challenges. I will simplify things and list potential opportunities to increase revenue with precision technology.
Seeding: A reduction in seedling mortality can be attained through improved precision placement of seed. Reducing the seeding depth variability can improve germination and emergence significantly. In canola, if we could reduce seedling mortality by 15% where 50% mortality is the norm, we could reduce seed costs by 0.75 lbs an acre with a 5 lb seeding rate. At $8.00/lb for canola seed that translates to a $6.00 an acre savings in seed costs.
Seedling mortality in cereals is typically around 20%. If we could improve seedling emergence by 10%, we could reduce seed costs by 10%. Therefore a typical 120 lb seeding rate for wheat will translate into a 12 lb/ac reduction in seed or $1.70 an acre in savings.
Research studies evaluating yield improvement through precision seeding have found net gains of 8% to 20%. I will be conservative and use a 5% increase in yield from precision seed placement. A 50 bu/ac wheat yield would equate to a 2.5 bu/ac increase in yield. At $5.00 a bushel, that works out to a net gain of $12.5 an acre. A 5% yield increase in canola with an average yield of 40 bu/ac and $9.00 a bushel is $18 an acre. Feed barley at 80 bu/ac and 3.00 a bushel works out to a net gain of $12.00 an acre.
Nutrients: Precision placement and site specific management of fertilizer has the potential to reduce fertilizer costs by 0% to 30%, depending on the field. In this calculation I'll use a conservative 5% savings in fertilizer. A 5% savings in fertilizer at today's price with an application rate of 225 lbs an acre will reduce costs by $2.45 an acre.
Protein: Site specific management of nutrients often raises the protein average across each field by reducing the under application of nutrients in high yielding areas. Using a five-year average of the CWB PRO, a 1% increase from 12.5% to 13.5% in protein can net you $5.00 a tonne. With an average yield of 50 bu/ac or 1.36 tonne an acre, you stand to increase revenue by $6.50 an acre.
Inter-row seeding: The use of inter-row seeding has been shown to improve germination and emergence, reduce seedling disease, and improve weed control and harvestability. Yield gains have been anywhere from 6% to 12% from the research I’ve seen. Let’s take a conservative 5% yield gain. That would generate an additional $12.50 an acre in wheat, $18.00 an acre in canola and $12.00 an acre in feed barley.
Controlled traffic farming: This concept is new to most and has received some publicity by yours truly because it can offer 10% to 30% yield gains, reduce fuel costs by 30 to 50%, reduce fertilizer inputs by 20% and tractor horsepower requirements by 30%. In total, controlled traffic farming has the potential to generate an additional $25.00an acre in wheat, $36.00 an acre in canola and $24.00 an acre in barley from yield while saving $3.00 an acre in fuel.
The verdict
Across 3,000 acres, Rock Farms can theoretically generate an additional $67.40 an acre through precision management. That still falls short of the $83.00 acre they could generate through economies of scale. In the end, perhaps growing your land base is more feasible than investing into precision technologies. Here’s my thought-- find a way to maintain efficiencies and employ precision farming technologies while you grow your land base. The combination of economies of scale with precision management is the farm of the future. In case you haven’t done the math yet, the combination could net you $150.00 acre! That’s a big win. SL
Deep ripping research reveals surprising results
I’ve been cautiously watching the results of deep ripping projects for alleviating compaction. I’ve been curious to see what soil types would benefit most from deep ripping and what kind of returns would materialize for the hefty investment. You all know how I feel about compaction but I haven’t been too keen to recommend this practice because of the $40 to $50 an acre price tag.
Recent research from Australia shows somewhat surprising results on deep ripping. Here is a summary of the findings:
- Deep ripping of compacted soils is most likely to improve grain yields on sandy soils and where compaction has occurred on upper parts of the soil profile through machinery traffic or livestock trampling.
- Deep ripping is less effective on heavy clay soils unless combined with gypsum on sodic soils prone to waterlogging.
- Deep ripping will provide little benefit if other subsoil constraints such as salinity, sodicity or acidity are also present.
- Recent advances in machinery, such as ‘slotting’ and deep placement equipment to simultaneously introduce ameliorants at depth with ripping, could increase the financial and agronomic effectiveness of this approach to managing subsoil constraints.
The greatest yield response from deep ripping was found in sandy textured soils. I’ve previously been told that sandy soils don’t compact! My friend Robert Ruwoldt, the CTF guru from Australia, was adamant that sandy soils compact the worst and he was right. It makes sense really-- when I built a base for a for paving stone sidewalk, I used sand soaked with water and compacted it with a roller and a tamper. I didn’t use clay or loam, I used sand.
The take home message from this research for me is to start looking at client’s land with sandy loam soil textures. From there, I’ll look into those who own livestock. Whether it’s cattle or hogs, manure spreading equipment is the worst culprit for compaction. I’m glad to finally have a starting point to begin investigating the possible returns on a $40 acre investment. SL
To read the deep ripping research and I recommend you do, go to: http://www.grdc.com.au/uploads/documents/GRDC_DeepRipping_6pp_.pdf
Source: http://www.grdc.com.au/uploads/documents/GRDC_DeepRipping_6pp_.pdf
Mike Solari breaks his own Guinness world record wheat yield
Last week, Mike Solari from Gore, New Zealand beat his own world record of 15.363 T/ha he set in 2007. The new Guinness world record now stands at 15.673 T/ha ofwheat or 232 bu/ac. I had a chance to call Mike on the weekend to congratulate him. He gave me a few details on what had occurred to help him break the record. First, his target yield was actually 16.5 T/ha or 245 bu/ac and he fertilized according to soil test results. He made three applications of nitrogen totalling 400 kg/N/ha or 360 lbs/N/ac. He applied fungicide at stem elongation, flag leaf and full head emergence. Growth regulators were applied at stem elongation with the fungicide. The field was sub-soiled or deep ripped down to 15 inches. For the second time, the world record crop was grown on, you guessed it, pea stubble. The crop rotation was forage grass, wheat, barley, peas, wheat. It was planted on April 15 2009 and harvested March 8, 2010. I didn’t get the early season rainfall average but from he received 6 inches in November, 4.2 inches in December and 5.2 inches in January.
Mike Solari, pictured above, on the right, is a quiet and humble man. When asked how he did it again, he cited Psalm 65, giving God the glory for caring for the land and bringing the rain. SL
Market News
Commodity Fundamentals
Technical Analysis
Canola: May futures. The short and long term trend is down.
HRS Wheat: May futures. The long and short term trends are down.
Corn: May futures. The short and the long term trends are down.
Soybeans: May futures. Short term and long term trends are down.
Canadian Dollar: March futures. Long and short term trends are up.
US Dollar Index: June futures. Short and long term trends are up.
Crude Oil: April futures. Long term and short term trends are up.
