How Bad is the Nitrogen Price Rise for Your Farm? – Charles Holt (Lincoln)    

The meteoric rise in nitrogen prices has been truly shocking.  I doubt I am exaggerating in saying it is unprecedented.  But in the context of many other price rises in the farming industry, how bad is it really?  Rather than panicking and declaring that you will not buy at these prevailing prices because a) it must be uneconomic, and b) the price will surely fall soon, sit down and do some sums.  It may not fall at all, or it may not fall until well after first cut.

Here is an example calculation to get you started.  Clearly, the figures and assumptions will all be different in your business, but the principles may well be identical.  If you need help in deciding what figures to include, or you wish to check your conclusions, there are many people around who will help. One could be your FCG consultant.

So, where to start?  Firstly, you need to make a few assumptions about your yields or outputs.  These should be as accurate as possible, not on ‘pub talk’ figures, or hoped-for targets.  When an input is expensive, don’t apply more than you really need to, appropriate to your level of production.  Above is a dairying example, on grass.  To get an idea of figures for your farm, it will help if you have an accurate production figure for grass on your farm.  In this example we will assume a 100-hectare farm producing 10 Tonnes DM/Ha of grass, ensiled and/or grazed.  We will also assume there are 250 cows on the farm, producing 8000 litres per cow.

The total extra cost in the table above of £34,420 is an increase of around 1.7 pence per litre of milk produced.  This explains why dairy farmers need a substantial increase in milk price, because fertiliser is certainly not the only item to be rapidly rising in cost.

Of course, some producers are looking at it a different way.  Should they put on less nitrogen, and plan to buy in more feeds, either concentrate or wet feeds?  The final calculation in the table above will give a clue as to whether this is the right policy on this example unit.  So, if the extra cost of forage is £34.42 per tonne of DM, and you want to compare this with a tonne of similar ME dry feed at (say) 85%DM, how do you do this?  Well, multiply £34.42 by 85% to give an answer of around £30 per tonne.  So, if the concentrate you are thinking of buying is £30 per tonne more expensive than in 2021 OR MORE, you are better off continuing to put a full application of N on your grass.

Clearly there are many assumptions in the above calculation.  For instance, we are assuming that the 2022 growing season will be as good as 2021.  We are assuming a ‘straight line’ response to nitrogen applied to grass.  We are assuming your grass and silage is well farmed and well made.  We are assuming there is a 1:1 substitution rate between concentrates and forage.  But these sorts of calculations need to be done, and thought about hard, to enable you to make good decisions about the management of your farm this year.

Contact Charles at charlesholt@fcgagric.com or your local FCG Office, for an independent assessment of how to make the best use of fertiliser in 2022 or to produce a Nutrient Management Plan with the help of one of our FACTS qualified Consultants.