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Private Management Practices and Public Policies Affecting Agricultural Nitrogen Use: An Overview

Roger Claassen and Stan Daberkow

Economic Research Service, USDA April 9, 2008

EPA’s Integrated Nitrogen Committee meeting

The views expressed are the authors’ and may not reflect those of USDA or ERS

Presentation Outline

Commercial nitrogen use in agriculture Trends in selected nutrient management practices in

corn production

Policy effects on land use and crop mix—Energy,

commodity, crop insurance, conservation

Factors affecting nutrient management practice

adoption—participation in conservation programs/cost-sharing incentives

Questions & answers

U.S. commercial nitrogen fertilizer use, 1995- 2006

10,500 11,000 11,500 12,000 12,500 13,000 13,500 1 9 9 5 1 9 9 7 1 9 9 9 2 1 2 3 2 5 Tons (000)

Source: Commercial Fertilizers, 2006

Nitrogen use by major field crops and other crops, 1995-2006

1,000 2,000 3,000 4,000 5,000 6,000 1 9 9 5 1 9 9 7 1 9 9 9 2 1 2 3 2 5 T o n s (0 0 0 ) Corn Cotton Soybeans Wheat Other

Source: U.S. Fertilizer Use and Prices, ERS

Adoption Levels of Selected Corn Nitrogen Management Practices

Application rates Soil testing Crop rotation Manure and nitrogen inhibitor use Nitrogen broadcasted with and without soil

incorporation

Yield monitors and yield mapping Application timing, information sources, and

yield goals

Corn yields and nitrogen application rates, 2006-2007

120 125 130 135 140 145 150 155 160 165 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

• Bu. or Lbs. per acre

Nitrogen applied (lbs/acre) Corn yield (bu/acre)

Source: National Agricultural Statistics Service

Share of planted corn acreage using a soil test or nitrogen soil test

10 20 30 40 50 60 1996 1997 1998 1999 2000 2001 2005

P e r c e n t

Soil test Nitrogen soil test

Source: http://www.ers.usda.gov/Data/ARMS/CropOverview.htm

March corn price, April nitrogen price, and nitrogen/corn price ratio, 1995-2007

0.1 0.2 0.3 0.4 0.5 0.6 0.7

1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 2 1 2 2 2 3 2 4 2 5 2 6 2 7

Prices or price ratio

Nitrogen Cents/lb. Corn Cents/lb.*10 N/corn price ratio

Source: National Agricultural Statistics Service

Major crop rotations on land planted to corn in the ten primary corn states, selected years, 1988-2005

20 40 60 80 1988 1989 1990 1995 1996 1997 1998 1999 2000 2001 2005 P e rc e n t o f p la n te d a c re s Previous crop corn CCC rotation CSBC rotation Other rotations

Source: Economic Research Service

Share of planted corn acreage on which manure was applied or nitrogen inhibitor used

5 10 15 20 1996 1997 1998 1999 2000 2001 2005

P e r c e n t

Manure applied Nitrogen Inhibitor

Source: http://www.ers.usda.gov/Data/ARMS/CropOverview.htm

Share of corn acreage on which all nitrogen applied was broadcast and share with and without soil incorporation

10 20 30 40 1996 1997 1998 1999 2000 2001 2005 P e rc e n t All nitrogen broadcast No soil incorporation Soil incorporation

Source; http://www.ers.usda.gov/Data/ARMS/CropOverview.htm

Share of planted corn acreage on which a yield monitor was used or a yield map produced

10 20 30 40 50 1997 1998 1999 2000 2001 2005

P e r c e n t

Yield monitor Yield map

Source: Economic Research Service

Nitrogen timing, information sources, and yield goals by share of planted corn acres, 2005

22 Yield goal 20% > actual yield 6 Extension service 37 Fertilizer dealer 20 Crop consultant Source of information about nitrogen application rates 36 Split applications 9 All applied after planting 34 All applied before planting-spring 16 All applied before planting--fall Nitrogen application timing

Source: Western Economic Forum, forthcoming 2008

Practice adoption varies across practices and crops, 2001-03

Practice adoption reflects farm and

• perator characteristics

Practice adoption reflects farm and

• perator characteristics

8 20 14 13 % Completed college 2 28 12 7 % Sought outside advice

Source: Lambert, Dayton, Patrick Sullivan, Roger Claassen, and Linda Foreman. Conservation Compatible Practices and Programs: Who Participates? USDA-ERS

74 84 81 69 % Farming

• ccupation

60 142 135 119 Bu/ Acre Average corn yield 3 15 10 4 % Irrigated land 4,561 34,833 24,587 17,409 $

• Avg. commodity

Payment 386 854 648 575 Acres Average farm size No listed practice Management intensive practices Decision aids Standard practices Unit Farm characteristics

Energy markets and policy are driving forces in commodity markets

Oil prices; ethanol mandates; tax subsidies Ripple effects in commodity markets, input

costs

May Futures 3/26/08 ’04-’06 Average 45.30 3.69 5.94 2.36 71.02 Cotton (cents/lbs) 10.69 Wheat ($/bu) 13.52 Soybeans ($/bu) 5.52 Corn ($/bu)

Sources: National Agricultural Statistics Service, USDA, Chicago Board of Trade, and Kansas City Board of Trade

Commodity programs protect some producers against low prices

Lbs. Bu. Bu. Bu. Unit 71.02 74.40 52.00 Cotton 10.69 3.92 2.75 Wheat 13.52 5.80 5.00 Soybean 5.52 2.63 1.95 Corn May Futures 3/26/08 Target Price Loan Rate Crop

Sources: Farm Service Agency, Chicago Board of Trade, Kansas City Board of Trade, Agricultural Marketing Service, USDA

Insurance and disaster programs protect producers against production or revenue loss

Research suggests crop insurance has small

land use effect (2-3 million acres)

Subsidy increases beginning in 2000 could

mean the effect is now larger

Ad hoc annual disaster assistance could be

adding to that effect

USDA environmental programs retire land and encourage nutrient management

CRP: 34.7 million acres retired

Fields and whole farms High priority practices (mostly buffers, such as

grass waterways, filter strips, etc.)

CREP targets specific environmental issues

EQIP: assists with nutrient management and

• ther conservation practices

Figure 1. Trends in USDA Conservation Expenditures, 1983-2005

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 1983 1987 1991 1995 1999 2003 billion dollars Agricultural Land Preservation Working Land Programs Land Retirement Programs Conservation Technical Assistance

Long Term Trends in Federal Conservation Spending

Source: ERS analysis of Data from Office of Budget and Policy Analysis, USDA

EQIP focuses heavily on livestock and manure nutrients

Source: NRCS, 2003

Participation reflects farm and operator characteristics

93 141 99 57 % Average Ratio Owned/Operated

Source: Lambert, Dayton, Patrick Sullivan, Roger Claassen, and Linda Foreman. Conservation Compatible Practices and Programs: Who Participates? USDA-ERS

40 5 62 85 % Farming Occupation 4,430 634 12,698 26,571 $ Average Commodity Payment 374 267 1,127 1,089 Acres Average Farm Size Non- Partic. Land Retirement Partial Farms Whole Farms EQIP/CRP Working Land Unit Farm Characteristics

Amber Waves (July 2006) – Agriculture and the Environment

www.ers.usda.gov/ AmberWaves/ july06specialissue

Lambert, D., P. Sullivan, R. Claassen, and L. Foreman, Conservation-

Compatible Practices and Programs: Who Participates? Economic Research Report No. 14 (ERR14), Economic Research Service, USDA, (February 2006), 43 pp. www.ers.usda.gov/publications/err14

Wiebe, K, and N. Gollehon, Agricultural Resources and Environmental Indicators, 2006 Edition, Economic Information Bulletin No. 16 (EIB5), Economic Research Service, USDA, (July 2006), 79 pp.

www.ers.usda.gov/ publications/ arei Customized Data Summaries from ARMS: http://www.ers.usda.gov/Data/ARMS/CropOverview.htm

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