Dr. Michael Deliberto made a presentation at the Louisiana Agriculture Technology & Management Conference last month which was excellent! When rice prices are down, producers tend to try to reduce expenditures on seed and fertilizer. One of the major points that he made was that, because fertilizer and fuel costs are down, the overall cost of production for rice is down. See Dr. Deliberto’s slide below.
As an agronomist, I am going to encourage you not to cut back on fertilizer and sacrifice yield when fertilizer costs are the lowest we have seen in years! Dr. Deliberto explains the economics of this in more detail below.
Fertilizer Costs Associated with Rice Production in Louisiana
By Dr. Michael Deliberto
As commodity prices remain lower than levels witnessed the prior year, producers will be faced with making critical farm management decisions to improve profitability. Such decisions may be determining way(s) to increase crop yields to offset a slumping market price and/or reducing the cost of production. The latter will likely have the most apparent effect. For CLEARFIELD® rice, the projected variable cost per acre in 2016 is estimated at $551.72. This is a reduction of $31.54 from the estimated $583.26 cost of a year prior, and a continuation of a four-year decreasing trend in overall rice production costs.
The fertilizer recommendation, as contained in the projected costs for CLEARFIELD® rice that is drill planted in southwestern Louisiana, is 130 pounds of nitrogen (N), 40 pounds of phosphate (P), and 60 pounds of potash (K). Over the past decade, fertilizer costs in rice represent approximately 19% of the total variable cost per acre. This dollar amount can vary from $76.30 to $149.10 per acre, with the maximum amount being imposed during the 2009 crop year. This was a year in which the price per pound of P and K were at record levels.
Figure 1 illustrated the price per pound of active ingredient for N, P, and K fertilizers as contained in the Louisiana rice enterprise budgets. For 2016, the fertilizer expenditure is $98.50 per acre, consistent with a 130-40-60 fertilizer prescription.
Nationally, fertilizer prices have declined by as much as 20% from a year earlier. The cost of urea during the week of February 9, 2015 was $473 per ton. During the week of February 8, 2016, the DTN retail survey reported the price was $369 per ton. This represents a $104 (21.9%) reduction in unit cost. Di-ammonium phosphate, referred to as DAP, decreased from $569 to $479 per ton over that same time period. This is a $90 (15.8%) reduction in cost. Potash also witnessed a price decline, from $488 to $378 per ton. Potash decreased by $110 per ton (22.5%) over the past calendar year.
Figure 2 present the national retail price per ton for urea, DAP, and potash.
The 2015/16 average farm price for long and medium-grain price received downward revisions in both the January and February USDA World Agriculture Supply and Demand (WASDE) estimates. Midpoint price estimates are $11.30 and $12.00 per hundredweight for long- and southern medium-grain rice, respectively.