Agricultural Economics Department


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Nitrogen fertilizer (N) is commonly used as a production input to increase crop yields. It is included as one of the six Testing Ag Performance Solutions (UNL TAPS) program decision choices and contributes much to productivity as well as costs. Its use however is not without controversy. The over-application of N gets into the groundwater and nearby waterways becoming a pollutant. Excessive use does little or nothing to increase revenue but can inflate costs, thereby reducing profit. For these reasons and others, using the right amount of N has become a popular and important topic among those that use and/or study it. The main problem in using this nutrient is determining the right amount to use and apply. Like many natural processes, at some usage level N exhibits a diminishing marginal effect that is, at a specific level of use the next added unit returns less than the previously applied unit. From the 2018 TAPS contest data it was estimated that the corn variety D60-69 on average for the 49th lb of added N increased yield by 1.0045 bu/acre, whereas the 50th lb increased yield by .998 bu/acre exhibiting marginal diminishing yields (MDY).The last column in Table 1 shows these incremental yield changes along with other pertinent information. The estimated yield response relationship for the D60-69 corn variety for the 2018 crop year had an average increase of 5.38 bu/acre for each additional acre inch of applied water, 1.34 bu/acre for each lb of N with an associated penalty of -0.0034 bu/acre for those additional lbs of N units squared. This response function is illustrated in Figure 1. Figure 2 illustrates the decreasing yield response of corn to N described above as the MDY. It is this physical diminishing relationship that is important to remember and account for in making the decision to apply N fertilizer, or for that matter any variable input that has a similar diminishing effect. Using this response function and representative prices and costs, the economically right amount of N to apply was estimated and provides the basis for the following discussion.