Agricultural Economics, Department of
Cornhusker Economics
Date of this Version
4-24-2025
Document Type
Newsletter Issue
Citation
Cornhusker Economics (April 24, 2025)
Agricultural Economics, University of Nebraska-Lincoln
Abstract
Summary
The WNIPI is a purely physical measure of I and N efficiency and was developed to determine efficiency winners in several TAPS contests. DRIN is a powerful tool in measuring the effectiveness of the dollars spent on I and N. It is a ratio of dollars returned as revenue in terms of dollars spent. The third measure, NRIN, is an overall measure of economic gain. It is the difference in money spent on I and N versus the revenue taken in and measures the volume of net returns. Both DRIN and the NRIN measure dollar effectiveness dependent on the biological process tempered by the value of the inputs I and N, with respect to output or crop value. Farm #16 has the highest WNIPI rank and is the most efficient farm in its use of I and N in the production of Y. Farm #18 is the most effective in getting a return for each dollar spent. Of the $104.78/acre spent on I and N, this group gained $277.06/acre in capital, making the DRIN a score of $2.64 for every $1 spent on I and N. Farm #6 is the leader in gaining the greatest net return ($198.35/acre). This team spent the second-highest amount of $173.61/acre on I and N but ranked highest in total return of $371.95. The fact that outcomes vary by measure is not surprising. Physical efficiency does not automatically relate to costs or revenue. It is natural to expect at least some correlation; however, depending on the efficiency being sought, costs may become a heavy burden. In many cases, efficiency itself has a cost, and to achieve it often requires added costs or a reduction in revenue relative to a reduction in overall productivity (diminishing return). It is the job of the farm manager to balance desired outcomes to meet their individual objectives and goals. Each farm and year are unique and requires careful management to balance productivity, costs, and revenues. Tracking the DRIN and NRIN through time can help develop the skill to make wiser choices and needed adjustments to these three factors.