The ROI For 4R

Farms have a key goal: To be profitable. When it comes to fertilizer management, the Canadian canola industry also has a goal: To see canola growers utilize 4R nutrient stewardship practices on 90 per cent of canola acres by 2025. The two goals can go hand in hand.

Fertilizer Canada, in its 2021 survey of farmers, found that 4R practices are utilized on just over 50 per cent of canola acres. For farmers who have not adopted 4R practices, recent economic analysis may provide some incentive. The Canola Council of Canada (CCC) partnered with Fertilizer Canada on a study, “The Economics of 4R BMP Implementation and Emissions Reductions from Fertilizer,” with results released in early September. (Read the full report at fertilizercanada.ca.) While the study focused a lot on nitrous oxide emissions, the CCC objective was to also show scenarios where 4R practices can improve farm profitability.

For the Prairies, the study compared three regions – dry Prairies, wet Prairies east, wet Prairies west – and used modelling to show economic and emissions reduction results for 4R practices under different yield and adoption rate scenarios. Farms can improve production and nutrient use efficiency without implementing every 4R practice. For that reason, farms will want to choose the practices that provide the greatest benefit.

Here are a few of the most common 4R best management practices (BMPs):

Soil testing (Right rate)

Soil analysis provides fertilizer recommendations in line with soil residual nutrients and expected yield. Soil testing is an added cost, and the knowledge provided may not provide a return on investment for every field tested – especially if test results confirm that a farm is using the right rate to meet its yield target. However, soil test analysis may encourage a farm to use higher nitrogen rates to match yield goals or, in the case of high nutrient reserves, use lower rates to meet yield targets. In both cases, profitability can go up because of soil tests. Farms that want to try soil testing for the first time can apply for funding through the new Canola 4R Advantage program described in the sidebar.

Spring application of nitrogen (Right time)

The ideal time to apply nitrogen fertilizer is just before the crop needs it. Small applications through the growing season are not practical for canola, but shifts to spring application instead of fall, and split applications with one in-crop application can provide some 4R advantages. Spring application tends to reduce losses and increase yields compared to fall application in general, based on Prairie research. And, while 4R recommends late-fall banding over fall broadcasting, any fall application is subject to higher losses when soils are wet in the spring.

Economic disadvantages of spring application can include cost of fertilizer, slower spring seeding operation because of fill times, and required investment in machinery that can apply seed and fertilizer in one pass with spatial separation between seed and fertilizer. The report makes special reference to clay soils in the wet Prairies: “Fine textured soils tend to saturate for extended periods in the spring, triggering denitrification.”

Split applications (Right time)

Split applications, with some nitrogen applied at seeding and some while the crop is growing, have timing advantages and allow growers to match nitrogen rates to growing conditions. However, economic gains tend to occur only when the in-crop application is not needed. For example, drought has limited crop yield and the crop will not require any extra fertilizer. In this way, the split application – which allows for a lower initial nitrogen investment – provides risk protection . As the report says, split application provides growers with a nitrogen saving option when stored soil moisture is low at seeding, and conditions don’t improve. The report adds that in normal moisture years, the split application provides “little or no yield advantage relative to all nitrogen at seeding.”

Advanced 4R

Advanced 4R includes enhanced efficiency fertilizers (EEFs), used where appropriate to reduce losses, and variable rate application.

Enhanced Efficiency Fertilizers (Right product)

EEFs protect nitrogen from loss so more of the applied nitrogen fertilizer ends up in plants, not the atmosphere. EEFs come in three main forms: urease inhibitors, nitrification inhibitors and controlled-release nitrogen.

EEFs provide the biggest benefit when soils have excess moisture. They also reduce nitrogen losses from broadcast and early fall nitrogen applications, which increase loss risk due to exposure and time.

Nitrification inhibitors are the most effective for reducing nitrous oxide emissions. The CCC and Fertilizer Canada report says nitrification inhibitors typically lower nitrous oxide emissions by 25-49 per cent. Urease inhibitors slow the conversion of urea to ammonium and reduce volatilization losses, and in certain circumstances will have more value from an overall profitability perspective. Polymer-coated nitrogen slows the release of urea so it more closely matches crop uptake. Farmers can expect to pay $5 to $10 per acre for urease inhibitors or nitrification inhibitors and $10 to $15 per acre for combination products and polymer-coated urea. As the report says, “A yield response will only occur if crops are nitrogen limited and the EEF results in more nitrogen available to the crop compared to a conventional nitrogen product. Replacing conventional nitrogen with an EEF on a pound of nitrogen for pound of nitrogen basis will increase costs without an increase in revenue if the conventional product rate was sufficient. If nitrogen rates using conventional nitrogen products have been optimized, switching to an EEF should allow a modest reduction in rate without yield loss.” Farms will want to review how each EEF fits best within their systems. Often a urease inhibitor or nitrification inhibitor used individually is the right balance for profitability and nitrogen loss management, however the report focuses on combination products that include both treatments. Farms that want to try EEFs for the first time can apply for funding through the new Canola 4R Advantage program described in the sidebar.

Variable Rate (Right rate)

Applying nitrogen at variable rates based on productivity zones within fields may not reduce overall nitrogen rates, but it applies nitrogen in a way that can increase overall yield and nitrogen use efficiency. Costs include zone-based soil testing, seeding tools that can apply variable rate fertilizer and variable rate maps. Soil tests and prescription mapping are relatively low costs compared to seeding tools, but many new seeding tools are variable-rate capable.

Sectional control (Right rate)

Many of the seeding tools set up for variable rate application also have sectional control, an important tool to reduce overlap. Sectional control maintains yield while reducing costs (less seed and nitrogen applied) and emissions.

Overlap areas that receive two times the fertilizer will have lower – likely negative – profitability because those areas do not have two times the yield. In many cases, the original rate is the most economical for yield. Overlap areas will also have higher nitrogen losses from unused nitrogen. From the report: “Overlap may range from as low as two per cent in square fields with no obstacles seeded with a 40-foot drill up to 25 per cent in a field with large obstacles seeded with a 100-foot drill.”

For the dry Prairies, the report concluded that use of variable-rate fertilizer application and sectional control tended to increase contribution margins relative to the baseline when urea was used as the primary nitrogen source, fertilizer rates were reduced and yield held constant.

Every field is different

The economic outcomes varied depending on the scenario modelled and parameters used in the study. In the no yield increase scenario, some 4R practices reduced profits compared to standard practices, while the yield increase scenario substantially slowed the erosion in contribution margin and supported farm profitability. For example, increased canola yield increased the contribution margin by $160 per acre or 118 per cent in 2030 compared to the no yield increase scenario. It is important to note that these scenarios are all based on general assumptions. Crop price, fertilizer price and yield all impact profitability, and they vary from farm to farm and over time. A logical next step is to make this analysis available to individual farms where they can use their own variables to determine specific outcomes.

The report notes, “We did not model all possible BMPs and using different BMP combinations and different assumptions concerning crop prices, fertilizer prices, operational costs, and fixed costs would undoubtedly result in somewhat different numbers.”

As one final plug for 4R, one report recommendation is that Canadian agriculture “scale up 4R adoption”, noting: “4R BMPs are scientifically proven to optimize N fertilizer and reduce GHG emissions when used effectively and many farmers are already using these practices. This is the most effective approach we have available. These practices should be integrated into programs, policies, and international climate diplomacy.”

There is no ‘one size fits all’ approach when it comes to 4R. For those practices that have lower economic returns but have strong environmental benefits, farmers may need financial incentives to enhance uptake.