Southwest Research and Outreach Center

Economics of Manure Application?
Manure: Does it Add or Subtract from your Bottom Line?

Written by: Bob Koehler, SWROC - Adapted from a Microsoft PowerPoint Presentation

Table of Contents:

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This page created 5/4/05 by B. Koehler with assistance from M. Werner. Last revised 6/6/05.

Swine Finisher Situation - These assumptions are used for the value estimation in the next slide.

 

Economic Value of Manure Applied to Agricultural Land

Input the value in $0.00 per pound for each of the nutrients below to determine the value of the manure nutrients on a per field basis.

Nitrogen Value --- $0.27 /lb N
Phosphorus Value --- $0.25 /lb P
Potassium Value --- $0.14 /lb K

What is manure worth in this situation? Some might assume that the economic value of manure in this situation is $7335.24. However, all available nutrients are most likely not needed by the crop, In this case only the nitrogen will have likely value. Also the cost of applying these nutrients manure could be as much as $0.01 per gallon. Economic contribution of this manure (positive cash flow) is about $477.84. (N= $3777.84 - $3300.00 application cost).

Some Major Differences

Some Additional Differences

Commercial Fertilizer Advantages Manure Advantages
Can match nutrient need vs uncertainty in tests, ratio, and availability estimates of manure Non NPK yield benefit
Timing flexibility, less labor, less equipment (for producer) Organic matter increase
More accurate (manure calibration issues) and uniform distribution Trace minerals
Less weight/compaction Microbes Slower release/availability
No odor (mostly) (Where else would you put it?)
No weed seeds (solid manure)  
Less pressure to over apply  
No manure plan, rules, etc  

A small percentage of producers have the ability to apply at low rates (possibly phosphorous based rates). Technology to apply lower rates in an accurate manner is increasing/improving.

The Economic Model

Model used for analysis on next slide.

Economics of Supplying Nutrient Needs of 1,000 Acres of Corn (120-50-50) With One Million Gallons of Manure (60-50-40 per 1,000 Gallons), Producer Perspective

 

High Rate

P Rate

N Rate

Commercial fertilizer costs with no manure used/available

 $ 38,800

 $ 38,800

 $ 38,800

Manure gallons applied per acre

6,000

1,250

2,500

Acres required for manure application

167

800

 400

Corn acres receiving only commercial fertilizer

833

200

 600

Manure pumping and application costs

 $7,500

 $ 16,283

 $14,056

   Per 1,000 gallons

 $7.50

 $16.30

$14.10

Cost to apply commercial fertilizer needed in addition to manure

 $ 32,333

 $ 18,160

 $23,280

Cost to meet fertility needs with manure and fertilizer

 $39,833

 $34,443

 $37,336

Difference in total cost compared to scenario 1

xxx

 $(5,390)

 $ (2,498)

Difference in total cost compared to using all commercial fertilizer

 $1,033

 $(4,357)

 $ (1,464)

Days required per year

 1.4

 10.6

7.8

Machinery Investment Required, manure operation share

-

 $ 87,921

 $79,953

Scenario's ROA on initial investment, compared to High rate

-

12%

9%

Scenario's ROA on initial investment, compared to all fertilizer

-

11%

8%

N application in excess (deficit) of 1st year crop needs/acre

168

(60)

0

P application in excess of 1st year crop needs/acre

190

 -

50

This slide shows a systems analysis with the assumptions listed at the top of the slide. Analysis is done with an Excel spreadsheet called Manurcst.

Economic Impact of Manure - Formula for determining manure economic value.

Economic Impact of Manure = Value of Year 1 Fertilizer & Application Costs Replaced + Residual Value (Mostly Year 2 if any) +/- Non- NPK Yield Response - Manure Application Costs

What is Manure Worth? - An example output of a spreadsheet for making manure value estimates (called Manurwkst).
Bob Koehler - Southwest Research & Outreach Center, University of Minnesota Bill Lazarus - Department of Applied Economics, University of Minnesota

 

Scenario 1

 

3750 gallon rate

 

Total

N

P

K

1.  Nutrients that would be applied to this field with commercial fertilizer if no manure was used - N, P, K # Per Acre

 

180

75

80

2.  Commercial fertilizer value (applied) Per Unit of N, P & K, $/lb.

 

$0.25

$0.30

$0.17

3.  Value of individual fertilizer nutrients that would be applied to this acre (line 1 x 2)

 

$45.00

$22.50

$13.60

4. Cost of applying commercial fertilizer (per acre)

$4.00

 

 

 

5.  Total value of fertilizer nutrients that would be applied to this acre (sum of line 3 values plus application cost)

$85.10

 

 

 

6.  Gallons of manure applied per acre

3,750

 

 

 

7.  Nutrients per 1000 gallons (from manure test)

 

60

40

40

8.  Estimated nutrient availability (%)

 

80%

80%

90%

9.  Pounds of available nutrients applied with manure per acre (line 5 x line 6 x line 7 ÷ 1000)

 

180

120

135

10.  Value of "needed" nutrients applied with manure, N, P, & K (line 2 x the smaller of lines 1 and 9)

 

$45.00

$22.50

$13.60

11. Total value of "needed" nutrients applied with manure (sum of  N, P, & K in line 10)

$81.10

 

 

 

12. Cost of applying these manure nutrients per gallon, $/gal

$0.01

 

 

 

13.  Total cost of manure application per acre (line 6 x line 12)

$37.50

 

 

 

14.  Value of "needed" nutrients minus cost of application per acre (line 10 minus line 12)

$43.60

 

 

 

15.  Per acre adjustment for yield impact ($ Plus or Minus)

$10.00

 

 

 

16.  % of applied nitrogen available for year 2

 

15%

 

 

17. Potential nutrients available in year 2

 

33.75

45

55

18.  Nutrients that will be used and credited in year 2 (or later for P & K)

 

0

30

0

19.  Individual value of residual nutrients (year 2), per acre

 

$ -

$9.00

$ -

20.  Total value of residual nutrients (year 2) per acre

$9.00

 

 

 

21.  Net per acre value of manure application in excess of application cost (line 14 + line 15 + line 20)

$62.60

 

 

 

22.  Net value of manure per 1000 gallons (line 21 ÷ line 6 (expressed in 1000 gallon units))

$16.69

 

 

 

Farm totals

 

 

 

 

23.  'Gallons of manure to be applied

300,000

 

 

 

24.  'Acres receiving manure

80

 

 

 

25.  Net value of manure application in excess of application cost

$5,008

 

 

 

Net Return Per 300,000 Gallons Manure - Summary of results based on spreadsheet shown on previous slide. Different assumptions show the variation in possible value.

Manure Economics - Summary

  • Increased fertilizer prices have increased the value of manure
  • Manure value cannot be maximized unless sufficient acres are available
  • Manure with high nutrient concentration has more potential for a high net value.
  • Higher crop need increases potential for a high net value.
  • Low rate application extends the non-NPK yield benefits to more acres if those acres are available.
  • Low rate application introduces risks with uniformity of application and the impact of inaccurate nutrient availability estimates
  • Under conditions of high crop need and high-density manure, cost-effective hauling distances are greater than commonly believed. Application time is probably more constraining.
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