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Fertiliser value offset higher grain price?

andybob

Well-known member
DJ OUTLOOK 07: Swine Waste Value May Slow US Herd Reduction
7:00 AM, December 29, 2006

By Curt Thacker
Of DOW JONES NEWSWIRES


KANSAS CITY (Dow Jones)--U.S. swine herds are expected to shrink in 2007 as
producers incur losses at times due to higher corn costs, but the value
producers may reap from hog manure's use as fertilizer could possibly slow herd
reductions.

The value of the nitrogen, phosphorus and potassium along with other trace
minerals found in swine waste can be as much as $50 per acre on cropland to be
planted to corn, say agricultural economists.

Fertilizer costs are high due to strong energy prices, as fertilizer
production is an energy-intensive process. As such, many farmers seek
alternative lower-cost sources of fertilizer. For swine producers who are
either also crop farmers or are in partnerships with crop farmers, the manure
from their hog operations may provide cheaper sources of nitrogen, phosphorus
and potassium for their crops.

The prospects of high feed costs on a longer-term basis and low to negative
net-returns for hog producers could cause some operations, especially older
facilities, to reduce the size of their breeding herds or possibly exit the
business altogether.

However, for swine producers with ties to crop production, the byproduct
value of swine waste as fertilizer may be significant enough to keep them from
downsizing their hog operations, say some analysts and agricultural economists.

Rising prices of commercial fertilizer have raised the value of livestock and
poultry manure as well. Proper handling and application of the animal waste in
an environmentally friendly manner requires more management skills, labor and
investment in equipment than using commercial fertilizer alone, but the payoff
can be big.

Lower Fertilizer Costs Help Offset Higher Feed Prices


Expectations of higher corn prices in the longer term due to its use as raw
material for the burgeoning ethanol industry could alter production trends in
the pork and poultry industries. Corn makes up the majority of feed rations for
hogs, chickens and turkeys, and these animals are unable to utilize as much
distillers dried grains -- a byproduct of ethanol production -- as cattle.

Corn prices at the Chicago Board of Trade have risen sharply this fall, with
nearly all listed contracts currently above $3.60 per bushel.

Iowa State University agricultural economist John Lawrence, who issues
monthly breakeven and profitability reports for livestock operations,
calculated breakeven costs for Dow Jones Newswires using a flat $3.50 per
bushel price for corn and another using $4 corn. The breakeven cost for
farrow-to-finish swine operations using a $3.50 corn price averaged about
$46.00 per hundredweight on a live basis, compared with $40.80 for the latest
month using actual corn prices based on CBOT futures. At $4 corn, the breakeven
cost climbs to about $48.50 for farrow-to-finish operations.

In February, the U.S. Department of Agriculture released its Energy Estimator
for Nitrogen, a Web-based tool to help farmers reduce their fertilizer costs by
using organic sources of nitrogen and other nutrients such as animal manure and
cover crops.

The USDA's research showed that fertilizer accounts for 29% of agriculture's
energy use. The USDA also found that as much as $55 per acre on a net basis can
be saved by using animal manure instead of depending totally on commercial
fertilizers.

Ken Foster, agricultural economist at Purdue University, said it is not easy
to quote a single figure on the value of hog manure as fertilizer because the
actual value depends on several factors, including the pigs' diet, how the
manure is stored and handled, and when and how the manure is applied. In
addition, the crop that is being fertilized, the amount of manure applied, the
distance the fields are from the manure storage facility, and the prices of the
nitrogen, phosphorus and potassium from other sources also affect the
fertilizer value of the manure.

Glenn Grimes, agricultural economist at the University of Missouri, said
research has also shown that the plants are better able to utilize nitrogen
from organic sources than from commercial fertilizers.

Some farmers have been able to replace nearly all of their commercial
fertilizer use by applying livestock or poultry manure, and in certain cases
they are seeing higher yields, industry sources said. However, one of the
issues of concern is that certain types of manure may contain more phosphorus
than the crops will use in one season, so it is easy to reach a maximum
phosphorus level in the soil, but farmers may need to apply more nitrogen. So,
supplemental commercial nitrogen sources are used as well, but not as much is
needed since a portion of it is provided by the manure.


-By Curt Thacker; Dow Jones Newswires; 913-322-5178;
[email protected]
 
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