Friday, October 19, 2018

Maximizing Manure Value - Timing and Application Logistics for Value

“There is more than one way to skin a cat,” is a famous phrase telling us other options exist. It’s also a phrase murmured by this husband to Mrs. Manure when the initial plan for the day’s home renovation project hits an unexpected snag. However, the same idea applies when we think about capturing manure value, there is more than one way to achieve it.
In particular, I’d like to take a quick look at two approaches today, the bigger, faster, approach designed to reduce the cost of application per gallon and then side-dressing manure. The truth is, both have advantages and challenges to capturing manure value. Understanding the challenges of each is important to determine what may work best for you and your farm. While there are many considerations, today I’m going to focus on some of the economics behind value. To get started, I’ll be working on some of the concepts I first discussed in Manure Application Logistics – Rate and Cost, where I looked at how the application rate we are using impacts the cost of manure application rate.

To make this comparison, I’m going to consider a 4,800-head swine farm, which will generate about 1.75 million gallons of manure a year, or enough to cover about 695 acres (approximately 60 lb N/1,000 gallons and applying 150 lb N/acre). At this farm, we’d have an application rate of about 2,500 gallons per acre.

For illustrative purposes, I’m going to ballpark $500,000 in equipment costs (pumps, hose, drags, and a toolbar), but that is dependent on what you are using. In the case of swine manure, let’s assume we have a 30-foot bar and can drive through the field at 7 mph. This means they can cover an 0.42 acres per minute and to get 2,500 gallons per acre the flow rate would be about 1,060 gpm. This means to get all 1.75 million gallons applied would take 27.5 hours and assuming the crew was about 50% efficient, it would take about 55 hours overall. Just for fun, let’s assume run time costs about $500 an hour (tractors, fuel, wear and tear, etc.). If we figure a 5-year equipment life and 1.75 million gallons is about 10% of the total gallons they apply every year, then our cost for manure would be about $37,500 or about $0.021 a gallon of manure applied or about $0.36 per pound of N applied.

Figure 1. Manure application in the fall using drag line equipment and thinking about travel speed to lower application cost.

Now we need to do the same thing for a side-dressing type scenario. I’m going to keep the equipment cost the same and assume setup time remains the same at 27.5 hours (since I’ll have the same number of sets), but since we are side-dressing we are going to have to drive slower, here I’m going to assume a travel speed of 3 mph. At this speed, we will cover 0.18 acres a minute, or manure application will take 64.3 hours or 92 hours overall. Making the same assumptions as above for cost, that is $500 per hour in variable expenses and $0.006 in fixed expenses, per gallon for a cost of around $55,925 or $0.032 per gallon. This amounts to about $0.54 per pound of nitrogen.
When you look at these numbers it may be easy to say that the first case is maximizing manure value as the price per unit of nitrogen delivered to the field is cheaper, but there is a timing impact on how efficiently this nitrogen can be used by the plant. While I don’t have data on side-dressing manure and the impact it has on value, we do have data from the last two years on how three different application timings (early fall, late fall [50 degree soils and cooling], and spring manure application) impacted corn yield. While not a perfect comparison, they give us some idea of what the potential yield increase may be. In that study, we saw late fall versus early fall worth 45 bushels an acre on average, while moving to spring manure application versus late fall application was worth 33 bushels per acre. Given the weather and soils at that site, these are probably a bit higher than we’d see in much of Iowa, but provide a starting point to the conversation.

Figure 2. Side dressing manure, slows our gallon per minute rate, but what does it do to value?

The 33 bushels an acre we saw in that study, at $3 a bushel corn, would be worth $99 an acre. This improved timing added approximately $0.66 of value from the nitrogen applied. Thinking of this in a slightly different way, by changing timing we estimated a change in the cost of nitrogen delivery in these systems of $0.18 a pound increase, meaning the return on investment using the data we have, was about 3.6-to-1.

However, there are some concerns with this data – is that a good representation of the yield increase we could expect from switching from fall to spring, or because of the site and weather conditions, is this estimate a bit high? In coming up with the economics, I wrote off the cost of my equipment over the same amount of manure, but we saw firsthand in this example it took 1.7 times longer to apply the same amount of manure and if we have the same number of working days, this means we’ll apply less manure increasing our cost a bit more. Finally, we need to ask, given the time constraints of spring and side-dress manure season, what percent of manure could be applied this way given the number of working days available?