Fertilizer Cost Bears on Hay Prices

EDMONTON - Jul 28/08 - SNS-PR -- The dramatic rise of fertilizer prices over the last year may be old news, but the effects of these increased input costs are still surprising.

High fertilizer costs could affect hay, greenfeed and straw prices. Animal feed that is produced and harvested in one area and fed in another will export a lot of nutrients, and the fertility of that producing land will decline if these nutrients are not replaced as fertilizer or manure. The replacement cost of these nutrients needs to be built into the price of feed.

"Fertilizer prices have been volatile since the fall of 2007, and this has even carried into summer months when prices are usually stable due to low demand," says Doon Pauly, crop specialist with Alberta Agriculture and Rural Development, Brooks. "In an ever-changing market it is hard to come up with concrete prices, so, for the purpose of this article I have assumed some product costs that are hopefully close to realistic for much of Alberta."

                  Estimated Fertilizer Costs Summer 2008
                    N        P2O5        K2O        S04
Product          46-0-0    11-52-0     0-0-62    20.5-0-0-24
$/tonne          $1,100     $1,500       $575       $550
$/lb actual       $1.08      $1.08      $0.42      $0.17
Note - these costs have accounted for the nitrogen component
       of phosphate and sulphate fertilizers

"Using these estimated fertilizer values and average feed analysis, the fertilizer replacement costs in various feeds ranges from about $39 per ton for straw to over $94 per ton for alfalfa hay," says Pauly. "Keep in mind that these are only some of the expenses tied up in this feed and do not include any of the costs of cutting or baling.

"These values are also built on the assumption that any replacement fertilizer is 100 per cent efficient. In reality, fertilizer efficiency is lower than this and fertilizer is even more costly to replace. Although some may question the accuracy of these numbers, what they clearly indicate is that the nutrients in feed are valuable and need to be considered when setting prices."

    Nutrient Content and Fertilizer Replacement Costs in Various Feeds

                                                          Replacement
                N/ton     P2O5/ton    K20/ton     S/ton   Cost $/ton
Alfalfa          58.0       10.5       43.6        6.2      $94.29
Barley Greenfeed 37.0        9.6       29.0        4.7      $63.98
Brome            31.0        7.3       35.1        3.2      $57.15
Orchardgrass     41.0        9.6       46.0        5.8      $75.77
Timothy          26.0        6.9       30.1        2.8      $49.08
Oats Greenfeed   32.0        9.6       43.6        4.4      $64.62
Barley Straw     17.3        4.1       36.8        3.0      $38.96
From 10 Year Average Analysis of Alberta Feeds 1984-1994
http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/anim3780

"High fertilizer prices seem to be a new reality and are not surprising anymore," notes Pauly. "What is unexpected sometimes is how these prices affect farming practices and products. Hay and greenfeed have value not just as animal feeds, but also on the basis of their fertilizer replacement value. Even straw, which is often viewed as waste product, may contain over $39 per ton of fertilizer equivalent. Fertilizer prices have made the nutrients in feed quite valuable, and buyers and sellers should take this into consideration when setting hay, greenfeed and straw prices."