7. Consumption and economics of slow- and controlled-release and nitrification
7.2. Costs and benefits of slow- and controlled-release fertili- zers and nitrification and urease inhibitors
7.2.1. Slow- and controlled-release fertilizers
The main obstacle to the wider use of slow- and controlled-release fertilizers, particularly in agriculture, is their cost compared to conventional fertilizers. Farmers who grow high- value crops can more easily afford to pay for slow- and controlled-release fertilizers.
Figure 25. Price comparisons of slow- and controlled-release fertilizers with standard fertilizers (Adapted from Lammel, 2005).
0 2 6 4 8 10 12
Relative fetilizer prices (NPK = 1)
NPK Coated
8 – 12
Slow release
4 – 6
Ni inhibitor
1.3 – 1.6
Table 24. Comparative return on investment of farmers growing high-value crops agains low-value crops (Lammel, 2005).
High-value crop (melons)
US$/ha Low-value crop (Wheat1) US$/ha
Production cost 12100 750
Yield value 13750 780
Profit 1650 30
Value of 5% yield increase 687 39
1 Yield: 6 t/ha, no subsidies considered
The price difference is:
least with SCU and PSCU (generally less than 2 to 1),
greater with UF products, 3-5 times higher per unit N compared to conventional fertilizers, and
greatest with polymer-coated controlled-release fertilizers, ranging between 4 to 8 times that of corresponding conventional fertilizers.
There are several important reasons for these differences:
Cost of the materials used for encapsulated/coated products, particularly the price of the coating materials;
The organic polymer coating materials, which consist primarily of single polymers, polymer mixtures or co-polymers may cost 10 to 30 times that of the fertilizer itself.
To put this in perspective, the following example is given for a fertilizer with a cost index of 100 and a coating polymer with a cost index of 3000. A coated fertilizer, comprising 12% (by weight) of polymer coating and 88% of fertilizer encapsulated by the coating, would have a materials cost as follows:
Table 25. Cost comparison of urea vs. conventional polymer-coated urea (Detrick, 1996).
Component Cost index Weight % Materials cost index
Urea 46-0-0 100 88 88
Polymer coating 3000 12 360
PCU 40-0-0 100 448
Note that PCU contains only 40%, since the 12% coating result in only 88% urea in the PCU (88% x 46%
N = 40% N)
This model calculation can serve for actual calculations. It demonstrates that the material cost of the coated fertilizer is four times that of the basic fertilizer and in addition, the cost of production adds to this cost (Detrick, 1995). Further improvement of polymer coating of sulphur-coated fertilizers (‘hybrid-coating’) will permit the
production of products in a price range becoming economically interesting for use in conventional agriculture.
Larger production capacities since 2006/07 contribute to a reduction in production costs, but the majority of manufacturers still have only a small or limited production capacity. This results in relatively high costs of slow- and controlled-release fertilizers.
Furthermore, some producers manufacture their products in special batches (1,000 to 5,000 kg). To achieve perfect coating quality, producers usually use size separation of raw granular materials, which adds further to the cost of encapsulated/coated fertilizers.
There are also higher marketing and sales expenses associated with slow- and controlled-release fertilizers because their use has to be explained much more carefully to the user than with conventional fertilizers in order to ensure their correct application.
An economic indicator for the farmer to determine the profitability of using fertilizer products is the value/cost ratio (VCR). Unfortunately, there is practically no data from reliable field experiments with slow- and controlled-release fertilizers to allow this to be calculated. Such field experiments are urgently needed worldwide. The minimum profitability is fixed normally at a VCR of 2. However, under more risky conditions, e.g. under tropical and sub-tropical farming conditions, the VCR should be at least of 3 (Trenkel, 1993). Detrick (1996) calculated VCR (Table 26 and Table 27) using controlled-release fertilizers on low-cash value (LCV) crops and high-cash value (HCV) crops, which should serve as model for calculations with actual data.
Table 26. Low-cash value crop with 50% controlled-release urea-N. Standard fertilization prac- tice vs. experimental fertilization practice (Detrick, 1996).
Standard fertilization practice US$/ac
150 lb N/ac x US$ 0.30/lb N (urea-N) 45
Application costs, basic- and side-dressing 20
Total costs 65
Crop yield value 300
Experimental fertilization practice, 50% CR urea-N US$/ac
75 lb N/ac x US$ 0.60/lb N – CR urea-N 45
75 lb N/ac x US$ 0.30/lb N – urea-N 23
150 lb N/ac – total N 68
Application costs, basic-dressing 10
Total costs 78
Crop yield value (with 10% yield increase) 330
Value – incremental increase 30
Cost – incremental increase 18
Value/cost ratio (VCR) 1.7
This calculation clearly shows that the application of only 50% of total N in the form of controlled-release urea would not give a satisfactory value/cost ratio. In addition, in this example the cost of controlled-release urea is only twice that of urea. Such a small difference is not found generally for conventionally encapsulated products.
The situation is different with high-cash value (HCV) crops:
Table 27. High-cash value crop with 44% controlled-release urea-N Standard fertilization prac- tice vs. experimental fertilization practice (Detrick, 1996).
Standard fertilization practice US$/ac
300 lb N/ac x US$ 0.30/lb N (urea-N) 90
Application costs, basic- and 2 side-dressing 30
Total costs 120
Crop yield value 3000
Experimental fertilization practice, CR urea 44% of total N US$/ac
133 lb N/ac x US$ 0.90 lb N – CR urea 44% of total N 120
167 lb N/ac x US$ 0.30/lb N – urea-N 50
300 lb N/ac - total N 170
Application costs, basic- & 1 side-dressing 20
Total costs 190
Crop yield value (with 10% yield increase) 3300
Value – incremental increase 300
Cost – incremental increase 70
Value/cost ratio (VCR) 4
With high-cash value crops, using a controlled-release urea fertilizer at a cost three- times that of urea, the value/cost ratio is 4. In this case, it is profitable to apply at least part of the urea as a controlled-release fertilizer. The use of controlled-release fertilizers is to be recommended more for high cash value crops where production is pushed to the maximum through an oversupply of fertilizers, increasing the potential for greater nutrient losses.
For polymer-coated urea, Agrium gives the following calculations based on a premium of ESN to granulated urea of about US$ 60-100 per tonne (Hasinoff, 2005):
Table 28. Three-year maize yield average at TSM Research, Illinois: Return on investment with N rates of 100 lb/ac (Agrium, 2005).
Yield
(bu/ac) N
(US$/ac) Gross profit
less N cost ESN
advantage (US$/ac)
ESN 166 47.72 292.58
Urea 143 38.04 255.11 37.47
UAN side dressing 154 44.391 271.31 21.27
Retail cost per t/lb N per t of product = cents per lb of N ESN @ US$ 420.00/t: 47.72 cents/Ib N
Urea @ US$ 350.00/t: 38.04 cents/Ib N
1UAN @ US$ 215/t: 38.39 cent/Ib N, plus US$ 6.00/ac application cost Corn @ US$ 2.05/bu
Another example is for the application of ESN to potatoes (Figure 26) in Minnesota and to rice in Arkansas, 2004 (Figure 27).
Figure 26. Measurement of ESN effect on potato production in field trials in Minnesota in 2004 (Adapted from Agrium, 2005).
Potato yield (cwt/ac)
ESN GSP
Field A 532 406
Field B 541 564
300
Field A 2,330 1,740
Field B 2,690 2,530 2500
2000
1000 1500 3000 Net return to N ($/ac)
GSP (UAN) ESN
Total N
ESN advantage
+ $590/ac
+ $160/ac Applications
249 7x
275 2x
Total N Applications
266 8x
272 2x
400 500 600
These results clearly demonstrate that the use of polymer-coated urea (ESN), though more expensive than conventional urea, is also profitable in field crops like maize, rice, wheat and potatoes.