The Economics Of Reducing Nitrate Loss: Experiences With A Five Course Limestone Rotation In Lincolnshire

P. A. Johnson, P. A. Chambers and P. N. Smith

Farm Management Vol 9, No 7 Autumn 1996

Few experiments on nitrate loss from land have included estimates of the financial effects of growing crops in nitrate "friendly" systems or how crop agronomy must be changed. This paper reports on the agronomy and financial results for one such experiment and shows that NSA compensation payments are adequate.

Introduction
Methods
Discussion of crop agronomy and factors affecting margins
Financial analysis
Conclusions
Acknowledgements
References
Biographical Notes

Introduction

Since the ratification of the EC Drinking Water Directive (2) which put an upper limit of 50 mg/l of nitrate in public drinking water supplies, there have been many studies of nitrate loss from soils. In addition to detailed small plot experiments farmers in 10 areas around the country were encouraged to take compensation for changing their practices in the Pilot Nitrate Sensitive Areas (NSA) scheme (4) and in 1994 another 22 areas were introduced.(5) Compensation payments were based predominantly on levels of income foregone. This paper gives the financial results of a combinable crops experiment which was established by ICI Fertilisers at Oasby (Lincolnshire) to investigate husbandry methods which could reduce N loss from soils. It was established before the NSA scheme was finalised so the treatments were similar, though not identical to, the prescriptions devised for the NSAs. We look at the first five year rotation, detail the agronomic problems encountered, compare the results with the compensation being paid in the NSA scheme and show that, even when extreme treatments are compared, there is a marginal financial advantage to be achieved by joining an NSA scheme.

Methods

The experiment, on a thin limestone soil some 8 km east of Grantham in Lincolnshire, had a five course rotation of winter barley, oil-seed rape, feed wheat, peas and milling wheat which was typical of the area. A similar experiment on sandland where potatoes and sugar beet are being grown in a four course rotation is in progress at ADAS Gleadthorpe in Nottinghamshire. There were three husbandry systems known as "Standard" (reflecting normal farm practice), "Protective" (using systems of husbandry likely to reduce nitrate leaching such as very early drilling, shallow cultivations and cover crops) and "Intermediate" (cheaper or simpler alternatives to those used in the Protective system). Fuller husbandry details were given at the AAB conference "Nitrates and Farming Systems" in 1992. (3) N was applied at two rates, full and half recommended rate (Table 1), on all crops except peas (which received no nitrogen).

Table 1: Nitrogen application rates (kg/ha)

Each N sub-treatment within a husbandry system was regarded as a "field" and agro-chemical applications were individually applied as necessary. Yields were obtained from plots in three randomised blocks using a small plot combine. Yields were reduced by 10% before calculating returns to allow for the higher yields commonly recorded from small plots. Full details of the methods used for monitoring nitrate loss and the results for the first five years of the experiment will be published elsewhere (submitted to Soil Use and Management). Suffice to report here that soil water nitrate levels were measured in samples taken from porous pots and drainage volumes modelled by the ADAS Irriguide system and from these two figures N losses were calculated.

Discussion of crop agronomy and factors affecting margins

The major factor affecting gross margin is yield. Mean yields over the five year period are given in Table 2. This hides some year to year variation so important differences are discussed under the individual crop headings.

Winter Barley

Grain from the Standard and Intermediate treatments which received half rate N was sold for malting every year gaining premiums ranging from 17/t in 1992 to 39/t in 1995. These treatments were ploughed prior to the barley crop. However the Protective treatment was shallow cultivated, and volunteer wheat in 1991, 1992 and to a lesser extent in 1993 meant that grain could not be sold for malting. Variable costs were also increased because a desiccant spray was required to kill the wheat and sterile brome in 1991 otherwise harvest would have been seriously delayed. The admixture of wheat reduced the price of the grain to 8/t below feed in 1991 and 1992; in 1993 it was sold as a feed sample. Because of this, and although it was expected that nitrate leaching would be increased, a decision was made to plough all treatments before establishing winter barley. There was little point in growing a crop which was almost impossible to sell. A malting sample was obtained on the half rate N Protective treatment in 1994 and 1995.

Table 2: Mean yields (t/ha) 1991 - 1995

Oil Seed Rape

The shallow cultivated treatments commonly required extra graminicide which increased agrochemical costs. Very poor gross margins for all treatments in 1992 were due to abysmal yields (mean 0.85 t/ha), a fairly common experience on this soil type in the Grantham area in 1992.

N application rates varied more with oil seed rape than any other crop because of changes in the price anticipated for the crop and variations in support payment systems. Sulphur deficiency was seen on the farm in 1994 and the 1995 crop received a sulphur-containing N fertiliser for the first top dressing.

In some years a pre-harvest desiccant was needed on the full rate N treatments but not on the half rate.

Variable costs increased in 1994/95 on all plots mainly due to the increased use of fungicides. Phoma was present in the autumn and light leaf spot in the spring. Locally it was a high disease risk year. On full rate N treatments the disease risk was thought to be higher and costs were about 10/ha more.

Feed Wheat

Riband was grown for the first three years. We changed to Brigadier in 1994 to follow local trends, despite yields in 1993 averaging 9.9 t/ha on the full rate N treatments and 8.6 t/ha on the half rate N treatments. N rates were based on the expectation of achieving normal farm yields of 8 t/ha. The increase in N application rate for 1993 and beyond was based on the predicted lower N residues after oil seed rape where lower N rates had been used.

Extra herbicide costs on the Protective treatment were justified by the need to control grass weeds and oil seed rape volunteers. Sterile brome became a problem on the shallow cultivated treatments. With couch and black grass also increasing on these treatments extra herbicides were required, so increasing costs. Cleavers also became a problem on some plots, particularly within the Protective and Intermediate treatments. The problem was increased by the lack of products available to control this weed in the previous oil seed rape crop, using shallow cultivation on this treatment did not help.

Fungicide costs were generally similar on all treatments but occasionally mildew was more of a problem in the full rate N treatments, this occurred in 1993 and again in 1995. Extra control was required in 1995, and this added 17/ha to variable costs. The Standard Full rate N treatment required an extra fungicide in 1993 to control mildew at a cost of 17/ha.

Peas

A cover crop was grown in the winter before the peas on the Protective treatment to mop up free nitrate in the soil. The cover crop was established with minimal soil disturbance to reduce mineralisation of nitrogen from soil organic matter. This became standard practice in NSAs when they were introduced in 1990. In the first two years forage rye was grown as the cover crop. But because of the cost ( 40/ha for seed) it was decided to change to the cheaper alternative favoured by many farmers of supplementing the wheat stubble with lightly harrowed and rolled in barley at 60 kg/ha. A desiccant was needed in most years to help destroy the cover before ploughing in early March. An autumn insecticide was used on the Protective treatment cover crop to help avoid the possibility of the spread of aphids carrying BYDV to other treatments

On a field scale this may not have been necessary. The use of a cheap cover crop made a large difference to the gross margin on the Protective treatment.

During the hot and dry spring of 1995 pre-emergence herbicides did not work so well as in the past resulting in post-emergenceproducts being applied for annual broad-leaved weed control. However the overall cost of herbicides did not alter significantly from previous years as spring germinating grass weeds were not a problem and did not need controlling. The weather and use of late herbicides may well have affected the yield of peas in 1995 (mean of 2.6 t/ha) which was much lower than previous years.

Milling Wheat

Following changes in the standard fertiliser recommendation system (1) N rates were increased by 20 kg/ha in 1992 and then again by another 20 kg/ha in 1994. This was due to reductions in the suggested levels of residual N following peas. Extra N above that applied to feed wheat is advised for milling wheat and although we followed this practice we failed to get milling premiums. It was only in 1994, when the variety grown was changed to Hereward and 40 kg/ha of the N was applied to the Standard and Intermediate treatments as a foliar spray at milky ripe, that a premium was obtained for the first time. Ironically, the Protective treatment which had previously come close to producing a milling sample, possibly because of later application of N, also reached milling standard.

Fewer problems with graminaceous weeds have been experienced in this crop than in the feed wheat because of better control following ploughing before the pea crop. However very high herbicide costs were incurred in 1994 and again in 1995 on the Protective treatments because of a need to control blackgrass, wild oats and cleavers. Costs ranged from 15.55/ ha on the full N Standard treatment to 54.25/ha on the full N Protective treatment in 1995.

Financial analysis

Gross margins for the 1991 harvest year were published at an AAB conference in 19923 and are included for completeness in Table 3. The figures shown indicate the mean gross margin for the rotation. The last three years are probably the most important as these are the years when set-aside was in operation. Farmers were also either considering entering or had joined the NSA scheme in the area around Oasby (Aswarby NSA was introduced in 1994). Our comments are therefore based on the results for these last three years.

Table 3: Mean gross margins ( /ha)

Table 4: Mean annual nitrogen losses by leaching 1990-95

The compensation paid to farmers in the Aswarby NSA, which includes the experimental site, for the Basic Arable Option A is 105/ha. This is just 5 greater than the average loss in gross margin recorded between the Standard full N treatment and the Protective half N treatment. Like most forecasters, (e.g. Nix (6)), the consultant who calculated the compensation payments for the NSAs cannot have anticipated wheat prices of 125 per tonne. Had cereal prices remained at 1994 levels there would have been a larger advantage to entering the scheme. A decision to join one of the grass reversion options of the NSA scheme needs consideration of the resulting fixed cost savings as well as changes in gross margin. For many farmers a payment of 550 per hectare to establish grass and then cut it twice a year for five years could be attractive.

Conclusions

The economics show that even using the harshest of comparisons possible that there would be a marginal advantage to farmers joining the NSA scheme, even with wheat prices of 125 per tonne. But were the changes in husbandry successful in reducing nitrate leaching? The losses of nitrogen shown in Table 4 show that the mean loss of N from the soil zone on the Protective half N treatment was less than half that on the Standard full N treatment. So the answer is yes. But we have had to spend more on weed control, particularly grass weed control, on the Protective treatments.

Acknowledgements

Financial support, initially from ICI Fertilisers, and post September 1990 from the Ministry of Agriculture, Fisheries and Food is gratefully acknowledged.

References.

l Anon 1994. Fertiliser recommendations for Agricultural and Horticultural Crops (RB209). MAFF London.

2 EEC. 1980. Council Directive relating to the quality of water intended for human consumption. (80/778/EEC) Brussels.

3 Johnson, P. A., Smith, P., Chambers, P., Wells, A. & Shepherd, M. 1992. "The effects of husbandry practices limiting nitrate loss on gross margin".Aspects of Applied Biology (:Nitrates and Farming SystemsJ, 30 , 359-366.

4 MAFF/DoE 1990. The Nitrate Sensitive Areas (Designation) Order 1990. Statutory Instrument 1990 No 1013, HMSO, London.

5 MAFF 1994. The Nitrate Sensitive Areas Regulations 1994. Statutory Instrument 1994. No 1729, HMSO, London.

6 Nix, J. 1994. Farm Management Pocket-book (26th Edition) . Wye College, University of London.

Biographical Notes

Paddy Johnson graduated from Wye College in 1965 and initially worked as a soil surveyor, gaining a MSc in Pedology) from Reading University. He is closely involved with MAFF nitrate policy.

Pam Chambers is also a graduate of Wye College having gained her degree in 1983 as an Agricultural Chemist. She joined ADAS in 1986 and is a Senior Agricultural consultant in Lincolnshire.

Peter Smith is a graduate of Oxford Polytechnic in Estate Management. He has managed Glebe Farm since 1978, is chairman of Grantham NFU and a director of Lingrain.

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