Introduction to cost of production and its uses part 4
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Agronomic and nutritional needs are a critical component to achieving production goals. This also makes them significant, though they are often silent part of what drives a farm’s cost of production.
Plants and animals need nutrients, water and appropriate environments to grow within. If any of these are lacking, then the production the farm hopes to achieve will be diminished. How might this impact variable costs?
Livestock have specific nutritional needs that influence their rate of growth and overall productivity. The availability of feed sources and their nutritional values influence how these needs are met. Livestock also have different nutritional needs as they mature. This makes feed one of the largest and most variable input costs on a farm.
For example, a farm manager decides to raise corn silage as feed for their dairy livestock. They understand that poor quality feed significantly reduces the digestibility and energy output on a dairy cow as referenced in the Nutrition and Feeding page. This results in fewer pounds per day of milk as well as impacting the quality of that milk (i.e. components).
In order to obtain high quality feed with the desired nutritional values, the crop being harvested must be in good health. MSU’s Nutrient Recommendations for Field Crops outlines that one ton of corn silage requires 9.4 lbs. of Nitrogen, 3.3 lbs. of P2O5, and 8 lbs. of K2O in order to meet crop needs. If the yield goal is 30 tons per acre, that means the total fertilizer program needs 282 lbs. of Nitrogen, 99 lbs. of P2O5, and 240 lbs. of K2O. How much and what types of these nutrients will be provided to the plant? Will soil tests from these fields result in different fertilizer requirements? The answer to these questions greatly impacts the fertilizer purchases for the farm.
How do agronomic and nutritional inputs impact fixed costs?
This question can be answered by considering the land discussion from earlier. As outlined, land is often one of the larger costs of production for the farm. Knowing what goes into producing a commodity, is the property worth the price being paid?
Anytime ground is being rented, it is important to consider the condition and potential investment that would need to be made for crops to be grown. Can it produce the high-quality feed source you need for your livestock, or sufficient commercial grain yields to be profitable? Or are nutrient levels so low that higher than average amounts of fertilizer or lime will need to be applied just to get a normal yield? This helps producers decide if the agronomic or nutritional needs will require large investments that outweigh the benefit of renting the ground.
Understanding the impact of agronomic and nutritional needs is a critical part of knowing your farm’s cost of production. Understanding what drives these costs is just as important as knowing how to use that information to make decisions. Especially when it comes to marketing.
This is part of a six-part article series from the MSU Extension Beginning Farmer DEMaND series. The DEMaND series is a line of publications designed to help beginning farmers learn about financial and business management strategies that will assist them in developing into the next managers and decision-makers on the farm. For more information, check out the DEMaND series homepage on the MSU Extension’s Farm Management webpage.
