Risk and Reward: The Economics of Big Decision Making
23 Jul 2310 min 11 sec

Kelly is running a nitrogen reduction trial on his corn. Well, its more than reduction, he is growing corn without any additional nitrogen on a few acres.  Is it working? Why is he doing this?  Damian talks about the economics of big decision making on your farm, specifically as it relates to reducing inputs.

Listen Here:

00:00 Hey, we're talking about risk and reward. We're talking about the economics of big decisions and changes to your farming practices, especially when it comes to reduction of input. Let's face it, Kelly, 00:09 you've said a number of times in our recordings on our webinars, the holy grail of agriculture production is grow more corn to do that, 00:16 throw more nitrogen at us, right? We're in a field right here where you didn't just reduce nitrogen, you reduced it to almost nothing or maybe to nothing. 00:24 And so Chad Henderson and Kelly are gonna talk about, okay, is this a crazy experiment? Maybe, but let's evaluate the risk and the reward, 00:31 but more important than the economics, might you end up deciding we could do corn production on a more profitable basis with a way less amount of nitrogen input. 00:41 Absolutely. You know, Chad and I Temple, Matt, you know, uh, Kevin, Mike Evans. 00:47 We've all been involved in these conversations over the winter about trying to find balance from a chemistry perspective. And when I saying chemistry, 00:55 I'm not talking about Roundup. I'm talking about elements. And we push too many macros. Yeah. 01:01 And we don't pay enough attention to the micros. And the plant needs carbon, sulfur, zinc, molly, copper, cobalt, iron, 01:11 the list goes on and on. The plant needs all of those in certain levels to help the plant assimilate nitrogen. Yep. And we're having, we have so much nitrogen, 01:20 and these guys gimme a hard time here. Rightfully so, because of the great soil we have. My soil is producing so much nitrogen that we continue to, you know, 01:29 the microbial system, the biological system here produces so much nitrogen. We continue to turn down the synthetic to try to come into balance. 01:37 And now with the, the tissue samples that Evans and Vern are taking, the SAP analysis that we've started to use, we on a couple acres here, 01:45 we went to zero. Mm-hmm. And Chad, I mean, you could tell where it's at zero. Yeah. But it doesn't look like zero from what we would be used to. 01:53 Like if you missed a spot in the field. It doesn't. And that's because we've supplied the carbon, the sulfur, and the micronutrients. This is what I think. It doesn't look like zero. 02:02 It isn't a pea green. It looks nice. And we, And, and we don't ever know. We're not saying that, oh, we can just go out here and we just gonna quit using nitrate. 02:08 We're not going to do that. We can, we salt provides enough. We're not saying that it's all about a balance. 02:13 We've learned that through extreme ag. We've learned about the balance. We've known about it for years. 02:17 But with the connections we have with extreme ag, I think the balance is there. And then you get into the sustainable piece and efficiency piece. Well, 02:24 that's what it's all about. It's, it's not, it's saying we can't, let's cut the population back and let's, and let's not use much nitrate. 02:31 We're gonna load it with carbon, or we're gonna load it with sulfur. There's other things that we're gonna load it with and switch the place of that, 02:36 you Know? Right. I'm Looking over this field, Chad. Um, and it doesn't look like from everything you and I learned our entire growing up about growing corn, that there's no nitrogen out here. Right. 02:46 Because you would think if there's no nitrogen, there'd be no corn. Right. That's not the case. So when we go back to the risk restore award, 02:51 the analysis we did, there's an experiment you're not even being paid for. This is something you're doing with, uh, Evans our, 02:57 our favorite agronomist here in Iowa. And the idea is what isn't It kinda like when Chad loves to push the envelope and go too much, like he says, he measures in five gallon buckets. 03:07 You're going the other way. You're reducing this by, by increments of five gallon buckets. Absolutely. I, and I've learned that from Chad. 03:13 If we don't do something that the average person thinks is radical or extreme, we're not gonna learn anything. Couple years ago I had a, 03:21 a soybean population trial and the lowest population we planted were 34,000 beans per acre. I was trying for 30, but the planter wouldn't go that low. Yeah. 03:29 We got cleared down to 34,000, be right next to it. We had 150,000. That 150,000 looked really sexy. 03:35 That 34,000 came up and it looked like it got hailed out of the year. The 34,000 out yielded the 150 by three bushel. 03:42 We would've never predicted that that was a risk that brought us great reward because now we have revamped our whole thinking about the population for 03:49 soybeans. And we're getting better yields as a result of that. This is another risk that we're taking here, but I believe there'll be a reward, 03:56 but I don't know what It is yet. And, and it's not about, you can't just say, oh, I'm gonna go plant 34,000 veins. It's gonna be okay. 04:01 You have to supplement that with other things. You know, it's whether making 'em, 04:04 we'll talk about how they branch or we'll talk about how the spacing was. There's other things that key into thatt. 04:10 Go out here and let's throw 34,000 outta airplane. Like, hey, I'm good. Check it up. See? Cause that's not gonna work. You know, 04:16 it's all about the approach of it. And, and then with this, with a nitrogen study here, it's about available fertility. 04:21 Alright. So Chad, if you're going to do a crazy experiment, one thing that you end up doing is making adjustments. 04:27 So sort of like a compensation, I'm gonna reduce this, but I'm gonna add this. Maybe you don't do that in the first experiment, but you learn I did. Okay. 04:35 If I'd have just added this, it's kind of a little show game of moving Nutrients. That's a hundred percent. I mean, we have our budgets, 04:41 and don't forget that as farmers, we're not trying to cut the budget and cut the budget out of it. We're trying to replace the budget with different areas and whether it's carbon 04:48 or sulfur or other elements that we may choose to use, you know, instead of our original NPS and Ks and plant population, 04:56 obviously if we're standing in corn, you know, but there's, there's certain things that we switch around and we want to end up with the same 05:02 money in mind, but do better with efficiency and do better with a crop, do better with availability pieces. There's, there's project, you know, 05:09 projects that are going on inside the project. You Didn't exactly do it that way. You came out this field and you went to an area and the view are seeing this 05:16 right now of an overhead of where you did no nitrogen and then standard practice nitrogen, is that what I'm talking about? 05:23 And then there's a, there's a couple partials in here as well. Okay. So, uh, the risk, when we talk about risk and reward in economics, 05:29 what are we trying to, first off, the risk is you get no corn. Yep. If there's no, no, you get, you get almost no corn if it's half nitrogen, 05:35 is that the risk? That is the risk. And the the risk is a yield deficit. A yield penalty. Okay. The reward, of course, is the 05:41 Reward, is that we figure out what the balance is and we come up with the ratios that we need and we can break the next yield barrier because we kind of have a, 05:49 a roadmap now of what to do. So I don't believe any, I don't believe anybody has the roadmap. A hundred percent. And so let's talk about the ratios just one second. 05:56 Let's say we do build that ratio this year. Well, how is that ratio, what do you expect that ratio to do? That ratio is gonna be a floating target. 06:02 It is, absolutely. As you move now, ratio will be a floating target. Yes. So then you have a new standard, yearly, you know, if you, 06:08 You know, if You, if you're gonna, if you're gonna reduce an estrogen by X amount, then you do adjustments to other stuff by X amount. 06:14 A hundred percent. Okay. Agronomy is chemistry plus biology. And what we have verified, you know, Vern and Evans and I, 06:22 is that our chemistry is a lot further off than what we thought. Mm-hmm. And these are, this is what we're talking about right here. 06:28 And if we can get closer or if we can solve the chemistry piece, it's very low hanging fruit. And I think 06:34 Its important reward, I think it's important. You said also from the beginning, chemistry doesn't mean glyphosate. No. Two 40 D chemistry. 06:39 What you're saying is balance of nutrients, Elemental charts, elemental, and, you know. Okay. And then a little bit of the reward is when we bring the Tru Terra piece in here 06:47 and the Soil Health Initiative, the nitrogen reduction dollars. Yeah. However you want to turn it, the sustainable dollars. Yep. 06:54 What we're doing here, very sustainable. The, the people in that sustainable space get excited about that. There's a revenue stream for us here that helps us, 07:02 that helps us soak up part of the risk. Yeah. You know, I'm doing this for agronomic reasons, but I'm all about these sustainable dollars, what farmer is. Yeah. Well 07:10 The point is, if you're gonna take a bigger risk, and then, like you said, our partnership with trutter, the idea there is I'm taking this huge risk, 07:17 I might get no crop, so at least let's do some kind of a program where I am getting compensated to justify the experiment. And 07:25 Absolutely. And you know, us as farmers as well, you know, we're all about the, the land, you know, and people wanna give us some time a, a bad rep about, oh, 07:32 we get, we're fertilizing and we're getting it in our rivers and our streams and things like, we're not, I promise you, 07:36 we don't wanna over fertilize it's money out of our pockets. That's, we don't wanna do that. 07:39 We're the only ones here that's making a living from the dirt you're standing on. Everybody else is just driving on it, work, working on it, 07:44 or putting their house on it, you know, and we're making a living on it. So there's things like that that come into play that kinda gets us around pretty 07:50 good. When think people think that we're going the other way. Farmers are very frugal, very conservative people, 07:54 because we don't want to be wasteful. Yeah. Answer me then, going into the wasteful and the economics of it. We opened this video by saying, let's talk about risk rewarding economics. 08:02 What does your gut tell you? Well, let's ask the guy from Alabama's camp, what should gut tell you? What are we going, what do you think he's gonna learn? 08:07 Is it gonna be that he finds Out he learn something? He learn something? What if he learns? 08:11 What if he learns that for a hundred years we've been using over utilizing nitrogen, which he already thinks that, 08:17 and we can still get as much Remember net return. That's right. Isn't it about the net, not about the gross. 08:23 What's in your pocket? We Love big yield. Oh wait, well, what if it's a smaller yield, but you got less money in 08:27 It? That's right. Is that Gonna happen? Let's pass it through the field. Well, no, this first year I'd bet against it. Yeah. But everything is, we're leading, 08:35 you know, everything we're doing with us and, and the true tire deal, we're looking at years out. Mm-hmm. 08:39 And we gotta start somewhere to finish somewhere. Okay. So you gotta start to finish. Mm-hmm. This is our starting point. We're going, yeah, we did this in two passes out here, you know, 120 feet each pass, 08:50 and then there's passes in between it. Right, right. You know, so there's pieces going on, but the, the point is, 08:55 we're trying to figure this out to do it on 10,000 acres. You know, this is just the steps going forward to make it where when we know, 09:01 when the people come to us say, we can't reduce, well, we know for a fact we can reduce this amount of end, but put this much in it. We won't have the details on it. This is not a guessing game. 09:09 This ain't a shell game. This is gonna, no, this facts here. All right. So the economics from your standpoint, and I, we've, 09:15 we were here two weeks ago and I said, I think you might end up maybe not this year, like he said, he'd betting against it. But three years from now, 09:22 deciding I made more net return, more actual money in my wallet by doing this, is that where we're we think we're gonna be? 09:30 Absolutely. This is not a one year experiment because we're gonna learn this year, what happens if there's zero. But we're continually turning it down. 09:36 We haven't found the bottom yet. In three years, I believe we'll have it Calibrated. 09:40 So imagine if you get to a point where you're going across the field less, you're using less diesel, less inputs, and you still make as much net profit. 09:47 Absolutely. And the soil is better quality And the soil is healthier. And when the soil's healthier, I believe the yields will be better. 09:54 Absolutely. Risk rewards, economics and experiments going on here at Garrett Land and Cattle, uh, in area in Iowa. I'm with Chad Henderson and Kelly Garrett. 10:01 My name is Dam Mason. Stay tuned for more great stuff just like this to help your bottom line.

Growers In This Video

See All Growers