A bioeconomic framework for phosphorus deep-placement decisions

Andrew Zull, Mike Bell, Howard Cox and Jayne Gentry

No 235820, 2016 Conference (60th), February 2-5, 2016, Canberra, Australia from Australian Agricultural and Resource Economics Society

Abstract: Research indicates potential yield benefits from replenishing phosphorus (P) in sub-surface layers (10-30cm) if soil tests indicate a deficiency; however, it was unknown if amelioration has economic merit. Deep-P placement is a longer-term decision due to initial application and P fertiliser (MAP) costs with potential benefits that can last for many seasons. However there are risks due to unknown future season types. The fundamental question of deep-P placement is “how much P and how often?” We developed a bio-economic framework and used a case study in the Goondiwindi region with a deep-soil Colwell-P of 5 mg/kg to demonstrate the risk and benefit of applying different amounts of MAP at depth for a “short-rotation” (3-years) and “long-rotation” (7-years). The results indicate: (a) the optimal MAP rate was 135 kg/ha and 270 kg/ha for the short- and long-rotations, respectively, resulting in real-annual returns of $43/ha/year and $76/ha/year; (b) the short-rotation risked a loss of -$14/ha/year compared to $6/ha/year for the long-rotation (worst case); and (c) due to the lower investment cost with the short-rotation, the expected return on investment was 142%, compared to 67% p.a. for the long-rotation. The payback period for both decisions was around 2-years. As with all risky decisions, the farmer will have to weigh up the benefits, risks and their financial situation. Economic results will change when biophysical or pricing parameters change. As our knowledge of deep-P responses improve they can be incorporated into this bio-economic framework.

Keywords: Agricultural and Food Policy; Environmental Economics and Policy (search for similar items in EconPapers)
Pages: 5
Date: 2016-02
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aare16:235820

DOI: 10.22004/ag.econ.235820

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