Some aspects of the economics of nitrogen storage farming in New Zealand

In this paper we are concerned with some economic aspects of the use of artificial nitrogen fertilisers in New Zealand agriculture. With the prospect of much cheaper nitrogen fertiliser in the future (and possibly more expensive phosphatic fertiliser), some agriculturalists looking well to the future have suggested that New Zealand should and will move progressively towards systems of farming which are much more dependent than at present on nitrogenous fertilisers. The most comprehensively argued approach comes from Dr K. J. Mitchell, Director of the Plant Physiology Division of the New Zealand Department of Scientific and Industrial Research. In a number of recent papers [14, 15] he has argued that fertiliser nitrogen should be progressively substituted for clover as a source of nitrogen in New Zealand agriculture. Also, this should be coupled with a change in farming systems away from conventional clover based pasture towards continuous cropping and storage of maize and annual winter ryegrass. Though we propose in the paper to touch on some of the wider aspects of nitrogen use, our attention will be concentrated mainly on Dr Mitchell's suggested system which is important enough to justify a preliminary economic appraisal. In subjecting Dr Mitchell's proposals to a critical economic appraisal, we are not indulging in the negative criticism that is so often implied when criteria of profit and loss are applied to a new and important idea. Indeed, we started out with the contrary hope, namely that we would find increased profits or reduction in costs in the suggested new approach. At the least we felt that an economic appraisal of this sort would lay bare just where the economic advantages and disadvantages of the nitrogen storage system lay by comparison with conventional systems of producing livestock fodder. Also, in what directions further technical research should proceed if the maximum cost reductions or profit increases were to be achieved. In tackling this subject we have laboured under two major disadvantages. The first concerns the fact that there does not exist a great volume of research data relating to the agronomy of nitrogen fertiliser in New Zealand, especially in relation to grassland. Thus we have had to fall back in many cases on the opinions and guesses of agricultural scientists with whom we have discussed the matter. The second problem is that there is very little data available on costs of production of conventional pasture and, imperfect as our methods are, we found it necessary to tackle this question first, in order to provide a bench mark against which to compare the production costs of the new technology. We proceed as follows: In Section II we discuss the economics of conventional clover based pasture production. This is followed in Section III by a brief description and case study of a Mitchell type farm, and in Section IV by an economic appraisal of both this and other types of farms. In Section V the original budgets are recalculated to give return to land rather than the conventional return to capital. Some general criticisms are given in Section VI, followed in Section VII with a discussion of costs of feed conservation and storage of alternatives. Some alternative nitrogen using approaches are canvassed in. Section VIII before the whole matter is summed up in the concluding Section IX