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Recent rice and fertilizer price surges affected U.S. rice farming profitability

Thursday, January 4, 2024

According to data from USDA’s Economic Research Service (ERS), recent returns from rice farming are positive, on average. From 2012 to 2022, U.S. rice farmers received a positive net return (equal to the value of production minus costs) in all years except 2016, when rice fell to its lowest price of that decade. The total gross value of producing one acre of rice increased 23 percent over that time, ranging from a low of $863.46 in 2016 to a high of $1,439.19. This was, in part, because of strengthening rice prices. Notably, rice prices surged in recent years before reaching an all-time high in 2022. Over the 2012 to 2022 period, the total cost of producing one acre of rice increased by 36 percent. Most of the increase in cost stemmed from an increase in operating costs of 62 percent, while allocated overhead costs increased 6 percent. Surging fertilizer costs, which increased by $150.75 per acre from 2020 to 2022, largely drove the increase. By contrast, allocated overhead costs—a category that includes labor costs and the opportunity cost of land—increased by $12.09 since 2020. This chart is based on data collected from the ERS Commodity Costs and Returns data product.

Most manure applied to corn fields is not incorporated into the soil

Tuesday, July 25, 2023

Corn farmers most frequently apply manure to the soil surface without incorporating it, rather than using other methods. Manure types vary based on water content, such as lagoon liquid, slurry liquid, and dry or semi-dry. USDA, Economic Research Service (ERS) researchers found that irrespective of manure type, corn farmers used surface application most often, tending not to incorporate the manure with tillage afterward. With incorporation, manure is first spread on the soil surface and then mixed into the first few inches with a tillage implement, thus increasing its contact with the soil. Less than 30 percent of all surface-applied manure on corn fields is incorporated. Surface application without incorporating into the soil or applying manure through an irrigation system results in less nutrient retention and lower fertilizer value. Farmers gauge manure moisture content to determine which application method to use when addressing crop nutrient needs. On operations such as swine or dairy farms, it is common to use water to wash manure out of barns, creating lagoon and slurry liquid manure with a high water content. Liquid manure is usually applied to the land’s surface, but roughly 20 percent is injected into the soil using specialized equipment like a manure injector. Only a small portion of liquid manure stored in lagoons is sprayed through irrigation systems. Poultry and beef feedlot manures are typically dry or semisolid. Almost all dry or semisolid manures are surface applied. In 2020, more acres were planted to corn (90.8 million acres) in the United States than any other crop, and a larger percentage of corn acres (16.3 percent) received manure than any other crop. This chart appears in the ERS report Increasing the Value of Animal Manure for Farmers, published in March 2023.

Farmers mostly use manure sources from their own operations

Monday, July 24, 2023

In 2020, manure was applied to about 8 percent of the 240.9 million acres planted to 7 major U.S. field crops. Most manure applied to U.S. cropland (78 percent) comes from animals raised on the same operation, while 14 percent is purchased and 8 percent is obtained at no cost from other animal operations. USDA, Economic Research Service (ERS) survey data show that crop farmers received compensation from animal producers for taking manure for less than 1 percent of the manure applied, noted as “Obtained with compensation” in the chart. For most crops, farmers use manure that either comes from their own farm or at no cost from other farms. However, cotton and peanut producers are the most likely to purchase manure, typically from poultry growers. Among all animal manure types, poultry litter has the highest nutrient content, making it less costly to transport. Manure markets tend to be highly localized. When manure is obtained by a crop producer at no cost from the animal producer, that can indicate an excess supply of manure in the local area. Animal producers who apply their operations’ manure to their own crops account for a high proportion of manure used on oats, corn, and barley crops, followed by soybean and wheat. This chart appears in the USDA, ERS report Increasing the Value of Animal Manure for Farmers, published in March 2023.

Farmers spread most manure through surface applications

Monday, July 3, 2023

Between 2013 and 2019, the leading manure application method for farmers of major field crops was to apply manure to the surface without incorporating it—the simplest method in which manure is flailed or sprayed out of wagons and left on the ground. This method was used on 8.3 million acres, including about 6 million acres of corn. Surface application with incorporation was the next most common method, used on 5.5 million acres. With incorporation, manure is first spread on the soil surface and then mixed into the first few inches with a tillage implement, thus increasing its contact with the soil. The least common method was applying or injecting the manure directly in one operation, often with a chisel, disk, or knifing implement, used on 3.2 million acres. Injecting liquid manure below the soil surface or incorporating manure after surface application conserves more nutrients and increases the fertilizer value. Surface application without incorporation results in less nutrient retention. Manure is a valuable source of nitrogen, phosphorus, and potassium, which can make it a substitute for, or complement to, commercial fertilizers. In 2020, farmers were estimated to have applied manure to about 7.7 percent of the 240.9 million acres planted to 7 major U.S. field crops (corn, soybeans, wheat, cotton, oats, peanuts, and barley). This chart appears in the ERS report, Increasing the Value of Animal Manure for Farmers, published in March 2023. See also the Amber Waves article Despite Challenges, Research Shows Opportunity to Increase Use of Manure as Fertilizer, published in April 2023.

Manure sources vary for crops based on proximity to livestock production

Tuesday, April 11, 2023

The proximity of livestock production helps explain the type of manure farmers apply to crops. Livestock production is geographically concentrated in the United States, and manure can be expensive to transport because of its low nutrient density and high proportion of water. Accordingly, farmers typically apply the type of manure that is available from local animal production. Since most hogs are produced in the Midwest, hog manure is applied more often to corn and soybeans that are grown in the region. Dairies, which tend to be located in the western, midwestern, and northeastern U.S., supply the largest share of manure applied to corn, barley, and oats. Most chickens are raised in the southeastern U.S. and poultry manure is used to meet crop nutrient needs of cotton and peanuts that are mainly grown in the region. Beef cattle operations in the Great Plains supply more than 50 percent of the manure applied to wheat acreage. In 2020, manure was applied to about 8 percent of the 240.9 million acres planted to seven major U.S. field crops. This chart appears in the USDA, Economic Research Service report Increasing the Value of Animal Manure for Farmers, published March 2023.

Application rates of manure as a nutrient source vary by crop

Wednesday, April 5, 2023

Manure has long been used as a source of primary plant nutrients, including nitrogen, phosphorus, and potassium. However, the proportions available in manure are unlikely to match a crop’s nutrient needs perfectly. For instance, while manure could be used to satisfy many crops’ nitrogen requirements, this would result in more phosphorus being applied than what most crops need. Excessive application of manure on cropland can cause nutrients to accumulate in soil, leach, or to run off into nearby bodies of water. To help avoid over-application of nutrients, farmers can test the nutrient content of manure, restrict manure applications, and/or apply just enough supplemental commercial fertilizer nutrients to meet their crop’s needs. Between 2013 and 2019, producers of seven major crops in the United States who used manure were asked how much manure they applied per acre on these croplands. Using this information, ERS estimated crop nutrient application rates. Corn received the highest application rate of nitrogen from a manure source—92 pounds per acre—followed by cotton, wheat, barley, oats, soybeans, and peanuts. Cotton led phosphorus application at 37 pounds per acre, and corn led potassium application at 59 pounds per acre. Soybeans and peanuts require less nitrogen fertilization; therefore, they were applied with the lowest manure nitrogen application rates. Manure applied to soybeans and peanuts is valued primarily for its phosphorus and potassium. In 2020, manure was applied to about 8 percent of the 240.9 million acres planted to 7 major U.S. field crops. This chart appears in the USDA, Economic Research Service report Increasing the Value of Animal Manure for Farmers, published March 2023.

Small-scale farmers are more likely to apply manure as a plant nutrient source

Thursday, March 23, 2023

For most crops, small-scale farmers are more likely than large-scale farmers to apply manure. The smallest 25 percent of farms (by planted area) were more likely to apply manure than any other farm size group for five of seven crops studied: corn, barley, oats, soybeans, and wheat—all except cotton and peanuts. For example, among the smallest 25 percent of corn farmers, roughly half applied manure. On the other hand, only 13 percent of the largest corn farmers applied manure to their corn. This pattern of small-scale farmers using manure as a crop nutrient source more than other size farmers may be partly explained by specialization. Larger crop farms are more likely to specialize and not diversify their operations with animal production, limiting access to manure produced on the farm. Manure was applied to about 8 percent of the 240.9 million acres planted to the seven major U.S. field crops. Manure supplies nitrogen, phosphorus, and potassium to growing crops and can improve soil quality. This chart appears in the USDA, Economic Research Service report Increasing the Value of Animal Manure for Farmers, published March 2023.

Fertilizer prices spike in leading U.S. market in late 2021, just ahead of 2022 planting season

Wednesday, February 9, 2022

Nitrogen fertilizers are a key component in the production of field crops. Fertilizer constitutes an average of 36 percent of a farmer’s operating costs for corn, 35 percent for wheat, and 30 percent for sorghum, according to estimates in USDA, Economic Research Service’s (ERS) 2020 Commodity Costs and Returns data product, published in October 2021. Given the importance of applying fertilizer to meet yield goals for most field crops, a rapid escalation in fertilizer prices affects a wide variety of farming activities and decisions. Data for Iowa production costs—used as a proxy for U.S. expenses because of Iowa’s central location and its importance in field crop production—indicate a steady decline in fertilizer prices from 2013 through 2017 before gradually rising through 2019. In late 2021, fertilizer prices began to spike alongside rising prices of natural gas—a primary input in nitrogen fertilizer production. By December 2021, average monthly spot prices of natural gas at the Henry Hub distribution hub in Louisiana, as published by the U.S. Energy Information Administration, were 45 percent higher than in December 2020. U.S. farmers use three primary forms of nitrogen fertilizer: anhydrous ammonia, urea, and liquid nitrogen. ERS estimates an annual price increase of 235 percent for anhydrous ammonia, 149 percent for urea, and 192 percent for liquid nitrogen (32 percent) using data provided by USDA’s Agricultural Marketing Service (AMS) as of December 2021. Researchers expect the spike in fertilizer prices to affect producer decisions going into the 2022/23 marketing year. This chart is drawn from ERS’ January 2022 Feed Grains Outlook.

States with strictest dicamba restrictions saw less dicamba applied after cotton planting in 2019

Monday, September 27, 2021

Dicamba is a common herbicide used to control annual and perennial broadleaf weeds. Federal and State restrictions for the use of dicamba can influence a farmer’s decision to adopt genetically engineered dicamba-tolerant (DT) seeds. In 2019, for example, Federal restrictions limited the application of dicamba on cotton fields from one hour after sunrise to two hours before sunset, limited applications to 60 days after planting cotton, and required that fields in areas with endangered plant species maintain buffers on all sides of the field. Different States imposed additional restrictions or extensions for dicamba application. For example, Georgia, Oklahoma, and Texas were among states that expanded the dicamba spraying window further into the growing season from the allowed 60 days after planting by granting Special Local Need registrations to their farmers, which were allowed at the time. Data from USDA’s 2019 Agricultural Resource Management Survey show that, in States with earlier dicamba cut-off dates, less dicamba was applied after planting during the growing season. In Arkansas and Louisiana, where cut-off dates occur early in the growing season, 16 percent and 23 percent, respectively, of DT cotton acres were sprayed with dicamba after planting in 2019. By contrast, Georgia allows dicamba spraying until one week before harvest, which can occur as late as December. About 57 percent of DT cotton acres received after-planting applications of dicamba in Georgia in 2019. In 2020, the U.S. Environmental Protection Agency instituted a single nationwide cut-off date of July 30. This chart appears in the July 2021 Amber Waves data feature, “Adoption of Genetically Engineered Dicamba-Tolerant Cotton Seeds is Prevalent Throughout the United States.”

Fertilizer costs shape U.S. corn production expenses

Monday, April 12, 2021

USDA’s Economic Research Service (ERS) reports production costs for corn and other major commodities in Commodity Costs and Returns, which includes estimated fertilizer costs for corn at the national level. From 2010 to 2019, fertilizer was a major expense in U.S. corn production, accounting for 33 to 44 percent of operating costs—a category that includes other variable expenses like seed, chemicals, fuel, and repairs. Fertilizer also comprised 16 to 24 percent of the average corn producer’s total costs, which include overhead charges like land costs, machinery depreciation, and farm taxes. Most U.S. corn acres are planted in April and May, and growers often purchase their inputs months in advance. Prices for fertilizer have risen since August 2020, with an even more pronounced surge starting in January 2021. Farmers who made fertilizer purchases for the 2021 corn crop before this uptick may incur similar fertilizer costs to the 2019 and 2020 crops, while those who have waited may pay significantly higher costs. This chart is drawn from ERS’s Commodity Costs and Returns data product.

Price of fertilizer and prices received for crops have been relatively volatile since 2002

Wednesday, February 26, 2020

Fertilizers provide nutrients (such as nitrogen) essential in the production of crops. The amount of fertilizer farmers use can be affected by changes in the price of the fertilizer, variation in production practice (such as the type of tillage employed and crop mix), and the price received for the crops. From 1960 through 2002, both fertilizer prices paid and crop prices received by farmers increased in tandem at a fairly modest rate. Between 2002 and 2008, annual fertilizer prices paid by farmers increased rapidly (generally much faster than increases in crop prices received by farmers) and became more volatile. Fertilizer price increases through 2008 were largely driven by high energy prices and the record costs of natural gas (a basic input to produce nitrogen). In response to record fertilizer prices in 2008, farmers reduced their use of fertilizers, contributing to a decline of 18 percent in fertilizer prices through 2010. Fertilizer prices recovered somewhat through 2012—driven by strong domestic demand for plant nutrients due to high crop prices, and limited domestic production capacity—before declining again. Since June 2017, fertilizer prices have trended upwards, along with crop prices received. Using an index that sets 2011 price levels to 100, farmers paid 66.7 for fertilizer and received 86.8 for their crops in 2018. In other words, farmers paid less for fertilizer and received less money for their crops in 2018 than they did in 2011. This chart appears in the USDA, Economic Research Service data product, Fertilizer Use and Price, updated October 2019.

Fertilizer use has fluctuated over time and varied by primary nutrient

Monday, July 16, 2018

Fertilizers provide nutrients (such as nitrogen, potash, and phosphate) essential in the production of crops. The total consumption of fertilizers grew rapidly throughout the 1960s and 1970s, as U.S. farmers devoted more acreage to crop varieties and hybrids (such as corn and wheat hybrids) that respond well to more intensive use of commercial fertilizer, especially nitrogen. In 1960, farmers used about 7.5 million short tons of fertilizer—and use peaked at nearly 23.7 million short tons in 1981. After 1981, total fertilizer use fluctuated from year to year but displayed no trend, as modest growth in nitrogen use was offset by modest declines in potash and phosphate. Annual fluctuations in fertilizer use since 1981 reflected several factors, including changes in fertilizer and crop prices and changes in the mix of crops (e.g., corn uses more fertilizer than soybeans or wheat). Higher fertilizer prices limited use to some extent, while higher crop prices encouraged greater fertilizer use. Finally, macroeconomic events can affect use: for example, fertilizer use dropped in 2009, concurrent with the Great Recession. This chart appears in the ERS data product Fertilizer Use and Price, updated February 2018.

U.S. corn and soybean farmers use a wide variety of glyphosate resistance management practices

Monday, May 2, 2016

For weed control, U.S. corn and soybean farmers rely on chemical herbicides which were applied to more than 95 percent of U.S. corn acres in 2010 and soybean acres in 2012. Over the course of the last two decades, U.S. corn and soybean farmers have increased their use of glyphosate (the active ingredient in herbicide products such as Roundup) and decreased their use of herbicide products containing other active ingredients. This shift contributed to the development of over 14 glyphosate-resistant weed species in U.S. crop production areas. Glyphosate resistance management practices (RMPs) include herbicide rotation, tillage, scouting for weeds, and other forms of weed control. In some cases, ERS found that usage rates for RMPs increased from 1996 to 2012. In other cases, RMP use dropped from 1996 to 2005/06 but increased as information about glyphosate-resistant weeds spread. For example, herbicides other than glyphosate were applied on 93 percent of planted soybean acres in 1996, 29 percent in 2006, and then 56 percent in 2012. This chart is found in the April 2016 Amber Waves finding, “U.S. Corn and Soybean Farmers Apply a Wide Variety of Glyphosate Resistance Management Practices.”

Major crop producers apply most nitrogen fertilizer in the spring and after planting

Friday, April 22, 2016

Efficient nitrogen fertilizer applications closely coincide with plant needs to reduce the likelihood that nutrients are lost to the environment before they can be taken up by the crop. Fall nitrogen application occurs during the fall months before the crop is planted, spring application occurs in the spring months (before planting for spring-planted crops), and after-planting application occurs while the crop is growing. The most appropriate timing of nitrogen applications depends on the nutrient needs of the crop being grown. In general, applying nitrogen in the fall for a spring-planted crop leaves nitrogen vulnerable to runoff over a long period of time. Applying nitrogen after the crop is already growing, when nitrogen needs are highest, generally minimizes vulnerability to runoff and leaching. Cotton farmers applied a majority of nitrogen—59 percent—after planting. Winter wheat producers applied 45 percent of nitrogen after planting. Corn farmers applied 22 percent of nitrogen after planting, while spring wheat farmers applied 5 percent after planting. Farmers applied a significant share of nitrogen in the fall for corn (20 percent) and spring wheat (21 percent). Fall nitrogen application is high for winter wheat because it is planted in the fall. This chart is found in the ERS report, Conservation-Practice Adoption Rates Vary Widely by Crop and Region, December 2015.

Corn and soybean returns are highest when growers and their neighbors manage glyphosate resistance

Thursday, July 30, 2015

Glyphosate, also known by the trade name Roundup, is the most widely used herbicide in the United States. Widespread and exclusive use of glyphosate, without other weed control strategies, can induce resistance to the herbicide by controlling susceptible weeds while allowing more resistant weeds to survive, propagate, and spread. Resistant weed seeds can disperse across fields—carried by animals, equipment, people, wind, and water. Consequently, controlling weed resistance depends on the joint actions of farmers and their neighbors. ERS analyses evaluated the long-term financial returns to growers who adopt weed control practices that aim to slow resistance to glyphosate, and compared those returns when neighboring farmers also manage to slow resistance. Projected net returns (annualized over 20 years) for growers who manage resistance generally exceed returns for growers who ignore resistance; they are even higher when neighbors also manage resistance. Projected net returns for growers with neighbors who also manage resistance range 18-20 percent higher than those of growers/neighbors who ignore resistance. This chart visualizes data found in the Amber Waves feature, “Managing Glyphosate Resistance May Sustain Its Efficacy and Increase Long-Term Returns to Corn and Soybean Production,” May 2015.

Managing glyphosate resistance is more cost effective than ignoring resistance

Wednesday, July 1, 2015

Glyphosate—known by many trade names, including Roundup—has been the most widely used herbicide in the United States since 2001. Crop producers can spray entire fields planted with genetically engineered, glyphosate-tolerant (GT) seed varieties, killing the weeds but not the crops. However, widespread use of glyphosate in isolation can select for glyphosate resistance by controlling susceptible weeds while allowing more resistant weeds to survive, which can then propagate and spread. ERS analyses show that weed control strategies (over 20 years) that manage glyphosate resistance differ from those that ignore glyphosate resistance by using glyphosate during fewer years, by often combining glyphosate with one or more alternative herbicides, and by not applying glyphosate during consecutive growing seasons. Initiating resistance management reduces returns compared to ignoring resistance in the first year, but increases them in subsequent years, as the value of crop yield gains outweighs increases in weed management cost. After two consecutive years of resistance management, the cumulative impact of growers’ returns from continuous corn cultivation, corn-soybean rotation, or continuous soybean cultivation exceeds that received when resistance is ignored. This chart is found in the Amber Waves feature, “Managing Glyphosate Resistance May Sustain Its Efficacy and Increase Long-Term Returns to Corn and Soybean Production,” May 2015.

Peanut farms are adopting precision agriculture technologies

Monday, May 18, 2015

Precision agriculture is a set of practices used to manage fields by assessing variations in nutrient needs, soil qualities, and pest pressures. In 2013-14, USDA conducted the latest Agricultural Resource Management Survey (ARMS) of U.S. peanut growers, interviewing farmers about production practices, resource use, and finances. Some technologies have been rapidly adopted; in particular, 42 percent of peanut farms used auto-steer or guidance systems in 2013, up from 5 percent in 2006. These systems can reduce stress for operators and limit the over-application of inputs on field edges. Yield monitors and yield maps, with essentially no usage in 2006, were used on 8 and 6 percent of farms, respectively, in 2013. With these technologies, monitors can identify within-field yield variations so farmers can adjust inputs and practices accordingly. The use of variable rate application, which has increased from 3 to 22 percent of farms, allows for the adjustment of fertilizer application over a field so that fertilizer can be applied where and when it is needed, thus reducing costs and being more environmentally friendly. This chart is found in the joint ERS/National Agricultural Statistics Service (NASS) report, 2013 ARMS—Peanut Industry Highlights, based on ARMS Farm Financial and Crop Production Practices data.

Glyphosate use is more widespread in soybean than in corn production

Monday, May 11, 2015

Recent data from the Agricultural Resource Management Survey (ARMS) suggest that glyphosate resistant weeds are more prevalent in soybean than in corn production. Glyphosate, known by many trade names (including Roundup), has been the most widely used pesticide in the United States since 2001. It effectively controls many weed species and generally costs less than the herbicides it replaced. Overall, glyphosate was used on a higher proportion of soybean than corn acres, and it was used alone (not in combination with other herbicides) on a substantially higher proportion of soybean acres. Using glyphosate alone contributes to resistance. Many soybean fields are managed with glyphosate alone, because the next best alternative herbicides are more expensive, less effective, and/or can cause significant injury to soybean plants. This chart is found in the Amber Waves feature, “Managing Glyphosate Resistance May Sustain Its Efficacy and Increase Long-Term Returns to Corn and Soybean Production,” May 2015.

Farm business reliance on energy-intensive inputs varies by commodity specialization

Monday, November 17, 2014

Agricultural businesses, particularly those specializing in crop production, are heavy users of energy and energy-intensive inputs. Ignoring the energy embodied in purchased machinery and services, energy-based purchases accounted for over 25 percent of farm operator expenses in 2012, on average. U.S. farm businesses are classified as industrial users of electricity; poultry production has the highest share of electricity expenses (5 percent) among all types of agricultural producers, while cotton and rice producers have the highest share of electricity expenses (3 percent) among crop producers, primarily for irrigation. While motor fuel accounts for about 6 percent of operator expenses, the farm sector is a heavy indirect consumer of natural gas. For example, up to 80 percent of the manufacturing cost of fertilizer can be for natural gas. Expenditures for fertilizer were over 11 percent of total operator expenses among farm businesses in 2012, with much higher expenditures for most crop farms. Natural gas as a source of electric power has been increasing in recent years, reaching 27 percent of electricity generation in 2013. As a result, the farm sector is particularly sensitive to fluctuations in the price of natural gas. This chart is found in the September 2014 Amber Waves data feature, "Agricultural Energy Use and the Proposed Clean Power Plan."

Environmental vulnerability varies across the Chesapeake Bay watershed

Thursday, August 21, 2014

The Chesapeake Bay is North America’s largest and most biologically diverse estuary, and its watershed covers 64,000 square miles across 6 States (Delaware, Maryland, New York, Pennsylvania, Virginia, and West Virginia) and the District of Columbia. In 2010, the U.S. Environmental Protection Agency established limits for nutrient and sediment emissions from point (e.g., wastewater treatment plants) and nonpoint (e.g., agricultural runoff) sources to the Chesapeake Bay in the form of a total maximum daily load (TMDL). Agriculture is the largest single source of nutrient emissions in the watershed. About 19 percent of all cropped acres in the Chesapeake Bay watershed are critically undertreated, meaning that the management practices in place are inadequate for preventing significant losses of pollutants from these fields. Critically undertreated acres are not distributed among the four sub-basins in the same way as cropland. For example, the Susquehanna watershed contains 69 percent of critically undertreated acres but only 41 percent of cropland. Targeting conservation resources to highly vulnerable regions could improve the economic performance of environmental policies and programs. This chart displays data found in the ERS report, An Economic Assessment of Policy Options To Reduce Agricultural Pollutants in the Chesapeake Bay, ERR-166, June 2014.