Choosing Nitrogen Application Rate Recommendation Given Florida’s Regulatory Water Policy

Abstract

State and federal policies in the United States focus on agricultural best management practices (BMP)—such as improving nutrient management—to address water quality issues. BMP development is a challenging process as a new BMP may also affect farm profitability. This article explores the economic feasibility of nitrogen (N) management programs, including nitrogen application rates (N rates), given alternative scenarios for current nitrogen use and producer risk perceptions of carrot production in Florida. In this study, eight alternative N rates are ranked to find the economically optimal BMP. Carrot profitability is determined based on carrot yields per hectare, input costs, and carrot sale prices, using data from a 2-year carrot production experiment. The analysis applied stochastic simulation to account for the uncertain factors by using Simetar Add-In for Excel. We found that 224 kg·ha−1 N fertilizer rate is the most preferred by the producers among the eight rates considered. According to Florida’s agricultural water policy, BMP recommendations should balance water quality improvements and agricultural productivity. We consider the potential reduction of nitrogen fertilizer rate BMP from 224 kg·ha−1 to 168 kg·ha−1 and show that the effect of such reduction depends on producers’ current fertilizer application rates and their risk aversion levels. For example, reducing the N fertilizer rate from 336 kg·ha−1 to 168 kg·ha−1 decreases mean net returns by only 2% ($49/ha). In contrast, reducing the nitrogen fertilizer rate from 224 kg·ha−1 to 168 kg·ha−1 reduces the mean net returns by $151/ha, with an almost 10% reduction in the certainty equivalent of the net returns (for extremely risk-averse producers). Overall, if most producers in the region are very or extremely risk-averse, and if most of them operate close to the optimal level of fertilizer use, then setting the more restrictive BMP of 168 kg·ha−1 N can be perceived as undermining their economic profitability and require significant cost-share incentives to ensure targeted 100% adoption of BMP recommendations.