A systems approach to the economic evaluation of nitrogen fertiliser use in sheep farming enterprises

An optimisation model is developed to evaluate the economic use of nitrogen fertiliser in sheep farming enterprises which depend on seasonal production of grass-legume pastures as the main source of feed. Nitrogen fertiliser has not been widely used in grass-legume based pastoral systems. These farming systems have instead relied on nitrogen fixation by legume-rhizobia symbiosis as the main source of nitrogen input. The main component of the model is a multi-seasonal minimum cost network model, which is used iteratively, to determine the stocking rate, stock performance, seasonal pasture production using nitrogen fertiliser and inter-seasonal feed transfer policies in order to, maximise net farm income. The Cornforth-Sinclair phosphate model and the U.K. Agricultural Research Council's model for estimating feed requirements of ruminant livestock have been used as important components of the optimisation model. The optimisation model is used extensively to determine the effects of various farm management and economic policies on the optimum use of nitrogen fertiliser on 24 representative sheep farming enterprises in New Zealand. These representative farms have been defined in the study using information from the New Zealand Meat and Wool Board's Economic Service, the National Water and Soil Conservation Organisation, and agricultural experimental research stations. The results of the study indicated that nitrogen fertiliser could be used to economically increase stocking rate and stock performance of sheep farming enterprises in some regions. Regions which are characterised by pasture yields which are low in early spring, high in summer and depressed in winter would benefit most from the use of nitrogen fertiliser. Such regions are normally located in the South Island of New Zealand. The aggregate demand for nitrogen fertiliser was estimated on the basis of the level of adoption of nitrogen fertiliser use technology. The aggregate demand was found to be responsive to the price of nitrogen fertiliser when product prices were higher than the base 1981/82 product prices used in the study.