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Why a Grower Should not Stabilize their Urea or UAN

About six weeks ago I put forth a long complex paper that broadly addressed several
questions.
As a follow up, to that paper I would like to simply ask one question and put forth a
potential answer within the concept of Occam’s Razor. Occam’s Razor is a problem-solving
principal that incorporates the theory that the simplest answer to a question, is likely the best
answer to the question.
This paper answers the question of why a grower should not use stabilized nitrogen. That
answer addresses a question, inside a complex puzzle, wrapped in an enigma, and
surrounded by an illusion. Hopefully this paper will help answer that question or at least
shed some light on it and you will ponder the questions it brings out.

At Eco Agro our goal and our mantra is, “not to change paradigms, but to create paradigms”. Our very basic, simple, core belief, … our “lighthouse”, is to create technologies that bring significant value in three areas. The first is Economic value, the second is Agronomic value, and the third is Environmental value. That is EAR.

As a technology company with proof of concept in the form of sales, and a go to market strategy based on nutrient efficiency and not nutrient production, Eco Agro is in a unique position. Because of this Eco Agro has a unique opportunity to evaluate the question raised above without any conflicting interests.

 

Nitrogen stabilization now has a track record of proven performance. The marketplace is beginning to understand the value of having BOTH above ground and below ground protection. After all, if you save nitrogen from volatilization what good does it do you if you lose it to denitrification and leaching? Or, if you address leaching, you may only be saving
the nitrogen you did not already lose to volatilization.

The premise of the question above is we know why growers should stabilize their nitrogen. But only 15-20 percent, actually do. So, at Eco Agro we choose to evaluate the opposite
question outside the box. What is the case for a grower to NOT use stabilized nitrogen or stabilize their nitrogen?

By knowing this answer, we can address the issue with specificity and drive mass adoption. If only we knew why mass adoption has not happened? To understand this, we need to understand a lot of moving parts.

The grower’s ultimate objectives being a primary input into adoption. We could do a statistical analysis or engage in primary data collection, but often the answers are found in
simplicity. Remember the story of the truck we have all heard about that was stuck under an overpass until a young child suggested letting some air out of the tires to ‘set it free’?
Possibly the answer to mass adoption is setting Enhanced Efficiency technologies free … by letting some of the air out of the tires …

Ultimately, I would submit a grower’s objectives are to be profitable, while mitigating risk and creating sustainability. A grower is only going to be more profitable by either reducing
costs or increasing margin through increased yield or increased prices. A grower individually has little control over crop price, so increasing yield and lowering costs become
the controllable objectives.

There are many factors that go into this evaluation. Nutrient management, Risk mitigation,
risk loss mitigation, precision management, crop rotations, cover crops, etc, etc… But our
question is direct, simple and a major part of the big picture. Once again, our question is,
why should a grower not adopt technologies that have a record of increasing yield and by
proxy profitability?

A grower’s specific baseline yields and profitability are generally defined, so what are the
positives and negatives of this new concept of efficient nitrogen versus other more
traditional practices?

Let’s look at each area that EAR looks at when evaluating projects and technologies. Let’s
look at Economics, Agronomics, and Environment. But, let’s look in reverse order just to
change things up.

Is it Environmentally Responsible to use products such as Eco’s Neon line of products or
ANY product either upstream or downstream that provides BOTH above ground and below
ground protection?

Certainly, scientifically there is a history of the Active Ingredients NBPT, DCD, and
Nitrapyrine being very effective in the area of nitrogen efficiency. This means that less
nitrogen is lost to our Air, Soils, waterways, and the environment in general, and more is
consumed by the plant.

But let’s look at the Environmental part of the equation a little bit deeper. If efficiency
products help nitrogen to be “saved” and ultimately made available to the plant at a rate of
35-50% as some have suggested, then some other assumptions can also be made. Does it not
make sense that emissions in production, the power to produce, the water used to produce
said nitrogen, capital expenses, maintenance, and operational efficiency would also be
reduced by 35-50%?

So not only is 35% -50% more nitrogen available to the plant but 35-50% less is in the air we breathe, water we drink, and power bills producers pay.

However, the Environmental part of the question must address nitrogen efficiency in totality, not just partially when evaluating Urea or UAN. BOTH above ground and below ground protection is needed when evaluating Environmental efficiency as a grower. Neither Volatilization, denitrification, nor leaching are singularly acceptable Environmentally, given
otherwise equal Economics and Agronomics.

 

 

Let’s look one more time at the simple question being asked of why a grower should not use efficiency nitrogen from an Environmental Evaluation? I would submit the answer to the Environmental Portion of the question is that there is no good Environmental Reason for a
grower to not use Stabilized Nitrogen.

Now let’s look at the same question from an Agronomic perspective. While there can be market debate over diminishing returns, optimum rates, and competitors can present their own beliefs at what point below ground protection in the form of DCD is optimized, the fact is that NBPT and DCD are generally very proven chemical performers from an Agronomic perspective.

Single component Polymeric compounds are less proven and have been questioned from an Agronomic standpoint by some but are useful chemically for the right reasons and in the right combinations with DCD and NBPT. There are some new compositions that have been patented and are in the process of being EPA registered for use as nitrogen stabilizers that are polymeric or adduct versions or modifications of these proven chemistries.

 

But generally speaking chemistries that are time tested PROVEN Agronomic performers
are the same baseline chemistries. Those are DCD, Nitrapyrine and NBPT or versions thereof. These have proven to be have very good results individually, as well as in combination for a prolonged history.

Significant advancements in the efficient of delivery and performance optimization of these
compounds has occurred. Proudly I say much of this has been driven by Presidion. We have taken the “next Step”, but the biggest leap is yet to come.

The awareness of the need for combination technologies and protection from above AND
below ground loss is becoming more known. From a purely Agronomic Standpoint, and excluding Economics and Environmental Responsibility, the protection above ground and below ground is far superior Agronomics. This applies whether done as individual treatments, or in combination as pretreated into Urea, or applied to urea locally. Treating for all three modes of loss is far superior alternative than treating for only one mode of loss be it either above ground or below ground, based on pure Agronomics.

Eco Agro with our NEON family of products, has been able to combine proven NBPT and DCD technologies that provide these above ground protections and below ground protections. This protection has also traditionally been available in the pretreated form of urea or UAN with the proven chemistries of DCD and NBPT included in the urea
production. As stated earlier, there are also other polymeric protection products being marketed that are not the proven DCD/NBPT/Nitrapyrine being sold as “above ground/below ground” products.

I would submit, that regardless of the combinations or delivery, a grower has, independent of Economics or Environmental reasoning, NO Agronomic reason to not use Efficiency nitrogen.

So, to recap we have concluded that a grower has no reason to NOT use nitrogen efficiency products from an AGRONOMIC or ENVIRONMENTAL perspective.

We promised a potential answer as to why a grower should NOT stabilize their nitrogen….. so what could that reason be?

There is only one remaining side of the Nitrogen Efficiency Triangle that was introduced in my earlier paper. That is Economics. So … let’s explore the Economics.

 

Is there an economic reason why a grower should NOT use a nitrogen stabilizer? Again, after all a grower has a no Agronomic or Environmental reason to not use Efficiency products.

It is understood there are two manners of treating Urea and UAN and protecting both above and Below ground, Pretreating at Urea production or treating “locally”.

The market has clearly told us that Pretreated Urea is going to cost a grower around (give or
take) $140.00 to $160 to protect 35-50% of your urea. For simplicity, based on 35-50% a
grower pays $140 to $160 to save $91-$133. While this sort of return may be acceptable in
some instances, Eco Agro already creates the paradigm of savings greater than this level,
through superior delivery in our Neon product line ONTO Urea, and performance equaling
or surpassing Pretreated urea in yield studies.

But is there another paradigm to create?

A grower is going to increase their profitability in some simple ways: increased production
(either increase yield or decrease loss), lower input costs, or higher prices. A grower has
limited effect on overall worldwide crop prices. Loss mitigation is a mature well-known
platform for another discussion. However, Production and input costs are within an
individual grower’s control and ability to affect and Risk Management is also always on a
grower’s mind.

We have seen proven Agronomic Performance leading to increased yield for a prolonged
period of time based on the use of Efficiency Fertilizers. But the input costs, (which can also
be referred to as “Risk factor”) of $140-$160 per ton is a barrier to adoption.

What if a grower could create an entirely new paradigm where instead of return on investment being 2-3X that the return on investment could become 5 to 10X? What if the economic risk factor to adopt and make this change was lowered from $140 – $160 per ton to closer to single digits? What if there was a choice to do this by purchasing pretreated urea or by purchasing “down Stream” treatment options at these low risk inputs? What if a urea producer or grower could do this TODAY with the time tested proven active ingredients and no EPA or FIFRA barriers?

The Eco Agro “Lighthouse” is focused on mass adoption through efficacy, efficiency, and technology. When evaluating price models Eco Agro evaluates where the price “should be” with our goals in mind, …. and not where it “is” because of anyone else’s organizational goals. Some companies price models are what they are because they have competing business units, different price modeling, and or different corporate goals. We focus on EFFICENCY only, with a goal of mass adoption…. not balancing or lessening the financial impact of segmented profitability of potentially cannibalized business units.

Price models based on competing business units, negatively incentivize market adoption of Efficiencies and technological advancements. For example, if Urea is $275 per ton and efficient urea would save 35-50%, then a Urea producer would lose $96.00 (35%) to $137.00 (50%) of Sales revenue in the form of Urea sales, by selling Efficient Urea.

More importantly Urea producers would potentially lose 35-50% of Urea Production and Revenue. The math tells us if there is 9 million tons of sold in the USA, then 3-4.5 million tons less Urea would impact our environment (and economics) with 100% adoption.

However Economically, price elasticity and neutralizing the cannibalization models, tells us
the “proper” price point to recapture the lost revenue for a situation such as exists today is around $140.00 per ton, give or take, which the market tells us, it is.

Now, we have arrived at the answer to the single question asked initially. Why would a
grower NOT treat their Urea? A grower should NOT use efficiency urea if there is risk that
the cost of treatment will negatively affect his business from an ECONOMIC standpoint.
Simply put, the risk factor of Return on Investment is too high given the cost of treatment
for the untreated acre. The price point may limit adoption.

But can this change? Can technology create a paradigm where the Price Point and therefor
the Risk is lower and provide the same yield benefits and higher return on investment? Can
this be done while also providing acceptable ROI on the technology.

Massive change can only come with technology advancement that creates a new paradigm.
Incrementally changing a paradigm will not create the paradigm to equal mass adoption.

What if it were possible to chemically enhance the effectiveness of NBPT and DCD for both
Urea Producers and “Down Stream” treatments at a cost paradigm never even contemplated
until now? What if technology could provide that option?

Economics, Agronomics and Responsibility. We are fairly certain, if not darn convinced, there is not an Agronomic or Environmental reason to not use Stabilized Urea either in Urea Production or on urea downstream. What if technology took the Economic leg (Risk) of the Efficiency Triangle to levels that virtually eliminated the Economic Risk to growers who do not use Efficient Urea. What if these technologies made Growers not just more profitable, but Significantly more profitable by BOTH increasing yield and lowering input costs to do it?

Would this drive Mass adoption?

Questions? Contact the Presidion Ag. Team Today