Author

German Mandrini

German is a Data Scientist at FBN, working at the intersection of data science, agronomy, and finance. He comes from a family farm, and agriculture has guided much of his career. He holds a B.S. in agronomy, an M.S in agricultural economics, and a Ph.D. in crop sciences. He has more than ten years of experience working for different companies in the farming sector, including grain trading, input selling, farm management, and corn breeding.


Article Tools And Technology

How Does Soil Productivity Determine Land Value?

Jan. 20, 2023

by German Mandrini

In agriculture, we know that not all soils are equal. While some soils achieve high productivity, others have limitations related to texture, depth and drainage that lower their yields. These diverse variations make it challenging to directly compare two soils.  What Is a Soil Productivity Index? Whether you’re considering buying new ground or considering the yield potential of your soils in your management decisions, soil productivity indices can help. Soil productivity indexes (PIs) are relative scales by which different soils can be compared and assessed. By taking into account many factors that determine yield potential, a soil PI provides a single number to rate soil quality. There are several publicly available soil PIs covering a range of geographies and some that focus on specific crops. Most PI systems give ratings to each soil data maintained by USDA-NRCS which can be used to map soil types within a field. Typically soil PI scores don’t change over time, unlike crop yields. They represent something more akin to average yield over time. In fact, average crop yields are typically used in constructing soil PIs. Taking a Closer Look at the Illinois Soil Productivity Index (ILPI) As an example, let’s take a closer look at the Illinois Soil Productivity Index (ILPI). The ILPI rates soils in Illinois for suitability for several major crops under best management practices. Like other soil PIs it summarizes multiple factors that affect the productivity of soils into one simple number. It’s a notable example of a soil PI because of its wide adoption in farmland real estate by farmers, appraisers, and tax assessors. In this article, we’ll answer the following:  How is the Illinois Soil Productivity Index (ILPI) calculated? What is a good Illinois Soil Productivity Index (ILPI) for farm land? How are crop yields related to the Illinois Soil Productivity Index (ILPI)? How are land values and cash rents related to the Illinois Soil Productivity Index (ILPI)? How Is the Illinois Soil Productivity Index (ILPI) Calculated?  The ILPI is the most widely used soil PI in Illinois, and it’s only available for soils in that state. Developed at the University of Illinois, it combines historical crop yield records and soil characteristics to produce a relative rating of seven key crops in the state.  To establish the ILPI, researchers first calculated the highest crop yields for each of the 800+ soils in the state using data from several sources, including university trial data, agronomic check plots on farmer fields, and yield monitor records from farmers and researchers. The top 16% crop yields for a given soil indicates yield potential with "optimum" management.  Then, one widely distributed soil with plenty of data was used as a benchmark: Miscatune silt loam. That soil was assigned an ILPI score of 147. Area-weighted crop yields for each other soil were then compared to the Miscatune silt loam benchmark yield. Soils with lower yields were given proportionally lower ILPI scores. [Additional details on the methodology can be found in the authoritative documentation - “ Crop productivity index for optimum management .”] Soil PIs, including ILPI, are unitless; they are relative and not absolute measures of productivity. The range of ILPI is 47-147, with higher numbers indicating more productive soils.  Why 47-147? It’s likely just an artifact of the ILPI’s history. The current-day ILPI rating adapted earlier work in the 1970s which may have used a scale based on actual corn yields to indicate productivity. What Is a Good Illinois Soil Productivity Index (ILPI) for Farm Land? In Illinois, a broad grouping of soils into categories can be made, using the following guide: Excellent (ILPI higher than 133) : Very productive soils. Good (ILPI 117 to 132) : Productive soils with some properties that limit yield to remain below the excellent ones. These limitations can include sub-optimal texture, water-holding capacity, cation exchange capacity, etc.  Average (ILPI 100 to 116) : Average to good soils. They may evidence some limitation to their yield, for example, low rooting depth, low permeability, or high clay in the subsoil.  Fair (ILPI below 100) : below average soils, usually with limitations like adverse topography, flooding, erosion, etc. How Are Crop Yields Related to the Illinois Soil Productivity Index (ILPI)? The figure below shows the association between ILPI and yield. The relationship is strong and linear and consistent across crops. The R2 for corn is 0.73, and for soybeans is 0.67, which means that the prediction is not exact and there is an error around it. In that matter, the median error for corn is +/-6.8 bu/ac, and for soybeans is +/-2.8 bu/ac. How Are Land Values and Cash Rents Related to the Illinois Soil Productivity Index?  Since ILPI was created to classify soils based on yield, it is also strongly associated with economic variables that depend on yield. The figure below illustrates two examples that also show a linear relationship.  In the case of cropland value, the R2 is 0.74, and the median error is +/-650 $/ac. For cropland rent, the R2 is 0.75, and the median error is +/-15 $ac. Knowing the ILPI brings transparency to the Illinois agricultural sector, allowing comparisons among different soils and fair price calculations adjusted by soil productivity. Interested in Learning More About Illinois Farmland Values?  The FBN® Illinois Land Values Report (Fall 2022) provides timely, data-driven insights about local land markets and valuations to empower you in future farmland transactions. Unlike any other land valuation publication, FBN ’s new report delivers deep insights into U.S. market conditions based on multiple data points, including soil quality, land productivity, historical ag yield data and real estate transaction records. Download the report for free using the form below.  Copyright © 2014 - 2022 Farmer's Business Network, Inc. All rights Reserved. The sprout logo, “Farmers Business Network” and “FBN” are trademarks, registered trademarks or service marks of Farmer's Business Network, Inc.


Jan. 17, 2023

by German Mandrini

Recent farmland transaction data helps growers understand the potential market value of land they're considering purchasing, refinancing, or selling.  FBN ® 's state- and regionally-specific land values reporting provides timely, actionable transaction data to growers on a regular basis using the more relevant land value metric of $/plantable acre rather than the more common $/gross acre. This value helps farmers better assess the potential ROI of a parcel of land they may be considering. Midwest U.S. Top Cropland Sales Click here to enlarge the map. Midwest U.S. Representative Cropland Sales Click here to enlarge the map. Midwest U.S. Recent Top Land Sales State County Sale Date Total Price Price per Acre Total Acreage Nebraska Wayne 10/31/22 $1,200,000 $19,666.32 61.018 ac Minnesota Dodge 10/17/22 $1,386,000 $25,010.91 55.415 ac Iowa Dubuque 11/4/22 $1,507,500 $29,317.76 51.419 ac Illinois Sangamon 11/15/22 $1,400,000 $24572.99 56.973 ac Midwest U.S. Representative Land Sales State County Sale Date Total Price Price per Acre Total Acreage Illinois La Salle 10/17/22 $795,000 $12,759.87 62.304 ac Iowa Tama 10/20/22 $884500 $11,146.00 79.355 ac Minnesota Martin 11/16/22 $300,000 $6,998.02 42.869 ac Nebraska Cuming 10/12/22 $1,354,350 $8500.87 159.318 ac FBN Farmland Value Data Collection and Analysis Process To create these analyses, the FBN data science team first collects and analyzes publicly-available data about farmland real estate transactions. Representative sales are selected from recent transactions with approximately average soil productivity for the region.  Next, the team enhances the basic transaction data with estimated plantable/tillable acreage to report sale value in terms of $/plantable acre. This $/plantable acre metric enables a fairer comparison of land values across farm properties which may have different amounts of non-plantable acreages like forest or wetland.  Excluded from these assessments are farmland sales in which buildings and/or urban development potential may contribute substantially to the sale price.  Ready to Finance a Land Purchase?  If, after considering recent land sale trends and other real estate transaction data, you’re interested in making a land purchase decision, it may be worth exploring your available financial options.  With an average of 15+ years each in ag finance experience, FBN Finance loan advisors are available to answer any questions you may have on land loans, the application process, or which financial option may be the best fit for your operation.  Whether you are actively looking for land financing or just interested in learning more about FBN Finance’s financial solutions, reach out to us today. Click here to start your application or complete the form below to have a member of our FBN Finance team guide you through the process.  Copyright © 2014 - 2023 Farmer's Business Network, Inc. All rights Reserved. The sprout logo, and “FBN” are trademarks, registered trademarks or service marks of Farmer's Business Network, Inc.  The farmland valuation has been prepared solely for informational purposes. The information contained herein has been prepared to assist individuals in making their own evaluation and does not purport to be all-inclusive or to contain all of the information a prospective land purchaser may desire. In all cases, interested parties should conduct their own investigation and analysis on this information. FBN makes no representation or warranty as to the accuracy or completeness of this information and shall not have any liability for any representations (expressed or implied) regarding information contained in, or for any omissions from, this information or any other written or oral communications transmitted to the recipient in the course of its evaluation. This Information includes certain statements and estimates provided by FBN with respect to the projected future performance. Such statements, estimates and projections reflect various assumptions by management concerning possible anticipated results, which assumptions may or may not be correct. No representations are made as to the accuracy of such statements, estimates or projections. Prospective land buyers will be expected to have conducted their own due diligence investigation regarding these and all other matters. All land purchases involve risk and may result in loss. Terms and conditions apply. Land financing offered by FBN Finance, LLC, provided in connection with Farmer Mac and our underwriting partners, and is available only where FBN Finance, LLC is licensed. To qualify, a borrower must be a member of Farmer’s Business Network, Inc., and meet the underwriting requirements of FBN Finance, LLC and its lending partners. All credit is subject to approval and underwriting. Interest rates and fees will vary depending on your individual situation. Not all applicants will qualify.


Jan. 17, 2023

by German Mandrini

Recent farmland transaction data helps growers understand the potential market value of land they're considering purchasing, refinancing, or selling.  FBN ® 's state- and regionally-specific land values reporting provides timely, actionable transaction data to growers on a regular basis using the more relevant land value metric of $/plantable acre rather than the more common $/gross acre. This value helps farmers better assess the potential ROI of a parcel of land they may be considering. Minnesota Top Cropland Sales Minnesota Representative Cropland Sales Minnesota Top Land Sales Dodge 10/17/22 $1,386,000 $25,010.91 55.41 ac Dodge 10/11/22 $1,386,000 $25,010.91 55.41 ac Renville 10/18/22 $959,588 $17,854.24 53.75 ac Watowan 10/07/22 $2,760,000 $17,269.29 159.82 ac Pipestone 11/22/22 $2,492,090 $15,438.70 161.42 ac Minnesota Representative Land Sales Martin 11/16/22 $300,000 $6,998.020 42.869 ac Chippewa 10/5/22 $279,600 $6,934.635 40.319 ac Blue Earth 10/4/22 $1,235,000 $8,030.790 153.783 ac Rice 10/18/22 $524,800 $6,874.919 76.335 ac Polk 10/25/22 $1,232,000 $7,671.879 160.586 ac FBN Farmland Value Data Collection and Analysis Process To create these analyses, the FBN data science team first collects and analyzes publicly-available data about farmland real estate transactions. Representative sales are selected from recent transactions with approximately average soil productivity for the region.  Next, the team enhances the basic transaction data with estimated plantable/tillable acreage to report sale value in terms of $/plantable acre. This $/plantable acre metric enables a fairer comparison of land values across farm properties which may have different amounts of non-plantable acreages like forest or wetland.  Excluded from these assessments are farmland sales in which buildings and/or urban development potential may contribute substantially to the sale price.  Ready to Finance a Land Purchase?  If, after considering recent land sale trends and other real estate transaction data, you’re interested in making a land purchase decision, it may be worth exploring your available financial options.  With an average of 15+ years each in ag finance experience, FBN Finance loan advisors are available to answer any questions you may have on land loans, the application process, or which financial option may be the best fit for your operation.  Whether you are actively looking for land financing or just interested in learning more about FBN Finance’s financial solutions, reach out to us today. Click here to start your application or complete the form below to have a member of our FBN Finance team guide you through the process.  Copyright © 2014 - 2023 Farmer's Business Network, Inc. All rights Reserved. The sprout logo, and “FBN” are trademarks, registered trademarks or service marks of Farmer's Business Network, Inc.  The farmland valuation has been prepared solely for informational purposes. The information contained herein has been prepared to assist individuals in making their own evaluation and does not purport to be all-inclusive or to contain all of the information a prospective land purchaser may desire. In all cases, interested parties should conduct their own investigation and analysis on this information. FBN makes no representation or warranty as to the accuracy or completeness of this information and shall not have any liability for any representations (expressed or implied) regarding information contained in, or for any omissions from, this information or any other written or oral communications transmitted to the recipient in the course of its evaluation. This Information includes certain statements and estimates provided by FBN with respect to the projected future performance. Such statements, estimates and projections reflect various assumptions by management concerning possible anticipated results, which assumptions may or may not be correct. No representations are made as to the accuracy of such statements, estimates or projections. Prospective land buyers will be expected to have conducted their own due diligence investigation regarding these and all other matters. All land purchases involve risk and may result in loss. Terms and conditions apply. Land financing offered by FBN Finance, LLC, provided in connection with Farmer Mac and our underwriting partners, and is available only where FBN Finance, LLC is licensed. To qualify, a borrower must be a member of Farmer’s Business Network, Inc., and meet the underwriting requirements of FBN Finance, LLC and its lending partners. All credit is subject to approval and underwriting. Interest rates and fees will vary depending on your individual situation. Not all applicants will qualify.


Jan. 17, 2023

by German Mandrini

Recent farmland transaction data helps growers understand the potential market value of land they're considering purchasing, refinancing, or selling.  FBN ® 's state- and regionally-specific land values reporting provides timely, actionable transaction data to growers on a regular basis using the more relevant land value metric of $/plantable acre rather than the more common $/gross acre. This value helps farmers better assess the potential ROI of a parcel of land they may be considering. Indiana Top Land Sales Adams 8/31/22 $2,615,000 $28,356.10 92.219 ac Boone 8/25/22 $2,561,580 $25,096.01 102.071 ac Hancock 7/20/22 $1,092,033 $21,433.55 50.949 ac Boone 8/22/22 $1,580,000 $19,720.10 80.121 ac Boone 9/13/22 $998,460 $18,239.67 54.74 ac Indiana Representative Land Sales Miami 8/23/22 $498,996 $10,960.459 45.526 ac Adams 7/13/22 $700,000 $10,954.874 63.898 ac Boone 8/3/22 $1,869,537 $12,290.023 152.118 ac Boone 7/26/22 $390,000 $9,551.562 40.831 ac Adams 9/9/22 $947,050 $12,982.433 72.948 ac FBN Farmland Value Data Collection and Analysis Process To create these analyses, the FBN data science team first collects and analyzes publicly-available data about farmland real estate transactions. Representative sales are selected from recent transactions with approximately average soil productivity for the region.  Next, the team enhances the basic transaction data with estimated plantable/tillable acreage to report sale value in terms of $/plantable acre. This $/plantable acre metric enables a fairer comparison of land values across farm properties which may have different amounts of non-plantable acreages like forest or wetland.  Excluded from these assessments are farmland sales in which buildings and/or urban development potential may contribute substantially to the sale price.  Ready to Finance a Land Purchase?  If, after considering recent land sale trends and other real estate transaction data, you’re interested in making a land purchase decision, it may be worth exploring your available financial options.  With an average of 15+ years each in ag finance experience, FBN Finance loan advisors are available to answer any questions you may have on land loans, the application process, or which financial option may be the best fit for your operation.  Whether you are actively looking for land financing or just interested in learning more about FBN Finance’s financial solutions, reach out to us today. Click here to start your application or complete the form below to have a member of our FBN Finance team guide you through the process.  Copyright © 2014 - 2023 Farmer's Business Network, Inc. All rights Reserved. The sprout logo, and “FBN” are trademarks, registered trademarks or service marks of Farmer's Business Network, Inc.  The farmland valuation has been prepared solely for informational purposes. The information contained herein has been prepared to assist individuals in making their own evaluation and does not purport to be all-inclusive or to contain all of the information a prospective land purchaser may desire. In all cases, interested parties should conduct their own investigation and analysis on this information. FBN makes no representation or warranty as to the accuracy or completeness of this information and shall not have any liability for any representations (expressed or implied) regarding information contained in, or for any omissions from, this information or any other written or oral communications transmitted to the recipient in the course of its evaluation. This Information includes certain statements and estimates provided by FBN with respect to the projected future performance. Such statements, estimates and projections reflect various assumptions by management concerning possible anticipated results, which assumptions may or may not be correct. No representations are made as to the accuracy of such statements, estimates or projections. Prospective land buyers will be expected to have conducted their own due diligence investigation regarding these and all other matters. All land purchases involve risk and may result in loss. Terms and conditions apply. Land financing offered by FBN Finance, LLC, provided in connection with Farmer Mac and our underwriting partners, and is available only where FBN Finance, LLC is licensed. To qualify, a borrower must be a member of Farmer’s Business Network, Inc., and meet the underwriting requirements of FBN Finance, LLC and its lending partners. All credit is subject to approval and underwriting. Interest rates and fees will vary depending on your individual situation. Not all applicants will qualify.


Jan. 12, 2023

by German Mandrini

Farm land values have been increasing over the last three years, with a record increase in values in 2021. Most farm land sales occur after harvest and going into the winter.  For the 2022 sales season, we do not see any significant effect of higher interest rates on new sales, and land values are still strong . This is because farmers have had a better year than expected, with high prices for commodity crops (corn 10.2% and soybeans +15.3% between December 2021 and December 2022) and sound balance sheets. These two factors increase demand for farmland. In addition, the real mortgage rate (mortgage rate minus inflation) is one of the best predictors of farm land value change. Currently, the real mortgage rate is still negative but approaching zero (6.33% mortgage rate, and 7.1% inflation rate in November 2022 ), which indicates positive increases in farm land values of +8.8%.  [READ: December Fed Meeting Recap: Still A Good Time to Secure Short Term Financing] We see stability so far, but that could change. The future ahead depends on the interaction of two main factors:  Interest Rates: If the Fed successfully controls inflation and interest rates peak next year and start to decrease, that would be a positive sign for farm land values. If the Fed needs to push more with their tightening policies and increase interest rates for an extended period, that would eventually reduce purchase power from farmers, leading to lower farm land values.  Farm Profits: Fertilizer, chemical, and energy costs are expected to be higher next year . If commodity prices increase more next year, compensating for those higher costs, demand for farm land will likely stay strong. If commodity prices do not increase to compensate for those higher costs, farm profits will be lower, reducing the interest in farm land purchases and probably reducing farm land values.  The balance between those two determinants gives the following four scenarios, with the respective outcome in farm land values: Scenario Fed successful, higher commodity prices Fed successful,  lower commodity prices Fed keeps increasing rates,  higher commodity prices Fed keeps increasing rates,  lower commodity prices Cost of Capital Lower Lower Higher Higher Farm profits Strong Weak Strong Weak Farm land Values Higher Neutral Neutral Lower The Time Might Be Right to Apply for a Land Loan Even though rates are high, the market is predicting they will rise even higher. Now may still be a good time to purchase that ag land you have your eyes on. The FBN Finance team is ready to support you as you finance your operational expansion. Click here to learn more about land loans and other financial services from FBN Finance.   Copyright © 2014 - 2023 Farmer's Business Network, Inc. All rights Reserved. The sprout logo, “Farmers Business Network” and “FBN” are trademarks, registered trademarks or service marks of Farmer's Business Network, Inc. The farm land valuation has been prepared solely for informational purposes. The information contained herein has been prepared to assist individuals in making their own evaluation and does not purport to be all-inclusive or to contain all of the information a prospective land purchaser may desire. In all cases, interested parties should conduct their own investigation and analysis on this information. FBN makes no representation or warranty as to the accuracy or completeness of this information and shall not have any liability for any representations (expressed or implied) regarding information contained in, or for any omissions from, this information or any other written or oral communications transmitted to the recipient in the course of its evaluation. This Information includes certain statements and estimates provided by FBN with respect to the projected future performance. Such statements, estimates and projections reflect various assumptions by management concerning possible anticipated results, which assumptions may or may not be correct. No representations are made as to the accuracy of such statements, estimates or projections. Prospective land buyers will be expected to have conducted their own due diligence investigation regarding these and all other matters. All land purchases involve risk and may result in loss. Terms and conditions apply. Land financing offered by FBN Finance, LLC, provided in connection with Farmer Mac and our underwriting partners, and is available only where FBN Finance, LLC is licensed. To qualify, a borrower must be a member of Farmer’s Business Network, Inc., and meet the underwriting requirements of FBN Finance, LLC and its lending partners. All credit is subject to approval and underwriting. Interest rates and fees will vary depending on your individual situation. Not all applicants will qualify.


Jan. 06, 2023

by German Mandrini

Historically-high inflation rates have pushed the Fed to increase interest rates . Such increases affect farmers by increasing the cost of capital for loans used for buying inputs, covering operational costs, or purchasing land.  This happened at the same time that farm input costs were also increasing due to the Russian invasion of Ukraine, major producers of oil and fertilizer. Recent inflation figures show that the Fed's aggressive policies may be taking effect, and the future hikes in interest rates could be smaller than the hikes seen since March 2022.  How Does the Fed Control Interest Rates? The federal funds rate is the interest rate at which commercial banks borrow and lend their excess reserves to each other overnight. The Federal Open Market Committee meets eight times annually to set the target for this rate, part of its monetary policy. The Fed bases this decision looking at two indicators: unemployment and inflation. A low interest rate promotes economic growth, which reduces unemployment. On the other hand, a low interest rate increases the flow of money into the economy, increasing inflation. That means that the Fed needs to find a balance, setting a rate low to keep maximum employment but not too low to raise inflation above their 2% target. The federal funds rate determines many other interest rates in the economy, like mortgage and bond rates, directly or indirectly.  The Consumer Price Index (CPI) is one of the metrics used by the Fed to make decisions about interest rates. On December 13th, the Bureau of Labor Statistics released its estimates for November CPI. The report stated that CPI increased 0.1% in November and 7.1% from a year ago, while core inflation (without energy and food) was 6%. These numbers indicate a reduction in annual inflation for the second time, from the releases for September and October when annual inflation was 8.2%, and 7.7%, potentially indicating a downward trajectory. The reduction occurred across different categories – food, energy, and core inflation (all items without food and energy) -- which could signify the decline is happening all over the economy.  What Does Inflation Reduction Mean for Prices? It is essential to recognize that the inflation reduction does not mean prices are decreasing. Prices are still increasing, but at a slower pace than before. These inflation numbers were better than what the market expected and were interpreted as an indication that while inflation is still high, it could start to cool.  In the same week, on December 14th, the U.S. Federal Reserve announced the rise of the federal funds rate by 50 basis points, increasing their benchmark interest rate from 4% to 4.5%. This is the sixth meeting this year they have raised rates in an attempt to combat swelling inflation, but it is a step down from the 75 basis points seen over the previous four meetings. The Fed also continued with the quantitative tightening program that it has been doing since mid-summer, which means they continued to reduce their balance sheet to a cap of $60 billion per month for their U.S. treasury holdings and to a cap of $35 billion per month for mortgage-backed securities. Quantitative tightening also contributes to driving interest rates upwards.  Among their most important announcements is that they anticipated that increases in rates will continue next year, as there is a need to return inflation down to the 2% target. This was taken as a negative sign by the markets, who were expecting signs that the Fed would slow down their interest rate increases. That generated a market response, with most stock indexes reducing their values following the report (S&P 500 -2.05%, Nasdaq -2.41%).  In 2022 the federal funds overnight rate went from 0.25% at the beginning of the year to 4.5% after the last meeting. This is the most rapid increase in interest rates since the early 1980s (graph). The 30-year mortgage rate is now at 6.33%, a bit below the peak of 7% it reached in November, which was a record-high interest rate since 2002.  Has Inflation Peaked?  It is too early to tell. Although the last CPI report was a positive sign, inflation is a complex phenomenon and depends on multiple prices that are volatile. Many more downward reads are needed to detect a trend. Additionally, the 7.1% inflation rate is still well above the Fed's 2% target, which indicates that it will take time for the Fed's actions to bring inflation down to the target successfully. One way we can get a consensus for future expectations is to look at the Fed Funds Futures. These are financial futures contracts traded on the Chicago Mercantile Exchange (CME) , reflecting market expectations about future changes in the Fed funds rate. After the announcement, the Fed funds futures market shifted its expectations, delaying the expected rate peak and how long it will last. Currently, the market anticipates that the Fed rate will peak at 5% in June 2023 and that the Fed will slowly start reducing it in the following months. Copyright © 2014 - 2023 Farmer's Business Network, Inc. All rights Reserved. The sprout logo, and “FBN” are trademarks, registered trademarks or service marks of Farmer's Business Network, Inc. The material provided is for information purposes only. It is not intended to be a substitute for specific legal or professional advice. Neither Farmer’s Business Network nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in the material and any liability therefore is expressly disclaimed. 


Mar. 09, 2022

by German Mandrini

The Economic Optimum N Rate (EONR) is the N rate that can help maximize profit potential for a given field. Many methods promise farmers that they would predict the EONR of their fields with higher accuracy and, consequently, increase their profits. Some are simple, require few inputs, and provide recommendations that do not change for particular years or fields and instead are designed to work well on average across a wide range of growing conditions. Among these is the Maximum Return to Nitrogen tool (MRTN), the current recommendation system promoted in the US Midwest, based on decades of real-world trials conducted by several universities in the area. Some other methods are complex and usually require specific inputs at the field level or sometimes for different soils inside the field. Every year, they provide a particular N recommendation, varying according to the soil and crop conditions. A fundamental assumption of these recommendation methods is that an improved prediction accuracy – will save N inputs when possible, improving economic and environmental outcomes. Are those complex tools better? So far, studies have shown that complex methodologies struggle to increase farmers' profits, which explains why adoption remains low. A recent study covering 49 sites and three years of trials help explain the reasons. In that study, they compared many N recommendations tools available nowadays, including tools that require site-specific soil information  (e.g., PPNT, PSNT) or complex simulations programs (e.g., Maize-N) and simpler tools that provide a stable recommendation for a broad region (e.g., MRTN). Among 31 tools, the MRTN was the tool that best maximized profitability. Additionally, they also measured the environmental outcome of the tools, shown by how much N is lost from the soil-crop system, and complex tools did not provide consistently better results in that aspect either.  Another study compared MRTN with a complex tool that used machine learning, soil sampling, weather, and crop information to improve the accuracy of the predictions. They found that the complex tool slightly increased the accuracy of the recommendation, but that did not translate into higher profits. The reason is that predicting EONR is challenging since it depends on the balance between what the crop needs and what the soil will provide, and both are unknown at the time of making a decision. The EONR is highly variable across fields, and it changes every year even in the same field. In that context, complex methods can not achieve an accuracy high enough to meet their promise of increasing profits and many times recommend N rates that are far from what the real EONR need was. Simpler methods, with static N recommendations that work well in most situations, escape that problem, and never recommend N rates far from the target, as it happens with the complex tools. From an environmental point of view, they concluded MRTN used at the low end of their recommended N range achieves similar N losses than the complex tool. So, how does MRTN work? Experts from the universities' extension service divided the area into regions with similar soil and crop growing conditions. They conducted trials with several N rates in those regions for multiple years. In each of those trials, we can obtain what is known as the profits response curve to N, which shows what the profits for increasing N rates are. Then they averaged all the profits curves for multiple trials and finally selected the N rate that maximizes the return to N -that's where the name comes from. Every year, new trials are conducted, and the MRTN calculation is updated to keep it current with new hybrids and any change in weather patterns that affect the response.  The MRTN is an improvement over old methodologies known as yield-based approaches -i.e., the 1.2 lb. N per bushel of expected yield. Those methods were developed in the 1970s and suggested that higher yield potentials require higher N rates. Over time, researchers understood that in the US Midwest, the EONR was not very much related to yield at the EONR rate, meaning that high-yielding corn needs more N but not necessarily more Nitrogen fertilizer. Part of the reason is that conditions that lead to higher yields, like higher rain and temperature, also lead to higher mineralization which increases the N provided by the soil and reduces the need for fertilizer. Seeing this lack of relationship, researchers decided to move in a different direction, and that's how they created the MRTN, which is based on the N rate that maximized profits in a region instead of focusing on yield.  In summary, the MRTN is a methodology based on real data that has proved to maximize profits, even when compared with tools that use advanced technology to provide site-specific recommendations. The MRTN is also an improvement over yield-based methods that tend to recommend higher N rates than actually needed, reducing profits for farmers. *Mineralization: The release of nitrogen from soil organic matter in a form that plants can use. Copyright © 2014 - 2022 Farmer's Business Network, Inc. All rights Reserved. The sprout logo, Farmers First flag logo, "Farmers Business Network," "FBN," and "Farmers First" are registered trademarks of Farmer's Business Network, Inc. or its affiliates. All other trademarks are the property of their respective owners. Terms and conditions apply.