Overview of Fertilizer Tonnage Fee Based Research Programs Bruce Montgomery MN Department of Agriculture

1. Overview of Fertilizer Tonnage Fee Based Research Programs Bruce Montgomery MN Department of Agriculture

2. Current Midwest Tonnage & Research Fertilizer Fees Note that these figures includes the $0.15 increase to MDA starting 7/05

3. Examples of States with Research and/or Educational Fertilizer Check-Off Programs • Wisconsin Established in 1978 • Iowa Established in 1987 • Illinois Established in 1990 • California Established in 1990 • Oklahoma Established in 1989 • Oregon • Missouri Established in 1999 • Kansas Established in 1985

4. Financial Impact on Minnesota Farms?

5. Financial Impact of MN’s Current Fertilizer FeesSimplified Analysis on an “Average” Minnesota Farm

6. Cost per Acre of Cropland Including Basic Fees, Research and “Clean-Up” Type Programs

7. Helpful Rules of Thumb Each Increase of 10 cents per ton on Minnesota’s fertilizer sales: • Generates approx. $220,000 of revenue; • Increases the cost per farm by $2.66; • Increases operating costs by 1 cent per cropland acre.

8. Economic Value of Soil Fertility Research? • The “average” Minnesota farm has 281 acres of cropland including a 100 acres of corn. Assuming the farmer could benefit from a 20 lb/A reduction of nitrogen fertilizer by using UM Recommendations: • 100 Acres*20 lb/A*$0.30/lb=$600 Savings; • Assuming a NEW $0.30 RESEARCH &/or OUTREACH was established, the annual farm contribution is $8.43 per year

9. Potential Payback • With the savings from one year of fertilizer savings ($600), in this simple example the farm just covered the costs of the research for the next 71-75 years!

10. Considerations in Designing a Fertilizer Check-Off Program Will the program fund research, outreach or both? Who can compete for the funds? Land Grants? Agencies? Commodity Groups? The Research Review Process? Peer Review? The Board …Who and How? Governing Rules?

11. Research and/or Outreach Fees Associated with Fertilizer Sales

12. Research and/or Outreach Fees Associated with Fertilizer Sales Iowa charges $0.92 per ton on Nitrogen Sales

13. Research and/or Outreach Fees Associated with Fertilizer Sales California charges $0.001 mills on overall Sales

14. Research and/or Outreach Fees Associated with Fertilizer Sales Kansas charges $0.04/Ton for Kansas State U Research and $1.40 for the State Water Plan

15. Annual Revenue Generated for Research and/or Outreach Most programs are generating between $200,000 to $400,000 $1,000,000

16. General Observations Regarding “Fee Structure” • Department of Agriculture serves as the fiscal agent in all existing programs with the exception of Kansas; • Fees are mandatory, non-refundable; • The Land Grant Universities are usually the recipients; Illinois is the most notable exception; • WI and Ill allow administration fees; others not clear at this time.

17. General Observations Regarding “Intended Purpose” • In this category, the programs are relatively consistent. The general mission is to improve fertilizer efficiencies, research environmental concerns, dissemination of research results, and improve application methods, storage and handling techniques. • Manure and Lime research????

18. General Observations Regarding “Research Board Specifics” • Most have a 7-10 membership board represented by the fertilizer industry, farmers, farm organizations, and a possible member from either the University or State Agency; • Board Recommendations typically need approval from either the Governors Office, Commissioner of AG and/or Dean of Agricultural College.

19. General Observations Regarding “Proposal Criteria” • Most programs require annual renewal with no formal duration limits; • Reports/presentations due each year. Both Wisconsin and Illinois require recipients to present at the annual fertility conferences.

20. Wisconsin Fertilizer Fees fund a variety of programs

21. The WISCONSIN Fertilizer Research Council (FRC) The Fertilizer Research Council resides in the Department of Agriculture, Trade and Consumer Protection. The Council nonvoting members are the Secretary of Agriculture, Trade and Consumer Protection, the Secretary of Natural Resources, and the Dean of the College of Agricultural and Life Sciences at the University of Wisconsin-Madison.

22. The WISCONSIN Fertilizer Research Council (FRC) The Council has seven voting members: three members are industry representatives selected from a list of candidates provided by the fertilizer industry; three members are farmers who are crop producers; and one member serves as a water quality expert. All members are volunteers, and serve no more than two consecutive 3-year terms.

23. The WISCONSIN Fertilizer Research Council (FRC) Legislative Mandate: The Wisconsin Fertilizer Research Program is a state-wide funding source for applied agricultural research. Funding criteria contained in the law states that funds shall be forwarded to the University of Wisconsin to be used "for research on soil management, soil fertility, plant nutrition problems and for research on surface water and ground water problems which may be related to fertilizer usage; for dissemination of the results of the research; and for other designated activities tending to promote the correct usage of fertilizer materials."

24. The Fertilizer Research Council is particularly interested in new proposals covering the following topics in 2005 funding: • P & K fertilization of soybeans (early planted) • Specialty crops such as fruits, vegetables, etc. • Buffers • Research on micronutrients (esp. foliar placement, row placement, and crop response) • Fertility impacts on the quality or desired traits of grains • Crop nutrient management for ethanol production • Manure movement/condensing • Practical strategies to manage N & P from fertilizer and manure in different cropping systems (no-till vs. conventional tillage vs. zone tillage vs. conservation tillage).

25. RESEARCH CRITERIA-WI Program • Researchers from the University of Wisconsin system are eligible to apply. Approximately $100,000 is available to support research projects each year. Average funding for new proposals in 2004 was $10,000. • 2. Funds are provided for a term of up to three years; however, renewal is given on an annual basis pending evidence of progress and availability of funds. Priority for funding is given to continuing proposals. • 3. Funds can be used to cover the general operating expenses of projects including: labor, fringe benefits, expendable project supplies (not office supplies), travel, sample and data analysis, and miscellaneous costs that do not fit into one of these categories. Funds are generally not approved for capital expenses. Indirect costs are not allowed.

26. RESEARCH CRITERIA-WI Program 4. Proposals that show ancillary support from industry sources, commodity groups, etc. are encouraged. It is not necessary to show in-kind support from faculty and staff salaries. Ancillary support is requested for informational purposes only. Documentation/letters of support are, however, required. 6. Funds may be withheld for continuing projects if reporting requirements are not met. You must submit an annual continuing progress report, clarification if there is to be a change in the scope of work submitted previously, and a detailed budget for the upcoming continuation year for each subsequent year of funding. 9. Principle Investigators must present their research proposals (new and continuing) to the Fertilizer Research Council in January 2005, on the UW-Madison campus. 10. Researchers are asked to credit the WFRC when presenting results from projects funded in whole or part by the Fertilizer Research Fund.