Fungicide Use in a Lower Price Environment

A recent article posted to the Farmdoc Daily website at the University of Illinois explores the economics of fungicide applications on corn and soybeans. In it, Carl Zulauf, an emeritus agricultural economist at The Ohio State University, and his University of Illinois Farmdoc team colleagues pulled information from more than 100 field trial yield studies for each of the two crops. They found that at current crop prices, fungicide use on corn and soybeans may not be economically sound due to a combination of factors. Zulauf says that includes uncertain yield response.

“Some of them had negative yield responses to fungicide. Zero was not uncommon. And then you would have these really large responses to yields. And what was nice about this is this is what I hear in conversations with farmers that on a field-by-field basis, it’s just hard to predict exactly how the fungicide is going to respond, and so, variability is one of these things that very clearly drops out of the field trial studies. The average increase in yields from the field trial studies was between 3.5 and six bushels per acre for corn and between 1.5 and two bushels per acre for soybeans. So, it was a positive response, but the variability is something that they highlighted.” 

The broad number of studies evaluated by the ag economists showed a wide range of yield increases from fungicide use, from negative to very high. This variability makes it difficult to predict if the added yield will justify the cost of the fungicide.

“If you take today’s prices and those yield increases, it would be highly questionable about whether they would pay. It probably would not pay if you did the exact calculations. There, of course, is a debate, as there always is in academics, about “Are we measuring the yield response right?” For example, is it larger when you go to larger acreages? So, that is a question that always sits there. But if you just use the small trials where they’re controlling for a lot of factors, at least at current prices, it’s not. Now, a couple of years ago when we had $7 corn, that was a different story.”

Some of that different story lies in the end-of-season drying costs. Fungicides can keep plants greener longer, delaying dry-down and potentially increasing drying costs at harvest. Since drying costs are based on moisture content, even a small increase in moisture can significantly impact the bottom line.

“If you have to dry corn or soybeans or you have to pay commercial drying costs, it’s an expensive proposition. For each percentage point that you are above the no dry minimum for corn and soybeans, it adds about 20 to $25 per acre to the cost of the crop. Why this is so important in the fungicide decision is the entire crop is affected, not just the additional bushes from the fungicide.”

Thinking about this more broadly, Zulauf says if fungicides do cause a delayed harvest at a higher moisture content, that brings in additional drying costs. It doesn’t take too many years to realize a large negative impact on the returns from their application.

More narrowly though, focusing on just this year in a break-even context, with lower corn and soybean prices, the number of bushels needed to cover the cost of fungicide application and drying has increased.  Using cash prices of $4.25 for corn and $11.00 for soybeans requires yield responses of 9.6 bushels for corn and 3.6 bushels for soybeans to cover a $40 per acre cost of commercial fungicide application plus the cost of harvesting and transporting the increased bushels.

The average yield response from agronomic small plot trials is generally less than the needed yield increases at 3.5 to six bushels for corn and 1.5 to two bushels to the acre for soybeans.