Economic Efficiency Approach of Applying Layer Litter

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Organic FarmingBassam C. Hamdar

a& Ibrahim G. Rubeiz

a

a Faculty of Agricultural and Food Sciences,

American University of Beirut, Beirut, Lebanon

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Organic Farming:Economic Efficiency Approachof Applying Layer Litter Rates

to Greenhouse Grown Strawberriesand Lettuce

Bassam C. HamdarIbrahim G. Rubeiz

ABSTRACT. The agricultural sector is becoming more and more con-cerned with implementing environmentally friendly practices in orderto enhance environmental quality and lessen environmental degrada-tion. The paper presented here is an identification of costs and benefitsassociated with applying ammonium nitrate, layer hen litter at 7 ton/ha,

and layer hen litter at 14 ton/ha as fertilizers to greenhouse grownstrawberry and lettuce, through the utilization of the Net Present Value(NPV) technique which compares benefits and costs. The results of thistechnique indicated that, after deducing costs from benefits, layer henlitter at 7 ton/ha or 14 ton/ha was found to be more profitable thanammonium nitrate. However, for environmental safety, the lower rateof layer hen litter (7 ton/ha) is preferred to the higher rate (14 ton/ha)because it is less than the critical 13 ton/ha, considered to cause watercontamination by the United States Environmental Protection Agency(USEPA). [Article copies available for a fee from The Haworth Document

Delivery Service: 1-800-342-9678. E-mail address: [email protected] ]

KEYWORDS. Environmental quality, NPV, layer litter hen rate, agri-cultural sector

Bassam C. Hamdar is Assistant Professor of Agricultural Economics and IbrahimG. Rubeiz is Associate Professor of Horticulture, Faculty of Agricultural and FoodSciences, American University of Beirut, Beirut, Lebanon.

Address correspondence to: AUB, 850 Third Avenue, New York, NY 10022.Small Fruits Review, Vol. 1(1) 2000

E 2000 by The Haworth Press, Inc. All rights reserved. 3

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SMALL FRUITS REVIEW4

INTRODUCTION

Environmental issues are capturing more and more of the worldsattention. Researchers and scientists are aiming at improving environ-mental quality through the adoption of techniques and measures thathave a reduced impact on the environment. Among the various strate-gies is the attempt of the agricultural sector to move from conventionalfarming to a more environmentally friendly method known as organicfarming.

Organic farming is a system of crop cultivation employing biologi-

cal methods of fertilization and pest control as substitutes for chemicalfertilizers and pesticides. Organic farming is usually suggested as apractice to solve farmers problems in developing countries (Cacekand Langner, 1986), however, limited research has been done tocompare organic vs. conventional techniques especially from econom-ic standpoints (Klepper et al., 1977).

Two experiments were conducted to compare the performance ofthese two poultry litter rates and ammonium nitrate (AN) for produc-tion of strawberries and lettuce (Rubeiz et al., 1998). The net benefits

associated with each fertilizer are compared in order to find whichfertilizer (chemical or organic) and rate, would produce maximization.

LITERATURE REVIEW

History. For much of its history farming has been organic by defini-tion. Chemical fertilizers and pesticides were not available to farmers

before the beginning of the 20th century. After World War II, the useof agricultural chemicals became the norm as farmers tried to increasefood production to meet the higher food demand caused by a demo-graphic explosion (Encyclopedia Encarta, 1998). This was the caseuntil recently when the risk associated with excessive use of pesticidesand other chemical products along with their inefficiency compared totheir costs gave the farmers a strong incentive to go back to organicpractices. (Lockeretz et al., 1983).

The idea of chemical free farming was first introduced by Sir Albert

Howard, a British agronomist and botanist. He was sent to India by theBritish government where he introduced a system in which organic

wastes were returned as nutrient material to enrich the soil. Inspired by


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Bassam C. Hamdar and Ibrahim G. Rubeiz 5

Howards work, J. I. Rodale, an American businessman, worked todevelop organic gardening in the United States (Rodales All-New

Encyclopedia, 1997).

CONVENTIONAL VERSUS ORGANIC FARMING

In some respects, conventional chemical-intensive agriculture andorganic farming differ very little. Comparing grain farms in severalstates of the U.S. led to the conclusion that sometimes organic farmingequals inorganic farming with respect to economic performance (Ca-

cek and Langner, 1986). Although the word organic farming is used todesignate a small-scale, labor-intensive farming system, several or-ganic farms are large-scale, and use the mechanized methods as doconventional farms with the only difference that the former use littleor no agricultural chemicals. Crops grown under either system requirethe same nutrients. Both systems must provide adequate supplies ofnutrients, water, and energy and adequate control of pests for crop andlivestock production (Klepper et al., 1977).

Conventional agriculture was criticized as being a capital-inten-sive agricultural system weighted by output towards larger specializedmonocrop units heavily dependent upon non-renewable, resource-based input of non farm origin. By contrast, the organic farmingsystem does not rely much on the use of chemicals. Organic farminguses less petroleum than does conventional farming. It encourages theuse of crop rotation and manure to maintain soil fertility. This makesthe organic system less dependent on large industrial societies andmore regionally self sufficient (Batie and Taylor, 1989).

Although small organic farms use crop rotation, the small-scalefarmers do not have sufficient land to allow a legume based croprotation, thats why nutrients needed for soil improvement (mainlynitrogen) are derived mostly from manure and compost (Papendickand Elliott, 1983; Schwenke, 1991). Since chemical fertilizers arecheaper and easier to apply than commercial organic fertilizer, profit-able operation is more difficult if organic fertilizers must be purchasedinstead of using farm-grown leguminous, green-manure crops, com-posts, or manure for soil enrichment (Schwenke, 1991). Large organic

farms include legumes and crop rotation. The nitrogen removed bycrops does not exceed the nitrogen available in the soil. These farmsrun a deficit in their phosphorus and potassium budgets, for these


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nutrients cannot be generated on the farm and must be brought in fromthe outside to compensate for their removal by crops (Papendick and

Elliott, 1983).Organic farming uses natural materials of biological or mineral

origin for fertilizing the soil and combating plant pests and diseases.The natural fertilizers are materials derived from plants and animals.Generally, they are divided into two major groups: organic fertilizersand organic manure.

ORGANIC FERTILIZERS

Organic fertilizers are derived from biological materials or fromnatural rocks and minerals. The composition of these materials varies

widely and may include such examples as bloodmeal which contains15% N, 1.3% P2O5, and 0.7% K2O; horndust and hoofmeal, whichcontain 12.5% N, 1.75% P2O5; tankage, which contains 6% N and 5%P2O5; and bonemeal, which contains 4% N, 21% P2O5, and 0.2%K2O. They also include rock materials like rock phosphate, whichcontains 18 to 32% P2O5; granite which contains mainly K2O; andgreensand which contains 1.5% P2O5 and 5% K2O (Schwenke, 1991).

Organic fertilizers supply nitrogen and phosphorus and other ele-ments but are more expensive than the synthetic fertilizers and aretherefore used only in special situations in modern agriculture (Ency-clopedia Universalis, 1995). Organic rock fertilizers dissolve in watermore slowly and release their nutrients more steadily (an advantage innutrient conservation) compared to the chemical fertilizers which needto be applied frequently because of their high solubility in water

(Schwenke, 1991).Because organic farmers continually add large amounts of soil-building material to their fields, they increase the level of their topsoilannually. Conventional farmers, by contrast, suffer from erosion

which causes enormous losses of topsoil each year. The availability ofa richer and deeper soil for future cultivation is one impact of organicfarming which offers much greater potential long-term security for thefuture of farming than the organic farmers non-use of toxic agricul-tural chemicals (Batie and Taylor, 1989).

Manure. Manure is bulkier than organic fertilizers. The best knownof manure is farm manure, the excrement of farm animals together

with straw or other bedding materials (Encyclopedia Universalis,


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1995). The composition of farm manure depends on the type of ani-mals that produced it and how they were reared and fed (Beaumont,

1947). Usually, a single ton of fresh manure from cattle supplies about2.9 kg of N, 1.7 kg of P2O5, and 1 kg of K2O (Schwenke, 1991). Freshchicken manure is richer, it supplies about 1.63% N, 1.56% P2O5, and0.85% K2O. Manure also contains micronutrients, it supplies boron,copper, iron, molybdenum, manganese, and zinc for several cropsplanted in succession. Where manure is used regularly, micronutrientdeficiencies are rare, and the organic matter of the soil increases.Sewage sludge (which contains 0.74% N, 0.33% P2O5, and 0.24%

K2O) and other urban wastes have been proposed as farm manuresubstitutes, usually to aid in their disposal (Schwenke, 1991).Manure must be carefully managed and it must be carefully stored

to minimize loss of nutrients, particularly nitrogen. It must be appliedto the right kind of crop at the proper time to derive the most benefitfrom it. In order to gain full value of the N and K that are contained inmanure, additional fertilizer may be needed, such as phosphorus oxide(Encyclopedia Encarta, 1998; Encyclopedia Universalis, 1995).

CONTROLLING PLANT DISEASES AND PESTS

Organic farming practices proved to be successful in controllingplant diseases and pests through cultural control, biological control,physical control, and as a last resort, chemical control (Rodales All-New Encyclopedia, 1997).

Cultural control. Selection of plants is very important, organicfarmers select plants which are resistant to diseases. They try to keep

them healthy. These plants attract fewer insects and are less vulnerableto diseases. Organic practices such as mulching, timed planting, croprotation, and companion planting prevent problems and fight diseases(Rodales All-New Encyclopedia, 1997).

Biological and physical control. Insect barriers and traps are usedboth to monitor and control pest population. Predators such as theladybug beetle may be introduced to control insects. Many plants suchas tomato, onion, garlic, pepper, and turnip contain organic com-pounds that may be extracted with water and act as insect poisons or

repellents. Natural substance like BT (Bacillus thuringiensis), a soilbacterium that is toxic when ingested by specific insects, is also one

way of reducing insects. In addition, pheromones, repellents, and


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growth regulators are used with considerable success to lure insectsinto traps, to distort their reproductive activity, to disorient them, or to

disrupt their normal growth (Rodales All-New Encyclopedia, 1997;Vogtmann, 1983).

Furthermore, weed control is mainly achieved by means of croprotation, manure management, green manuring, mulching and tillage.These organic methods proved to be more effective when compared tochemical weed control methods in several growing conditions (Vogt-mann, 1983).

Removing weeds and insects is necessary to prevent diseases. Hand

weeding, tillage and mowing can help. Organic farmers spray theinsects by water alone or they add some detergents to it. Once a plantis infected by a certain disease, it is removed from the field (Rodales

All-New Encyclopedia, 1997).Organic farmers may use chemical controls as a last resort. They try

to select the least toxic and effective pesticide. Timing is important sothat they dont have to apply the pesticide frequently (Rodales All-New Encyclopedia, 1997).

ORGANIC FARMING AND SOIL CONSERVATION

Organic farmers apply mulches, cover crops, green manure, and useinterplanting and rotation of crops as regular agricultural practices.These practices reduce run off water by about 10 to 50%. Infiltrationof water is increased by 10 to 25%, adding to the soil moisture avail-able for plant growth. The root system of the covercrops and green

manures anchors the soil in place. All these factors put together willreduce soil erosion by at least two fifths (Cacek and Langner, 1986).Both organic and conventional farmers use minimum tillage as a

conservation practice. It includes practices such as tilling narrow stripsof soil for planting, reducing the number of steps in soil preparation,using implements that lessen the amount of soil disturbed in tillage(using a disk or chisel plow for example), or planting in stubble (Batieand Taylor, 1989). Organic farmers prefer shallow tillage becauseorganic materials need to be near the soil surface for better results

(Papendick, 1983).To a large extent conventional and organic farming are distinct

primarily in the cost of the inputs and the returns from the sale of the


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crop produced under each system. These performance differences arereflected in the following experiment.

OVERVIEW OF THE EXPERIMENT

In their paper: Evaluation of Layer Litter Rates as a Fertilizer forGreenhouse Strawberry and Lettuce, Rubeiz et al., (1998) conductedtwo experiments to study the yield responses of greenhouse strawber-ry, a fruiting crop, and lettuce, a leafy crop, to different rates of laying

hen litter; and second, to identify a low application rate of laying henlitter that could give a comparable yield to that from a recommendedrate of inorganic nitrogen fertilizer for these two crops. These twocrops are often grown simultaneously by greenhouse growers in theMediterranean region.

Laying hen litter and ammonium nitrate were used as fertilizers inboth experiments which consisted of four treatments. In treatmentsone and two, laying hen litter at 7 and 14 ton/ha, respectively, wasevaluated in both experiments. In treatment three, ammonium nitrate(34-0-0) was used at 150 kg N/ha for strawberry in 8 split applicationsand 100 kg N/ha for lettuce in two split applications. Treatment four

was an unfertilized control in both experiments.

METHODOLOGY

The results were analyzed using the Cost-Benefit technique in

which various costs and benefits were calculated and then compared.For this analysis, the Net Present Value (NPV) was utilized:

NPV

N

n 0

Bn Cn(1 r)n

Where Bn is the benefit incurred in year n n = 0---N

C1 . . . Cn = the cost incurred in year n n = 0---NN is the life of the projectr is the interest rate.


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In these experiments, benefits and costs are only incurred in year zero.Therefore,

NPV = Bo Co.

For each experiment, the treatment that has the higher NPV is pre-ferred.

The inputs and output of the two experiments are evaluated andnext compared for each treatment. For most inputs, organic and con-ventional farmers have essentially identical costs. The major differ-ences come in the use of labor, pesticides, and fertilizers (Klepper et

al., 1977).In the experiments under consideration, pesticides and cost of labor

are the same. The only difference lies in the cost of fertilizers. As forthe benefits, they can be divided in two groups. The direct benefit isthe total revenue derived from multiplying the quantity produced bythe price of sale. The main benefits of manure are indirect. They areeither agricultural or environmental and are not easily measured inmonetary terms. Therefore, the direct benefit will only be considered.

Solution. The price of laying hen litter is $1 per 50 kg. Consideringthat 7 tons of litter are utilized per hectare:

The price of fertilizer per ha = 7 $1 100050

= $140

For the 14 tons of litter per hectare, the price of fertilizer perhectare will be $280. The price of ammonium nitrate is $160 perton. To apply 150 kg/ha we would need to apply 454.5 kg amo-nium nitrate. The grower cost would be 160 454.5/1000 =

$72.73

Utilizing the same methodology for strawberries we get $72.73.

The price of organic and inorganic strawberries and lettuce arepresented in Table 1.

RESULTS AND ANALYSIS

The results of the strawberry experiment indicated that the yield inall three fertilizer treatments was higher than the control (p 0.05);


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TABLE 1. Retail price of organically and inorganically fertilized strawberriesand lettuce.

Crop Organic Inorganic$ $

Strawberry (1 kg) 11.67 6.67

Lettuce (1 head) 1.93 1.1

Center of Documentation and Research, Ministry of Agriculture. 1998.

InputsGreenhouse length = 21 m.Greenhouse width = 5.5 m.

Greenhouse area = 21 5.5 = 115.5 m2

Number of beds per greenhouse is 4. Two plants are grown from each side of the bed every 20 cm.Number of plants per bed = 212 plants.Number of plants per greenhouse = 212 4 = 848 plants.Therefore, the number of plants per ha = (848 10,000)/115.5In the same fashion, the number of heads of lettuce per ha is 318 10,000/157.5Direct benefit for every treatment in each experiment is equal to yield per plant in kg times price ofone kg times number of plants per hectare.

and the highest yield was for the treatment 2 (14 ton/ha). Analysis ofNO3-N and phosphorus content was done at mid- and late-season. Thepercent of NO3-N was lowest in the control for both seasons, it washighest in the chemical fertilizer for mid-season and in the 7 ton/halitter treatment for the late season. Phosphorus was highest in the 7 ton/halitter for the mid-season and in the 14 ton/ha litter for the late-seasontreatments. The results of the lettuce experiment indicated that theyield was higher in all fertilized treatments than the control (p 0.05), and the highest yield was for the 14 ton/ha litter treatment. Leaftissue concentration of NO3-N and phosphorus done at harvest,

showed that the highest NO3-N concentration was for 14 ton/ha littertreatment and the lowest was for the control. The highest P contentwas found in the control treatment while the lowest was found in thechemical fertilizer (Rubeiz et al. 1998).

In both experiments the results were as follows: the highest benefitand the highest cost were the result of using 14 ton/ha of litter whilethe lowest cost was incurred when ammonium nitrate was used (Table 2and 3). The direct benefit per ha is calculated using the followingformula: Yield (kg) per plant number of plants/ha price/kg.

Using 7 ton/ha litter the yield was 265 g/plant (Rubeiz et al., 1998).0.265 kg/plant 73420 plants/ha $11.60/kg will result in a $227direct benefit to the grower.


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TABLE 2. Benefits and costs for inorganic and organic fertilized strawberries.

Treatment Cost of fertilizers/ha Direct benefit/ha Benefit- Cost

Litter: 7 ton/ha US $140 US $226,990 US $226,850


NH4NO3: 150 kg N/ha US $ 73 US $123,835 US $123,762

TABLE 3. Benefits and costs for inorganic and organic fertilized lettuce.

Treatment Cost of fertilizers/ha Direct benefit/ha Benefit- Cost



NH4NO3: 100 kg N/ha US $ 48 US $ 6,441 US $ 6,393

After deducting costs from benefits, the results did not change. Thehigher cost of litter in treatments 1 and 2 were covered by the higherprice of the organically grown product compared to inorganically

grown product.

CONCLUSIONS

The results of the analysis indicate that layer litter used in twodifferent treatments had more benefit (before and after deducting thecost) than ammonium nitrate. This can be explained by the high priceof the organic products (both strawberry and lettuce) which was high

enough (75% more) to cover the difference in cost of fertilizers. Someother indirect environmental and agricultural benefits of the use oforganic manure are mentioned above. These benefits, if evaluated,

will further support the results. In addition, some other environmentalcosts are attributed to the use of the chemical fertilizer, ammoniumnitrate.

After comparing the treatments, the results were in favor of thehigher rate of layer litter whether viewed environmentally or in mone-tary terms. However, for environmental safety, the lower rate of layer

litter (7 ton/ha) is preferred to the higher rate (14 ton/ha) because it isless than 13 ton/ha, critical rate found to cause water contamination byUSEPA standards.


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For price comparisons to be valid, quality must be comparable.Organic food is often fresher, but there are sometimes signs of insect

infestation or decay. The damage is generally superficial on outerleaves that are discarded from supermarket produce. Decay from stor-age is more a result of lack of preservation than production method.When similarly treated, organic food may actually store better.

Although indirect benefit of manure was not included in our cal-culation, some agricultural benefits are worth mentioning becausethey reinforce the results we obtained. Manure supplies humus (darkbrown to black organic matter of soil). Humus has an important effect

on the physical properties of soil. It binds the particles in the soil. Itimproves the capacity of the soil to hold water and facilitates itsabsorbency. When decomposed in the soil, humus releases some mac-ro elements like phosphorus (Beaumont, 1947). Other environmentalbenefits are also important--the organically grown products (strawber-ries and lettuce) contain no chemicals. The use of chemical fertilizerslike ammonium nitrate have been implicated in the increased produc-tion of potentially hazardous byproducts in inorganically grown prod-ucts (Batie and Taylor, 1989). This is a potential benefit of organically

grown products and may increase demand in the markets where con-sumers are health conscious.

LITERATURE CITED

Batie, S. and Taylor, D. 1989. Widespread adoption of non-conventional agriculture:Profitability and impacts. American Journal of Alternative Agriculture 4 (3 & 4):128-134.

Beaumont, A. 1947. Artificial Manures. Orange Judd Publishing Company, Inc. NY.

pp. 35-36, 63-68.Cacek, T. and Langner, L. 1986. The economic implications of organic farming.American Journal of Alternative Agriculture 1(1):25-29.

Center of Documentation and Research. 1998. Prices of organic vs. inorganic prod-ucts. Ministry of Agriculture, Beirut, Lebanon.

Encyclopedia Encarta. 1998. Interactive Media Division. Microsoft Corporation.Redmond, WA, USA.

Encyclopedia Universalis. 1995. 4th edition. France S.A.Harwood, R. 1983. Organic farming research at the Rodale Research Center. In D. F.

Bezdicek (ed.) Organic Farming: Current Technology and Its Role in a Sustain-

able Agriculture. American Society of Agronomy, Crop Science Society of Amer-ica, and Soil Science Society of America. Special Publication no. 46, AmericanSociety of Agronomy. Madison, WI, pp. 1-17.

Klepper, R., Lockeretz, W., Commoner, B., Gertler, M., Fast, J., OLeary, D., and


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Blobaum, R. 1977. Economic performance and energy intensiveness on organicand conventional farms in the corn belt: A preliminary comparison. American

Journal of Agricultural Economics 59:1-12Lockeretz, William, Georgia Shearer, D.H. Khol, and R.W. Klepper. 1983. Compari-son of organic and conventional farming in the corn belt. In D. F. Bezdicek (ed.)Organic Farming: Current Technology and its Role in a Sustainable Agriculture. American Society of Agronomy, Crop Science Society of America, and SoilScience Society of America. Special Publication no. 46, American Society ofAgronomy, Madison, WI, pp. 37-48.

Papendick, R. and L. Elliott, 1983. Tillage and cropping system for erosion controland efficient nutrient utilization. In D. F. Bezdicek (ed.) Organic Farming: CurrentTechnology and Its Role in a Sustainable Agriculture. American Society ofAgronomy, Crop Science Society of America, and Soil Science Society of America.Special Publication no. 46, American Society of Agronomy, Madison, WI, pp. 69-81.

Rodales All-New Encyclopedia of Organic Gardening. 1997, edited by Fern Mar-shall Bradley and Barbara W. Ellis. Rodale Press, Inc. pp. 412-431.

Rubeiz I. G., M. Khansa and M.M. Freiwat. 1998. Evaluation of layer litter rates as afertilizer for greenhouse strawberry and lettuce. Commun. Soil Sci. Plant Anal.29: 161-167.

Schwenke, K., 1991. Successful Small-Scale Farming: An Organic Approach, 2ndedition. Capital City Press. USA. pp. 7-11, 109-113.

Vogtmann, H. 1983. Organic farming practices and research in Europe. In D. F.Bezdicek (ed.) Organic Farming: Current Technology and Its Role in a Sustain-

able Agriculture. American Society of Agronomy, Crop Science Society of Amer-ica, and Soil Science Society of America. Special Publication no. 46, AmericanSociety of Agronomy, Madison, WI. pp. 19-36.


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Economic Efficiency Approach of Applying Layer Litter