Calculating Return On Investment With ESN

ESN can provide the farmer a significant return on investment (ROI) when properly used. Depending on the crop and local conditions, the return ranges from 0.5 to 10+ times the cost of ESN. By using simple calculations based on a set of agreed upon assumptions, you can see just how much ESN could benefit you. To help you get started, we’ve provided data two studies using ESN on corn and wheat.

Calculating Return on Investment

Example 1 – Illinois

For our first example, we’ll use a simple comparison of ESN and urea, both applied before planting. In four years of an Illinois study, pre-plant urea averaged a yield of 123 bushels per acre. ESN applied in the same manner averaged 138 bushels per acre for an advantage of 15 bushels per acre. If the corn price is $3.50 per bushel, the increase in gross revenue is 15 bushels per acre times $3.50 per bushel, or $52.50 per acre.

The nitrogen rate used was 150 pounds N per acre. The difference in cost between urea and ESN is typically about 20¢ per pound of N. So, at this price, the additional cost of using ESN instead of urea is 150 pounds of N per acre times 20¢ per pound of N or $30.00 per acre.

The net gain from using ESN is $52.50 per acre greater revenue minus $30.00 per acre greater cost or $22.50 per acre more profit. The farmer’s ROI is the profit increase, or $22.50 per acre, divided by the cost of ESN to obtain the profit increase, $30.00 per acre. 22.5 divided by 30 = 0.75. The farmer’s ROI is 0.75 or 75¢ in net profit returned for each dollar invested in ESN.

Example 2 – Saskatchewan

The next example is a wheat study from Saskatchewan. Based on the results of this study we will use the following values:

  • ESN produced a yield of 90 bushels per acre; urea yield was 84 bushels.
  • N rate was 75 pounds of N per acre.
  • A wheat price of $4.00 per bushel.

This calculation is the same as the Illinois corn example above. The yield difference is 6 bushels per acre times $4.00 per bushel for an increase in revenue of $24.00 per acre.

The additional cost of ESN is 75 pounds of N per acre times 20¢ per pound of N, or $15.00 per acre. The profit increase is $24.00 per acre minus $15.00per acre or $9.00 per acre more profit.

The ROI is therefore 9 divided by 15 or 0.6. The farmer makes 60¢ more profit for each additional dollar spent on ESN.

Greater value with ESN

These examples illustrate how to calculate the value of ESN. They also show what a great value ESN can be to the grower by improving N-use efficiency. Better N-use efficiency means better crop performance and more money in the farmer’s pocket.

Test your knowledge on calculating ROI in Lesson 6 of ESN Fundamentals. Complete all seven lessons to earn a CEU credit.

You can also simplify ROI calculations by using our ESN ROI Calculator. Put your data into this simple calculator and see how ESN can help improve returns.