The Value of Fusion Technology™

By: Fred Hulme, Chris Buchheit, Scotts-Sierra Horticultural Products/ICL

Much of the controlled release fertilizer (CRF) manufactured is surface-applied to second year container nursery stock. While this may be a very labor-intensive process, it is the only practical means that many operations have to apply fertilizer to crops remaining in the same pot over multiple seasons. For many years, container nursery growers have experienced significant losses of CRF when pots tip over from exposure to high winds, heavy rainfall and blasts of air from mist-blowers. This situation causes a high percentage of carefully applied fertilizer to end up on the ground cloth under containers rather than in the pot where it can provide plants with much-needed nutrition. As a result, growers not only waste the money spent to purchase the fertilizer, but they may also contribute to the pollution of nearby groundwater sources.

In 2010, Scotts-Sierra Horticultural Products provided a solution to this pervasive problem by introducing Osmocote® Pro with Fusion Technology™, a new category of controlled release fertilizers. The unique technology present in these fertilizers contains a proprietary fusion agent that, when activated by water, bonds surface-applied fertilizer prills to the growing media’s surface. Once the bond is created, the fertilizer prills stay in the pot where they can continue to feed the plant as intended.

Scotts-Sierra tested Fusion Technology by repeatedly tipping pots over during a series of research trials that took place in Ohio and Oregon. The company’s findings showed that, when pots containing non-Fusion fertilizer were mishandled in this manner, approximately two-thirds of the fertilizer was lost over the course of the spring and summer. Comparatively, those pots containing Osmocote Pro with Fusion Technology lost only one-fifth of their surface-applied fertilizer. This research also found that Fusion Technology works best if the top surface of the growing media is well-settled with few small, loose particles. The Fusion treatment would have kept even more of the fertilizer in the pots if the growing media had been more tightly packed.

Clearly, fertilizer encourages plant growth. Therefore, it stands to reason that when pots are tipped over, the smaller amount of fertilizer left behind will stimulate less plant growth. If CRF application rates are optimal, spillage will reduce rates, resulting in a decline in plant quality and value. The research completed in 2010 clearly demonstrated that crop quality declined as fertilizer rate was intentionally reduced. Since it is not practical or feasible to reapply fertilizer every time a container blows over, most growers have just accepted this loss in economic yield as something they can’t control. Now, Fusion Technology not only offers a viable and easy-to-implement solution for second-year, surface-applied fertilizer treatments—it also maximizes profits by improving plant quality.

The Hidden Costs of Lost Fertilizer

The actual cost of the fertilizer that falls out of the pot and gets swept up or washed away is only one way that growers lose money when they don’t use fertilizer treated with Fusion Technology. Because less fertilizer in the pot generally leads to lower overall crop quality, growers will also encounter the following scenarios:

  • They may be forced to accept less money for the poorer quality crop.
  • Plants will grow at different rates, making it impossible to ship all plants in a
    block, leading to lost revenue/ profit.
  • The off-color or lower quality plants need to be re-fertilized and grown for a
    longer period of time resulting in additional fertilizer costs and slower crop
    turnover.
  • The longer plants must be kept for finishing, the greater the risk that they will be injured or diseased, causing them to be lost altogether.
  • If plants are not ready to be shipped as previously anticipated, then new plants cannot be grown in their place which equals a huge opportunity cost.

In today’s tight economy, growers are carefully monitoring all their production costs and cutting back on expenses in the hopes of maximizing margins and profits. But costcutting on fertilizer may lead to other production decisions that are penny wise and pound foolish. Adding Fusion Technology to a fertilizer program does require growers to make a larger investment. So how can growers easily understand how much money they are losing due to fertilizer spillage and decide if an investment in Fusion Technology makes sense?

The best way to illustrate the value of Fusion Technology is by conducting a proper analysis that contains enough detail to make a thoughtful, informed decision. The key is to look beyond bag cost or cost-in-use to understand the improved return in crop quality and value from using Osmocote Pro with Fusion Technology. To help navigate through these calculations, Scotts-Sierra has developed an easy-to-use web-based calculator. The Fusion Value Calculator is simple and flexible, allowing growers to use cost estimates based on their operations. After growers input some basic information about spacing, fertilizer rates and bag costs, the Fusion Value Calculator compares the investment costs of various fertilizer treatments. If one only looks at the cost per bag and assumes all products are the same, any product enhanced with Fusion Technology would appear too expensive. However, the Fusion Value Calculator takes the process a step further by then estimating the cost of materials lost due to spillage. Then, the calculator focuses on the potentially huge hidden costs of the poorer crop quality that can result when fertilizer is spilled from containers.

The following scenarios demonstrate how to calculate Cost Per Bag as well as how the Fusion Value Calculator determines Cost in Use, Cost of Reapplying Spilled Fertilizer and Return on Investment when comparing two fertilizer products:

Cost Per Bag

Cost per bag is the simplest metric to understand. The entire annual budget for a production input is easily calculated by multiplying total number of bags or containers of fertilizer, pesticide, fungicide, etc. used per year times the unit cost per bag. Therefore, when taking this approach, a grower can put the annual order for these items out to a number of suppliers for bidding and choose the bid with the lowest unit cost in order to minimize expenses. This approach is fine when dealing with well-defined commodities that can easily be substituted for one another; however, when comparing different fertilizers, cost shouldn’t be the only determining factor.

Different products may have extremely diverse properties, values or use directions, and these differences may not show up in a simple cost-per-bag comparison. Products may differ by any combination of the following variables:

  • Bags or container size
  • Rate recommendations
  • Recommended application frequency
  • Ease and speed of application
  • Efficiencies or waste factors
  • Unique components or attributes that can’t be easily substituted
  • Overall effectiveness

There are those growers who use a short term (one-two month), cheap ($25 average cost per bag) top-dress product and claim that even after multiple applications, they end up spending less than they would have for Fusion Technology. Again, if one only looks at the cost per 50 lbs, it certainly appears to be less expensive to use this type of product.

Cost in Use

To determine a fertilizer’s cost-in-use requires taking the process few important steps beyond calculating a simple cost-per-bag. Bag size, rates, number of applications and labor cost are factored into the equation in this model so growers can calculate the true material cost per unit crop. In this case, growers will consider the final product cost per bag, effective product rate, number of product applications per crop, application labor and so on for a more, well-rounded picture of the actual production cost per crop unit. If one product is missing some component (e.g. micronutrients), the cost analysis should include the cost of adding the additional component needed for a successful crop.

Fusion Calculator Section 1 – Cost-in-Use:

Assumptions:

  • 40,000 one-gallon containers/acre, both products applied at 17 grams/ container, one application/season.
  • Product A costs $45/ 50-lb bag; Fusion costs $65/ 50-lb bag.

Conclusion:

Both products require approximately 30 bags per acre. The Fusion option costs $1,947 per acre, $599 per acre more than the less expensive Product A. On first glance, Product A seems like a great value.

Not necessarily. Again, if we’re comparing commodities with similar performance, this may be a reasonable analysis to account for varying bag sizes or rates. The cost-in-use method only analyzes unit production costs; it doesn’t consider the economic results of production. Therefore, it’s still offering an incomplete picture of the actual scenario. If one product will result in better crop performance (and better economic return) than another, further analysis is required to decide which is best for an operation.

Fusion Calculator Section 2 – Cost of Re-Applying Spilled Fertilizer:

Assumptions:

  • Grower estimates losing 30% of his fertilizer due to pots tipping over. (Note: This may be more or less than your particular situation but many growers in a 2009 survey reported losses of this magnitude. Even if your overall losses are less, perhaps you have a windy field, top-heavy plant types or another part of your operation where fertilizer loss due to spillage is significant.
  • Grower cost to reapply is assumed to be $0.02/ container.

Conclusion:

If the cost of lost fertilizer is factored in, the “less expensive option,” ends up costing more. Replacing the 30 percent of fertilizer lost to spillage ( if this were feasible), would cost an additional $1,204 per acre for Product A. When analyzed to account for lost fertilizer, Product A now costs $605 per acre more. In this case, the Fusion option looks much more attractive.

Return on Investment (ROI):

Wise growers will certainly always strive to control raw material and labor costs, but their principal objectives should include an investment in raw materials that will lead to the most profitable return once the crop is sold. A well-designed trial can quantify the performance differences between different products. After different products are applied and crops are grown and marketed, a detailed analysis can then determine if any product treatment results in significant economic advantages or disadvantages.

The performance of different product treatments might result in:

  • Faster or slower average production time (days to bloom, days to desired plant size)
  • Lower or higher than average plant loss or shrink
  • Higher or lower than average plant grade – bigger, better, fuller, greener (tied to value)
  • More or less efficiency or environmental waste

Growing space costs money. If you can turn a crop faster by using a more expensive product, it may make economic sense. A greater investment in fertilizer or pesticide, for example, might be warranted if it results in a crop with a higher percentage rated “top grade” or if reduces shrinkage (culls/ discards) in the production and post-production phases. Some products may result in less waste because more of the product is being used by the plant. In this case, the cost of losing nutrients or other active ingredients into the environment due to spillage or leaching should also be considered.

The Return on Investment analysis method looks at the relative return that any specific product treatment might bring to help you maximize profitability.

Fusion Calculator Section 3 –Return on Investment:

Assumptions:

  • The grower assigns economic values to various crop quality grades. In this case, Grade 1 is worth $7/ plant, Grade 2 is worth $6.50/ plant and Grade 3 or Cull is worth $2.00/ plant.
  • Grower enters their usual shrinkage factor. In this case we are assuming a normal 10% loss from disease/ physical damage, etc. across the board.
  • Then the grower estimates how much value is lost from plants that have tipped over and lost fertilizer. In this case, 30% of the fertilizer is lost – we are assuming that this will result in:
    • 25% of the plants going from Grade 1 to Grade 2 (lose $0.50/ plant value)
    • 5% of the plants going from Grade 1 to Grade 3 (lose $5.00/ plant)

These estimates are very liberal; it is more likely that economic losses would be much greater if 30% of the crop lost all their fertilizer.

Conclusion:

In this case, the hidden cost of lost fertilizer and its impact on crop value is huge. Most of the plants only lost $0.50 in value, but on an acre basis, this calculates to a loss in value of $61,501 per acre. So, even if we ignore the cost of lost fertilizer for Fertilizer A, the investment in Osmocote Pro with Fusion Technology ($1204/ acre) yields a return on investment of over $60,000/ acre.

In this example, if the grower is willing to invest $0.0301 more per container, there will be an incremental return of $1.538 per container. Fusion is a much better investment here as its use leads to a much more profitable crop.

Competitive products may initially seem less expensive based on initial costs, but they actually can be much more expensive if you factor in:

  • Performance
  • The need to provide multiple applications (short-term top-dress products)
  • The need to replace spilled fertilizer
  • The erosion of plant quality and reduced return on investment

The Fusion Value Calculator is available to help growers explore various scenarios to determine if there is a place for Fusion Technology in their operations. If you’d like to determine whether Fusion Technology can give you a greater return on investment, contact your local Scotts-Sierra Horticultural Territory Manager. He or she will sit down with you, enter your data into the Fusion Value Calculator and analyze your specific operation. This will provide you with the data you need to make an informed decision and set trials that can demonstrate the profit you can experience by using Osmocote Pro with Fusion Technology.

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