Notes: Percentage increases in each county are defined as changes between five-year planted acre averages. Values are the percent change in average planted acres between and Using the average aids in reducing potential influence of nonrepresentative outliers, such as a single-year increase or decrease.
Counties without a color designation either did not plant corn or had a decrease in planted corn acres. Figure 3 shows that shortly following the enactment of these policies and subsequent expansion of the U. Naturally, U. Figure 3 shows that between and , farmers planted, on average, 10 million more acres annually than the average of the preceding two decades. The expansion of U. Further, increased nitrogen demand may have been further bolstered by two factors.
First, the continued development of higher-yielding corn varieties during the s and s meant that larger fertilizer quantities were needed to meet yield potentials. Second, Figure 4 shows that much of the expanded corn acreage occurred in the northern Great Plains, where corn had not previously been a major crop alternative. This was made possible not only by higher corn prices but also by the genetic development of shorter-season corn varieties.
In these locations, fertilizer demand growth was relatively larger than in traditional Midwest corn producing areas as corn production displaced other crops e. In addition to demand-side changes to the U. Hydraulic fracturing and horizontal drilling methods allowed for the development of new oil and natural gas fields in the northern part of the United States as well as increased natural gas output in existing fields in the central and southern Great Plains.
Figure 3 shows the resulting sharp reductions in natural gas prices, which have remained at historically low levels and returned the United States to being one of the lowest-cost natural gas producers in the world. The concurrent structural changes in the U. Economic theory suggests that when profit opportunities arise, an industry will experience entry. Moreover, in an industry in which the output is a commodity and production technologies are well known as is the case for the fertilizer industry , entry would likely occur relatively quickly.
Between and , six additional plants came online and seven plants expanded, representing approximately 3. In addition to producing higher quantities of widely used products such as urea, this expansion probably increased the demand for fertilizer products such as anhydrous ammonia, which is more safely and economically transported domestically relative to imports.
The expansion of production capacity, however, was coincident with increased market concentration. Department of Justice, Governmental concerns about concentrated sectors result from statutory provisions of the Sherman Act sections 1 and 2 , the Clayton Act section 7 , and the Federal Trade Commission Act section 5.
The assumption is that highly concentrated industries are synonymous with the exercise of market power in which output prices are higher than marginal costs of production and are not representative of competitive equilibria.
Of course, the actual exercise of market power depends on many factors and is ultimately an empirical although difficult to quantify issue. On the other hand, the contestable markets hypothesis posits that competitive equilibria can occur in such markets if low entry barriers allow for a credible threat of entry Baumol, Panzar, and Willig, Hence, one may surmise that global production and low import barriers provide a credible entry threat and help obviate the potential of market power.
Nonetheless, consolidated industries certainly provide a higher potential for the use of market power relative to less consolidated sectors. Nitrogen fertilizer is a critical element of crop production in developed economies.
The industry generally produces fertilizer as a commodity and production technologies are well-known. Hence, entry barriers are low and the U. Corn and soybeans dominate the other two. This piece will focus on their production trends and the correlations with fertilizer and pesticide use.
Sixty five years ago, harvested area of corn sat around 77 million acres, and average US corn yield was just 54 bushels per acre. Presently, corn acreage is at In the s, soybean harvested area was at just Today, there are around Soybean yield was less than 20 bushels per acre in the s, but now averages 49 bushels per acre. Corn and soybean production has increased largely because of heightened demand, enhancements in farming technology, and developments of genetically engineered GE varieties.
In response to demand which resulted in greater plantings, farmers began to apply more fertilizers and spray more pesticides on the growing production area. With more applications also came greater spending on such inputs. However, expenditures have started to level off or slowly drop as farmers employ an integrated basket of control measures and variable-rate nutrient applications.
The three broad categories of fertilizers are nitrogen, phosphorus, and potassium NPK -based. Rates of their combined applications grew after , but have started to level off because of better practices. The nutrient accounts for approximately 59 percent of total fertilizer weight.
They account for around 20 and 21 percent of total fertilizer treatments, respectively. Corporate Account. Statista Accounts: Access All Statistics. Basic Account. The ideal entry-level account for individual users. Corporate solution including all features. Statistics on " Sugar industry " The most important statistics. The most important statistics. Further related statistics. Further Content: You might find this interesting as well.
Statistics U. Topics U. Learn more about how Statista can support your business. January 31, Total U. In Statista. The first sales of a commercial material to add nutrients to the soil began with guano imported from Peru, which was the principal fertilizer used in the U. Guano is composed of bird manure that accumulated in deposits on islands off the coast of Peru, but its use was unsustainable as these deposits were quickly mined and depleted when it became a popular fertilizer worldwide.
Other early commercial fertilizers used in the U. Fertilizer use increased from , and the development and distribution of information about nitrogen fertilizer practices through agricultural institutions, state extension services, field experiments, and the USDA led to better fertility practices and improved fertilizer use on farms. However, yields remained relatively stable throughout this period, as the actual average per acre use of plant nutrients remained relatively low, especially in comparison to today Nelson The Haber-Bosch process utilizes hydrogen and atmospheric nitrogen under extremely high pressure and temperature in combination with a metal catalyst such as iron to produce ammonia gas, which is condensed with the help of cold water, forming liquid ammonia also known as anhydrous ammonia Figure 1A.
In this process, natural gas is typically used as a hydrogen feedstock and as a source of energy to obtain the high pressure and temperature required for the reaction, and for this reason, natural gas and nitrogen fertilizer prices are closely related Sawyer et al.
Anhydrous ammonia also has disadvantages, especially its toxicity that requires specially designed and well-maintained equipment for storing and handling under high pressure. The challenge of storing and handling anhydrous ammonia is one of the reasons why ammonia is the foundation for many other nitrogen fertilizers such as urea, urea-ammonium nitrate UAN solutions, ammonium sulfate, and calcium nitrate, as shown in Figure 1B.
The discussion in this article will focus on the main sources of nitrogen fertilizer applied in the United States, which are anhydrous ammonia, UAN, and urea. Among the synthetic nitrogen fertilizers produced from anhydrous ammonia, urea has been leading the fertilizer market in world agriculture since the s, which can be attributed to the nonhazardous properties of an organic compound that can easily be applied to the soil or mixed with other fertilizers to prepare NPK formulations.
The main limitation of urea is ammonia volatilization, which can lead to serious nitrogen losses when urea is applied to coarse textured soils or allowed to dissolve on the soil surface e. An alternative nitrogen fertilizer is ammonium nitrate, which is synthesized from the reaction of nitric acid with anhydrous ammonia Figure 1B. Although different studies have shown the potential of this nitrogen source for plant growth, ammonium nitrate is more expensive than other nitrogen fertilizers and can be extremely dangerous as it can explode when in contact with high temperatures Laboureur et al.
A safer option arises from the mixture of ammonium nitrate, urea, and water forming the UAN solutions Figure 1B. These fluid fertilizers have been gaining increasing attention in fertilizer markets because they are safe to handle, convenient to mix with other nutrients and chemicals, and easily applied. The additional chemical processes required to produce UAN solutions make them more expensive per unit of nitrogen than other nitrogen fertilizers such as anhydrous ammonia and urea.
Many other nitrogen fertilizers can be prepared from anhydrous ammonia, and some of them, like calcium nitrate and ammonium sulfate have received more attention in other regions like Europe and Latin America, however, their low nitrogen content is a disadvantage, reflecting a higher logistic cost of these fertilizers.
It is also relevant mentioning that some phosphate fertilizers such as mono and diammonium phosphate MAP and DAP can indirectly supply nitrogen for crop production, although these fertilizers are mainly used to provide phosphorus.
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