FERTILIZER DEMAND FUNCTIONS FOR SPECIFIC NUTRIENTS APPLIED TO THREE MAJOR U.S. CROPS

Several past studies used time series data to estimate price elasticities of demand for fertilizer or nutrient use on all crops in the United States or by region. In this study, demand functions for nitrogen, phosphorous and potassium applied per acre of corn, wheat and soybeans in the United States were estimated, using a combination of autoregressive least squares and seemingly unrelated regression techniques. The results suggest that the demands for nitrogen, phosphorous and potassium applied to corn are price elastic, while similar responses for wheat and soybeans are price inelastic. Nitrogen and phosphorous applied per acre of corn were found to be positively related to government sponsored acreage diversion. The estimated elasticities could provide policymakers with insight for developing fertilizer and crop policies.