A Three-Legged Stool Approach To Nitrogen Management: Considering Fertilizer Industry Interests In Tandem With Farmers and The Environment.

Research on improving agricultural nitrogen (N) management frequently focuses on farmers and the environment: the agronomic and economic benefits to the farmer of applying N more efficiently, and the environmental benefits to society of less N pollution. While these are clearly critical components of successful N management policies, there is a third element that is crucial to consider: the profitability of the fertilizer industry. The fertilizer industry is a key political stakeholder in any N management policy – if farmers increase their N use efficiency, the fertilizer industry will sell less N fertilizer than they otherwise would, with a negative impact on their profitability. However, an N management policy could also increase demand for more efficient (patent-protected) fertilizer technologies (e.g. controlled release fertilizers and nitrification/urease inhibitors), which can be sold at a premium to customers, in contrast to traditional forms of nitrogen fertilizer, which have existed for decades and are no longer patent protected. With this in mind, we quantitatively integrate fertilizer industry interests into the consideration of N management policies. Using the US maize sector as an example, a 10 year cost-benefit analysis of a standard mandating a 10% increase in N use efficiency demonstrates that the market share of enhanced efficiency fertilizers would have to expand to 8.4% of the US N fertilizer market for corn in order to offset the industry losses ($1.9 billion over 10 years). Such a standard would simultaneously achieve farmer net savings of $1.1 billion (taking into account reduced fertilizer expenditure and the cost of a nutrient management plan) and environmental benefits of $7-24 billion from reduced N pollution.