National and Regional Demand Functions for Fertilizer

Abstract

T H IS study deals with the demand for a particular resource, fertilizer, by farmers. It is part of a larger study dealing with resource demand and product supply by farmers. It is an aggregative study, based on time series data, indicating the variables related to United States fertilizer use.Improved knowledge of variables important in resource demand by farmers is necessary for understanding supply phenomena. Agricultural economists agree that major problems of agriculture revolve around the quantities of farm output and resources used. To date, several studies of aggregate output phenomena have suggested that the elasticity of the aggregate short-run supply function for farm products is low in the short run. However, research in indicating the quantitative effect of product and factor prices and other related variables on output has not been extremely successful. A proposition which serves as the foundation for this study is: Supply phenomena might better be understood if variables relating to demand for agricultural resources are quantified. Farmers make their more exact decisions on inputs; they only anticipate output, since exogenous variables such as weather and nature cannot be predicted or controlled.Fertilizer was selected for the current study since time series data are available, both for the various regions of the United States and for individual nutrients. Also, fertilizer is a resource which is easily divisible. In contrast to resources such as tractors and machinery, an individual farmer can purchase fertilizer in pound or ton quantities. He can readily adjust its use as prices of fertilizer or crops, or other relevant variables change in magnitude.The main objectives of this study are to estimate demand functions for commercial fertilizer and individual nutrients for the United States and regions, and to express demand elasticity for fetilizer relative to fertilizer price, crop prices, and other relevant variables. Also, prediction has been made of demand functions for individual producing regions of the United States. The statistics presented are from single equation, least squares models. These appear largely sufficient for the types of phenomena involved. We have applied some simultaneous equations and "expectation" models, for methodological purposes, but will not present them or the

The impact of “Kethata Aruna” fertilizer subsidy programme on fertilizer use and paddy production in Sri Lanka

“…Many studies have been carried out in different parts of the world to study the variation in application of chemical fertilizers as a response to their price (Heady & Yeh, 1959, Sidhu & Sidhu, 1985& Quddus et al, 2008. Economics of fertilizer use in major crop sectors of Sri Lanka was studied by Chandrapala & De Silva (1988).…”

Estimates of immediate effects on world markets of a hypothetical disruption to Russia’s supply of six mineral commodities

“…As farmers have the option to leave their fields fallow for 1 year and make use of fertilizer residue from previous years if prices rise too much, demand for potash is quite elastic in the short run (EclectEcon, 2010). The low-elasticity estimate for short-term price elasticity of demand of potash is -0.403 and is based on U.S. data, and the high-elasticity estimate of -1.85 is based on Pakistani data (Heady and Yeh, 1959;Quddus, Siddiqi, and Riaz, 2008).…”

Determinants of Demand for Fertiliser: A Conceptual Review

“…The early studies include works by Griliches (1958); Heady and Yeh (1959); Carman (1979), and Okoroafor, Echebiri and Nwachukwu (2010). These studies use time series data to estimate determinants of demand for fertiliser in different areas and to assess the various elasticities of fertiliser demand.…”