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Calculation of Optimal Nitrogen Fertilizer Rates

Dep. of Agric. Economics, 1301 W. Gregory Dr.
Dep. of Agronomy, 102 S. Goodwin Ave., Univ. of Illinois, Urbana, IL 61801

^* Corresponding author.

Agronomists sometimes fail to apply sound economic theory when recommending economically optimal nitrogen fertilizer application rates. Producers' objectives, producers' attitudes toward risk, and the effect of N on second and higher moments of the yield distribution are often left unstated or ignored. If a farmer knew, prior to N application, the future values of all stochastic factors that affect yield response to N during the growing season, optimal N rates could be established for each individual site-year. However, farmers do not have perfect knowledge, so recommended rates should not change from year to year for a given site. We propose a more economically sound method for deriving economically optimal N fertilizer application rate recommendations. Our method maximizes profit on average over observed years for a given site. Long-term field experiments from Illinois demonstrate that our proposed method increases profit from a trivial $0.18 ha^–1 yr^–1 to a substantial $103A1 ha^–1 yr^–1, depending on site and cropping sequence. We call for increased collaboration among agronomists and agricultural economists in the economic analysis of fertilizer application.

Received for publication September 13, 1993.

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