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Agricultural Policy Review

Abstract

Agricultural scientists and economists have long been interested in quantifying the optimal amount of nitrogen needed on an acre of corn. Notions of optimality are sometimes based on principles of cost and revenue, sometimes on yield targets, and other times on environmental concerns. Ask any producer, fertilizer retailer, or agronomist how much nitrogen a corn producer needs to apply and you will probably not be surprised to hear, repeatedly, “It depends.” Even if the optimal amount of nitrogen can be computed for a single yield, being right ex post hinges critically on weather and other factors. The nitrogen management decision is complicated because the yield response to nitrogen depends on a host of variables, most of which are uncertain when nitrogen is applied and beyond the control of the producer: rainfall amounts and timing, in-field nutrient availability, and growing conditions top the list.

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