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Estimating the Elasticity of Demand and the Production Response for Nitrogen Fertiliser on Irish Farms

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  • Breen, James P.
  • Clancy, Daragh
  • Donnellan, Trevor
  • Hanrahan, Kevin F.

Abstract

The application of artificial fertiliser continues to be a vital component of the production system on the bulk of Irish farms, accounting for approximately nine percent of total costs on dairy and cattle farms (Hennessy et al. 2011). However, the average application of artificial nitrogen fertiliser per hectare of grassland has been in decline recently. This reduction in use is likely due to a number of factors including better on-farm grassland management, as well as better management and utilisation of organic manures, the introduction of the Rural Environmental Protection Scheme, the Nitrates Directive, and more recently higher fertiliser prices. Changes in the level of artificial nitrogen usage are likely to have significant implications for agricultural productivity and the environment, both in terms of nitrate emissions and greenhouse gas emissions. Therefore, a better understanding of the factors affecting fertiliser demand, as well as the relationship between fertiliser use and agricultural production levels is required. In this study an unbalanced panel dataset was constructed using data for the period 2000 to 2010 from the Irish National Farm Survey (NFS) and used to estimate two fixed effects models. The first model estimated the elasticity of demand for artificial nitrogen fertiliser applied on grassland. A second fixed effects model was developed to estimate the relationship between stocking rate and the level of artificial nitrogen applied on grassland.

Suggested Citation

  • Breen, James P. & Clancy, Daragh & Donnellan, Trevor & Hanrahan, Kevin F., 2012. "Estimating the Elasticity of Demand and the Production Response for Nitrogen Fertiliser on Irish Farms," 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK 134965, Agricultural Economics Society.
    • Handle: RePEc:ags:aesc12:134965
    DOI: 10.22004/ag.econ.134965
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    References listed on IDEAS

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    1. Crosson, P. & O'Kiely, P. & O'Mara, F.P. & Wallace, M., 2006. "The development of a mathematical model to investigate Irish beef production systems," Agricultural Systems, Elsevier, vol. 89(2-3), pages 349-370, September.
    2. Higgins, James, 1986. "Input Demand and Output Supply on Irish Farms--A Micro-economic Approach," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 13(4), pages 477-493.
    3. Pierani, Pierpaolo & Rizzi, Pier Luigi, 2003. "Technology and efficiency in a panel of Italian dairy farms: an SGM restricted cost function approach," Agricultural Economics, Blackwell, vol. 29(2), pages 195-209, October.
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    1. Kilcline, Kevin & O'Donoghue, Cathal & Hennessy, Thia & Hynes, Stephen, 2014. "Economic factors affecting concentrate usage on Irish sheep farms," International Journal of Agricultural Management, Institute of Agricultural Management, vol. 3(4), pages 1-10.
    2. Morgenroth, Edgar & Murphy, Martin & Moore, Kyle, 2018. "The environmental impacts of fiscal instruments," Research Series, Economic and Social Research Institute (ESRI), number BKMNEXT351, June.
    3. Micha, E. & Tsakiridis, A. & Ragkos, A., 2018. "Assessing the importance of soil testing in fertilizer use intensity: an econometric analysis of phosphorus fertilizer allocation in dairy farm systems," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277103, International Association of Agricultural Economists.
    4. Ambec, Stefan & Esposito, Federico & Pacelli, Antonia, 2023. "The economics of carbon leakage mitigation policies," TSE Working Papers 23-1408, Toulouse School of Economics (TSE), revised Sep 2023.

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