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Dynamic changes in spatial competition for the nitrogen fertilizer industry in the United States

Author

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  • Wilson, William W.
  • Shakya, Sumadhur
  • Dahl, Bruce

Abstract

Changes in crops, increased demand, reductions in natural gas prices, and spatial competition among producers and imports are affecting the nitrogen fertilizer industry. A spatial competition model of the US nitrogen fertilizer industry was developed to determine the likely future spatial distribution of production and flows for nitrogen. The model minimizes production and shipping costs from plants and imports to consuming regions. A base model of 2010–2012 was developed and a future case was modeled representative of 2018. The most valuable (lowest cost) origins for US processing are primarily in Louisiana, followed by other states with low natural gas prices. Shadow prices indicate locations in Wyoming, Iowa, Georgia, Louisiana, Nebraska, Kansas, and North Dakota would be positive. Not all of proposed plants would be viable and if forced to operate at 75% of capacity or more only a few of the new plants including those located in Louisiana, Iowa and North Dakota would be viable.

Suggested Citation

  • Wilson, William W. & Shakya, Sumadhur & Dahl, Bruce, 2015. "Dynamic changes in spatial competition for the nitrogen fertilizer industry in the United States," Agricultural Systems, Elsevier, vol. 135(C), pages 10-19.
    • Handle: RePEc:eee:agisys:v:135:y:2015:i:c:p:10-19
    DOI: 10.1016/j.agsy.2014.11.006
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    References listed on IDEAS

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    1. Francisco Rosas, 2011. "World Fertilizer Model-The WorldNPK Model," Food and Agricultural Policy Research Institute (FAPRI) Publications (archive only) 11-wp520, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    2. Olson, Kent D. & Rahm, Michael & Swanson, Michael J., 2010. "Market Forces And Changes In The Plant Input Supply Industry," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 25(4), pages 1-6.
    3. Maung, Thein A. & Ripplinger, David G. & McKee, Gregory J. & Saxowsky, David M., 2012. "Economics of Using Flared vs. Conventional Natural Gas to Produce Nitrogen Fertilizer: A Feasibility Analysis," Agribusiness & Applied Economics Report 133410, North Dakota State University, Department of Agribusiness and Applied Economics.
    4. Wilson, William W. & Shakya, Sumadhur & Dahl, Bruce L., 2014. "Dynamic Changes in Spatial Competition for Fertilizer," Agribusiness & Applied Economics Report 174402, North Dakota State University, Department of Agribusiness and Applied Economics.
    5. Casavant, Kenneth L. & Denicoff, Marina R. & Jessup, Eric & Taylor, April & Nibarger, Daniel & Sears, David & Khachatryan, Hayk & McCracken, Vicki A. & Prater, Marvin E. & O'Leary, Jeanne & Marathon, , 2010. "Study of Rural Transportation Issues," Research Reports 147544, United States Department of Agriculture, Agricultural Marketing Service, Transportation and Marketing Program.
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    Cited by:

    1. Wilson, William W. & Shakya, Sumadhur, 2023. "Quantifying impacts of competition and demand on the risk for fertilizer plant locations," Journal of Commodity Markets, Elsevier, vol. 30(C).
    2. Ilinova, Alina & Dmitrieva, Diana & Kraslawski, Andrzej, 2021. "Influence of COVID-19 pandemic on fertilizer companies: The role of competitive advantages," Resources Policy, Elsevier, vol. 71(C).

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