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The Optimal Number and Size of Fertilizer Plants Under Hazardous Materials Regulations

Author

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  • Lahlum, Suzanne M.
  • Dooley, Frank J.

Abstract

Public concern about hazardous materials, such as agricultural fertilizers, has steadily increased. Thus, North Dakota created Recommended Management Practices for The Primary and Secondary Containment of Fertilizers (RMP). This study attempted to determine how compliance with RMP guidelines affects logistic, operating, and investment costs of fertilizer plants and evaluate the effect on plant size and industry market structure. This study will be important to fertilizer plant managers because the North Dakota Health and Consolidated Laboratories, which regulates the North Dakota fertilizer industry, has been approached about introducing legislation that would create and support consistency within the industry. A cost-minimizing, mixed-integer linear programming model was employed in four different scenarios to analyze the effects of possible fertilizer legislation. Results show forced compliance with the RMP guidelines will (1) start a shake-out of excess capacity, (2) generate cost savings of 8 percent for the industry, and (3) discourage storage capacity expansion.

Suggested Citation

  • Lahlum, Suzanne M. & Dooley, Frank J., 1996. "The Optimal Number and Size of Fertilizer Plants Under Hazardous Materials Regulations," MPC Reports 231704, North Dakota State University, Upper Great Plains Transportation Institute.
    • Handle: RePEc:ags:ndtimr:231704
    DOI: 10.22004/ag.econ.231704
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    File URL: https://ageconsearch.umn.edu/record/231704/files/agecon-ndsu-378-784-u664-m-96-53B.pdf
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    References listed on IDEAS

    as
    1. Dahl, Bruce L. & Cobia, David W. & Dooley, Frank J., 1995. "Distribution Costs for Dry Fertilizer Cooperatives," Agricultural Economics Reports 23117, North Dakota State University, Department of Agribusiness and Applied Economics.
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    3. Duane S. Rogers & Jay T. Akridge, 1996. "Economic impact of storage and handling regulations on retail fertilizer and pesticide plants," Agribusiness, John Wiley & Sons, Ltd., vol. 12(4), pages 327-337.
    4. P. W. Lytle & L. D. Hill, 1973. "The Optimum Combination of Resources Within and Among Country Elevators," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 55(2), pages 202-208.
    5. Dennis, Scott M., 1995. "Risk Costs of Transporting Hazardous Materials By Rail: 1982-1992," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 35(2).
    6. Dooley, Frank J. & Bangsund, Dean A. & Leistritz, F. Larry & Fischer, William R., 1993. "Estimating Optimal Landfill Sizes and Locations in North Dakota," Agricultural Economics Reports 23366, North Dakota State University, Department of Agribusiness and Applied Economics.
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