Economic evaluation of increased nitrogen fertiliser prices on risk-efficient fertiliser applications

Abstract

World market prices for food and fertiliser have increased significantly, leading to concerns about the impact of high food prices on food security. Therefore, the article investigates the effect of increased nitrogen fertiliser prices on optimal fertiliser use decisions for maize under irrigation, considering the uncertainty regarding maize crop yield response to nitrogen fertiliser application in different production years. The results showed that as the fertiliser price increases from 5 to 19 ZAR/kg, the amount of fertiliser applied decreases from the maximum of 220 kg/ha to around 100 kg/ha. Increased N fertiliser prices would decrease the amount of fertiliser applied, although the response is determined by the combination of fertiliser price, soil used, fertiliser application method and risk behaviour. The expected yields estimated for the optimal nitrogen fertiliser levels showed flat yield responses to decreased fertiliser application levels. The reduction in crop yields due to reduced fertiliser use is never more than 300 kg/ha. The results suggest that the soil used for production does not greatly impact the crop response since the optimal fertiliser decision is adjusted to ensure the maximum possible expected yield. However, the decision to use a single or split application does impact the optimal fertiliser use decision with higher application levels for a split application and a slightly lower crop yield response. The main conclusion is that increased nitrogen fertiliser prices would decrease the amount of fertiliser applied; however, the effect on expected crop yield would be minimal.