A new white paper from the Agricultural Risk Policy Center (ARPC) at North Dakota State University, Crop Insurance and Nitrogen Reduction Under Elevated Fertilizer Prices (ARPC White Paper 2026–08), examines how elevated fertilizer prices may influence nitrogen application decisions for U.S. corn producers and how crop insurance provisions may interact with those decisions. Authored by Francis Tsiboe, Dylan Turner, Shawn Arita, Kyle Jore, Rwit Chakravorty, and Seth Meyer, the paper focuses on the demand-side margin of the 2026 fertilizer price disruption, highlighting producers’ own input-use adjustments alongside broader federal supply-side responses.

The analysis builds on agronomic literature suggesting that U.S. corn producers often apply nitrogen at rates somewhat above the agronomic profit-maximizing level, largely as a hedge against uncertain weather and growing conditions. Under elevated fertilizer prices, the cost of that hedge increases. Although recent research suggests nitrogen reductions of 12% to 16% may be feasible without measurable expected yield loss, this white paper evaluates a more conservative 5% reduction scenario.

Simulation results suggest that a 5% reduction across insured U.S. corn acres would save roughly 300,000 short tons of nitrogen. The paper estimates that this scenario would increase federal indemnities by approximately $0.10 billion, while leaving the Approved Insurance Provider rate of return near 16.9%, above the 14.5% target rate established under the Standard Reinsurance Agreement.

The white paper emphasizes that crop insurance is not the primary driver of nitrogen application decisions. Weather risk, soil conditions, fertilizer-market expectations, crop rotations, equipment, labor, and custom-applicator scheduling remain central to producer decisions. However, the authors identify two crop insurance features that may matter at the margin under shock-price conditions: Good Farming Practices and the multi-year Actual Production History calculation.

The paper raises several open questions for further consideration, including whether additional clarity may be needed in how Good Farming Practices are interpreted under sustained shock-input-price conditions, whether existing yield-modification provisions could apply to documented producer-elected reductions, and how any additional AIP exposure might be addressed if policy changes were pursued.

The ARPC White Paper is available through the Agricultural Risk Policy Center at North Dakota State University: ARPC White Paper 2026-08
Media Contact:
Agricultural Risk Policy Center (ARPC)
North Dakota State University
arpc@ndsu.edu
https://www.ndsu.edu/agriculture/arpc