Washington, DC – August 6, 2025 — A new study published in Applied Economic Perspectives and Policy reveals that short-term price spikes in nitrogen fertilizers, particularly ammonia, are primarily driven by market-specific shocks, rather than by corn or natural gas prices as commonly believed.

Researchers Fengxia Dong and Jayson Beckman of the USDA’s Economic Research Service, and Shawn Arita of North Dakota State University’s Agricultural Risk Policy Center, used a structural vector autoregression (SVAR) model to analyze nearly three decades of U.S. nitrogen market data.

Using prices for natural gas (a key input), corn (a major fertilizer consumer), and ammonia itself, the authors separated nitrogen price fluctuations into demand-side, supply-side, and market-specific shocks. Their results suggests that corn price increases do affect ammonia prices, but with a delay and a disproportionate impact, making fertilizer less affordable and squeezing farm profits.

Natural gas price shocks, while commonly cited, had only brief and limited effects.

The study suggests relying solely on corn or energy prices to understand fertilizer volatility misses the bigger picture. This insight is crucial for designing more effective risk management tools and farm policy.
The study recommends further exploration into how fertilizer market structures and logistics influence price volatility, and calls for greater investment in precision agriculture, infrastructure, and financial tools to cushion producers from future shocks.

To learn more, you can read the full article here: https://doi.org/10.1002/aepp.70004