Agricultural Economics Department


Date of this Version



SB 545. The Agricultural Experiment Station University of Nebraska-Lincoln Institute of Agriculture and Natural Resources


Copyright 1980 University of Nebraska-Lincoln


1. About 1.8 million tons (1.6 million t) of fertilizer were applied by ~ ebraska farmers in 1978, an increase of nearly 800 percent over 1954 levels. Slightly more than one-third of recent usage was dry-bulk fertilizer.

2. Utilization of plant capacity was the most important of the cost factors analyzed. Even at capacity output, average fixed costs accounted for half to two-thirds of average total costs. Increasing plant output from 50 percent to 100 percent of capacity saved from $12.23 to $17.01 per ton ($13.48 to $18.75/t), depending on plant size and type of application/delivery system.

3. Economies of size were relatively modest, due in part to higher delivery costs associated with larger delivery territories. Savings realized from operating the largest size plant (3840 tons or 3484 t per year capacity) as compared with the smallest size (2160 tons or 1960 t per year) averaged $2.74 per ton ($3.021t).

4. The lowest cost delivery system utilized pickup trucks to deliver portable spreaders filled with fertilizer. The cost advantage of this system over flotation spreaders served by nurse trucks averaged $2.4 7 per ton ($2.72/t). Nurse trucks delivering fertilizer and portable spreaders to farms had average costs $4.09 per ton ($4.511t) above costs for the pickup-truck delivery system.

5. The effect of sales density on average total costs was relatively small. The average saving from increasing effective density from 5 to 10 tons per square mile (1.75 to 3.5 tlsq. km) was only 79 cents perton (87¢1t).

6. Excess capacity does not appear to be a problem for most Nebraska dry-bulk fertilizer plant operations. Based on the present study and related research, consolidation of plant facilities, even if rail service should be discontinued to many plants, would not generally be economically advantageous. Increasing delivery costs associated wid increasing plant scale negate much of the cost advantage realize( from increasing plant size. Changes in fertilizer consumption pattern could alter the equilibrium, however.

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