The Demand for Fertilizer: A Critical Review

Four studies [2, 3, 7, and 11] and a comment [1] on the demand for fertilizer have appeared in this Review: All fit similar demand specifications to aggregate data for roughly the same time period. Surprisingly, each presents distinctly different results. Together, the studies provide 28 estimates of the price elasticity of fertilizer demand of which only seven are significant and even these range from – 1.21 to 0.46.1 The studies are split evenly on the policy issue of price subsidization. The implications of these results are difficult to assess. If little consensus is possible among researchers on empirical estimates from the same data, the policy implications of the estimates can be seriously discounted. Whether this is a necessary or extreme assessment is the principal question of interest posed by the current state of research on the demand for fertilizer. The aim of this paper is to review the past research with the intention to assess the conflicting estimates. We begin with a brief statement of the underlying methodology; we then critically review each past study; and, finally, we conclude with an over-all assessment of past research on the demand for fertilizer.