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The fertilizer industry produces nitrogen, phosphate, and potassium fertilizer, and it experienced exponential growth in the second half of the twentieth century. In the U.S., 400,000 tons of nitrogen were consumed in 1940 and 22.3 million tons were consumed in 1997. Nitrogen fertilizer, the focus of Gulf of Mexico eutrophication concern, is produced mainly from ammonia which is a by-product of natural gas extraction. Natural gas exploration companies produce and sell their own fertilizer (like Unocal and Norsk-Hydro ASA). More commonly, the ammonia is processed by a specialized company. Because this process is complex and requires heavy capital investment, fertilizer producers tend to be large with revenues in the billions. The consumption of fertilizer is concentrated along with agricultural production in the Mississippi River basin. Not surprisingly, fertilizer industry associations such as The Fertilizer Institute and the International Fertilizer Association dispute any mention of “excessive” fertilization.
Fertilizer production is very capital intensive, but it is a mature industry today after the decades of rapid expansion. Innovations are not revolutionary and the emerging markets have been filled. The current fertilizer market is characterized by excess supply, slow rising demand and growing international competition from Russia and China. Subsequently, growing concerns over hypoxic zones, such as the Gulf, could not come at a worse time. Making matters worse, fertilizer producers are often involved in pesticide as well, a market that is shrinking in the U.S. due to regulation and development of resistant seed varieties.
In defense of their market, the fertilizer industry holds the position that any increase in agricultural production is necessary to feed the global population. They point to studies showing rising yields per ton of fertilizer as evidence that fertilization is at an optimal level. Lobbying groups like The Fertilizer Institute are fighting for billions of dollars on Capital Hill that could be lost as a result of regulations like nitrogen budgets. The industry is involved in studies of the effects of Gulf of Mexico hypoxia and advertises results supporting their position (U. of Alabama study). Also useful in the defense of their corporate incomes are farmers, whose yields and incomes would also drop as a result of nitrogen restrictions. If you haven't read the discussion of farmers' relationship to the problem follow this link. Or, click on the NEXT button for "Ecological Economics of Hypoxia"