Economic and Marketing Information
FOR INDIANA  FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana    
University, Lafayette, Indiana
February 29,  1968
INDIANA  FARMERS
The Indiana COMMERCAL FERTILIZER Industry
by J. W. Hanlon*
J.HE INDIANA commercial fertilizer industry has undergone rapid
change in the past decade. Total consumption has increased steadily, with
the increase unevenly distributed
among the three primary nutrient elements, among the various grades of
fertilizers, and among the several product forms. New techniques of manufacturing, handling and applying commercial fertilizer have been developed
and adopted, while shifts have occurred
in the relative importance of certain
previously known techniques. These
changes have necessitated complementary adjustments in the marketing
channels and techniques utilized in Indiana. A major adjustment has been
the increasing concentration of ownership and control of the industry by
petroleum and chemical producers. The
farmer then is faced with new alternatives as he makes decisions on type of
fertilizer, quantity, timing and method
of application and place of purchase.
Fertilizer Use
Indiana is a large user of commercial
fertilizer. Nearly two million tons
was used in 1966. In a 1965 study
comparing fertilizer usage in Ohio,
Indiana, Illinois, Michigan, Minnesota,
Iowa and Missouri, Indiana ranked
first in the amounts of nitrogen (N),
phosphorous (P), and potassium (K)
applied per acre of corn; second in
N and third in P and K applied to
wheat; and seventh, fifth and fourth
in N, P, and K, respectively, applied
per acre of soybeans.
The total tonnage of commercial
fertilizer applied annually to Indiana
soils increased over 80 percent from
1956 to 1966 (Table 1). Annual ap-
* Former staff member in Agricultural
Economics. Sincere appreciation is expressed to Charles F. Douglas of Tennessee Valley Authority and to Robert C.
Rund and Edward A. Peterson of the
office of the Indiana State Chemist for
the willing and patient consultations offered in various phases of this study.
plication of nitrogen increased by 300
percent, followed by K20 at 95 percent and PoO; with an increase of 65
percent.
The average N content of commercial fertilizers applied to Indiana
soils rose from 7.29 per cent in 1956
to over 16 percent in 1966. This increase was due chiefly to greater use
of high analysis nitrogen materials
for direct application, including anhydrous ammonia, aqua ammonia and
nitrogen solutions. The average content of P2O5 ranged between 13 and
14 percent during this period, while
the K20 content ranged between 14
and 17 percent.
Industry  Organization
The Indiana commercial fertilizer
industry is organized into three major
manufacturing-marketing systems differentiated according to the final product used at the farm level. The three
final products are liquid nitrogent
materials used for direct application
to the soil, dry fertilizer in bulk or
Table 1.   Fertilizer applied to Indiana soils, 1955-66
Mate
rials
Available primary
and
mix
lutrients
Year
tures
N
P205
K20
thousand  tons
1956
1,1 14
81
153
174
1957
1,066
89
143
165
1958
1,112
101
156
179
1959
1,178
132
166
186
1960
1,146
133
160
160
1961
1,094
143
149
168
1962
1,236
173
163
190
1963
1,437
201
196
230
1964
1,571
242
208
252
1965
1,436
244
191
221
1966
1,997
333
273
339
Source: Data for 1956-62 are from Janssen,
M. R., Armstrong, J. H., and Barber, S. A.,
FERTILIZER USE IN INDIANA, Research
Progress Report 81, Sept. 1963. Other data
are from "Inspection of Commercial Fertilizers," Indiana State Chemist, Purdue University.
bags, and fluid fertilizers. These three
systems in practice are highly integrated with one another in terms of
ownership and operation, but they are
differentiated here to facilitate identification of the several phases of the
industry that occur in Indiana.
Liquid nitrogen materials for direct
application typically move directly
from the ammonia manufacturers and
processers through local outlets to
farmers. Application services are usually provided at these outlets. Anhydrous ammonia accounted for about
60 percent of all N applied to Indiana
soils in liquid nitrogen materials in
1967. Nitrogen solutions accounted
for 35 percent and aqua ammonia the
remaining 5 percent.
There were 570 local outlets for
anhydrous ammonia in 1967, and only
211 in 1965. In 1967, 318 of these
outlets were owned or controlled by
eleven national manufacturers of petroleum products, and 153 by 15 national chemical manufacturers (Table
2). These manufacturers supply the
local outlets with anhydrous ammonia.
Individual petroleum producers owned
or controlled a range of 1 to 74 outlets, compared with a range of 1 to
26 for the chemicals manufacturers.
The forms of control included a variety
of leasing and financing arrangements.
The second manufacturing-marketing system is for dry fertilizer in bags
or bulk. Bag distribution, while still
important in Indiana, has been seriously challenged in recent years by
the bulk blending system where fertilizer materials are dry blended at the
local blending plant to produce compound fertilizer that is usually marketed in bulk. A second but less
prevalent way of marketing bulk
fertilizer is through bulk stations which
receive mixed or blended fertilizer in
a limited number of grades and sell
it in bulk to farmers.
There were 500 retail outlets for
dry bulk fertilizer in Indiana in 1967,