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Abstract
The application of artificial fertiliser continues to be a vital component of the production
system on the bulk of Irish farms, accounting for approximately nine percent of total costs on
dairy and cattle farms (Hennessy et al. 2011). However, the average application of artificial
nitrogen fertiliser per hectare of grassland has been in decline recently. This reduction in use
is likely due to a number of factors including better on-farm grassland management, as well
as better management and utilisation of organic manures, the introduction of the Rural
Environmental Protection Scheme, the Nitrates Directive, and more recently higher fertiliser
prices. Changes in the level of artificial nitrogen usage are likely to have significant
implications for agricultural productivity and the environment, both in terms of nitrate
emissions and greenhouse gas emissions. Therefore, a better understanding of the factors
affecting fertiliser demand, as well as the relationship between fertiliser use and agricultural
production levels is required. In this study an unbalanced panel dataset was constructed using
data for the period 2000 to 2010 from the Irish National Farm Survey (NFS) and used to
estimate two fixed effects models. The first model estimated the elasticity of demand for
artificial nitrogen fertiliser applied on grassland. A second fixed effects model was developed
to estimate the relationship between stocking rate and the level of artificial nitrogen applied
on grassland.