The purpose of this study is identifying the sources of declining in chemical fertilizer consumption in Korea. Furthermore, this study aims at providing forecasts of fertilizer demands incorporating the impacts of those sources. The study estimates a demand function of fertilizer, and investigates the impacts of reducing fertilizer subsidy on fertilizer demand. The impacts of the policy change on farming cost are estimated by an input-output analysis. The results are combined with those of a time-series estimation of per acre fertilizer consumption and total acreage in order to derive a complete forecast of fertilizer demand in 2013. The paper shows that fertilizer consumption will decline substantially in 10 years, and fertilizers will be over-supplied unless an effective structural adjustment is performed by the industry.