The reliance of US agriculture on synthetic fertilizers is significant, with about 78 percent of all farmland utilizing commercial fertilizers in some form. Farmers invest in these fertilizers hoping to enhance crop yields enough to recover their expenses. However, a recent study indicates that a substantial portion of the fertilizer used exceeds the crops’ needs. In corn-soybean systems, in particular, nearly half of the applied fertilizer is not absorbed by the plants, leading to waste and pollution.
Even under normal circumstances, the overuse of fertilizers poses challenges, but recent developments have highlighted the broader consequences. Understanding the full cost of fertilizers is increasingly crucial for fostering an economically stable and environmentally friendly food and farming system.
Rising Costs May Push More Farmers to Bankruptcy
Recent changes in the corn market highlight the interconnectedness of fertilizer prices, production choices, and policy shifts. Fertilizer expenses account for a large portion of operational costs for US farmers, ranging from 33% to 44% for corn and 34% to 45% for wheat. This alone places immense strain on farm finances.
The introduction of tariffs in early 2025 exacerbated the situation, causing an estimated 8% to 15% rise in agricultural input costs at a time when profit margins were already tight. My colleague Dr. Omanjana Goswami addressed the impact of these tariffs on fertilizer costs in a detailed blog post. The situation became more dire as key export markets shrank. For instance, soybean exports plummeted from 985 million bushels in 2024 to 218 million in 2025, and the cessation of a USAID purchasing program cut another $2 billion in crop demand. Consequently, the US is facing an unprecedented agricultural trade deficit.
The ongoing conflict with Iran, which led to the closure of the Strait of Hormuz—a crucial route for fertilizer production inputs—further disrupted global fertilizer markets, driving up costs for farmers. Dr. Goswami and Dr. Kathryn Anderson have explored these issues in their recent analyses.
These challenges arise as the US anticipates a bumper corn harvest. The combination of abundant supply, shrinking markets, and high fertilizer prices is likely to push more farmers into severe financial distress. In fact, more farmers filed for bankruptcy in the first quarter of 2025 than in any whole year since 2021. In this context, cutting costs is not just about efficiency—it’s essential for survival.
The Overlooked Environmental Costs
The excess fertilizer that does not remain on farms ultimately impacts downstream environments, both literally and figuratively. It runs off into waterways, contaminating drinking water supplies. In states heavily dependent on fertilizers like Iowa, this has been associated with increased cancer risks and harm to infant health. Additionally, excess fertilizer contributes to greenhouse gas emissions, including nitrous oxide, which is 273 times more potent than carbon dioxide, and deteriorates air quality through pollutants such as particulate matter and ozone. It also leads to toxic algal blooms in bodies of water and the Gulf of Mexico’s dead zone, negatively affecting human health and resulting in economic losses in tourism, property values, fishing revenue, and biodiversity.
The US Environmental Protection Agency (EPA) reports that the total annual cost of agricultural nitrogen pollution on health, drinking water, and recreation and fisheries amounts to an astonishing $157 billion. Taxpayers and local communities ultimately shoulder these downstream impacts through increased water treatment costs, pollution cleanup efforts, health expenditures, lost tourism revenue, and taxes that fund conservation programs. Recognizing these hidden costs, often referred to as externalities, is crucial if we aim to tackle both the environmental and economic challenges facing agriculture.
Conservation Programs Offer a Lifeline
In 2025, farm bankruptcies increased by 46% from the previous year, driven by high input costs and low output prices. Many farmers who grow commodity crops have been reliant on federal subsidies to remain profitable, signaling a systemic issue. Fertilizer is the most expensive operational cost, with evidence suggesting that up to 50% of it remains unused by crops. A practical solution is to apply less fertilizer—since the cheapest nitrogen is the one not bought.
Fortunately, US Department of Agriculture (USDA) conservation programs offer solutions to reduce fertilizer use, lower costs, and decrease pollution. These programs provide tested methods for reducing fertilizer dependence, cutting input costs, and protecting natural resources.
Federal conservation initiatives fall under Title II of the farm bill, which provides financial incentives and technical assistance for addressing environmental issues like soil health, erosion, and water quality and quantity. The Agricultural Conservation Easement Program, the Conservation Reserve Program, the Conservation Stewardship Program (CSP), and the Environmental Quality Incentives Program (EQIP) are all managed by the USDA’s Natural Resources Conservation Service (NRCS).
In both the 2014 and 2018 farm bills, Congress allocated approximately $6 billion to $6.5 billion annually (in 2023 dollars) for conservation programs. This sum is relatively minor compared to the larger portion of farm bill spending dedicated to commodity support and crop insurance that maintains the current system.
When effectively implemented, conservation practices greatly enhance environmental outcomes. Research indicates that CSP and EQIP can reduce greenhouse gas emissions from fertilizers. More generally, Title II conservation programs yield significant improvements in soil health and other environmental benefits, such as reduced soil erosion and enhanced wildlife habitats. Additionally, conservation practices can help farmers cut costs; for example, a nutrient management plan can save approximately $30 per acre in fertilizer expenses.
Challenges in Program Funding and Staffing
As the frequency and severity of extreme weather events rise, along with the environmental impacts of industrial agriculture, investing in conservation practices becomes increasingly vital—not only for environmental health but also for reducing farmers’ input costs and enhancing profitability. Nevertheless, demand for these programs far exceeds available funding. In fiscal year 2024, only about 43% to 44% of EQIP applicants and 53% to 55% of CSP applicants received funding, even with increased funding from the Biden administration. Funding rates are expected to drop as temporary funds expire, particularly if the current House farm bill proposal to cut EQIP by $1 billion is enacted. This indicates that farmers, as land stewards, are eager to adopt conservation practices but require technical and financial support to do so, especially during the early stages of transition.
However, conservation programs alone are insufficient. Annual funding for NRCS field staff and technical assistance is crucial for effectively delivering these programs, but it has not kept pace with demand. Without adequate appropriations, even increased conservation funding will fall short of reaching farmers at the necessary scale.
As farmers grapple with unprecedented financial challenges, expanding access to conservation programs is not only an environmental necessity but a vital economic support. As Congress deliberates over the next farm bill, it has a distinct opportunity to address the economic and environmental challenges posed by fertilizer use. By strengthening investment in conservation and ensuring ongoing support for NRCS staffing and technical assistance, Congress can empower farmers to reduce costs, achieve their conservation objectives, and mitigate environmental impacts that affect everyone.
