US agriculture is heavily dependent on synthetic fertilizer, with approximately 78 percent of all cropland receiving commercial fertilizers in one form or another. Farmers buy it, apply it, and hope it boosts yield enough to offset the cost. In a recent analysis, however, we found that much of the fertilizer they apply is more than crops need. In corn-soybean systems particularly, we found that as much as half of the fertilizer applied remains unused by crops, becoming both waste and pollution.
This is a problem even in the best of times, but recent events are underlining the implications of excess fertilizer use. Now more than ever, understanding the true cost of this resource is key to building a food and farm system that is both economically resilient and environmentally sustainable.
Rising costs may bankrupt more farmers
Recent developments in the corn market underscore how fertilizer prices, production decisions, and broader policy adjustments are intertwined. Fertilizer costs represent a substantial share of operating expenses for US farmers, ranging between 33% and 44% for corn and 34% to 45% for wheat. That alone places enormous pressure on farm budgets.
Then came the tariffs of early 2025. These added an estimated 8% to 15% increase in agricultural input costs at a time when margins were already strained. More on this can be found in a blog post by my colleague Dr. Omanjana Goswami, who discussed the implications of tariffs on fertilizer costs. The situation worsened as key export markets contracted. Soybean exports, for example, declined from 985 million bushels in 2024 to 218 million bushels in 2025, while the dismantling of a USAID purchasing program eliminated another $2 billion in crop demand. The United States is experiencing a historic agricultural trade deficit as a result.
Compounding these pressures is the war against Iran, which effectively closed the Strait of Hormuz, an essential shipping route for inputs used in fertilizer production, further disrupting global fertilizer markets and driving up input costs for farmers. My colleagues Dr. Goswami and Dr. Kathryn Anderson explored these impacts in recent posts.
These disruptions come at a moment when the United States is estimated to have a bumper harvest for corn. This record-high supply, combined with shrinking markets and persistently high fertilizer prices, will cause many more farmers to face extreme financial pressures. More farmers filed for bankruptcy in the first quarter of 2025 than in any full year since 2021. Given these dire financial conditions, reducing costs becomes not just a matter of improving efficiency, but a matter of economic survival.
The environmental price we don’t talk enough about
When excess fertilizer doesn’t stay on the farm, the costs flow downstream, literally and metaphorically. Excess fertilizer runs off into waterways and pollutes drinking water. In fertilizer-intensive states like Iowa, this is linked to rising cancer risks and infant health harms. Excess fertilizer also contributes directly to heat-trapping emissions, including nitrous oxide, which is 273 times more potent than carbon dioxide, and harmful air pollutants like particulate matter and ozone lead to poor air quality. Excess fertilizer is also responsible for toxic algal blooms in lakes and rivers, and the Gulf of Mexico dead zone. Algal blooms are not only bad for human health, but also result in losses in tourism spending, shoreline property values, fishing revenue, and biodiversity.
According to the US Environmental Protection Agency (EPA), the total annual impact of agricultural nitrogen pollution on health, drinking water, and recreation and fisheries is a staggering $157 billion. Taxpayers and local communities ultimately bear the burden of these downstream impacts through increased water treatment costs, pollution cleanup costs, public health expenditures, tourism income losses, and the taxes we pay to subsidize conservation programs. Recognizing these hidden costs, which my fellow economists and I call externalities, is essential if we want to address both the environmental and economic viability concerns of agriculture.
Conservation programs that cut fertilizer use can help keep farmers afloat . . .
Farm bankruptcies in 2025 were up 46% from 2024 due to high input prices and low output prices. Many commodity crop farmers have had a long-term dependence on federal subsidies for profitability. This is a clear warning sign that something isn’t working. Fertilizer makes up the highest operating cost, and evidence suggests that up to 50% of fertilizer applied in fields remains unused by the crop. The clear solution to this is applying less fertilizer; after all, the least expensive pound of nitrogen is the one you don’t have to buy.
The good news is that US Department of Agriculture (USDA) conservation programs could both cut costs for farmers and reduce the pollution associated with fertilizer overuse. These programs offer practical, proven pathways to reduce fertilizer dependence, lower input costs, and protect natural resources.
Federal conservation programs fall under Title II of the farm bill, which authorizes the provision of financial incentives and technical assistance for addressing environmental concerns such as 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 set aside roughly $6 billion to $6.5 billion for conservation programs each year (in 2023 dollars). This is relatively small compared to the much larger share of farm bill spending that goes toward commodity support and crop insurance that reinforce the current system.
When implemented correctly, conservation practices significantly improve environmental outcomes. Our study shows that CSP and EQIP can reduce heat-trapping emissions from fertilizer. More broadly, Title II conservation programs result in significant gains for soil health, and other environmental benefits such as reduced soil erosion and improved wildlife habitat. In addition, conservation practices can help cut costs for farmers: a nutrient management plan, for example, can save farmers approximately $30 per acre in fertilizer costs.
. . . But the programs are underfunded and understaffed
With the frequency and severity of extreme weather events increasing, and the environmental impacts of industrial agriculture following suit, it is all the more important to invest in conservation practices that have positive effects not only on the environment, but also on farmers’ input use and, ultimately, profitability. Yet, demand for these programs far outstrips available funding. In fiscal year 2024, only about 43% to 44% of EQIP applicants and 53% to 55% of CSP applicants were funded, even with increased funding from the Biden administration; funding rates are likely to decline as those temporary funds expire, particularly if the current House farm bill proposal to cut EQIP by $1 billion is enacted. This suggests that farmers, being land stewards, are eager to adopt conservation practices but need technical and financial resources to support them, especially early in their transition.
At the same time, conservation programs alone are not enough. Annual appropriations for NRCS field staff and technical assistance are critical to delivering these programs effectively, but they have not kept pace with demand. Without adequate appropriations, even expanded conservation funding will fall short of reaching farmers at the scale needed.
At a time when farmers are facing unprecedented financial strain, expanding access to conservation programs is not just an environmental imperative but a critical economic lifeline. As Congress negotiates the next farm bill, it has a clear opportunity to address the economic and environmental burdens of fertilizer use. By expanding investment in conservation, alongside sustained appropriations for NRCS staffing and technical assistance, Congress can empower farmers to lower their costs, help them achieve their conservation goals, and reduce the environmental impacts that affect us all.