IC 8418 A Statistical Analysis Of U.S. Demand For Phosphate Rock, Potash, And Nitrogen

This study investigates the identity and relative importance of factors affecting the future demand for phosphate rock, potash, and nitrogen. The main objective is to analyze demand relationships for these chemical raw materials for some specified past period, and to utilize this information to make projections of consumption into some designated future period. The end-use approach is used, which divides total consumption of each chemical raw material into agricultural, industrial, and export use. Multiple regression analysis is employed to statistically measure the relative effects of the different factors on consumption in each end use. The general method centers on the construction of a consumer demand model, the fitting of the respective equations in the model, and the interpretation of the statistical results. Direct and cross price elasticities of demand are computed for each end use of the chemical raw materials. These give an insight into expected changes in consumption with respect to given changes in price. The results of this study indicate that price, consumer income, and level of technology are factors which measurably affect consumption of chemical raw materials. For phosphate rock and potash, the agricultural and industrial end uses showed an inelastic demand, whereas for nitrogen, all end uses (including export use) exhibited an elastic demand. Among the chemical raw materials, average annual growth of consumption of nitrogen for agricultural and export uses to 1980 is expected to be notably higher than that for phosphate rock and potash.