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Abstract
This paper develops a model of the impact of introducing a protein payments system on a
farmer's nitrogen application. The model. specifies a relationship between yield, protein,
nitrogen and seasonal conditions and incorporates this relationship into a decision framework
of optimal nitrogen application. The introduction of a protein payments system is shown to
have a positive impact on nitrogen application if the critical protein level for extra payments is
less than or equal to the farmer's existing expected protein level. However, if the reverse
situation applies, the nitrogen response is ambiguous and dependant on both the critical
protein level and the level of yield uncertainty. Further empirical work is required.