Economic impact of storage and handling regulations on retail fertilizer and pesticide plants

A budgeting model was developed to estimate the cost of retailing dry bulk fertilizer, liquid bulk fertilizer, anhydrous ammonia, and pesticides for three sizes of plants. Estimates were obtained of the cost to upgrade each of the model plants to comply with Indiana's regulations on the handling and storage of fertilizers and pesticides. Results suggest that there are significant scale economies associated with the regulations and that smaller plants will have a more difficult time rationalizing the investment in containment facilities. The implications of these regulations for the retail fertilizer industry are explored using Porter's five-forces model