After land and seed, nitrogen for fertilizer is the largest yearly expense for corn and soybean farmers. It costs more per acre than fuel, crop insurance or labor.

Most nitrogen fertilizer comes from factories, where the element is pulled from the air and liquefied using hydrogen in an energy-intensive process. The liquid, or ammonia, is then transported to farms as fertilizer.

Production of this fertilizer, which has revolutionized agriculture in the past century, is clustered around cities like Houston and Pittsburgh. Minnesota has none.

But a Minnesota company in its infancy is hoping to change how farmers get nitrogen, a shift that would reshape farming.

Researchers at the University of Minnesota have built small-scale prototypes of machines that can make nitrogen fertilizer out of air and water. Kennedy Research, an ag startup in Murdock, Minn., is negotiating with university officials for a licensing agreement to build a larger prototype that it could sell to farmers.

U professor Roger Ruan patented the technology in 2014, and has built at least three prototypes that work.

"The first thing we have to do is duplicate his process to make sure we can make that work, and then scale that up to make a product that would be of interest to a reasonably sized farm," said Pete Kennedy, who started Kennedy Research.

Kennedy said there are 133,000 farms in the Upper Midwest that grow at least 500 acres of corn.

His firm received a $35,000 grant from the Minnesota Department of Employment and Economic Development to develop the liquid nitrogen generator, which will be marketed under the brand name FarmGen.

Ruan, a professor in the U's Department of Bioproducts and Biosystems Engineering, said it will take time to come up with a large-scale prototype, maybe even a few years.

"This is still only a benchtop lab system, very small-scale," Ruan said. "But the main idea is simply to use air, water and electricity to produce nitrate."

In the prototypes, plasma ionizes nitrogen in the air and interacts with oxygen to infuse water with nitrates, which can be used as fertilizer. For now, the best application for the machine would be hydroponic growing operations since the end product is nitrate-rich water.

For farmers, the machine would have to be much bigger and the nitrates must either be sprayed on fields or the machine will need to produce nitrates in a different format than water.

"This is very preliminary, far from optimized. Pete is interested so we will work together to build a prototype," Ruan said. "I think it could be a revolutionary technology for fertilizer production."

The job ahead of Ruan and Kennedy is figuring out a way to design the machine to be cost-effective, and to figure out how to produce fertilizer in different forms than nitrate-rich water.

"What this is going to come down to, and what we have to prove out as we go through our product development, is how efficient we can make this process," Kennedy said.

If they can do that, the value proposition for farmers will be relatively straightforward.

"You essentially plug it into the electric and hook up the garden hose and this thing starts chugging out nitrogen fertilizer," Kennedy said. "It isn't going to be a complex process."

Most ammonia, or liquid nitrogen, is made using natural gas as a source of hydrogen and a process developed by German chemist Fritz Haber. The process is a large source of greenhouse gas emissions.

A liquid nitrogen generator that uses only air and water, when powered by solar or wind energy, would emit zero greenhouse gases.

Ideas and suggestions for articles for the agriculture page are welcome at adam.belz@startribune.com.

Adam Belz • 612-673-4405 • Twitter: @adambelz