Efficient nutrient use is critical to ensure economical crop production while minimizing the impact of excessive nutrient applications on the environment. Nitrogen (N) is a key component of agricultural production, both as an input to support crop production and as a waste product of livestock production. Increasing concern for future sustainability of agricultural production and preservation of the natural resource base has led to the development of nutrient budgets as indicators and policy instruments for nutrient management. Nutrient budgets for N have been developed by the Organization for Economic Co-operation and Development (OECD) as agri-environmental indicators to compare the evolving conditions in member states, and are also used by the US Department of Agriculture Natural Resource Conservation Service (USDA-NRCS) to develop nutrient management plans. Here, we examine the crop and animal production systems, drivers impacting management choices, and the outcome of those choices to assess the utility of gross annual N balances in tracking the progress of management decisions in minimizing the environmental impact of agricultural production systems. We use as case studies two very different agronomic production systems: Mississippi, USA and Poland. State and country level data from the US Department of Agriculture and OECD databases are used to develop data for the years 1998–2008, and gross annual N balances are computed. Examination of agricultural production practices reveals that the gross annual N balance is a useful tool in identifying differences in the magnitude and trends in N within agricultural systems over large areas. Significant differences in the magnitude of the N budget were observed between the highly diversified, small-scale agriculture common to Poland, and the large-scale, intensive agriculture of Mississippi. It is noted that use of N balance indices can be problematic if the primary intent is to reveal the impact of economic drivers, such as crop prices, or management choices, such as tillage or crop rotation. Changes in cropping systems in response to commodity prices that improve N balance can be masked by detrimental growing conditions, including edaphic, biotic and weather conditions, that are outside of the producers’ control. Moreover, use of large area-scale indices such as country or state-wide balances may mask the severity of localized nutrient imbalances that result from regionalized production systems that overwhelm the nutrient balance, such as confinement livestock production. Development of a policy to address environmental impact and establish sustainable production systems must consider the year-to-year variability of drivers impacting agricultural production, and the spatial heterogeneity of nutrient imbalance.