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14/12/2010
1
Identifying and examining the current challenges and opportunities faced by the fertilizer industry
Luc M. Maene, Director General, IFA
The challenges
14/12/2010
2
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
Growing demands on agriculture
Clothing a growing population
Fibres for construction, medicine and other non-clothing purposes
Production of chemicals and other industrial inputs
Crop-grown pharmaceuticals
Fibre and Other Components
Feeding a growing population
Ensuring minimal caloric intake
Growing preferences for meat
Diversifying diets to ensure balanced nutrition
Food
More people require more livestock
Meat consumption per person is rising
Feed
Concerns over the longevity of fossil fuel reserves
Security and dependence issues
Increasing energy demands per person
Reducing pollution from current fuels
Bioenergy
Food and nutrition security
Climate change
Conserving b
iodiversity
Envi
ronm
ent
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
A moving target
• Growing scarcity, changing distribution, contamination, salinization…
• New cropping patterns, declining soil pools of nutrients, new recycling loops in nutrient cycles…
• Changing weather patterns (climate change), soil degradation, rural depopulation…
• Urbanization (often on fertile land), deforestation, reforestation, wetlands disappearing…
WATERMULTIPLYINGDEMANDS ONAGRICULTURE
CHANGINGCONDITIONS FOR
AGRICULTURELAND USE
14/12/2010
3
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
World population growth(billion people)
60
50
40
30
10
0
Developed countries
Developing countries
Source: UN
Source: FAO
Undernourishment in the
world (million people)
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
Limited immediate availabilityof additional arable land
Arable area
m2 per person
World population
in billion
| Source: Lammel (2007),
citing FAO: Towards 2015/30 (2002)
5,5
6
6,5
7
7,5
8
8,5
9
9,5
2000
2200
2400
2600
2800
3000
1996 2015 2030
14/12/2010
4
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
Yield gaps and relative land availabilityin different countries
| Source: World Bank Report, 2010
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
Changes in food consumption patternsdue to income growth
60
50
40
30
20
10
0
-10
| Adapted from OECD-FAO (2009)
OECD production non-OECD production
non-OECD consumptionOECD consumption World production
Wheat Coarse
grainsRice Oilseeds Oilmeals Vegetable
oils
Sugar
% change
2018
compared to
2006-2008
average
14/12/2010
5
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
Population trends and nitrogen useduring the 20th century
1900 1950
Wor
ld p
opul
atio
n (m
illio
ns)
| Adapted from Erisman, et al. 2008
2000
6000
4000
3000
2000
1000
0
5000 40
30
20
10
0
50
% W
orld population
Average
fertilizerinput (kg N
ha-1
yr -1)
Meatproduction (kg person
-1yr -1)
World population
Average fertilizer input
% world population
fed by Haber-Bosch nitrogenMeat production
World population
no Haber-Bosch nitrogen
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
Nitrogen use efficiency
6
17
41
78
118
125
125
130
151
178
243
Sub-Saharan Afr
Africa
South Africa
North Africa
WORLD
Central Europe
South Asia
Latin America
North America
West Europe
East Asia
Fertilizer consumption by region, 2007/08
(Kg/ha)
| Source: IFDC, Africa Fertilizer
CHINA - N use efficiency
(PFP: kg grain/kg N applied)
Nitrogen Partial Factor Productivity (PFPN)
for maize in the U.S.
14/12/2010
6
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
Renewable energy developmentWorld biofuel production
| Source: OECD-FAO
Billion litres
0
20
40
60
80
100
120
140
160 Ethanol production Biodiesel production
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
Areas of physical and economic water scarcity
• 1,000 litres of water are
needed to produce a kg
of maize
• 1,500 litres to produce a kg
of wheat
• 2,500 litres for a kg of rice
• 4,000 litres for a kg of poultry
• 15,000 litres for a kg of beef
• 3,000 litres per person to
produce our daily food intake
ON AVERAGE
| Source: IWMI
Little or no water scarcity
Approaching physical water scarcity
Physical water scarcity
Economic water scarcity
Not estimated
14/12/2010
7
The opportunities
and industry initiatives
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
Opportunities for the fertilizer industryand the farming sector
Improve the efficiency of fertilizer manufacturing plants
Develop new products of high performance
Increase irrigated conditions and water use efficiency
Increase cropping intensity and crop diversification
Improve the availability and affordability of fertilizers in Africa
Investment in agriculture must increase so it can play
its role as an engine of growth and poverty reduction
and act as a longer-term pillar to fight hunger!
14/12/2010
8
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
IFA initiatives
Africa forum
Farming First
Fertilizer use and human health
Effective last-mile delivery
Protect&sustainThe global fertilizer industry’s product
stewardship initiative
Task force on climate change
Water management initiative
14/12/2010
9
Fertilizer demand situation
and outlook
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
Global fertilizer consumption trends
| Source: IFA Agriculture
0
20
40
60
80
100
120
140
160
180
-20
-15
-10
-5
0
5
10
15
20
Consumption (Mt nutrients)
2000/01 to 2010/11 2000/01 to 2010/11
Year to year variation (%)P2O5N K2O
P2O5N K2O
14/12/2010
10
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
Total fertilizer use by cropat the global level in 2006/07 (%)
Other crops, 15
Oil palm, 1Soybean, 3
Sugar crops, 4
Cotton, 4
Other OS, 5
Other CG, 5
Fruits & veg.
Maize
Wheat
Rice
17
16
15
15
| Source: IFA Agriculture
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
Total fertilizer use by cropfor the main countries in 2007/08
| Source: IFA Agriculture
14/12/2010
11
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
Insights: evolution of fertilizer products
• Trend toward high-
analysis products
• Safety and security
concerns
• Displacement of ABC, AN,
FMP
• Growth for UAN, AS
• Demand recovery for SSP
• Further growth for NPKs
on account of balanced
fertilization and NBS-
scheme in India, among
others0%
10%
20%
30%
40%
50%
60%
70%
80%
MOP
Urea
AP
AN
ABC
Dir Am
NPK
Share of products by nutrient application
| Source: IFA Agriculture
1987 to 2007
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
Anticipated impact of the driving forceson world fertilizer demand
N P2O5 K2O
Population growth
Food security
Food diversification
New land cultivation
Biofuels
Nutrient use efficiency
Nutrient recycling
Strongly influenced by technological developments and regulations
14/12/2010
12
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
Global P demandMedium-term outlook
Avg.
2007/08 to
2009/10
2014/15 (f)Change
(p.a.)
N 101.0 112.1 1.8%
P2O5 36.6 44.0 3.1%
K2O 25.0 32.2 4.3%
Total 162.7 188.3 2.5%
| Source: IFA
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
Regional fertilizer consumptionMedium-term outlook
| Source: IFA Agriculture
0 10 20 30 40 50 60 70
Oceania
Africa
West Asia
E. Eur. & C. Asia
W. & C. Europe
Lat. Am. & Carib.
North America
South Asia
East Asia
Av. 2007/08 to 2009/10
Variation in 2014/15
Million tonnes nutrients
14/12/2010
13
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
Global nutrient supply/demand
balances
135 140 144 150 158
130 134 136 138 142
Mt N
Supply Demand
| Source: IFA PIT Committee
2010 2011 2012 2013 2014
40 42 43 45 47
38 39 41 42 44
Mt P2O5
38 39 41 4348
30 32 34 35 36
Mt K2O
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
Beyond the factory gate…
Greater investment in agriculture
More effective development aid
Reform in trade and domestic policies
14/12/2010
14
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry| Source: Bationo,2009
A BETTER, MORE SECURE FUTURE…
…a new, efficient, dynamic and competitive agricultural sectorwill unlock hope for millions of children!