Fertilizer 101: The Dynamics of a Global Industry
With the 2014 World Fertilizer Conference right around the corner, I thought it was a good time to revisit the global nature of our industry. With the world’s population expected to top 9 billion by 2050, food security is one of humanity’s greatest challenges. With only a finite amount of arable land on the planet, farmers will have to boost crop production in areas already being cultivated. When you think about each individual plant in fields around the world, all in need of nutrients, you realize the distribution and economic challenges this poses to the fertilizer industry.
Keeping people around the world fed and healthy relies on “distribution logistics,” getting what you need from its location of origin to where it’s needed. For fertilizer, that means obtaining 17 essential elements from different sources around the globe, and blending them into different formulas for a variety of crops and climates. This makes fertilizer production and use subject to many global economic factors, including:
- Commodity prices for corn, rice, wheat, soybeans and other crops affect demand for specific nutrients, as farmers make planting decisions based on what crops are most profitable.
- Transportation costs affect fertilizer supply for end-users (farmers) because fertilizer is a bulky and heavy product that is often shipped great distances by ship, rail, truck and river barge.
- Natural gas is used in both the production of nitrogen and to dry other nutrient products. It’s also used to generate heat needed for the conversion process of atmospheric nitrogen to ammonia. The price and availability of natural gas affects the supply of nitrogen needed by plants through its impact on production costs and decisions.
Despite the many challenges, global growth is positive for the fertilizer industry, according to the International Fertilizer Industry Association (IFA), which released its “Fertilizer Outlook 2014-2018” in May. Record crop production and strong crop prices are expected to boost world fertilizer demand by 2.1 percent, particularly in South Asia, Oceania, West Asia, Latin America and Africa.
If you’re interested in learning more about how the fertilizer industry affects the world, read IFA’s recent report, or check out our related posts, “Fertilizer Means Food: Nourishing the Soil to Feed the World” and “Fertilizer Means Food: Improving Human Nutrition.”