Identifying and examining the current challenges and opportunities faced by the fertilizer industry by Luc M. Maene

1. 14/12/2010
Identifying and examining the
current challenges and opportunities
faced by the fertilizer industry
Luc M. Maene, Director General, IFA
The challenges
1

2. 14/12/2010
Growing demands on agriculture
Food and nutrition security
Food Feed
 Feeding a growing population  More people require more
 Ensuring minimal caloric intake livestock
Conserving biodiversity
 Growing preferences for meat  Meat consumption per person is
 Diversifying diets to ensure
rising
Environment
balanced nutrition
Fibre and Other Components Bioenergy
 Clothing a growing population  Concerns over the longevity of
 Fibres for construction, medicine fossil fuel reserves
and other non-clothing purposes  Security and dependence issues
 Production of chemicals and  Increasing energy demands per
other industrial inputs person
 Crop-grown pharmaceuticals  Reducing pollution from current
fuels
Climate change
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
A moving target
MULTIPLYING CHANGING
LAND USE WATER DEMANDS ON CONDITIONS FOR
AGRICULTURE AGRICULTURE
• Urbanization • Growing scarcity, • New cropping • Changing
(often on fertile changing patterns, declining weather patterns
land), distribution, soil pools of (climate change),
deforestation, contamination, nutrients, new soil degradation,
reforestation, salinization… recycling loops in rural
wetlands nutrient cycles… depopulation…
disappearing…
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
2

3. 14/12/2010
World population growth
(billion people)
Undernourishment in the
Developed countries
Developing countries
world (million people)
60
50
40
30
10
0
Source: UN
Identifying and examining the current challenges and opportunities Source: FAO
faced by the fertilizer industry
Limited immediate availability
of additional arable land
Arable area World population
m2 per person in billion
3000 9,5
9
2800
8,5
2600 8
7,5
2400 7
6,5
2200
6
2000 5,5
1996 2015 2030
Identifying and examining the current challenges and opportunities | Source: Lammel (2007),
faced by the fertilizer industry citing FAO: Towards 2015/30 (2002)
3

4. 14/12/2010
Yield gaps and relative land availability
in different countries
Identifying and examining the current challenges and opportunities | Source: World Bank Report, 2010
faced by the fertilizer industry
Changes in food consumption patterns
due to income growth
OECD production non-OECD production
OECD consumption non-OECD consumption World production
% change 60
2018
compared to 50
2006-2008 40
average
30
20
10
0
-10 Wheat Coarse Rice Oilseeds Oilmeals Vegetable Sugar
grains oils
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry | Adapted from OECD-FAO (2009)
4

5. 14/12/2010
Population trends and nitrogen use
during the 20th century
World population % world population
no Haber-Bosch nitrogen fed by Haber-Bosch nitrogen
Average fertilizer input Meat production
50
Average fertilizer input (kg N ha-1 yr-1)
6000
Meat production (kg person-1 yr-1)
World population (millions)
5000 40
% World population
4000 30
3000
World population
20
2000
1000 10
0 0
1900 1950 2000
Identifying and examining the current challenges and opportunities
| Adapted from Erisman, et al. 2008
faced by the fertilizer industry
Nitrogen use efficiency
Nitrogen Partial Factor Productivity (PFPN)
for maize in the U.S.
Fertilizer consumption by region, 2007/08
(Kg/ha)
East Asia 243
West Europe 178
North America 151
Latin America 130
South Asia 125
Central Europe 125 CHINA - N use efficiency
(PFP: kg grain/kg N applied)
WORLD 118
North Africa 78
South Africa 41
Africa 17
Sub-Saharan Afr 6
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry | Source: IFDC, Africa Fertilizer
5

6. 14/12/2010
Renewable energy development
World biofuel production
Billion litres
160 Ethanol production Biodiesel production
140
120
100
80
60
40
20
0
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry | Source: OECD-FAO
Areas of physical and economic water scarcity
ON AVERAGE
• 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
Little or no water scarcity • 4,000 litres for a kg of poultry
Physical water scarcity • 15,000 litres for a kg of beef
Approaching physical water scarcity • 3,000 litres per person to
Economic water scarcity produce our daily food intake
Not estimated
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry | Source: IWMI
6

7. 14/12/2010
The opportunities
and industry initiatives
Opportunities for the fertilizer industry
and 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!
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
7

8. 14/12/2010
IFA initiatives
 Africa forum
 Farming First
 Fertilizer use and human health
 Effective last-mile delivery
 Protect&sustain
The global fertilizer industry’s product
stewardship initiative
 Task force on climate change
 Water management initiative
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
8

9. 14/12/2010
Fertilizer demand situation
and outlook
Global fertilizer consumption trends
Consumption (Mt nutrients)
180 N P2O5 K2O
Year to year variation (%)
160
20 N P2O5 K2O
140
15
120
10
100
5
80 0
60 -5
40 -10
20 -15
0 -20
2000/01 to 2010/11 2000/01 to 2010/11
Identifying and examining the current challenges and opportunities | Source: IFA Agriculture
faced by the fertilizer industry
9

10. 14/12/2010
Total fertilizer use by crop
at the global level in 2006/07 (%)
Fruits & veg.
17
Other crops, 15
Maize
16
Oil palm, 1
Soybean, 3
Sugar crops, 4
Wheat 15
Cotton, 4
15 Other OS, 5
Other CG, 5
Rice
Identifying and examining the current challenges and opportunities | Source: IFA Agriculture
faced by the fertilizer industry
Total fertilizer use by crop
for the main countries in 2007/08
Identifying and examining the current challenges and opportunities | Source: IFA Agriculture
faced by the fertilizer industry
10

11. 14/12/2010
Insights: evolution of fertilizer products
Share of products by nutrient application
80% • Trend toward high-
analysis products
70% MOP • Safety and security
60% concerns
Urea • Displacement of ABC, AN,
50%
AP FMP
40% • Growth for UAN, AS
30% • Demand recovery for SSP
• Further growth for NPKs
20% NPK on account of balanced
10% ABC fertilization and NBS-
AN scheme in India, among
0% Dir Am
others
1987 to 2007
Identifying and examining the current challenges and opportunities | Source: IFA Agriculture
faced by the fertilizer industry
Anticipated impact of the driving forces
on world fertilizer demand
N P2O5 K2 O
Population growth   
Food security   
Food diversification   
New land cultivation   
Biofuels    
Nutrient use efficiency 
Nutrient recycling 
 Strongly influenced by technological developments and regulations
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
11

12. 14/12/2010
Global P demand
Medium-term outlook
Avg.
Change
2007/08 to 2014/15 (f)
(p.a.)
2009/10
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%
Identifying and examining the current challenges and opportunities | Source: IFA
faced by the fertilizer industry
Regional fertilizer consumption
Medium-term outlook
East Asia
South Asia
North America
Lat. Am. & Carib.
W. & C. Europe
E. Eur. & C. Asia
Av. 2007/08 to 2009/10
West Asia
Variation in 2014/15
Africa
Oceania
0 10 20 30 40 50 60 70
Million tonnes nutrients
Identifying and examining the current challenges and opportunities | Source: IFA Agriculture
faced by the fertilizer industry
12

13. 14/12/2010
Mt N
144 150 158
135 140
Global nutrient 130 134 136 138 142
supply/demand
balances
Mt P2O5
43 45 47
Supply Demand 40 42
41 42 44
38 39
| Source: IFA PIT Committee
Mt K2O
48
39 41 43
38
32 34 35 36
30
2010 2011 2012 2013 2014
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
Identifying and examining the current challenges and opportunities
faced by the fertilizer industry
13

14. 14/12/2010
A BETTER, MORE SECURE FUTURE…
…a new, efficient,
dynamic and
competitive
agricultural sector
will unlock hope
for millions of
children!
Identifying and examining the current challenges and opportunities | Source: Bationo,2009
faced by the fertilizer industry
14