What is in this article?:
- Fertilizer market recovered from downturn in 2008-2009
- $88 billion
- Fertilizer markets for the main nutrients – nitrogen (N), phosphorus (P) and potassium (K) – have fully recovered from the downturn in 2008/09.
- This improved environment provides a strong basis for long-term investment in additional capacity in order to respond to rising demand in the agricultural sector.
The International Fertilizer Industry Association (IFA) has released its medium-term Fertilizer Outlook 2011-2015 to the public. The report clearly highlights the interdependence of the fertilizer industry and the agricultural sector.
Fertilizer markets for the main nutrients – nitrogen (N), phosphorus (P) and potassium (K) – have fully recovered from the downturn in 2008/09. This improved environment provides a strong basis for long-term investment in additional capacity in order to respond to rising demand in the agricultural sector. The industry is pursuing its steady program of long-term investment in new production sites to respond to an anticipated 11 percent growth in total demand between 2010/11 and 2015/16.
At the G20 meeting of agricultural ministers in Paris, policy solutions to high agricultural price volatility were discussed. This volatility has important impacts on farming beyond those on commodity prices, as it also influences decisions by farmers to invest in inputs and technologies needed for higher productivity. Moreover, it complicates efforts to expand local production.
“The challenge ahead for policy makers is to find solutions that meet the combined need to protect low-income consumers from higher food prices, to maintain incentives for increasing productivity, and to shield farmers from excessive volatility of agricultural commodity prices”, said Luc Maene, IFA’s Director General.
Agricultural markets worldwide remain tight, with low inventories and sustained high prices. Strong crop prices are boosting fertilizer demand for all nutrients. World fertilizer demand has fully recovered from the downturn and current demand is the highest to date, surpassing the levels reached in 2007/08. OECD and FAO project that, in the medium term, agricultural commodity prices will remain strong but volatile.
“In response to strong market fundamentals, world fertilizer demand is forecast to reach 191 million tons of nutrients in 2015/16,” said Patrick Heffer, Director of IFA’s Agriculture Service. South Asia, East Asia and, to a lesser extent, Latin America would contribute to about three-fourths of anticipated growth in demand. The contribution of China to the increase in world N and P fertilizer demand is, however, declining in comparison to the previous decade.
In 2010, the fertilizer industry operated at an average of 81 percent production capacity, showing improved conditions compared with a rate of 76 percent in 2009.
“Massive investments have been made and will continue being made in the near term to secure the supply of plant nutrients and improve global food security,” according to Michel Prud’homme, Director of IFA’s Production and International Trade Service.