Shifting Market Dynamics To Fuel Global Fertilizer Demand

DAP Pile in Warehouse

World demand for fertilizers reached 375 million metric tons in 2010. Suppliers around the world witnessed a pronounced recovery from 2009, when farmers began reinvesting in fertilization programs after an onslaught of high prices and credit constraints. The impacts of the business cycle aside, important trends remain in suppliers’ favor. For example, the global population continues to advance not only in scale but also affluence, such that grain-intensive meat and dairy products see ever more demand.

Further, government policies around the world are driving production of crop-derived fuels to encourage the development of clean, domestic sources of energy. Fertilizer suppliers are thus positioned well between the appetite of key markets and the circumstance of finite croplands.

Going forward, prospects for fertilizers will vary widely by region. In developed countries with mature agricultural industries, fertilizer use is well accepted and opportunities for growth will be limited. For example, fertilizer demand in Germany and France is expected to remain flat through 2015. Similarly, demand growth in other developed countries such as Canada, Australia, Japan and Korea, will be relatively moderate, averaging around 2% per year in volume terms.

Much better prospects are expected in the BRIC countries. Demand for fertilizers in India, the second largest national market (behind China), will grow from 53 million metric tons in 2010 to 62 million metric tons in 2015, representing an annual rate of nearly 3.5%. India’s recently enacted Nutrient Based Subsidy program is expected to boost demand for multinutrient fertilizer products. Brazil will experience similarly strong growth, with fertilizer demand increasing to 31 million metric tons in 2015.

Government mandates for biofuels will continue to increase the demand for sugar cane as a feedstock and also for fertilizer to increase sugar cane yields. The Russian government has moved recently to liberalize its potash industry and modernize infrastructure supporting grain production. Fertilizer demand in that country is projected to rise more than 4% annually to 6.9 million metric tons in 2015.

These and many other findings are presented in a set of Freedonia Focus Reports on agricultural, commercial and consumer fertilizers recently published by The Freedonia Group, an international industry market-research firm. Freedonia has produced separate reports for 15 different countries representing the world’s largest economies.

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