Developing Countries Driving Fertilizer Growth
23 September 2008 “To offset some of these costs, we expect US farmers to start looking at more efficient methods of farming, such as precision agriculture and other technologies that allow for more prudent nutrient applications and more efficient soil testing,” FitzPatrick said. “It could also demand a reassessment of tillage practices, perhaps looking at no-till. We could also expect farmers to seek out fertilizer as the markets dips throughout the year, and not just when they need fertilizers.”
Throughout the world, governments are helping their farmers by enacting subsidies. Eleven of the world’s top 25 fertilizer-consuming countries are subsidizing fertilizer costs, says FitzPatrick. Last year, the government of China paid $3.7 billion in fertilizer subsidies, while India – which pays for about half the cost of nitrogen and potash and 41% of phosphate – spent $5.3 billion to help offset the high cost of fertilizer to their growers. “The result is that farmers in China are less sensitive to fertilizer price increases than US farmers,” FitzPatrick explains.
It’s “these developing countries [that are] now driving global economic growth,” says FitzPatrick. “Along with this economic growth have come rising incomes and higher demand for grain products, elevating the amount of food production needed.”
The International Fertilizer Association’s forecasts indicate that demand for fertilizer – especially potash – is not going to change. In the 2007/08 crop year, potash sales are expected to outgrow phosphate and nitrogen sales.
FitzPatrick explains that global demand for potash is so strong because of previous nutrient applications in emerging markets. “In the United States,” says FitzPatrick, “farmers apply a very strong balance of nutrients and have very sophisticated methods of testing soil and applying nutrients in appropriate levels. In countries like India and China, this has not been the historical norm, and they have some catching up to do in terms of bringing soil fertility levels to par with the rest of the world.”
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