Fertilizer Industry Overview

Fertilizer Industry Fertilizer Industry OveriewOveriew

Global & PakistanGlobal & Pakistan

Global OutlookGlobal Outlook• Factors impacting agriculture and

fertilizer demand– Oil price– Weather– Biotech Developments– Agricultural Commodities

• Production, Stock and Prices– Price and Other Factors– Fertilizer use by Crops

• Supply/Demand situation

ReferencesReferences• International

– International Fertilizer Industry Association IFA– International Center of Agriculture for Dry Areas ICARDA– Yara International Yara– The FMB Group, UK FMB– Fertecon Phosphate Report FERTECON

• Pakistan– National Fertilizer Development Center NFDC– Soil Fertility Institute Lahore Soil Fertility– Fertilizer Industry of Pakistan Industry– Average price from Commodity Markets Market Price

Biotech DevelopmentsBiotech Developments Main breakthrough

Sequencing of maize genome

Main anticipated developments in next five years Release of GM rice in China and

India

Release of drought tolerant crops

Status of N use efficiency trait? Could be released by 2015

Recent partnerships:- Monsanto/Evogene- Pioneer/Arcadia

Mostly: USA, Argentina, Brazil, Canada, India, China Soybean, maize, cotton, rapeseed Herbicide tolerance, insect resistance

Source: James

Global GM Crops Area (Mha)

GM Crops consume 50 – 100% more fertilizers IFA

World Cereal ProductionWorld Cereal Production

IFA

World Cereal ProductionWorld Cereal Production

+21%

509 Mt

+1.5%

924 Mt

- 5.4%

136 Mt+17%

128 Mt

- 2.9%

391 Mt

+37%

25 Mt

IFA

World Cereal ProductionWorld Cereal Production

-4.8%

478 Mt

+0.1%

932 Mt

+8.3%

147 Mt+0.7%

132 Mt

+13%

438 Mt

+78%

41 Mt

IFA

World Cereals StocksWorld Cereals Stocks

IFA

Agri Commodity PriceAgri Commodity Price

Declining but stillhigh prices Sugar

Low but increasing prices Cotton Meat

Very high prices Wheat Soybean Maize Rice Palm oil Milk

31 %

Corn

87%

Soya

130%

Wheat

Price Increase Mar 07 – Mar 08

IFA

World Fertilizer Use (%)World Fertilizer Use (%)

IFA

Price FactorsPrice Factors

Supply D

emand

Com

modity P

rice

Raw

Material

Supply &

Dist C

ost

Product Price

World Fertilizer ConsumptionWorld Fertilizer Consumption45 Years Historical Trend45 Years Historical Trend

Million Tons

IFA

World Fertilizer ConsumptionWorld Fertilizer ConsumptionShort TermShort Term

IFA

World Fertilizer OutlookWorld Fertilizer OutlookLong TermLong Term

154

175 194

IFA

World Fertilizer DemandWorld Fertilizer Demand

Two Third of the total increase is expected to occur in East Asia,

South Asia together

IFA

Global ConclusionGlobal Conclusion• Fertilizer use continue to increase

+ Positive Factors• Population pressure and Food needs• Change in cropping system• Increase in GM crops area• Supporting Commodity prices

– Negative Factors• Increasing prices – Oil, Raw material, Products• Shortage of irrigation water availability

• Estimated growth pattern (CAGR)– Nitrogen 2.8%, Phosphate 2.9%, Potash 2.4%

PakistanPakistan• Land

– Geographical Area 79 million ha– Area under cultivation 23 million ha (29%)

• Irrigation water availability (million acre feet)– 1994 132– 2004 136– 2014 142 MAF (Dams : Satpara, Gomazam, 2 in Sindh)

• Population (million)– 1994 132– 2004 152 (2% CAGR)– 2014 197 (3% CAGR)

PakistanPakistan• Food security of increasing Population

– Horizontal expansion : Limited options– Vertical growth : Unlimited options

• Farm land distribution– Farm size breakup– Farming efficiency and attributes

• Fertilizer use by crops– Current crops and cropping system– High yielding crops– Genetically modified crops

PakistanPakistan• Factors impacting agriculture and

fertilizer demand– Weather– Irrigation water availability– Soil : Health and Reaction– Agricultural Commodities

• Production, Stock and Prices– Fertilizer use by Crops– Bio-tech Development– Fertilizer consumption pattern

• Supply/Demand situation

Soil HealthSoil Health

Soil Fertility Institute, Lahore

250

215

Soil P & K depleted due to lower use

Future crop yields depends on balanced fertilizer input

Increased use of P & K is critical

NFDC

Soil ReactionSoil Reaction0

Acidic14

Alkaline7

Neutral

Pakistani SoilspH range7.5 – 9.0

Mostly8.0 – 8.5

Low availabilityP, Fe, Mg, Bo, Co, Zn

Pakistan Commodity PricePakistan Commodity Price3

4 %

Cotton 76%

Wheat

88%

Maize

Market Price50

%

S Flower

55%

C Rice

67%

F Rice

Commodities price increase 2009 Vs 2008

Pakistan Fertilizer Use (%)Pakistan Fertilizer Use (%)

NFDC

Area (%)Area (%)

Genetically Modified CropsGenetically Modified Crops

Consume 50 -100 % Consume 50 -100 % More fertilizersMore fertilizers

Tons

per

Hec

tare

Source : NARC 2000

CorrelationCorrelationP Use and Wheat ProductionP Use and Wheat Production

NFDC

N Use EfficiencyN Use Efficiency

(Kg Grains/kg N applied)

IFA

Pakistan Fertilizer ConsumptionPakistan Fertilizer Consumption28 Years Historical Trend28 Years Historical Trend

Thousand Tons

NFDC

Pakistan Fertilizer OutlookPakistan Fertilizer Outlook

NFDC : Historical numbers and projections up to 2011/12Projection: Urea - 2020 off take based on NFDC growth till 2011/12

: DAP - Long term projection by IFA for global growth

Urea Supp DemandUrea Supp Demand

FFC 2,438Engro 850DHL 450PAFL 350PFL 100PCF 100

PFLPFL 350 NP350 NPLCFLCF 75 SSP 75 SSPHPFHPF 100 SSP100 SSPFFBLFFBL 450 DAP450 DAPEngroEngro 100 NPK100 NPK

• Fertilizer use continue to increase+ Positive Factors

• Increasing population pressure and Food needs• New varieties – high yield, high fertilizer need• Increase in area of BT Cotton and other GM crops• Supporting Commodity prices

– Negative Factors• High prices of P and K• Shortage of irrigation water availability

• Estimated growth pattern (CAGR)– Nitrogen 2.5%, Phosphate 3.0%

Pakistan ConclusionPakistan Conclusion