DUBAI (ICIS)--The global fertilizer industry is facing challenges at present but these also represent opportunities and enable the industry to evolve, according to Abdulrahman Jawahery, president of the International Fertilizer Industry Association (IFA).
Giving the keynote address at the 7th GPCA fertilizer convention on Wednesday, Jawahery said the main challenges being faced by the industry were less than ideal market conditions with persistent oversupply, increasing environmental pressures from nutrient losses and the misuse of fertilizers for criminal and terrorist activities.
The reality of the fertilizer market is currently weak demand and oversupply, with crop prices also low.
Global fertilizer demand is expected to grow by an average of 1.6% per year over the next five years, according to IFA estimates Jawahery said. Meanwhile, structural overcapacity for urea, phosphoric acid and potash is expected. Global capacity growth of 12% is expected between 2016 and 2020, assuming that projects are realised as scheduled.
However, Jawahery noted that while global fertilizer consumption growth is limited, there were chances to focus on supplying parts of the world where insufficient fertilizers are applied in order to boost growth potential.
One such area is Sub-Saharan Africa. Under the 2006 Abuja Declaration on Fertilizer for the African Green Revolution, the African Union Special Summit of the Heads of State and Government a resolved to increase fertilizer use from 8kg/hectare (ha) to 50kg/ha. This would mean current consumption in the region would need to be quadrupled, offering great potential for fertilizer demand.
Jawahery also said that encouraging more balanced application of fertilizers could also help boost faster growth in consumption. Some countries have an over dependence on a particular fertilizer, like India applying more urea as the subsidy system pushes farmers towards the product.
He said the industry should look at moving away from a commodity focus on fertilizers and needs to produce speciality fertilizers with controlled release, adding micronutrients.
Enhanced efficiency fertilizers have a higher price than conventional fertilizers, but lower volumes. But demand growth is expected to run at higher rates than conventional fertilizers.
Another challenge facing the industry was greater scrutiny on the environmental impact of fertilizers and greater time must be given to the issue. Jawahery expected rising regulations on fertilizer application to be introduced.
Nutrient losses from urea and phosphates impact water, air and soil quality, contribute to greenhouse gases and impact ecosystems and biodiversity. Jawahery said there was room for improvement on nutrient use efficiency and nutrient management, for example nitrogen losses could be reduced by using control release fertilizers. Farmer education would also be key.
Development and sales of enhanced efficiency fertilizers would also be appealing in the face of the structural oversupply for conventional fertilizers, he added.
The final challenge, according to Jawahery, is nitrogen being used for terrorism purposes and governments taking serious steps to curtail the movement and usage of these products. He said that 90% of improvised explosive devices (IEDs) used by so-called ISIS in Syria and Iraq are made with ammonium nitrate (AN) and calcium ammonium nitrate (CAN).
Turkey has put a temporary ban on the movement of nitrates after the PKK used AN in IEDs, while Nigeria has banned urea in some regions after the product was used by Boko Haram.
IFA has a global Product Security Group and product security experts on the ground to engage with stakeholders, assist dialogue and try to mitigate the risk and has introduced Protect and Sustain Certification.
Khalifa al Sowaidi, chairman of the GPCA Fertilizer Committee, echoed some of the challenges being faced by the industry, but with a particular focus on the GCC (Gulf Cooperation Committee) industry.
He said fertilizer capacity in the region has grown around 7% per year from 19.4m tonnes in 2006 to 37.7m tonnes in 2016 and that prices will remain under pressure until the growth in demand catches up with supply.
He said investment in research and development and product innovation was needed by producers in the region and the GCC industry was entering a new phase.
The 7th GPCA Fertilizer Convention, entitled ‘Steering the fertilizer industry through challenging times’ is being held in Dubai on 6-8 September.