Economics Commenary

Global fertilizer supply- Manish Padhi

The article talks about the supply of fertilizer which is expected to outstrip the demand by the year 2011.These facts have been basically taken from the information given by the FAO (food and agriculture organisation).They say that the global fertilizer supply is expected to outstrip the demand in the next 5 years possibly by the year 2011 and will support higher levels of fuel and bio fuel production. It shows all impact on a global basis and what effect will it create on the continents and many other commodities that are related to fertilizers. The continents which are mostly involved in this activity will be the African countries such as Nigeria, South Africa, Egypt and Morocco with 6 other countries in the continent. We will also look at the effect on the world nitrogen supply, phosphate fertilizer supply and potash supply in the coming 5 years. I will be explaining this article with a diagram about the demand and supply curves which will give us a better outlook of the entire scenario.

This curve basically shows what effect it is going to have on the prices which will affect Africa in many ways. Africa  is among one of the biggest exporters of phosphate and increase nitrogen exports while importing all of its potash. This will create a hike in the supply by the year 2011.

The FAO estimates the world fertilizer supply(nitrogen, phosphate and potash nutrient)will increase by some 34 million tonnes representing and annual growth of 3 percent worldwide between 2007/2008 to 2011/2012. Sufficient to cover demand growth of 1.9 percent annually.

This is also

To greater fertilizer use, in a result has lead to tighter markets and fertilizer prices. The expected is that the demand for basic food crops, trying to say that the north is expected to grow from 206.5 million tonnes in 2007/2008 to 241 million tonnes in 2011/2012 and the fertilizer demand will increase from 197 million tonnes today to 216 tonnes 2011/2012.

Inside sources say that the high commodity prices which have been experienced over the recent years have lead to increased production and correspondingly fruits and vegetables, for animal products and for bio fuel crops are likely to remain strong and it is expected that the fertilizer supply will grow sufficiently to meet the needs of people for higher consumption.

Total production in world nitrogen is forecast to rise by 23.1 million tonnes by the year 2011/2012, world phosphate fertilizer supply will increase by 6.3 million tonnes and potash supply by 4.9 million tonnes.

America, which you know is one of the biggest oil consumers of the world is also a big net importer of nitrogen and that the region will move into increasing phosphate deficit while remaining a primary supplier of potash. In this, America is playing a big role for the money that is flowing in for the market. America is said is going to handle the rest of the market perfectly well. The country is still moving into the region with increasing phosphate deficit while it still wants to remain a primary supplier of potash.

Now coming to Asia, the continent is expected to produce a rapidly increasing surplus of nitrogen, but will continue to import phosphate and potash from the north and south American countries along with some of the African countries at a higher pricing on export in India so that they can make a bigger profit then ever would have imagined. Their share in these kinds of markets is very big and money-making; and will always be less time consuming.

Now it will be explained with the help of the demand and supply curves will give us a better output of the entire scenario.

The upper curve talks about the excess supply which is going to take place in the coming years, mostly from the years till 2011. This also shows that the demand for fertilizers in the coming years will increase rapidly all over the world and will impact the global market on fertilizers rapidly. I would like to conclude that the article only talks about the demand and the supply of fertilizers with only one outcome that it will keep on increasing in the coming years.