Will Asia continue to drive global fertilizer demand to 2030? Fertilizer demand forecasting beyond traditional trend analysis Laura Cross Analyst Integer Research Overview Integer s new approach to fertilizer demand forecasting What s driving fertilizer demand? What will be driving fertilizer demand What does this mean for future fertilizer demand? 1
Today s largest markets:,, EU27 and USA Fertilizer demand by country, 2010 United States Million tonnes N, P and K 41-60 21-40 11-20 5-10 2-4 0-1 Note: We have split demand into 12 regions/countries, the remaining fertilizer demand is regrouped in a rest of the world (ROW) category, IFA Past fertilizer demand trends: The rising influence of Asia Fertilizer demand change by country, 1990-2010 United States United States 21-40 Million tonnes 11-20 N, P and K Above 5-10 20 11-2 20-4 5-10 0-1 2-4 -0-13 0-1 -0-17 -0-13 -0-17 Note: We have split demand into 12 regions/countries, the remaining fertilizer demand is regrouped in a rest of the world (ROW) category, IFA 2
But how will the face of the map change over the next 20 years? United States 21-40 Million tonnes 11-20 N, P and K Above 5-10 20 11-2 20-4 5-10 0-1 2-4 -0-13 0-1 -0-17 -0-13 -0-17 By 2030? 1. Integer s new approach to fertilizer demand forecasting 3
What factors determine fertilizer demand? Traditional fertilizer forecasting consists of applying past trends to future demand But the fundamental starting point for fertilizer demand is agriculture Going beyond traditional fertilizer demand forecasting starting with agriculture Agriculture Leading consultancy for the agribusiness sector providing historical and forecasts data for: Yields Crop production Crop area Fertilizer Leading fertilizer consultancy with expertise in all nutrients providing analysis on: Application rates Use efficiency Fertilizer demand outlook Unique study linking crops to global fertilizer demand providing a demand forecast by: Nutrient Crop Country/region 4
Our coverage is by crop and by country Fibre crops: Cotton, other fibre crops Oilseeds: Oil palm, rapeseed, soybeans, other oil crops Grains: Barley, maize, rice, wheat, other grains Fruit and vegetables, & tubers USA EU27 ROW * Beige regions = ROW 2. What is driving fertilizer demand? 5
Fertilizer demand drivers Major drivers drivers Crop mix Application rates (use efficiency) Crop area Nutrient recycling Soil conditions Policy Climate Etc., LMC What were the main drivers between 2000 and 2010? N 0 2 4 6 8 10 12 14 16 18 20 Area Mix Rate Overall 0,6 2,0 5,4 10,2 18,2 * Million nutrient tonnes 6
What were the main drivers between 2000 and 2010? N 0 2 4 6 8 10 12 14 16 18 20 P 0 2 4 6 8 10 12 14 16 18 Area 5,4 Area 7,2 Mix 10,2 Mix 8,6 Rate 0,6 Rate 0,6 2,0 0,5 Overall 18,2 Overall 16,8 * Million nutrient tonnes What were the main drivers between 2000 and 2010? N 0 2 4 6 8 10 12 14 16 18 20 P 0 2 4 6 8 10 12 14 16 18 Area 5,4 Area 7,2 Mix 10,2 Mix 8,6 Rate 0,6 Rate 0,6 2,0 0,5 Overall 18,2 Overall 16,8 K -4-2 0 2 4 6 8 10 12 Area 10,8 Mix -1,7 Rate -1,1-3,0 Overall 5,0 * Million nutrient tonnes 7
What were the main drivers between 2000 and 2010? N 0 2 4 6 8 10 12 14 16 18 20 P 0 2 4 6 8 10 12 14 16 18 Area 5,4 Area 7,2 Mix 10,2 Mix 8,6 Rate 0,6 Rate 0,6 2,0 0,5 Overall 18,2 Overall 16,8 K -4-2 0 2 4 6 8 10 12 N, P, K 0 2 4 6 8 10 12 14 16 Area 10,8 Mix -1,7 Rate -1,1-3,0 Overall 5,0 Area 6,7 Mix 7,9 Rate 0,3 0,8 Overall 15,8 * Million nutrient tonnes Which crops consume most fertilizer? N Global nutrient split by crop, 2010 P 1% 15% 9% 3% K 15% 4% 3% 8% 12% 2% 54% 36% Cereals Oil Crops Sugar Crops Fibres FV&T Pulses N, P, K 19% 4% 4% 15% 13% 2% 46% 22% 17% 49% 3% 7% 19% 4% 4% 11%, LMC 8
Harvested area has increased more rapidly since 2002 Billion hectares 1.45 +0.70% 1.40-0.02% 1.35 1.30 Harvested Area 1.25 1.20 1.15 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Source: LMC Rapidly developing economies drive area increases Million hectares Change in harvested area by country, 2002-2010 US -10-5 0 5 10 15 20 Source: LMC 9
Rapidly developing economies drive area increases Million hectares Change in harvested area by country, 2002-2010 US -10-5 0 5 10 15 20 Source: LMC 3. What will be driving fertilizer demand 10
and have reached the limits of their expansion Million hectares Change in harvested area by country, 2010-2030 US -5-4 -3-2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25, LMC Use efficiency will be an important driver Application rate (Kg/Ha) NPK app rate per crop production (KG/tonne) 150 100 50 0 1990 1995 2000 2005 Yield (t/ha), RHS NPK app rate per crop area (Kg/Ha), LHS Ave crop yield (Tonne/Ha) NPK app rate per crop production (Kg/tonne), LHS 2010 2015 2020 2025 2030 7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0, LMC 11
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 08/11/2013 But, region-specific characteristics ultimately determine fertilizer demand Million tonnes 3.0 Fertilizer demand by 2030 n fertilizer demand in 2030 2.5 2.0 P K N 1.5 1.0 0.5 0.0 Key factors Oil palm Rice Maize Fruit and vegetables Area + + + - + Yield + + + + - Application rates N P K N P K N P K N P K N P K - + + - + + - + + + + + - + +, LMC case study: palm oil area growth will peak at 2023 whereas rice area will continue to grow Million hectares y-on-y change 7.0 Rice, paddy 6.5 Oil palm 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Cumulative change in area 12
case study: a combination of yield and area changes are forecast to drive fertilizer demand to 2030 N demand P demand K demand 100% 90% 80% 70% 60% 50% 40% 2,950 12% 7% 12% 18% 4,122 14% 7% 11% 21% 5,052 18% 12% 20% 100% 90% 80% 70% 60% 50% 40% 550 18% 12% 24% 838 19% 12% 29% 1,317 22% 11% 13% 24% 100% 90% 80% 70% 60% 50% 40% 801 11% 3% 1,460 9% 3% 62% 68% 2,172 11% 11% 4% 64% 30% 20% 0% 51% 2010 46% 2020 41% 2030 30% 20% 0% 37% 2010 31% 2020 30% 2030 30% 20% 0% 14% 2010 2020 2030 Fruit, vegetables & tubers Maize Oil palm Rice, paddy 4. What does this mean for future fertilizer demand? 13
The biggest fertilizer consumers will remain the same Fertilizer demand forecast by country, 2030 United States Million tonnes N, P and K 41-60 21-40 11-20 5-10 2-4 0-1 Note: We have split demand into 12 regions/countries, the remaining fertilizer demand is regrouped in a rest of the world (ROW) category and the continued influence of Asian countries cannot be underestimated Fertilizer demand change by country, 2010-2030 United States Million tonnes N, P and K 21-40 11-20 5-10 2-4 0-1 Note: We have split demand into 12 regions/countries, the remaining fertilizer demand is regrouped in a rest of the world (ROW) category 14
Thank you for your time Contact information: Laura Cross Analyst Laura.Cross@integer-research.com www.integer-research.com/fertilizers-chemicals 15