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Demand and Supply of Fertiliser in India
Piyush Agrawal, Vice President (Retired) - Corporate Affairs, Advance Group of Companies, New Delhi
India has emerged as one of the largest consumers of fertilisers along with China and the United States of America. The fertiliser sector in India holds a major share among the energy intensive industries of the country. However, there are issues which need to be addressed. This article highlights the need to review the present and future of fertiliser industry with emphasis on its sustainable development.

Imagine the world 50 years from now. World population has stabilised. What will be the major role of mineral fertilisers? What does the world fertiliser industry need to do to become sustainable in the long term after that date? In this context, sustainability can be viewed as having two parts. 1st How can the mineral fertiliser industry and its products support the sustainable development goals of the wider community? 1. By contributing to food security on a local level, thus contributing to poverty alleviation and human development. 2. By helping prevent and correct soil degradation to meet global environmental objectives such as combating desertification. 3. By ensuring that negative environmental impacts of fer tiliser production and use are eliminated where possible and otherwise minimised.

2nd What measures need to be taken by the industry to ensure that mineral fertilisers are produced and used in ways which contribute to those objectives?
1. Development of improved products with greater nutrient efficiency.

2. Processes which remove unwanted impurities and, where possible, Demand and Supply of Fertiliser in India India has emerged as one of the largest consumers of fertilisers along with China and the United States of America. The fertiliser sector in India holds a major share among the energy intensive industries of the country. However, there are issues which need to be addressed. This article highlights the need to review the present and future of fertiliser industry with emphasis on its sustainable development. identification of new uses which turn these waste products into valuable resources.

3. Working to ensure that the entire fertiliser value-chain, down to retailers, is involved in capacity-building to enable correct use of fertilisers.

4. Ongoing training and capacity-building of farmers and their organisations

It is clear that rather than development of stakeholder relationships, the industry must develop better, value-added products and services to help meet the major challenges posed by sustainability. The industry must establish a pattern of minimal losses, maximum efficiency and maximum recycling. Today is not too early to start imagining this future and the shifts that need to occur to realise this vision. More research and product development are the keys. Farmers must receive better training in the use of fertilisers, but how? By whom?

This research seeks to put fertilisers in context today, discuss ways that the fertiliser industry has moved towards sustainability and, most importantly, highlight ways to move forward toward a vision of sustainability.

The fertiliser outlook, therefore, needs to be viewed from the perspective of the world economic growth. The world economy has been recovering from 2010 after the spike in commodity prices followed by deep recession experienced in the preceding two years. The recovery is driven by improvement in financial conditions, buoyant activity in many emerging and developing economies, and growing confidence in advanced economies. World production of major crops is expected to increase in 2013 which may ease the prevailing tight market situation. World food prices have been strongly on the rise surpassing the earlier peak of 2008. Consumption of fertiliser nutrients increased significantly in 2010 and is expected to grow in a stabilised way during the following years World demand for total fertiliser nutrients is estimated to grow at 2.0 per cent per annum from 2011 to 2015. The demand for nitrogen, phosphate, and potash is forecasted to grow annually by 1.7, 1.9, and 3.1 per cent, respectively, during the period. Global total nutrient production rose significantly in 2010 keeping pace with world consumption. Over the next five years, the global capacity of fertiliser products intermediates and raw materials would further increase.

The world potential nitrogen balance as a percentage of global total demand is expected to remain between 3 to 5 per cent between 2011 and 2013 and is likely to increase to 7 per cent in 2014 and 10 per cent in 2015. The potential phosphate balance is likely to grow from 3 per cent in 2011 to 6 per cent by 2015. The potential potash balance as a percentage of global total demand is expected to rise from 24 per cent in 2011 to a high level of 44 per cent in 2015.

According to the International Monetary Fund, Economic recovery is continuing as a result of improvement in financial conditions in varying degrees in various countries, buoyant activity in many emerging and developing economies, and growing confidence. The global growth is projected to reach 4.4 per cent and 4.5 per cent in 2011 and 2012, respectively, from 5 per cent achieved in 2010. Advanced economies are expected to grow by 2.4 per cent in 2011 and 2.6 per cent in 2012 from 3 per cent in 2010. The global recovery is continuing with varying speed and direction with large output gaps in advanced economies and closing gaps in emerging and developing economies. In advanced economies, investment is recovering due to low interest.

The FAO Food Outlook, June 2011 predicts an increase in world production of major crops in 2011 which is expected to ease the prevailing tight market situation. However, this is not expected to replenish stocks sufficiently. FAOÊs first forecast for world cereal production in 2011 points a record increase of 3.5 per cent after a 1 per cent decline in 2010. The main reasons for the projected increase are due to expectations of recoveries in yield and larger plantings.

Demand for Fertiliser Nutrients
In light of the above background and keeping in view the factors which influence and likely to impact in future, the demand for fertiliser nutrients have been projected for the coming years. Total fertiliser nutrient (N+P2O5+K2O) consumption estimated at 170.7 million tons in 2010 is expected to reach 190.4 million tones by the end of 2015. The Phosphate fertiliser consumption/ demand includes H3PO4 (phosphoric acid) based fertiliser demand + non-H3PO4 fertiliser demand. The non-H3PO4 fertiliser demand includes P2O5 through single super phosphate, rock phosphate, etc. The world phosphate fertiliser demand is expected to increase from a total of 41.7 million tonnes in 2011 to 45.0 million tons in 2015 at a growth rate of 1.9 per cent per year. Of the overall increase in demand for 3.3 million tones P2O5, 55 per cent would be in Asia, 29 per cent in America, 8 per cent in Europe, 4 per cent each in Africa and Oceania.

Among the Asian countries, about 28 per cent of the growth in world demand of phosphate is expected in India, 9 per cent in China, 5 per cent in Pakistan, 3 per cent in Vietnam and 2 per cent in Indonesia.

Fertiliser consumption in South Asia is increasing at a fast pace. It is the second largest fertiliser consuming region in the world. Its share in world consumption of nitrogen, phosphate and potash is 20.5, 22.3 and 14.2 per cent, respectively. Nitrogen, phosphate and potash consumption is expected to grow at 2.6, 2.9 and 2.7 per cent, respectively per annum during 2011 to 2015. The sub-region would continue to remain deficit in all the three nutrients during the forecast period. The deficit in nitrogen balance might reduce slightly by the end of the projected period if the plants which are planned are commissioned as per schedule. The deficit balance of phosphate and potash would continue to rise during the forecast period.

According to IFA, between 2010 and 2015, close to 34 new phosphoric acid units are planned for completion, of which 15 would be located in China, 6 in Morocco and 3 in Saudi Arabia. Only two stand-alone merchant units are expected to come on stream. Over the next five years, close to 40 new units of MAP, DAP and TSP are planned to come on stream in eleven countries. After taking into account operating rates, the world supply of phosphoric acid (as P2O5) is estimated at 39.6 million tonnes in 2010, which is estimated to rise to 42.1 million tonnes in 2011.

Because of highly fluctuating crop and fertiliser prices, farmers are seen as reinvesting in P and K fertilisers to maintain or improve the fertility of their soils. In 2010/11, demand would continue its recovery, with growth rates of 4.5 and 18 per cent for P and K fertilisers, respectively. However, sales and production dropped to levels unprecedented over a decade due to important inventory carry-overs in worldwide distribution systems. Production decreased mostly in the case of potash and phosphate products, while output of nitrogen products rose moderately. Global capacity increased in key exporting regions, but at modest rates compared with those of the previous years. Completion of a few projects was postponed due to a combination of soft market conditions and technical delays. Between 2010 and 2014, world fertiliser consumption is projected to grow at an average annual rate of 2.3 per cent, which is more in line with the historical growth rate of 2.1 per cent in the past decade.
World Fertiliser Consumption (Calendar Year Basis)
Demand increases are projected for all three major nutrients. Since consumption of potash and phosphate was severely depressed in 2008, the recovery of demand for these nutrients will register important growth in 2010 and 2011. Beyond 2011, demand for P and K fertilisers would then increase at an average annual rate of 3 and 4 per cent, respectively.

Current Phosphate Rock Supply and Demand · General Situation & Production
The known global resources of rock phosphate are of the order of 163,000 million tonnes of all grades and types.
(I) China has 17.86 billion tons of secured phosphate rock reserves, in which reserves is 1.18 billion tons, accounting for 6.6 per cent, basic reserve is 3.17 billion tons, accounting for 17.7 per cent, the quantity of resources is 14.69 billion tons, accounting for 82.3 per cent, only next to Morocco, ranking the second place in the world. Chinese phosphate rock resources are large in quantity but not high in grade, and geographically distributed unevenly. The average grade nationwide is 16.95 per cent, and there are but 1.108 billion tons of rich rock phosphate with P2O5 >30 per cent. More than 85 per cent of the middle and low-grade rock phosphate are colloidal phosphate

(II) In 2010, Chinese phosphate rock production volume accounted for 36.9 per cent of the global total production volume, which increased by 13.1 per cent over the previous year, ranking the first place in the world. In India, 15.3 mt of indigenous deposits of high grade rock phosphate could meet hardly 35 per cent of the total demand and remaining demand is met through its import. The rock phosphate scenario in India is, however, not very comfortable as it possess a resource of only 260 million tones (0.19 per cent of the world) of rock phosphate of all types and grades, catering the agricultural needs of 1/6th population of the world. The current annual domestic demand of high grade rock phosphate is of the order of 4 million tones. Out of which 95 per cent is consumed in agriculture sector as a source of P-fertiliser. The domestic production of about 1.4 million tones/year of rock phosphate could hardly meet 35 per cent of the total demand.

Sulphur Outlook
Between 2009 and 2014, world production of elemental sulphur is projected to grow at an average annual rate of 8 per cent, to 67.1 Mt S in 2014. Close to 60 per cent of the 19 Mt increase would be generated in the natural gas processing sector. Sulphur importing countries would contribute 8 Mt S, or 40 per cent of the worldÊs net supply increment between 2009 and 2014, while sulphur exporting countries would add 11 Mt. Significant production growth is expected in East Asia, West Asia, EECA and North America. Together, these four regions would account for 85 per cent of the net increase in production between 2009 and 2014.

Quick recovery in sulphur consumption in the fertiliser and industrial sectors
Global consumption of elemental sulphur is projected to grow at an annual rate of 6 per cent over 2009, reaching 62.1 Mt S in 2014. This increase would result from a quick recovery in consumption of sulphuric acid in the manufacture of phosphoric acidbased fertilisers and its growing use in ore leaching. Global sulphuric acid consumption, which accounts for 84 per cent of total sulphur demand, is forecast to grow at an annual rate of 5 per cent over 2009. The manufacture of fertilisers, which contributes half of total sulphuric acid use, is projected to increase at an annual rate of 4.5 per cent over 2009.

Balanced sulphur market conditions in the short term, shifting to increasing potential surpluses after 2012.In the short term, the sulphur market appears to be in balance, given the strength of the recovery in the phosphate sector and the shortfall in production from announced projects. A moderate surplus of 2.0-2.3 Mt is seen in 2011 and 2012, assuming new supply was then available from delayed projects. At the end of the forecast period, a significant surplus may emerge on the basis of a large increment of supply in 2014. However, if future sulphur production grows at lower rates than anticipated due to delays in large projects, tight sulphur market conditions will prevail through 2013. (Source: M. PrudÊhomme, IFA, June 2010)

Medium-term Trade Prospects
Global trade will recover its 2007 level within the next two years, as world fertiliser demand rebounds quickly and registers sustained growth through 2014. In the short term, world supply/demand conditions are expected to include resilient annual potential surpluses of phosphate rock, potash and urea due to the emergence of large capacity in the main exporting regions. Over the next five years, market conditions for phosphate fertilisers, notably DAP, merchant phosphoric acid, merchant ammonia and sulphur, are seen as relatively balanced due to firm demand growth and a gradual increase in capacity. Over the period 2009 to 2014, global trade will expand by 15 to 33 per cent, depending on the nutrient products and regions. Phosphate imports would increase by an overall 3-4 Mt P2O5 (15 per cent over 2009). There could be an overall increase in global potash imports of 35 per cent between the 2008/09 average and 2014.

Review of the Super Phosphate in India
The development trajectory of the agricultural industry derives its main stimulus from the growth in production of fertilisers in India. The fertiliser industry earlier witnessed the preponderance of the public sector units who still retain their status as the major players in Indian fertiliser market. Coupled with the private enterprisers manufacturing fertilisers, India has emerged as the third largest producer of the agro- input. The country has also emerged as one of the largest consumers of fertilisers along with China and the United States of America. The fertiliser sector in India holds a major share among the energy intensive industries of the country. The industry has shown unparalleled growth in the past few years. Although growing in an accelerating rate, the industry is faced with a number of challenges, inter alia, the lack of major plant resources such as nitrogen, phosphate and potassium. India produces both nitrogenous and phosphatic fertilisers in the domestic market. Urea and ammonium are the two popularly manufactured nitrogenous fertilisers in India. The various companies dedicated to the manufacture of fertilisers also produce straight phosphate fertilisers such as single super phosphate and complex fertilisers such as di-ammonium phosphate or DAP. The lack of indigenous reserves of potash in India has stunted the production of potassic fertilisers in the country. The Indian fertiliser industry has a capacity of 56 lakh MT of phosphate nutrient and 121 lakh MT of nitrogen. While the private sector has a huge installed capacity for phosphate fertilisers, capacity utilisation of nitrogenous fertilisers is higher in the public sector.

Chemical fertilisers have played an important role in making the country selfreliant in food grain production. The role of Government of India has been significant as the Government has been consistently pursuing policies conducive to increased availability and consumption of fertilisers at affordable prices in the country. It is for this reason that the annual consumption of fertilisers, in nutrient terms (N,P&K), has increased from 0.07 million MT in 1951-52 to more than 28 million MT in 2010-11 and per hectare consumption, has increased from less than 1 Kg in 1951-52 to the level of 135 Kg now.

There is no denying the fact that over the years increased usage of fertiliser has played a significant role in increase of agriculture productivity. Current trends in agricultural output, however, depict that the marginal productivity of soil in relation to the application of fertilisers is declining. The comparatively high usage of straight fertilisers (Urea, DAP & MOP) as against the complex fertilisers (NPKs) which are considered to be agronomically better including low or non-usage of secondary and micro nutrients has also probably contributed towards slowdown in growth of productivity. The declining fertiliser use efficiency is also one of the factors for low productivity. The pricing of subsidised fertilisers is also probable responsible for higher usage of straight fertilisers and skewed usage of nutrients. The manufacturers/importers were earlier not willing to fortify the subsidised fertilisers with secondary and micro nutrients, which are only required in nominal quantities as the additional cost for the same was required to be borne by them from their own return on fertiliser production. However, now the manufacturers / importers are allowed to charge 5 per cent above MRP in case of fortified subsidised fertiliser (10 per cent for zincated urea and Boronated SSP) and thus better availability of fortified fertilisers is being ensured by the suppliers. It is therefore more relevant in times to come for the Government to ensure balanced usage of fertilisers comprising of primary, secondary and micro nutrients in optimum quantities by the farmers and to simultaneously monitor the farm productivity levels so that the country is able to generate export surplus after meeting the demand of agriculture.

Over the years, the consumption of fertiliser in the country has risen steadily, while the indigenous production of fertilisers has not increased likewise to meet the growing requirement mainly due to raw materials/inputs limitations. There has been hardly any investment in urea sector in last decade except for few revamp and modernisation been carried out by few urea units after the Government notified IPP linked New Investment Policy in 2008. Further, the indigenous capacities for phosphatic fertilisers, especially DAP remain underutilised due to raw material constraints and their international pricing levels. India is, thus, becoming more and more import dependent in phosphatic and potassic sector and even the gap of production and consumption in nitrogenous sector is also widening. The increasing international prices of inputs as well as finished fertilisers are making the growing fertiliser subsidies unsustainable. Urea is the only sector where the country can achieve self-sufficiency provided the new gas finds are committed for the new urea units and alternative resources like coal, CBM etc. are used for urea production. It is, therefore, pertinent that conducive policy environment be created for encouraging investments in nitrogenous sector by incentivising alternative feedstock based production and also by committing part of future discoveries of gas to new investments as it takes around four to five years from planning to commission of a urea unit; moreover it requires very high capital investment. In Phosphatic and Potassic (P&K) sector, it is necessary to secure long term supplies of not only finished fertilisers but also raw materials/intermediates in this sector, through strategic investments in resource rich countries.

Thus diligent planning at the commencement of the year and respective season to make available the right quantity of fertiliser at right place is very critical. Required storage, transport, staffing, credit, financial and foreign exchange arrangements are dependent on demand. In case the actual demand of fertilisers is less than that planned or if it increases substantially, the whole plan would go hay way. It may not only have severe financial implications but also production related issues and related political fallouts. The IT based Fertiliser Monitoring System (FMS) is in operation to check the status of fertiliser movement across the country on almost real time basis. Even the status of availability of fertiliser with the dealer, in a District, company wise etc. can be monitored through FMS nowadays.