The production and supply of mineral fertilizers are of vital importance to world food security. Consequently, they are closely linked to food and agricultural policies, both in developing and developed countries.

An important prerequisite for producing the required quantity and quality of affordable food is that the farming community worldwide has adequate access to mineral fertilizers on equitable terms. This requires that farmers are able to chose between various sources of supply of the appropriate types of fertilizers, at prices they can afford and in the quantity, quality and at the time they are required.

The purpose of the international trade of mineral fertilizers is to offer the user the right of free choice in sourcing the product needed at the time desired.

Requirement and availability of fertilizers and fertilizer resources

The conditions for producing food vary considerably from region to region and do not necessarily match the population pattern of the world. Neither do the resources for the production of mineral fertilizers, which are needed to meet food production requirements. These resources are unevenly distributed and vary as to availability, cost of exploration and development, competitive usage and prices, quality and proximity to markets. In a global context, the resources most apt to meet fertilizer production requirements are those that may provide a long-term, sustainable, cost-effective basis for the delivered cost of the final product.

In order to ensure that fertilizer resources are being utilized in an optimal way, it is important to establish an environment in which those involved in fertilizer production and supply can choose the most appropriate location, relative to targeted markets. Restrictions and incentives for establishing and/or maintaining indigenous fertilizer production may be defended from a national/regional point-of-view on the grounds of securing adequate food supplies, reducing trade deficits, avoiding excessive import bills and supporting the domestic industry while it adapts to a new, competitive environment. However, if such policies are allowed to persist over a long period of time, they will eventually lead to inefficiencies in production and supply and unnecessarily high costs.

An environment is needed in which the interested parties have the opportunity to compete for the best resources available and for representation in the market. Such competition presupposes that fertilizers, fertilizer raw materials and intermediates may be traded on a global basis under fair conditions.

A predictable, rule-based system for international trade

As the intergovernmental body committed to international trade conducted within a legal framework, the World Trade Organization (WTO) ensures predictability, enforces obligations, safeguards rights and provides a system for settling disputes.

WTO agreements outline the accepted principles of liberalization and the permitted exceptions for goods, services and intellectual property. They include countries' commitments to lower customs tariffs and other trade barriers. They prescribe special treatment for developing countries. They require governments to make their trade policies transparent and set procedures for dispute settlement. These agreements take the form of binding commitments on tariffs for industrial goods and combinations of tariffs and quotas for agricultural goods. Mineral fertilizers are categorized as industrial products.

A major challenge is to ensure that all countries can participate fully in the global economy. Developing countries, especially the least developed, have made it clear that they will not continue to support progress in areas in which they receive little direct benefit, unless something is done to better meet their concerns.

Supporting free enterprise and fair trade

As a matter of principle, IFA supports the rules on free enterprise and fair trade agreed by WTO members, with due consideration for the special requirements of developing countries. This implies that IFA favours a competitive business environment but at the same time supports the mechanisms within the WTO agreements ensuring that international trade is carried out on fair and equitable terms.

IFA recognizes that the trend towards liberalizing world food trade will likely have an important impact on the future structure of the fertilizer industry and the utilization of fertilizer resources.

May 2001