On changing global fertilizer demand, fertilizer industry growth, the need to innovate and pressure to improve nutrient use efficiency.
As part of the IFA2030 fertilizer industry strategic review exercise, IFA has conducted a series of interviews with leading plant nutrition academics and industry experts about how they see the future for farming and fertilizers.
IFA: How do you see fertilizer use changing globally over the next 12 years?
Oliver Hatfield: There will be slower demand growth compared to the last 10 to 20 years as farmers become more efficient at using fertilizers. Related to this, the type of products will also evolve, becoming more sophisticated. For example, we will see a growing number of fertilizer products that contain more secondary nutrients, release nutrients in a more controlled way, or that are more soluble. However, although they are growing at a fast percentage, these specialty products will still be a relatively small part of the market, accounting for 5% or less of overall use by 2030.
Regionally, crop production will continue to intensify in most locations, as productivity demands on land continue to grow. However not all places will see fertilizer demand grow at the same rate as crop yields, because the efficiency of fertilizer use is improving, dramatically in some cases. In most places it’s not possible to expand crop area, but the exception will be in South America, where scrubland and pasture will continue to be converted into arable land - in regions such as the Cerrado in Brazil. This type of land conversion will require increased fertilizer application. The most accessible and stable countries in Africa will continue to develop their agriculture and fertilizer use. While the continent will be the fastest growing market it will be from a very low base.
IFA: What factors do you think will have biggest impact on farming and agriculture up to 2030?
Oliver Hatfield: In general, agriculture will likely be quite similar to what has been like in the last few decades, in terms of the types of crops grown and fertilizers used. Greater sophistication will be essential. There will be a need to improve yields using less inputs such as fertilizers and pesticides. The main difference will perhaps be changing weather patterns and growing water scarcity, and this will place increasing demands on farmers and input suppliers to adapt.
IFA: How do you think the fertilizer industry will change in the coming decades?
Oliver Hatfield: The main products and producers will most likely continue to be dominant. The sector will likely to become more consolidated rather than fragmented, though not significantly. The growth of the Chinese industry, which has been the main story for nitrogen and phosphates over the last decade or two, will become more much more consolidated, sophisticated, and outward looking, however. We are seeing this change taking place already.
Innovation will also be a higher priority for the leading producers. The industry will come under greater scrutiny and pressure from governments to improve nutrient use efficiency. In countries such as China, Indonesia, Pakistan and India, the trend towards more efficient nutrient use will reduce the overall amount of fertilizer being used. It’s possible that we will see new entrants to the business offering more sophisticated fertilizer products and services taking a significant market share – this is more likely if the incumbents fail to adapt.
IFA: What do you think is the point of a strategic exercise like IFA2030 for the fertilizer industry?
Oliver Hatfield: So that the industry can anticipate future changes and position itself accordingly. By and large, the fertilizer industry has operated for decades with more or less the same products and business practices. It’s very useful to challenge them, because the future is unlikely to be like the past. The biggest test for the fertilizer industry is likely to be the demand from governments and related agencies to improve efficiency of use and deal with other externalities. This exercise will help to prepare producers and national/regional associations, come up with common approaches and share knowledge in order to be able to better anticipate future changes and lead discussion.
About Oliver Hatfield
Oliver Hatfield heads up the fertilizer research team at Integer, an Argus Media company based in London, and has more than 20 years of experience in business analysis and consulting. He is also one of the founders of the company. Oliver oversees the Integer fertilizer team which regularly publishes regular short to long term market forecasts and an independent point of view on the markets for nitrogen, phosphate, potash, sulphur and sulphuric acid. Oliver works extensively on bespoke fertilizer market studies and visits companies worldwide, assisting with strategy, due diligence, market entry and project feasibility. Oliver is a graduate of economics and development economics from Manchester University in the UK.