Growing market for compound fertilizers driven by demand to feed rapidly expanding population
HOUSTON, Texas – Driven by a rapidly expanding global population and a decline in the amount of arable land per-capita, the global market demand for compound fertilizers—already valued at approximately $50 billion—is expected to grow nearly 3 percent annually through the forecast period of 2018 to 2023, according to a new report by global business information provider IHS Markit.
Current global demand for compound fertilizers is more than 131 million metric tons (MMT) in 2019. IHS Markit expects the sector to reach more than 151 MMT by 2023, according to the IHS Markit NPK Compound Fertilizers report.
Feeding the nearly 10 billion people expected to inhabit the planet by 2050 will involve a combination of several developments, including relying on increased plant nutrition through compound fertilizers to expand yields more quickly and to enable the cultivation of more marginal land, particularly in dry climates.
NPK compound fertilizers, which combine two or three of the major nutrients used by the fertilizer industry to promote rapid plant growth—nitrogen (N), phosphate (P) and potash (K), are increasingly the answer for expanding global food production and meeting the need to improve the average diet of a large portion of the world’s population.
“Demand for fertilizers is driven by the need for food, which, in turn, is driven by the size and wealth of the population,” said Bala Suresh, executive director, IHS Markit, and lead author of the IHS Markit NPK Compound Fertilizers report. “Global food production has increased substantially during the past several decades and that fact is largely due to the use of fertilizers to increase crop yields. Compound fertilizers are easier to purchase and use, and they promote rapid plant growth at a reasonable cost,” Suresh said.
A distinct advantage of compounded NPK fertilizers is that they can be formulated based on the type of crop and soil, Suresh said. “The fact that these fertilizers are compounded enables them to be less soluble in groundwater. This makes them suitable for dry soils and areas prone to droughts, such as in many Asian and African countries,” Suresh said.
Because these compound fertilizers can be more easily tailored to individual terrains and drought-prone regions than traditional fertilizers, Suresh said they will be critical to meeting the world’s growing demand for food production.
According to the Food and Agriculture Organization of the United Nations, there are more than 815 million people globally who are chronically undernourished, while the global population is expected to rise to approximately 9.6 billion to 10 billion people by 2050. At the same time, the planet is facing the added challenges of climate change implications—such as persistent drought in some regions, and a decline in the availability of fresh water.
“To feed their expanding populations, many countries are increasingly forced to cultivate marginal, less arable land for food production, and that requires fertilizers, and compound fertilizers can be localized for specific soils and crops,” Suresh said.
Compound fertilizers differ from traditional, single-nutrient fertilizers in that they are produced mostly to meet local and regional demand. Along with a variation in the composition of the primary nutrients, a compound fertilizer can also include other secondary or micronutrients that are unique to the geography of the consuming region. Additionally, some crops may require higher doses of a nutrient, which is easier to deliver with a compound fertilizer, the IHS Markit report said.
While on a per-unit basis they are more costly than single-nutrient fertilizers, compound fertilizers are easier to purchase and offer all the required nutrients that can be applied in a single application, versus the purchase of multiple bags of several different fertilizers that may involve additional storage or special handling requirements.
“Compound fertilizers are more flexible and easier to use than single-nutrient fertilizers, and since they supply the three primary elements for plant growth in one application, the total operation time is shortened,” Suresh said. “In addition, since they are mass produced, they are inexpensive and easier to obtain,” Suresh said.
Additional findings on the global market for NPK compound fertilizers:
China is the largest consumer of NPK compound fertilizers by far, accounting for 44% of total world NPK consumption in 2018.The U.S. is second at more than 14%, followed by Southeast and Southwest Asia, both just shy of 10% each of global demand.
China also accounts for an even greater share of NPK production, dominating the market with nearly 71% of global production capacity. The next largest producer, Southeast Asia, accounts for just slightly more than 7% of total global capacity.
Africa is expected to have the highest rate of consumption growth for NPK compound fertilizers at more than 4% annually, followed by China and Southwest Asia, which are both forecast to grow at slightly less than 4% each annually through the study forecast period. Eastern Europe follows with demand at more than 3% during the period of 2018-2023.Total trade in NPK compound fertilizers accounted for approximately 19% of global production in 2018.
Due to its substantial domestic demand, China exported just 1.3 MMT of NPK compound fertilizers in 2018. Despite their smaller percentage contributions to global production, Eastern and Western Europe are the largest exporting regions in 2019, followed by the U.S, Africa and Central Europe. This is due, in part, to excess capacity in the regions countered with slowing domestic demand in the U.S. and negative demand for the forecast period for Western Europe.