In this blog post, Mike Straumietis, Founder and CEO of Advanced Nutrients, discusses the global fertilizer industry. He explores production issues and the many factors that influence the prices of fertilizers worldwide.
The U.S. and Global Fertilizer Production
It is important to note that even if the U.S. is the third-largest fertilizer producer in the world, it still needs to import the three primary nutrients required for fertilizer, especially potassium (potash) and nitrogen, to fulfill the demand.
According to the International Fertilizer Association, in 2018, the U.S. was second in global nitrogen production with 11.6 percent. China led the way with 24.6 percent of global nitrogen. The U.S. also ranked second in global phosphate production with 9.9 percent, behind China, which produced 37.7 percent. The U.S. was ahead of India, which accounted for 9.8 percent.
With potassium, however, Mike Straumietis notes that Canada led all countries in producing potassium with 31.9 percent, followed by Belarus with 16.5 percent of the world’s potash. Russia was third with 16.1 percent, and China was fourth. The U.S., with 0.8 percent, was 11th.
More recently, though, the U.S. ranked seventh in nitrogen production with only 4.6 percent of nitrogen exports worldwide. Russia was number one with 16.5 percent, and China came second with 11.2 percent. Saudi Arabia rounded up the top 3, with 6.4 percent. As for global phosphate exports, the U.S. ranked fourth with 11.8 percent, behind China’s 25.2 percent, Morocco’s 17.4 percent, and Russia’s 12.7 percent.
Finally, the U.S. accounted for less than 1 percent of global potassium exports, for which it ranked 12th globally. Canada held the largest share with 36.2 percent, followed by Belarus with 18.5 percent, and Russia with 16.5 percent
The Creation of Fertilizer
A lot of energy is required when creating fertilizer. In addition, energy is needed to convert the raw chemical materials into the final form that farmers and growers use.
Natural gas is the major ingredient for most nitrogen fertilizers, and it takes approximately 33 million metric British thermal units, or MMBtu, per material ton of ammonia to convert it. According to Mike Straumietis, this accounts for 70 to 90 percent of the production variable expenses in the synthesis process.
Since natural gas prices, especially in Europe, have experienced a spike in the past few months, many EU nitrogen plants have been forced to close. Nitrogen plants take around three to five years to fully construct and cost approximately $3 to $5 billion.
More Delays in Plant Turnarounds
Mike Straumietis explains with a demand surge and the construction of another production facility, people waiting for nitrogen will have to wait three to five years, and nitrogen producers will have to spend another $3 to $5 billion.
Be that as it may, plant turnarounds are needed to maintain the integrity of the chemical processes and the safety of fertilizer production plants. Since plant turnarounds were delayed during the height of the COVID-19 pandemic, preventive measures at production facilities had to be implemented, and companies that were under contract to perform said turnarounds were requested to delay visits until it was deemed safe to bring external employees back on site.
According to Mike Straumietis, even with the U.S. spending the past few years increasing its number of production plants, all these disruptions in production have caused a slight decrease in availability. In addition, other fertilizer nutrients are experiencing fluctuations in cost because of several factors.
For example, converting phosphate rock from a raw product to its final form for sale and usage undergoes a process that involves surface mining. Then, the soil and rock covering the phosphate are removed using enormous draglines measuring up to five stories tall. These draglines are both very large and expensive. This is just one factor that adds to the expenses, Mike Straumietis says.
As the Founder and CEO of Advanced Nutrients, Mike Straumietis knows the hurdles producers face to meet demand. A highly competent and skilled team can help address production obstacles, overcome them, and develop solutions that benefit many. For the case of Advanced Nutrients, it came up with a broad spectrum of new products that nourish each part of a crop’s cycle, from seed to senescence. Growers in more than 110 countries now rely on Advanced Nutrients to unlock their crops’ true genetic potential.