The development of specialty fertilizers has seen dramatic growth since 2000 as the fertilizer industry attempts to improve resource management and agricultural profitability while the world’s population increases.
This, in turn, has caused a busy decade of investment as fertilizer companies develop their own strategies to get in on the changing fertilizer market.
This was the message of a presentation at the 2017 Fertilizer Outlook and Technology Conference held in New Orleans in mid-November. The conference is put on by The Fertilizer Institute (TFI) and the Fertilizer Industry Round Table (FIRT).
WIDE RANGE OF PRODUCTS
Lauren Williamson, senior vice president of fertilizer for Argus Media, Inc., said specialty fertilizer incorporates a wide grouping of products. The products include blends, secondary and micro-nutrients, technical grades, enhanced efficiencies, water solubles, bio-simulates, surfactants, and adjuvants.
On the nitrogen side, these products can be controlled release, stabilized nitrogen fertilizers and slow release products. These types of products are being pushed by the fact that 30% of nitrogen loss is due to leaching and around 10% is lost to nitrification, she said.
With phosphorous, different coatings can be applied to the nutrient granules to improve efficiency, she noted.
Williamson said there has been huge growth in the specialty sector in the last 15 years.
In 2000, global demand for these products was around 1 million metric tons (mmt) and by 2016 the estimate was closer to 7 mmt. The demand percentage by ag also increased during this time, starting at 15% in 2000 and skyrocketing to 60% in 2016.
While some might think these products are relatively new, many of these products have been around for decades, Williamson pointed out, with patents for the slow-release technology introduced as early as the 1920s in both Europe and the U.S. This continued through the 1960s, she said. Controlled-release and slow-release products gained popularity in the 1980s and into the 1990s.
Williamson said there are several different factors increasing the popularity of specialty fertilizers.
Improving yields will be one way to help feed an ever-increasing global population, she said.
More land coming into production probably will not be enough by itself, so the world’s farmers will need higher yields on the existing land, she said. Increasing yields will also lead to higher agricultural profitability for farmers across the world.
There is also a push worldwide to improve resource management, Williamson said. This area can include location regulations on fertilizer application, Best Management Practices (BMPs) and the 4Rs strategy — the right source, at the right rate, at the right time and on the right place.
“How do you do more with less?” Williamson asked. “This effectively is what specialty fertilizers is all about.”
It is not all positive in the specialty fertilizers market, Blake Hurtik, North America fertilizer editor for Argus, said.
One key limitation for specialty fertilizers is U.S. farmer profitability. While profitability is expected to improve in 2017 and beyond, it is still fairly low, he said.
The challenge for fertilizer companies is getting farmers with $3 a bushel for corn to open up their wallets and spend even more money on specialty fertilizers, he said.
Hurtik said specialty fertilizers, such as micro-nutrients that are classified as premium products, are not immune to macro pricing trends. Even though these products have been decommoditized, they are still affected by low fertilizer prices in recent years in agriculture, he said.
It is difficult to get a real feel for micronutrient and secondary fertilizer demand in the U.S. Demand appears to be increasing from around 3 million short tons in 2000 to 6 million short tons in 2012, but there is no information about how much of this increase is sulfur versus magnesium or zinc, for instance, Hurtik said.
“There is a lot of uncertainty and the need for more information,” Hurtik said. “On top of that, what is a micronutrient or specialty blend look like? It means a lot of different things to a lot of different people.”
INVESTING IN SPECIALTIES
Despite these uncertainties, major fertilizer companies have stepped into the specialty fertilizer business over the last 15 years, Hurtik said.
One of the first companies to take the plunge into this area, and probably among the most well-known, is Mosaic with its MicroEssentials, a micronutrient product. The company has expanded its capacity over the years, going from 1.2 million tons a year to now 3.5 million tons a year, 30% of its finished phosphate fertilizer capacity, he said.
Mosaic’s top competitor, Morocco’s OCP, also offers a range of enhanced phosphates that target the African market. Meanwhile, Netherlands’ OCI added Shell Thiogro technology, which adds sulfur to finished phosphates, he said.
In addition, U.S.-based sulfur and potash producer Compass Mineral bought Wolf Trax, a company that manufactures a powdered-coated micronutrient, in 2014. This was Compass Mineral’s attempt to grow into the specialty product area, Hurtik said.
Two other global companies, ICL and Sirius Mineral, have begun to focus on the polyhalite fertilizer market. Polyhalite fertilizer is a specialty fertilizer with hydrated sulfate of potash, calcium and magnesium.
Hurtik explained that as more specialty fertilizers successfully enter the mainstream fertilizer market, it will make it easier for the next wave of new products.
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