The fertilizer market in Peru ended 2019 with sales of 1.2 million tonnes, level compared to 2018, according to data from private companies operating in the sector. Of this total, 65 percent of the products are generics, or bulk commodity fertilizer, that is formulated with the three basic nutrients: nitrogen (N), phosphorus (P) and potassium (K). The remaining 35 percent of the market consists of specialized fertilizers – those that add other nutrients and components in addition to NPK.
In this sense, the National Superintendence of Tax Administration of Peru (SUNAT) is a peculiarity, in that it does not classify fertilizers as soluble and edaphic (applied to soil in solid form), but between organic, nitrogenous, phosphate, potassium and compound fertilizers. According to Professor Sady Javier Garcia Bendezu, head of the soil department in the area of soil microbiology and biochemistry at the National University Agraria La Molina (Lima, Peru), this criterion makes it impossible to define the size of the water-soluble fertilizer market in the Andean country.
Fertilizers called “generics,” only with NPK, are the most widely used and cheapest products, which is why they have a long history and have been applied since the 1960s in Peru. In the evaluation of industry experts, this tradition of using generic fertilizers explains the difficulty in growing special products market and ends up preventing the development of agricultural crop productivity in the country, since they provide only three nutrients to plants among dozens that today exist for the proper development of a plant. This is precisely one of the main reasons why productivity per hectare is quite low. For example, while potato productivity is 15 tonnes per hectare in Peru, in neighboring Chile, 21 tonnes per hectare is produced.
Professor Bendezu points out the Peruvian market is almost entirely dependent on imports, whether in soluble or edaphic fertilizers. “Until the last century, urea, ammonium nitrate and simple superphosphate were manufactured in Peru, but national production declined due to the high cost of energy in our country, making it cheaper to import urea from Russia, United States or even China,” he said. “Peru has never produced triple superphosphate or ammonium phosphate compounds.
“National production is limited to the extraction of natural sources of phosphoric rock for direct application and compounds of epsomite (MgSO4-7H2O), ulexite and boron, marketed as soluble fertilizers. Some local companies like Sulfatos Naturales SA. Inkafert, Cerro Sal Peru SAC, stand out in this market,” added Bendezu. “A previous report reveals that in 2018, the CIF (cost, insurance and freight) value of the total imports was US$525 million (the equivalent of 1.57 million tons in total). Against this, exports had a FOB (free on board) value of $31.5 million (57,000 tons) in the same year. This gives an idea of the abysmal gap between import and export in Peru.”
The volumes imported in 2019 of the main fertilizers included 410,000 t of compounds, according to ITC, with combinations of two or three nutrients.
Hand blending fertilizers. Photo: Equilibra Perú
“Compounds” includes most fertilizers defined as water-soluble (monoammonium phosphate, potassium nitrates, calcium nitrates and magnesium nitrates), in addition to DAP (diammonium phosphate) and MAP (monoammonium phosphate) for edaphic application.
“It is worth mentioning that this item, together with organic products, are those that have shown sustained growth over the past five years, which indicates that soluble fertilizers continue to increase. MKP (monopotassium phosphate) is very rare and is only consumed in export crops,” said Bendezu.
There are import volumes of potassium nitrate (around 30,000 t) and calcium nitrate (10,000 t) (see article on these markets in this issue).
“The main demand for soluble fertilizers – I would say the only one – comes from producers of export-oriented crops, which continue to grow in Peru,” said Bendezu. “Among them are table vines, avocado, citrus, peppers and, mainly, blueberries.”
It should be noted Peru has the Bayóvar phosphate rock mine, started up in 2010, and in which Mosaic is the majority shareholder. From the mine, almost four million t are exported each year.
Market participants The main importers of fertilizers in Peru are:
A stand-out development in recent years in the fertilizer market in Peru was the partnership of the Norwegian fertilizer giant Yara with Equilibra, which was created by Japan’s Mitsui and the Romero group in 2017, and with whom Yara already had alliances in Bolivia. It is understood that the tie-up in Peru likely led to the sale of more than 300,000 tonnes of fertilizers per year to around 60,000 farmers.
The market still has enormous growth potential since Peru has more than 7.5 million hectares under cultivation and only 1.2 million hectares are fertilized. As a result, the new holding company aims to ‘snap’ a 30 per cent share of the high value input market over the next three years.
Clearly demonstrating its intentions to generate presence in the local market, the Norwegian company has reformulated its portfolio by removing commodity inputs, such as urea and potassium chloride, and started to focus on specialty products with high added value, used to correct specific nutritional deficiencies in the fields. In this way, Yara Peru started to have a 25 percent market share already last year.
In February 2020, Yara took a new step in its strategy and placed in charge of Equilibra Peru, through an exclusive alliance for the distribution of its three main fertilizer brands, which currently represent the majority of the company’s revenues in Peru.
“In 2020 we started with news that amazed the locals and foreigners in the agricultural sector, when in mid-January Yara signed a distribution agreement, with whom until 2019 had been its main contender in the soluble fertilizers market, Equilibra Peru,” said Ernesto Payet Soto, Equilibra Peru commercial manager. “This agreement shook everyone. It forced things to be rearranged, further strengthening the overwhelming participation of an Equilibra Peru that had been growing in previous years at rates of 20 percent in sales. Until now, this change has only influenced market share, with overall demand still stable.”
Prospects were looking good Until the beginning of the COVID-19 pandemic, in mid-March 2020 in South America, the scenario for the soluble fertilizer market “could not be better,” said Bendezu. “Peru was considered the first exporter of fresh asparagus, specialty coffees, the second exporter of artichokes, organic coffee and cocoa, the third of dried peppers. Some added that we would move to the first place in blueberries.”
Sady Javier Garcia Bendezu Photo: Sady Bendezu
However, the rapid spread of the pandemic in the first months made 2020 “the lost year. The economy was badly affected, and exports fell more than in previous years, increasing the fear that the market will retract a little. It will depend on how quickly we recover in the second half of 2020 and the year 2021,” added Bendezu.
According to Soto, during the first two weeks of March 2020, in the face of the pandemic, the Peruvian presidency dictated the mandatory stoppage, and the agribusiness industrial sector began to activate contingency plans for nutritional supply, thus advancing supplies and multiplying their days of inventories.
This caused March sales to grow versus the same period in 2019, but only due to an effect of increased stock in customer warehouses, which would be regularized with a decrease in sales in April and May 2020 in the agro-industrial sector. Another important effect was the variation in the prices of the main crops: in general, several vegetables and fruits raised their prices due to the expectations of millions of Peruvian consumers, who advanced their purchases and packed their cabinets with food, to be supplied while they had to winter for the “lockdown.”
“All this effect improved the situation of small and medium farmers of crops such as rice and potatoes, who could benefit from a higher profit but only during the month of March,” said Soto. “There were also some exceptions, for example, asparagus and mango, where if in certain passages of these months we found prices below cost, which caused fertilization rates per hectare to be reduced.”
Equilibra Peru. Photo: Equilibra Perú
Taking stock at the end of the first quarter of 2020, the demand for fertilizers has decreased slightly compared to the same period in 2019. “However, we are very optimistic that the situation may reverse in the short term as a consequence of two significant factors,” noted Soto. “First is the support of the Peruvian State, which under its ‘Reactiva Peru’ program has disbursed large sums of money to multiple companies in the sector with very low interest rates. And the other, that international fertilizer prices have dropped by approximately three percent, thus lowering nutrition costs for farmers. We are aware that today there are more questions than certainties about the evolution of crop prices, and that could make fertilization rates vary, but our expectations are that the market will remain at 1.35 million tons.”
According to Soto, at least for the next five years it will only be possible to prosper “giving the land the opportunity to be more productive. And this is scientifically proven, which can only be achieved by carrying out good agronomic management, which, among other activities, implies being able to fertilize the fields that lose their mineral wealth year after year. So, we can do in 80 hectares what we used to do in 100 hectares.
There are two important groups, said Soto. There are those who do not fertilize, but “when they fertilize, they will experience higher productions than they can without. And the other group are those who already fertilize. To continue optimizing their agricultural fields they will have to continue injecting new technologies.
“As communications evolve, so do fertilizers, and we must be at the forefront of improvements in new fertilizer technologies,” added Soto. “That is why from Equilibra we have partnered with Yara to deliver to Peru and Bolivia, through highly efficient fertilizers, the opportunities that the farmers themselves deserve to improve their economic situation, increase the productivity of their fields, and be able to feed a seriously increasing population.”
Ernesto Payet Soto Photo: Equilibra Perú
Market news
Local distributor Agri Micro Biotech has been selling in Peru the Huma Gro liquid fertilizers developed and manufactured by US firm Bio Huma Netics.
“For the past 12 years in Peru we have found that Huma Gro liquid fertilizers with their proprietary Micro Carbon Technology (MCT) have significant advantages to any granular or liquid fertilizers that are generally considered to be highly water-soluble fertilizers,” Salvador Giha, owner and CEO of Agri Micro Biotech, told New Ag International.
“Farmers have better control and management of irrigation, including no blocked drip systems due to being 100% soluble and no residues,” Giha explained.
The National Agrarian Health Service of Peru (Senasa) is promoting use of biological control agents (ACBs) to make pest control more sustainable in crops prioritized such as vines, cocoa, sugar cane, avocado, citrus, asparagus, coffee and others. (2BMonthly August 2020)
New Ag International SEPT/OCT 2020
Tessenderlo Kerley International and Finnish chemicals company Kemira have signed a long-term off-take agreement for the marketing and distribution of premium sulphate of potash (SOP) fertilizers.
Tessenderlo Kerley International will off-take and market the premium water-soluble SOP produced by Kemira at its plant in Helsingborg, Sweden. In addition, Tessenderlo Kerley International will also have access to a part of Kemira’s standard powder grade SOP production. This agreement will further strengthen Tessenderlo Kerley International’s position in the premium water-soluble segment. The agreement will become operational in 2021, Tessenderlo Kerley International told New Ag International.
With its production site located in Ham, Belgium, Tessenderlo Kerley International exports to more than 90 countries and is a top-five global SOP producer.
“This long-term agreement is an ambitious step forward for our business unit, enabling Tessenderlo Kerley International to grow and remain the leader in this premium water-soluble potassium sulphate market,” said Geert Gyselinck, executive vice president of BU Tessenderlo Kerley International. “Thanks to this contract, SOP customers around the world can now be even more assured of reliability of supply, access to highest quality product, and qualitative service and support. With Kemira, we partner with a SOP Mannheim producer who shares the same mindset towards continuous improvement and qualitative production.”
The off-take agreement with Kemira increases the amount of SOP that Tessenderlo Kerley International can bring to market. Being able to supply from two sites provides additional logistical flexibility for deliveries and enhanced output, particularly important in periods of high demand, stated Tessenderlo Kerley International.
The site at Helsingborg produces standard powder grade SOP, which is generally used for the manufacture of compound NPKs, as well as water-soluble (fertigation) grade SOP sold directly into the market through distributors. The Tessenderlo Kerley International plant at Ham produces a complete SOP range: powder grade, granular grade and soluble grade as well as a special grade, K-Leaf®, for foliar applications.
Since the divestment of the majority of its fertilizer assets, over the last couple of decades, Kemira has focused on its other activities. One of these is water treatment chemicals, for which hydrochloric acid is required as a starting material. In this context, the Mannheim process can be regarded as a means of producing this hydrochloric acid, along with SOP, which Kemira was supplying to a small number of clients under long-term contracts.
Tessenderlo Kerley International also uses its hydrochloric acid in other process, such as the production of calcium chloride at its Ham site in Belgium.
Product quality and volumes Since both Kemira and Tessenderlo Kerley use the Mannheim process, the SOP product have similarities. The water-soluble SOP grades of both Kemira and Tessenderlo Kerley International are among the most sought after for use in drip irrigation systems.
There are also some minor differences that will potentially allow Tessenderlo to better tailor the characteristics of product supplied to the specific needs of each customer, Tessenderlo Kerley International explained to New Ag International.
Precise volumes involved in the off-take agreement have not been disclosed. Tessenderlo Kerley International will off-take and market the premium water-soluble SOP produced by Kemira at its plant in Helsingborg. In addition, Tessenderlo will also have access to a part of Kemira’s standard powder grade SOP production.
Commercial strategy It is understood that some of the more commercial aspects of the off-take agreement are still under consideration. Tessenderlo Kerley International has a portfolio of well-known product brands.
“Our aim is to make the transition of supply as smooth as possible for all customers; and so, in this context, some material will continue to be supplied in Kemira-branded bags in the short term. The long-term goal is to market and sell most SOP products under Tessenderlo Kerley International’s own brand names. Nevertheless, we will keep serving customers with private label branded bags and there are customers of both companies who will prefer to purchase SOP in big bags, particularly those who manufacture high quality water-soluble and liquid NPKs,” the company stated.
“The range of products produced at both Helsingborg and at Ham are, we believe, amongst the best quality SOP products available in the market. Both sites use the Mannheim process to produce SOP and hence the characteristics of the products are very similar. Based on this, the intention is to apply one pricing strategy for the water-soluble SOP products, irrespective of the production site. Of course, variations in logistical costs between the two units and the local ports through which the SOP is shipped may lead to small differences in pricing,” the company told New Ag International.
100 years of SOP production
News of the off-take agreement comes as Tessenderlo Kerley International releases a book to commemorate 100 years of SOP production in 2019 at its production facility in Ham. The book, available as a PDF download, is a compendium of the knowledge accumulated by Tessenderlo and its forerunner Société Commerciale des Potasses et de L’Azote (SCPA).
Written by Michel Marchand, a senior agronomist with Tessenderlo for 17 years, and senior technical manager for fertilizers, the book also serves as a farewell to the company by Marchand, who has now retired. At more than 300 pages, the detail is extensive. It begins with an overview of the Mannheim process mentioned above, moving on to the movement of potassium cations and sulphate anions in the soil. Having covered the agronomic benefits of SOP, the book takes a detailed look at specific crops, from avocado to date trees to Solanaceae (potatoes, tomatoes, eggplants). There are 14 pages of references alone.
In the valedictory, Dr. Nicolas White, portfolio and knowledge director for Tessenderlo Kerley International, recognized Marchand as one of the world’s leading experts on SOP. White also said Marchand had played a key role in promoting SOP – he was the coordinator for West Asia and North Africa at the International Potash Institute (IPI), Switzerland, and later took up coordination of activities in Central Europe. Marchand also served as chairman of the agronomic committee of the Sulphate of Potash Information Board (SOPIB) since its creation in 1998. To download “Sulfate of Potash – more than 100 years of experience” click here.
This report will look at import and export numbers for 2019 for potassium nitrate (PN) and calcium nitrate (CN) available on the ITC portal. The aim is to give a general picture, provide some insight on the trade flows, and then highlight why caution is required with some of the numbers.
The report will also refer to a trade matrix for both PN and CN generated by New Ag International (NAI). Trade matrices are a vital tool in providing a snapshot for a given year, showing how much each supplier shipped to each buyer or destination. A trade matrix provides the detail on aggregate export numbers, and this can lead to insights on which markets are growing.
General points Some general points need to be made about these particular fertilizers at the outset. PN and CN would usually come under the umbrella term “specialty fertilizers” and this would imply that their volumes are smaller than bulk commodity fertilizers. PN and CN tend to be shipped in bags, and very large amounts of CN are also shipped as solutions. These bags are shipped in containers, hence the image used on the front cover. They are high-value products and bagging also counters the problem of adulteration.
For both fertilizers, production is dominated by only a few suppliers. We refer to this as concentrated supply, which reflects the supply of potash as well. As will become apparent, Chile/SQM dominates the production and export of PN; Norway/YARA the production and export of CN.
Having a concentrated supply does have benefits from an analytical view point. It can make it easier to deduce consumption figures – since many countries do not have any production of their own, the level of imports will also serve as an indication of the consumption minus any exports they make. And yes, even though a country has no production, it can still make exports, which means it re-exports some of its imports.
It is worth pointing out for those who have not worked with trade figures before that export and import numbers invariably will not match. This can be a shock to the uninitiated, particularly in this digital age - shouldn’t these numbers match perfectly?
The point that needs to be highlighted here is that any trade figures are trying to capture a snapshot of something that is inherently moving. Exports made in December might not arrive until January or February in the following year. So, exports for December could look higher than imports for December, for example. There can be other reasons – the product might be on a vessel making multiple discharges, such as three discharges at ports in three separate countries. Volumes to be discharged might change while the ship is in transit, or the final destination might change.
For these reasons, it is vital to make what is called a trade matrix, which we describe as “reconciled” trade data. This is where the exports that country A says it has exported to country B are equal to the imports that country B says it received from country A. Typically, you would backfill a historical series with reconciled data. That said, this doesn’t necessarily mean a trade matrix is the final word and testament on trade, more that this is the trade that can be accounted for from an exporter and importer perspective.
Consumption target The next general point to be made is that trade doesn’t tell you much about consumption, and knowing consumption is really the main analytical objective.
In the simplest case, if a country has no production, then imports will normally equal consumption.
But the problem comes when you have a country that has its own production of a particular fertilizer that exports that fertilizer and also imports that fertilizer, and when it uses some of that fertilizer to make other fertilizers that it then exports. (Hopefully, you are still with me!) And that’s before you even start looking at stock levels. Trade provides one piece of the jigsaw.
New Ag International has built production, import, export, consumption (PIEC) files for both PN and CN. The aim for this report is to bring out some highlights from the trade data, not to dissect the whole PIEC.
Once you start looking at PIEC you need to go further and separate capacity and production. Some plants will be running at full capacity, and there are economic limits here too. You are unlikely to run a plant below a certain percentage of its capacity before it becomes uneconomical. Of course, it depends on what type of plant you are talking about. Nitrogen plants would be run at high levels, >80 percent, but a potash or phosphate mine can be run at a lower level. For sulphur, largely a biproduct of the refining industry, you are talking about the refinery operating rates, so an indirect measure driven by demand for fuel, not even an agricultural commodity. The utilization rate of a plant or factory would again form part of a PIEC spreadsheet.
Actual production volumes are essential to know, rather than capacity numbers. In an ideal scenario, if you knew the actual production of every single producer, you could assume this equates to global consumption (putting aside the question of stock building). But there is no such perfect knowledge. You can make assumptions on how many days per year a plant will run, but what happens about that maintenance turnaround that was extended by a few weeks – what did that do to production?
But in essence, if we assume production and consumption should roughly be the same, then trade is what happens in the middle. This is where the product moves from geographical regions of surplus to regions of deficit.
Apparent consumption In the ideal world that was mentioned above, it would be nice to have actual fertilizer consumption figures published by each country. Some do – for the main straight fertilizers. Some publish consumption figures at the nutrient level. Some go by delivery records, so it might still be sitting on the farm.
The work-around is apparent consumption, a derived number. If you go to a textbook, you’ll find the following formula:
Apparent consumption = production – exports + imports – change in stocks
For some countries, where they published consumption, it can even be used to derive an apparent production figure if necessary.
And then there is the problem mentioned above, where countries have no production but are reported as having made exports, often called re-exports. Often when looking at trade data you will see that a country has some exports, but you know it has no production. One possible reason is when a destination is landlocked. South Africa often shows exports for fertilizers that it doesn’t produce, but it is the point of entry for southern Africa.
A country being the point of shipment not origin is often seen in the Baltic ports. Often fertilizer is produced in Russia and then railed to a Baltic port and, for example, shipped from the port of Muuga in Estonia. Exports from Estonia are likely to be Russian, so this is another reason for having a trade matrix. You don’t really want to put down exports for Estonia when these aren’t really exports from Estonia. You really want to take them off Russian production to give a more reliable figure for Russia’s consumption.
When devising a PIEC, as a general rule of thumb, you don’t want your overall global consumption figure running above your global production number. It is possible there was a build-up in stock for a few years, and so consumption could be higher than production, but this is unlikely to persist long term.
The other problem with consumption is stock levels and time delays. A country might report a jump in imports in one year – making analysts jump with excitement that this was a growing market. But that doesn’t mean it was necessarily all consumed in that year, and it might have been re-exported if there was a commercial opportunity.
Raw material problem With PN, there is also the problem that it is included in NPKs and exported in that form. This is the case with Haifa in Israel, where it exports PN and uses some for its NPK products which it also exports. If you only took the PN exports, this would give Israel a higher PN consumption than it really has.
This is another reason for constructing a trade matrix for each specific year to see detail of where exports are going, and then seeing what remains of an estimated production. In the case of Haifa, it is necessary to include PN into the NPK exports.
Exporter information Exporter information – namely the list of countries that an exporting country says it exported to – can also shed light on the demand from that destination, particularly if that country does not report its PN imports. When constructing the PN trade matrix, exporters reported India as a destination for around 20,000 tonnes (t). There is no clearly published capacity for PN in India (though some may exist), so once some small volumes of exports are deducted, it implies consumption could be 18,000 to 20,000 t.
Technical end-use Other factors for both PN and CN is that not all production is for agricultural end use, and is destined for what is called industrial use, such as solar concentrated power storage for PN and explosives for CN (and PN). PN is used in glass making and as a food preservative.
And even with agriculture, the agricultural end use might only partly be nutritional – some could be to induce flowering, such as the usage of PN in the Philippines.
The industrial component needs to be broken out in the numbers, but this is never straightforward. Ultimately, it needs to be done on a country by country basis. At some point, you will be hoping to find a figure for that country for agricultural consumption, and then apportion the balance to industrial usage. In China, one published source for PN consumption put industrial usage as high as 50 percent.
Potassium Nitrate Potassium nitrate (PN) (NOP, 13-0-46) is the main water-soluble straight fertilizer, and the primary ingredient in most water-soluble NPKs.
NOP is dominant in the world of water-soluble fertilizers (WSF), because in the same molecule it combines macronutrients nitrogen and potassium, consumed by plants at high rates.
The importance of PN as a WSF means, in general terms, the largest producers have also been the world leaders in the market for soluble fertilizer, including finished products.
There are two main producers in the world – SQM in Chile and Haifa in Israel. This is reflected in the export figures (see Table 1.). Indeed, such is the dominance of Chile, that it accounts for just under half of world exports and has done so for many years. That appears to be the case in 2019 when Chile’s PN exports were reported at 461,000 product t.
The producer in Jordan is Kemapco, and in China there are several producers of which Migao Corporation is probably the best known. Other lower production capacity is located in Spain, Belarus, Russia, and Ukraine.
Trade matrix From the NAI trade matrix for 2019 using ITC data, global trade for PN is estimated at 1,005,000 t, which would represent 32 percent of production.
In many ways we would expect that percentage to be high because of the concentrated supply, and so product needs to move to areas of demand. If you compared this with ammonium nitrate trade as a percentage of production, it would be around 20 percent and for urea it would be 28 percent.
One reason it is not higher is the dominance of Chinese production and consumption. This reduces trade as percentage of production. If you were to remove Chinese production and exports, then trade as percentage of global production increases to 61 percent.At this stage we just need to be wary since this is not all for agricultural use. Our adjustment factor will be something like 70 percent for agriculture (discussed below). Only further analysis, country-by-country, will refine this number.
PN importers The following table shows the top 10 PN importers from ITC data for 2019. These top 10 countries account for around 74 percent of total imports for 2019. There are 80 countries reporting imports in the ITC data, which suggests many import small quantities. This would be expected for a specialty fertilizer, where cargoes can be a few hundred tonnes in shipping containers.
With this table, you basically have two tiers. Spain, Netherlands and the U.S. out in front, with Turkey some way between the others. With the Netherlands, care always has to be taken with any trade statistics because of the Rotterdam effect – this is where exports from and imports to Rotterdam often get coded – incorrectly – as exports or imports for Netherlands. Table 1 – PN importers Top Ten (product tonnes)
Spain
190,745
Netherlands
177,515
USA
110,990
Turkey
62,430
Belgium
41,991
Italy
38,865
South Africa
37,211
Peru
33,591
Morocco
29,729
Greece
25,164
PN Exporters Potassium nitrate exports are dominated by Chile. The domestic market is around 60,000 t (See New Ag International June 2020). The 2019 trade matrix shows exports of 460,975 t from Chile, followed by Israel, China and Jordan. There is a big drop to Spain.
Table 2 – PN exporters Top Ten (product tonnes)
Chile
460,975
Israel
129,080
China
117,158
Jordan
91,508
38,481
35,431
Denmark
31,336
Germany
17,639
12,882
Russia
11,429
PN consumption Global apparent consumption according to the generated PIEC using ITC data is estimated at three million t (2.996 million t) for 2019.
Given the comments made at the start, consumption numbers often need to be derived in the form of apparent consumption. The data will be presented in later reports.
But just to highlight one country to show the steps necessary to disentangle the agricultural and industrial usage, Australia is a good example – it has a well-known mining sector and it has a growing greenhouse sector. The country has an estimated apparent consumption of 20,000-25,000 t PN, given imports from the trade matrix of 20,679 t. It is likely some of that would be used for explosives given the country’s mining industry. Using a calculation shown in references (Ref 1) based on data from ABARES, it appears that half of this PN volume is probably for agriculture and the remainder for industrial.
Calcium nitrate Calcium nitrate (CN) (15.5-0-0+26.5CaO) has a high solubility and is the third most import ingredient in the soluble straights market after potassium nitrate and technical-grade MAP. CN is the most important source of calcium in fertigation.
This product can be described chemically in different ways depending on the hydration, which will in turn dictate its solubility. This has implications for the HS code, which is discussed below.
In previous New Ag International articles, we have estimated some 60 percent of the world’s CN is applied by fertigation and foliar feeding, while the balance is applied by dry application.
Both the fertigation and foliar segments have been growing – our last figure was >5 percent per year – and there is an assumption this will continue, mainly due to growing acreage of fruits and vegetables.
CN is not compatible with WSF phosphorus and sulphate raw materials, such as MAP, MKP, SOP, AS and Mg-sulphate, so very few CN manufacturers also produce NPK products.
That said, a large majority of supply is produced by Yara – as its YaraLiva-Calcinit product. For Yara, CN is a byproduct in the production of phosphorus products.
Other producers include Fertiberia in Spain (at the site of former Portuguese ADP), the Czech producer Lovochemie, Polish producer Adipol and Adob, and various Chinese companies.
In 2016, Russia’s Uralchem presented a tech-grade anhydrous product (CN (17-0-0+33 CaO).
Chemical formula and HS code As can be seen from Uralchem product, it has a slightly higher N content then what might traditionally be called CN.
This raises the issue of how variations in chemical composition of CN reveal themselves in HS code, and as a result could lead to misalignments in trade data.
There are two points to this discussion – the chemical formula of CN and then the HS code.
Firstly, the chemical formula. The CN salt may occur as three hydrated salts, and an (anhydrate) anhydrous one. Ca2(NO3)2*2H2O, Ca2(NO3)2*3H2O, Ca2(NO3)2*4H2O. The latter with 4H2O is known as tetrahydrate and represents stable solid phase at room temperature. The tetrahydrate seems to be the standard reference, but one large producer gives its CN formula as Ca2(NO3)2*2.5 H2O. An (anhydrate) anhydrous product would have the chemical formula Ca2(NO3)2.
When discussing this issue with Dr. Oded Achilea, NAI’s contributing editor, it would seem the ideal is to have as little crystallization water as possible, which means that product is higher in specific nutrient content, such as calcium in this case, which means the producer could command a higher price. But less crystallization means higher hygroscopicity which can lead to other problems.
One word of warning – sometimes a product can be called calcium nitrate but it is calcium ammonium nitrate when you look at its chemical formula under the product specifications. The formula for calcium ammonium nitrate is: Ca2(NO3)2*NH4NO3*10H2O.
There is also a distinction between liquid and solid forms of CN. When talking to a fertilizer producer, they said anhydrous CN also had a lower N in NH4 form content than standard soluble grade. The level of NH4 is one reason why a grower might use a liquid form of CN which might be completely free of NH4.
Now on to the HS codes, which is how you identify a product in international trade. For CN there are two codes: HS 283429 and HS 310260 –
If you look up the HS code for a given CAS number – then the CAS number for CN tetrahydrate will return the HS code 283429. If you put in the CAS number for CAN you will get 310260, which is also 310240 (mixtures of AN with calcium carbonate). Therefore, 283429 has been used in the following data.
Just taking one example, if you use 310260 code you see China exporting 533,000 t in 2019 which is more than its 255,000 t CN capacity (albeit it's estimated capacity, so it might be higher). So, what else could be included in this 310260 code? The likelihood is this volume contains AN products. China does not export CAN.
CN trade CN provides a good example of the disparity that can exist when looking at total import numbers and then looking at a trade matrix. Global imports for 2019, according to ITC data, were 1.9 million t.
But the trade figure from the NAI trade matrix is 629,000 t in 2019, using the same ITC data. We’ll explain the discrepancy below, but essentially Norway does not report its exports, so only countries reporting imports from Norway are included, and in the trade matrix only 220,000 t could be found from Norway, yet production from Yara is more than one million t. Even adjusting for that will not get the trade matrix figure to 1.9 million t.
With CN, there are similar problems to PN, in separating out the technical and agricultural uses.
CN is also used in explosives and used in the construction industry to make concrete. Perhaps a lesser known application is its usage in the production of latex gloves. Given the Covid-19 pandemic, we might see more demand for CN for glove production, although this would not translate into a demand increase of large volumes.
CN importers Global CN imports were 1.9 million t in 2019 according to ITC data. Top importers are detailed in Table 3.
That is a close grouping for a top 10 of importers, compared to PN which dropped off quickly from the top three.
But we need to be mindful that not all imports are accounted for – this is the value of doing a trade matrix. As we’ll see in the next paragraphs, we need to take into account the Norway problem.
Table 3 - CN Importers Top Ten (product tonnes)
United States
89,068
France
55,970
37,775
Malaysia
36,412
28,628
Australia
28,233
Japan
27,127
Canada
24,426
24,151
22,061
CN ExportersOne of the key decisions is how to treat Norway exports. Norway doesn’t report exports of CN.
This is when we go back to the Yara financial reports and for 2019 see total CN production of 1.542 million t, of which 400,000 is reported as technical. We can use this for two purposes – the first is to estimate the Norwegian CN exports. Let’s say some of the CN is used for other products. One source to NAI has estimated the volume at 700,000 t from Norway, around 500,000 t more than that found in trade matrix. This still seems on the low side. If we add an additional 500,000 t to the trade matrix figure, we arrive at trade of 1.1 million t, which is still short of the 1.9 million t of total imports from ITC reporting countries. This implies Norway’s exports are closer to that production figure. If we assume exports of 1.2 million t, which allows a volume into other products, this brings the trade matrix towards that 1.9 million t figure.
The Yara figure can also be used to refine the estimate for the agriculture/industrial split. From the Yara figure, approximately 30 percent is listed as technical. And so our working assumption, which we’ll extend to the global split, is 70 percent of consumption is for agriculture.
China is the second largest exporter with 185,000 t from the trade matrix. From a domestic production of around 255,000 t this suggests an apparent consumption of around 75,000 t. That consumption is less than the U.S. China’s reported exports for 2019 were 198,000 t but only 185,000 t could be found for the trade matrix.
China’s consumption is less than the U.S., does this seem reasonable? The production capacity might be understated. The NAI capacity is separated by company, and so this is more solid than simply being given an aggregate figure for China capacity. But to export 70 percent of production seems high. One possible explanation is that the local market is being developed and eventually these exports will reduce.
As can be seen from the following table, Norway dominates exports, followed by China and then Poland, according to the ITC data.
Table 4 - CN Exporters Top Ten (product tonnes)
Norway
1,200,000 (NAI estimate)
198,344
Poland
41,557
30,250
27,995
21,813
19,293
17,732
13,860
8,689
CN consumption Global apparent consumption is slightly less than PN, at 2.6 million product tonnes across agriculture and industrial uses, according to the NAI PIEC model, and fitting with published estimates of production capacities. It is worth remembering that even allowing for stock-building effects, consumption is unlikely to run above production capacity for any length of time. Using our estimated split of 70 percent agriculture, this suggests 1.8 million t CN for agricultural use worldwide.
When trying to gauge the consumption level for the average sized market, we’re talking in the tens of thousands. The U.S. is the largest consumer, with a combination of domestic production (of around 60,000 t) and reported imports of around 80,000-90,000 t per year; less some exports, an apparent consumption of around 135,000-140,000 t.
Egypt would be the second largest consumer because of a production capacity of 120,000 t. The country exports very little.
Another way that a trade matrix can be of value – few exports were picked up from Slovakia which, given the country has a production capacity of 80,000 t, would give an apparent consumption at a similar level to China, which wouldn’t make sense. Separate research suggests exports of 65,000 t and therefore a consumption of Slovakia of 15,000 t, which fits with our general assumption of consumption in the tens of thousands.
Summary The following table summarizes where we have been in this first article in the series. We have seen the concentrated supply for both PN and CN and how this results in the traded volume forming a high percentage of apparent consumption. In the case of CN, the dominance of Yara production makes this percentage even higher. PN is also dominated by a single producer in Chile. Both products have agricultural and industrial usage, sometimes in small quantities, and this also explains why a high percentage is traded. But it presents a headache – how to estimate the split and therefore volumes involved in agricultural and industrial end use. The following presents the summary table:
Table 5: Summary - Based on ITC 2019 data
Product (tonnes)
Potassium Nitrate
Calcium Nitrate
Apparent Consumption
3.0 million
2.6 million
Trade
1.0 million
1.9 million
Trade as %
33%
73%
Agriculture end-use (est)
1.5-2 million t
1.5-1.8 million t
References Ref 1 PN Australia calculation based on a reference from here: ABARES fertilizer use year-end 2017
PN applied to 158,000 ha in Australia. Assuming a recommended rate for vegetables of 50-100 kg/ha, and using mid-point. 0.075*158,000 = 11,850 tonnes of PN for agricultural use.
Acknowledgement Thanks go to NAI contributing editor Dr. Oded Achilea for work on capacity and production tables.
The cotton compost mix promotes the growth of earthworms, which break down the materials. Photo: Tim Lee, ABC Landline
A New South Wales (Australia) entrepreneur has created a unique composing business to turn cotton waste into fertilizer. The process uses earthworms to break down the tough cotton residue.
This cotton trash, the residue leftover from processing, has long been a problem for Australia's multi-billion-dollar cotton industry. Cotton trash is fibrous and left out in the weather, it sets into hard mounds that can take years to decompose, between eight and 10 years in its natural state. But to Adrian Raccanello, cotton residue is the backbone of his burgeoning composting business.
"It's got a lot of properties," the former viticulturist said in a story published by ABC News in Australia. "The broader the mix of organic material, the better the end product."
In the past year, Raccanello has trucked out about 50,000 tonnes of high-grade fertilizer. Soon he expects to produce 200,000 tonnes annually. Much of it is going back onto the region's cotton fields in the form of fine, granular worm castings.
Raccanello’s business – Worm Tech – began as a bare field in a vast paddock adjacent to the Rivcott Cotton Gin at Carrathool, in southern New South Wales, in 2010. The aim was to find a way to turn thousands of tonnes of cotton residue into fertilizer. The secret was getting the right mix, one that could maximize a natural asset: earthworms. Raccanello won some contracts to process domestic organic waste from regional towns, such as Mildura and Wagga Wagga. He blended the waste with cotton trash and carefully tended his rows of waste material to ensure optimal conditions for worms. He soon found the perfect recipe, and so was born a unique compost product that will soon be available to the retail market as well.
The future of UK and international farming and food production has been boosted after Innovate UK announced funding of £2.5m for what is widely considered to be the world’s first robotic farm.
As reported by the University of Lincoln (UK), “Robot Highways” is a project that aims to ensure industry sustainability by addressing labour shortages and the need for global food production, and reduce the environmental impact of the farming sector.
The successful consortium responsible for delivering Robot Highways consists of Saga Robotics, global leaders in robotics and autonomous systems (RAS) technology for the soft fruit sector, the University of Lincoln (Europe’s largest academic research centre on agri-robotics), University of Reading (knowledge exchange and economic evaluation specialists), Manufacturing Technology Centre Limited, Berry Gardens Growers, BT, and Clock House Farm Ltd. (leader in the soft and stone fruit growing sector).
The consortium has delivered a vision for the future of soft fruit farming, and will create the largest known global demonstration of RAS technologies that fuse multiple application technologies across a single farming system.
With an aim to be delivered by 2025 across the UK, a fleet of robots will perform a multitude of on-farm functions as one operation, powered by renewable energy.
Robot Highways will also provide solutions for moving the sector towards a carbon zero future. With an estimated 20 percent reduction fruit waste, 90 percent reduction in fungicide use, huge reduction in use of fossil fuel across all farm logistic operations and a 15 percent increase in farm productivity.
Artificial intelligence and machine learning technologies will be harnessed, and crucial improvements will be made to telecommunications infrastructure in rural settings.
The University of Lincoln, through its Lincoln Institute for Agri-food Technology, will be leading the academic contribution to robotic development and coordinating the fleet control system.
University of Reading’s School of Agriculture, Policy and Development will be evaluating the economic benefits of the new robotic agricultural technologies, and bringing growers, policy-makers and tech developers together to create suitable robotic tech for agricultural use.
