Farmers will increasingly demand fertilizer as production rises, enabling modest growth.
Los Angeles, CA (PRWEB) December 20, 2012
Fertilizer is a natural or manufactured material containing at least 5.0% of nitrogen, phosphorous or potassium, and is used in crops that produce food, feed, fiber and energy. It is primarily a commodity, and the world market determines prices. Demand for the Fertilizer Manufacturing industry's products rose from 2007 to 2008, when crop prices increased and farmer incomes grew. When the recession hit in late 2008 and 2009, demand declined; as a result, farmers reduced their crop production and distributors cut inventories. In 2010, demand rose slightly, but it was still well off the highs of 2008. Expansion in international trade heightened competition and hindered revenue growth in 2010. Over the five years to 2012, industry revenue is estimated to grow at an average annual rate of 3.0% to $19.7 billion, including a 4.1% jump in 2012, says IBISWorld industry analyst Radia Amari. According to industry major player the Mosaic Company, the 2012 Midwest drought, which has been the worst since 1956, will not hinder fertilizer demand.
During the five years to 2017, industry revenue is expected to increase. Farmers will increasingly demand fertilizer as production increases, continues Amari. Fertilizer prices will also continue to grow, which will boost revenue. Moreover, exports are expected to grow over the next five years, which will further expand industry revenue. At the same time, imports are anticipated to grow, limiting revenue expansion. According to the US Department of Agriculture, the United States is one of the top five fertilizer producers in the world for all major fertilizer nutrients (i.e. nitrogen, phosphorus and potassium). Behind China, the United States is the second-largest producer and consumer of fertilizer in the world. Concentration in the Fertilizer Manufacturing industry is high. The three largest players are Agrium Inc., Potash Corporation of Saskatchewan Inc. and The Mosaic Company; however, there are a large number of small players. In 2012, an estimated two-thirds of 388 industry manufacturers will have fewer than 20 staff members.
Although industry revenue is projected to grow, company numbers are anticipated to decrease through 2017 because of acquisition activity. Players like Agrium and CF Industries completed acquisitions over the five years to 2012. This trend is anticipated to continue as the industry's product line remains saturated and manufacturers experience the most growth potential through mergers and acquisitions. From 2012 to 2017, the number of enterprises is forecast to decline. For more information, visit IBISWorld’s Fertilizer Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry primarily manufactures fertilizer products. These products contain a different mixture of the three vital nutrients essential for plant growth: nitrogen, phosphorous and potassium. The products are distributed via wholesale arrangements with third parties or, in the case of vertically integrated operations, by the manufacturer.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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