Los Angeles, CA (PRWEB) August 20, 2012
Fertilizer is a natural or manufactured material that contains 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 prices are determined by the world market. Similar to other product providers for the agricultural industry, demand for the Fertilizer Manufacturing industry's products rose from 2007 to 2008, when crop prices increased and farmer incomes grew. According to IBISWorld industry analyst Radia Amari, when the recession hit in late 2008 and 2009, demand declined, as 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. According to industry major player The Mosaic Company, the 2012 Midwest drought, which is the worst since 1956, will not hinder fertilizer demand. Profit will amount to about 8.6% of revenue in 2012, slightly up from 2011.
During the five years to 2017, industry revenue is expected to increase steadily. Farmers will increasingly demand fertilizer as production increases. Fertilizer prices will also continue to grow, which will boost revenue. Moreover, exports are expected to grow at an average annual rate of 4.3% over the next five years, which will further expand industry revenue. At the same time, imports are anticipated to grow over the five years to 2017, 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. While industry revenue is projected to grow, company numbers are anticipated to decrease through 2017 because of acquisition activity. Players like Agrium Inc. 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 firms experience the most growth potential through mergers and acquisitions. From 2012 to 2017, the number of firms is forecast to decline at an average annual rate of 2.4% to 343.
Market share concentration measures the extent to which major players dominate an industry. Concentration in the Fertilizer Manufacturing industry is high, with the top three players accounting for an estimated 86.3% of revenue in 2012. “Despite the dominance by the three largest players, there are a large number of small players,” says Amari. In 2012, an estimated two-thirds of 388 industry firms will have less than 20 staff members. Additionally, industry concentration varies between product segments. For example, in the case of phosphate fertilizers, the largest eight players control 90.0% of the market. In the case of ammonia, which is used as a feedstock, the top three players control more than 70.0% of the market. 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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