Southern States Corp

Potash Around the World

Potash Production

During the past decade, agricultural fertilizer, potash and other minerals have been fast growing markets. The steady growth trend resulted from increased worldwide demand for food, animal feed and fiber. More recently, the manufacturing of crop-based biofuels also increased the use of fertilizers.

Demand for food and animal feed has been on the rise since 2000. The U.S. Department of Agriculture’s Economic Research Service (ERS) attributes the trend to average annual population increases of 75 million people around the world. Geographically, population growth in Brazil, Russia, India and China, known collectively as “BRIC”, greatly contributed to the increased use of potash-based fertilizer.

Rising incomes in developing countries also was a factor in the growing potash and fertilizer use. With more money in the household budget, consumers added more meat and dairy products to their diets. This shift in eating patterns required more acres to be planted, more fertilizer to be applied and more animals to be fed – all requiring more potash.  

Fertilizer prices soared in 2007 and the first-half of 2008 as this strong worldwide demand strained potash inventories. Rising costs for input materials also contributed to climbing fertilizer prices.

Global potash supply and demand
After years of trending upward, fertilizer use slowed in 2008. And after hitting record highs in mid-2008, prices dropped later in the year because of the softening demand. The International Fertilizer Industry Association (IFA) says significant fertilizer stockpiles could be found in the major potash consuming nations of Brazil, China and the U.S. 

The worldwide economic downturn is the primary reason for the declining fertilizer use, dropping prices and mounting inventories. 

Commodities and fertilizers became risky investments, as the prices of fertilizer compounds potash, nitrogen, phosphate and others became more volatile. A tight lending environment limited credit access to purchase not only fertilizer, but also other agricultural products. Farmers postponed or reduced fertilizer applications until the economy and credit markets stabilize. That is particularly true in countries where potassium is found in the soil.
IFA expects little change in potash sales during 2009. Current market conditions likely will continue to depress consumer fertilizer demand during 2009. IFA projects 2.8 percent growth in 2009. That is less than previous years’ average growth of three to four percent. The more modest increase assumes countries, particularly developing countries, will continue to seek out methods and products that result in higher crop yields and improved crop quality.

IFA identifies consumer demand as the primary variable in determining if the agricultural fertilizer and related markets recover in 2009.

Potash production

While approximately 150 countries use potash for their crops, it is only produced in about a dozen countries. World potash production totaled 36 million metric tons in 2008, according to the U.S. Geological Survey. Canada is the world’s leading potash producer and exporter, accounting for 11 million metric tons of the 2008 total. Russia ranks second with 6.9 million metric tons and Belarus is third at 5.1 million metric tons. The United States ranks seventh at 1.2 million metric tons.   

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