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Overview of PotashCorp and Its Industry
Fertilizer 101
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To better understand our company — and our opportunity — we believe it
is important to begin with the basic drivers of fertilizer demand. Our story
is one of global development: millions of people with rising incomes want
to feed their families better diets with high-quality fruits and vegetables
and protein from meat. With pressure on global crop supplies mounting,
the need to sustainably increase production is clear. We believe that
fertilizer will play a key role in achieving this, and that the agronomic and
economic opportunities which exist today — and are expected in the
years ahead — will encourage farmers to apply more fertilizer, especially
potash.
Fertilizer 101
Overview of PotashCorp and Its Industry
Global Development Story
World Population
Shift to Urban Areas in Developing Countries
The global population is rising by almost 80 million people every year. This growth is
occurring simultaneously with the changing composition of the world population as it
is taking place in developing countries in Africa and Asia, particularly in urban areas.
Today, one out of every two people lives in a metropolitan area; by 2050, that figure
is expected to rise to more than two-thirds of the global population. This is an
important shift since urban consumers tend to eat more and better balanced diets.
For example, urban dwellers in China consume nearly 75 percent more meat and
almost 25 percent more fruits and vegetables than their rural counterparts.
Source: United Nations
Last updated: Aug 31, 2014
Fertilizer 101
Global Development Story
World Population
Overview of PotashCorp and Its Industry
Global Development Story
World GDP and Caloric Intake per Capita
Economic Growth Driving Increased Food Consumption
Many countries with rapidly rising populations are also global leaders in economic
growth. Although short-term fluctuations occur, the economies of China, India and
other developing countries are expected to continue to expand and enhance global
economic growth for decades to come.
As economies grow and individual incomes rise, history tells us that people in
emerging nations typically seek to improve their diets. People in Brazil, China and
Indonesia have experienced significant increases in their daily intake of fruits,
vegetables and protein from meat, eggs and fish. The shift to a better diet is just
beginning in other parts of the developing world such as India and Africa. In the
decades to come, dietary changes in these markets coupled with population growth
are expected to be a key driver of global food demand.
*Bubble size reflects the relative size of country population.
Source: United Nations, FAO, IMF
Last updated: Aug 31, 2014
Fertilizer 101
Global Development Story
World GDP and Caloric Intake per Capita
Overview of PotashCorp and Its Industry
Global Development Story
World Grain and Oilseed Production
Rising Production in All Major Crop Growing Regions
With the drivers of population and income growth in developing countries solidly in
place, demand for grain and oilseeds has been increasing for many years. Oilseed
demand has more than doubled and grain demand is up nearly 40 percent over the
past two decades.
In turn, this demand has put stress on grain supplies, raising prices for crop
commodities above historical levels and motivating growers to boost their production
levels. The five markets of China, India, Other Asia, Latin America and North America
produce over 70 percent of the world’s grain and oilseeds. North America is a major
producer and exporter of grains and oilseeds, while Latin America has emerged as a
leading exporter of oilseeds to markets such as China.
Source: USDA
Last updated: Aug 31, 2014
Fertilizer 101
Global Development Story
World Grain and Oilseed Production
Overview of PotashCorp and Its Industry
Global Development Story
World Meat, Fruit and Vegetable Production
Changing Diets Support Growth in Higher Value Agriculture Products
The desire to improve diets in the developing world not only increased demand for
grains, it has had a profound impact on global production of high-value agriculture
products such as meat, fruits and vegetables. China has significantly increased its
production capacity for these products to keep pace with growing domestic
consumption and also to capitalize on export opportunities for higher value crops.
Meat, fruits and vegetables are important products for the fertilizer business. Meat
production requires more grain to be allocated to feeding livestock and fruits and
vegetables are large consumers of all nutrients, especially potash which aids in the
maturing process and helps enhance color, taste and texture.
Source: FAO
Last updated: Aug 31, 2014
Fertilizer 101
Global Development Story
World Meat, Fruit and Vegetable Production
Overview of PotashCorp and Its Industry
Global Development Story
Global Population and Arable Land Per Capita
Pressure to Increase Productivity on Existing Land
As populations rise and urban areas expand, there is less arable land per person
available for agriculture. With a finite land base and an expanding global population,
this historical trend is expected to continue.
The strain on arable land is most pronounced in developing countries, where less
than 0.2 hectares per person is available for crop and animal production. These
countries have the most urgent need to improve their food production, highlighting
the importance of increasing long-term crop productivity.
Source: FAO, United Nations, PotashCorp
Last updated: Aug 31, 2014
Fertilizer 101
Global Development Story
Global Population and Arable Land Per Capita
Overview of PotashCorp and Its Industry
Global Development Story
World Renewable Water Profile
Water Availability an Increasing Concern
Not only is land constrained, water availability is becoming an increasingly important
issue in many countries. Over the past four decades, renewable water resources per
capita have declined by nearly 50 percent in the developing world. This strains water
supplies even as demand for agriculture and industrial purposes rises.
The competition for water in developing countries is unlikely to slow as populations
continue to increase and economies grow. Consequently, we believe agriculture will
have to use water more efficiently. Fertilizer, especially potash, helps plants retain
water and is expected to play an important role in enabling efficient water use in the
future.
Source: FAO AquaStat, United Nations, PotashCorp
Last updated: Aug 31, 2014
Fertilizer 101
Global Development Story
World Renewable Water Profile
Overview of PotashCorp and Its Industry
Global Development Story
Global Trends
Population Change Primary Driver of Anticipated Growth in Food Demand
Importantly, we believe that the global development story is not just one about
history, but also about the future needs of our growing world.
Using estimated population growth and dietary changes shifts, by 2050 you can see
that the developing markets will be a major driver of future food (and fertilizer needs).
In fact, more than 70 percent of future food demand growth is directly attributed to
population change with the other 30 percent expected to be driven by diet.
Source: FAO
Last updated: Aug 31, 2014
Fertilizer 101
Global Development Story
Global Trends
Overview of PotashCorp and Its Industry
Agriculture
World Grain and Oilseed Supply/Demand
Stocks Are Relatively Tight Despite Record Production
Crop production has struggled to keep pace with rising grain consumption for the last
few decades. Following the major supply shortfall in 2012, favorable weather and
increased planted area led to record crop production in 2013. This supported a
partial recovery in global ending stocks from the historically low levels recorded the
previous year. Global consumption and trade rose significantly as a result of
increased supply and lower crop prices.
While weather will continue to play a significant role in determining the yield
potential of each year's crop, the current strain on global grain supply highlights the
importance of proper soil fertility for improving yields, especially under difficult
growing conditions.
2014F refers to the 2014/15 crop year
Source: USDA
Last updated: Aug 7, 2014
Fertilizer 101
Agriculture
World Grain and Oilseed Supply/Demand
Overview of PotashCorp and Its Industry
Agriculture
Selected Crop Commodity Prices
Broad Strength in Global Crop Prices
With supply tight for many agricultural commodities, prices remain well above
historical levels. Although prices have been volatile in recent years, we believe they
are strong economic signals to farmers around the world to focus on improving
production.
Since production increases must be sustained to remedy low grain inventories,
elevated crop commodity prices are expected to remain for the coming years. Higher
food costs generally encourage countries seeking self-sufficiency in agricultural
production to adopt improved farming practices. Given our expectation of supportive
crop prices remaining intact for the coming years, we anticipate positive farm level
sentiment and a push to address soil fertility needs.
See current crop commodity prices
Source: World Bank, PotashCorp
Last updated: Aug 31, 2014
Fertilizer 101
Agriculture
Selected Crop Commodity Prices
Overview of PotashCorp and Its Industry
Agriculture
Impact of Fertilizer on Crop Production
Fertilizer is Essential to Current and Future Crop Production
Given that limited new arable land is available for crop production, the Food and
Agriculture Organization of the United Nations projects that approximately 80 percent
of future growth in crop production will come from yield advancements.
Consequently, fertilizer will play a critical role in meeting this challenge. In fact,
research indicates that fertilizer is responsible for approximately half of all crop
production on a global basis.
To enhance yields, fertilizer use needs to both increase and be properly balanced to
sufficiently replenish the vital nutrients that crops consume every year.
Source: IPNI, Agronomy Journal, FAO
Last updated: Aug 31, 2014
Fertilizer 101
Agriculture
Impact of Fertilizer on Crop Production
Overview of PotashCorp and Its Industry
Agriculture
Corn Fertilization Rates and Yield
Opportunity to Improve Yields Through Balanced Fertility
The disparity between crop yields in developed nations and those in developing
nations highlights the importance of agronomic best practices. In most developed
countries, balanced fertilizer application and other best practices have contributed to
significant yield growth.
Since all three nutrients provide unique benefits to plants and work in synergy with
each other, no nutrient can replace another. Obtaining proper balance among
potash, nitrogen and phosphate is key to ensuring that a plant achieves its full
potential. The developing countries that currently under-apply potash could
experience significant yield improvements for many of their crops by correcting this
imbalance.
Source: IFA, USDA, FAO, PotashCorp
Last updated: Aug 31, 2014
Fertilizer 101
Agriculture
Corn Fertilization Rates and Yield
Overview of PotashCorp and Its Industry
Agriculture
Fertilizer Impact on Crop Yield and Return
Balanced Fertilization Can Provide a Significant Economic Return
As farmers seek to improve yields, fertilizer is poised to play a significant role. Based
on long-term yield trials, farmers across all areas of the globe can improve yields
through proper fertilizer use.
The current economic incentive for utilizing proper fertility is significant for most crops
and most growing regions in the world. The situation in India is more complex as
changes in government subsidy levels has resulted in lower returns for its growers
compared to historical levels.
*Based on long-term yield trials
Source: IPNI, Bloomberg, Industry Publications, PotashCorp
Last updated: Aug 31, 2014
Fertilizer 101
Agriculture
Fertilizer Impact on Crop Yield and Return
Overview of PotashCorp and Its Industry
Global Fertilizer Trends
World Fertilizer Consumption by Region and Crop
Potash Has Most Diversity Amongst Regions and Crops
Fertilizer is needed everywhere that crops are grown. Developing countries in Asia
and Latin America account for almost two-thirds of global consumption. Potash
consumption is distributed amongst a number of major regions while nitrogen and
phosphate use is more heavily concentrated in China and India.
Grains and oilseeds account for nearly two-thirds of global nitrogen and phosphate
consumption. Potash consumption has the most diversity in the global usage by
crop. Oilseeds, fruits and vegetables account for almost 40 percent of potash use,
similar to the amount used by grains.
Source: Fertecon, IFA, PotashCorp
Last updated: Aug 31, 2014
Fertilizer 101
Global Fertilizer Trends
World Fertilizer Consumption by Region and Crop
Overview of PotashCorp and Its Industry
Global Fertilizer Trends
Global Fertilizer Consumption
Increasing Crop Production Will Rely Heavily on Fertilizer Application
To meet growing demand for crops, more fertilizer will be required and in an
improved nutrient balance. We believe over the next decade, fertilizer use will
increase by almost 2 percent annually, which is consistent with overall crop
production growth trends.
Potash is projected to have the highest growth rate (approximately 3 percent annual
growth), in part to address the under application of this nutrient in recent years.
Phosphate consumption is expected to grow by 2.0-2.5 percent annually while
nitrogen consumption is expected to grow at less than 2.0 percent per year.
Source: Fertecon, CRU, PotashCorp
Last updated: Aug 31, 2014
Fertilizer 101
Global Fertilizer Trends
Global Fertilizer Consumption
Overview of PotashCorp and Its Industry
Global Fertilizer Trends
China's Fertilizer Use
Fruits and Vegetables Are the Largest Consumers of Fertilizers in China
Approximately one third of fertilizer used in China is consumed by fruits and
vegetables, which require more nutrients per acre than most other crops. Cereals
(rice, wheat and corn) consume another 43 percent.
Production of fruits and vegetables is rising significantly in China, growing at an
annual rate of nearly 5 percent since 2000. As China’s population expands and diets
keep improving, we expect pressure to increase yields will continue to mount.
Based on field research data, crop yields in China are most responsive to increased
application rates for potash. Nitrogen and phosphate application rates are already
above world average levels and are not expected to rise significantly from current
levels.
Source: IFA, Fertecon, PotashCorp
Last updated: Aug 31, 2014
Fertilizer 101
Global Fertilizer Trends
China's Fertilizer Use
Overview of PotashCorp and Its Industry
Global Fertilizer Trends
India's Fertilizer Use
Government Policy Has Distorted Indian Fertilizer Consumption
Wheat and rice remain the primary food grains in India and are interchangeable in
the average diet. Together, these crops account for approximately half of the
country’s fertilizer consumption as production is growing at a compound annual
growth rate of 5 percent. Over the last 20 years, fruit and vegetable production has
doubled and now accounts for 7 percent of fertilizer use and more than 15 percent of
potash use.
After a period of very robust growth, phosphate and potash consumption has been
hindered by government subsidy changes over the past two years. While there does
not appear to be a quick fix to this situation, we believe population growth and
economic realities will ultimately drive the need for increased crop production and a
more balanced fertilizer application ratio.
Source: IFA, Fertecon, PotashCorp
Last updated: Aug 31, 2014
Fertilizer 101
Global Fertilizer Trends
India's Fertilizer Use
Overview of PotashCorp and Its Industry
Global Fertilizer Trends
Other Asia's Fertilizer Use
Rice and Oil Palm Are the Major Drivers of Fertilizer Demand
Strong domestic demand and increasing export opportunities have contributed to
rapid crop production growth in Other Asia (which excludes China and India).
Rice production in this region uses the most fertilizer, accounting for 35 percent of
total consumption. Oil palm, the second largest consumer of fertilizer accounts for 17
percent of consumption and 50 percent of potash consumption in this region. Rice
and oil palm production growth is expected to remain robust, driven by population
and economic growth in the region.
Given the potash intensive nature of many crops grown in Other Asia, the region’s
potash use has increased at a relatively steady pace over the past decade.
Source: IFA, Fertecon, PotashCorp
Last updated: Aug 31, 2014
Fertilizer 101
Global Fertilizer Trends
Other Asia's Fertilizer Use
Overview of PotashCorp and Its Industry
Global Fertilizer Trends
Latin America's Fertilizer Use
Corn, Soybeans and Sugar Account for Majority of Fertilizer Use
Crop production in Latin America has risen dramatically in recent decades. As world
demand for grains and oilseeds increased, the region brought new land into
production and became a major agricultural exporter.
The top three crops grown in Latin America are soybeans, corn and sugarcane
which have increased over 300 percent, 100 percent, and 100 percent respectively
over the past 20 years. Production is expected to continue to rise as growers in
countries such as Brazil continue to expand planted area and push for higher yields.
This, in turn, will support increased fertilizer consumption.
Given the significant potassium requirements of major Latin American crops, potash
is used in a relatively high ratio compared to the other primary nutrients.
Source: IFA, Fertecon, PotashCorp
Last updated: Aug 31, 2014
Fertilizer 101
Global Fertilizer Trends
Latin America's Fertilizer Use
Overview of PotashCorp and Its Industry
Global Fertilizer Trends
North America's Fertilizer Use
Corn, Wheat and Soybeans Account for Majority of Fertilizer Use
Corn is the dominant user of fertilizer in North America followed by wheat and
soybeans. Crop yields have risen significantly over the past several decades and in
recent years additional acres have been planted to nutrient-intensive crops such as
corn. The increase in planted acres has contributed to nitrogen consumption growth
but has not translated into additional usage of potash and phosphate.
Recent soil test studies show that North American application rates for potash and
phosphate have not kept up with higher removal rates, causing a decline in soil
fertility. We believe this trend is not sustainable and expect a renewed commitment to
proper soil fertility in North America in order to support long-term yield improvements.
Source: IFA, Fertecon, PotashCorp
Last updated: Aug 31, 2014
Fertilizer 101
Global Fertilizer Trends
North America's Fertilizer Use
Overview of PotashCorp and Its Industry
Global Fertilizer Trends
Fertilizer Use in Other Markets
Long-term Potential in Africa, Eastern Europe and FSU
Europe is the largest fertilizer market outside of Asia, North America and Latin
America. In Western European countries, numerous crop production support policies
have been removed or modified which has modestly decreased fertilizer
consumption. In Eastern European and former Soviet Union countries, there is
opportunity for increased usage as application rates remain below optimal levels
following a sharp decline in the early 1990s (when agriculture production
transitioned away from the state-operated model).
Improving agricultural productivity in Africa is essential for tackling the continent’s
food insecurity. There is tremendous opportunity to close the yield gap and
improvements in fertilization practices can play a major role. Africa currently
accounts for less than 3 percent of global fertilizer consumption despite having 15
percent of the population. This region has not only low consumption levels but
*Excludes Asia, North America and Latin America
unbalanced use of N:P:K also hinders crop yield potential. Africa’s N:K ratio is nearly
7:1 compared to the world average of less than 4:1 and the US average of less than
Source: IFA, Fertecon, PotashCorp
3:1.
Last updated: Aug 31, 2014
Fertilizer 101
Global Fertilizer Trends
Fertilizer Use in Other Markets