Tuesday, November 25, 2008
LOOMING FERTILIZER SHORTAGE
Publisher: Malaya Newspaper
Author: Ellen Tordesillas
Articles of interest are periodically sent out to our contact list and appear exactly as they did in the original dissemination. Links to the original posting website are provided when available.
MANILA - In our discussion of the current rice crisis, Commodore (ret.) Rex Robles tells us of the three legs of the national security tripod: food, fuel, fertilizer.
We are now burdened with the rising prices of food and fuel. Here comes the information of a looming fertilizer shortage.
The info was shared with us by a businessman who subscribes to assessments of a Hong Kong-based risk consultancy firm.
Here's a summary of the report:
"The role of fertilizers in the production of rice and corn cannot be understated -- less fertilizer means lesser yield; conversely, proper fertilization brings about optimum yield. Simply put: enhancing agricultural productivity is a function of farm inputs, foremost of which is the use of fertilizer.
"The world situation. The current instability in the supply of fertilizer products and the concomitant surge of its prices can be attributed to the following series of developments, principally involving China:
"Before 2000, China did not have the enough capacity to manufacture fertilizers. It was a major source of cheaply-priced raw material, specifically phosphate rock, and was a major importer of finished phosphate fertilizer products from the United States.
"2002, China's large fertilizer plants were completed and became operational. China reduced its importation of finished phosphate fertilizer products, while increasing its importation of raw materials, specifically sulphur. It became the world's largest importer of the said material by 2005. Chinese phosphate rock became unavailable to the world market when the Chinese government removed railcar allocation for the transport of phosphate rock to the ports which are 1,000 kms. away.
"With China's sulphur consumption cornering 30 percent of the global supply, prices were driven from $25 in 2002 to $750 per metric ton in 2008, and causing a severe shortage in the world supply. Sulphuric acid, on the other hand, (is now) $220 per metric ton at today's level.
"By 2004, China metamorphosed into one of the largest exporters of phosphate fertilizer products, forcing major fertilizer manufacturers in the world to bankruptcy. This removed about 6.5 million tons per annum of world fertilizer capacity.
"2005 to 2006, the rapid growth of the biofuel industry created an enormous demand for phosphate fertilizers;
"December 2007, China announced an imposition of a 35 percent tax on fertilizer products effective February 2008, principally to curtail the outflow of fertilizer products and assure its domestic supply due to its increasing requirements.
"January to February 2008, a severe winter in China resulted in major power outages that forced fertilizer plants to shut down for almost two months, thereby, compelling China to declare a three-month ban on exports of fertilizer products beginning April 1, 2008. Chinese fertilizer producers will not honor delivery commitments.
"The Philippine situation. The total annual fertilizer requirements of the Philippines amount to 700,000 metric tons for NP/NPK and another 800,000 metric tons for urea and ammonium sulfate. These four components are required for a balanced fertilization. NP/NPK and ammonium sulfate are produced locally while urea is imported totally.
"There are three NP/NPK producers in the Philippines, Philippine Phosphate Fertilizer Corp. (PHILPHOS), Atlas Fertilizer Corp. (ATLAS) and Soiltech Corp. (SWIRE), with a combined capacity of 1.4 million metric tons per year.
"Because of the worldwide shortage of sulphur/sulphuric acid/pyrite (raw materials of PHILPHOS ), and DAP, (raw material of ATLAS and SWIRE and one of the main products of PHILPHOS ) the industry will only be producing 25 percent of the total NP/NPK fertilizer requirement for the April to August 2008 planting season. This, together with 25 percent current inventory and 10 percent imports, will add up to only 60 percent of the total Philippine NP/NPK fertilizer requirement for April to August 2008.
"Although there will be sufficient supply of urea and ammonium sulfate, the 40 percent deficit of NP/NPK fertilizer requirement for the coming planting season will substantially affect the rice and corn production of the country.
"Proposed solutions. The following action plans are proposed to address the impending fertilizer shortage in the coming April to August 2008 planting season:
"1. Temporarily disallow, at least for the next six-month period, the export of raw materials used in fertilizer production, such as pyrite, sulphur, and sulphuric acid.
"2. Direct the country's primary fertilizer producer, PHILPHOS, to supply the raw material requirements of secondary producers, ATLAS and WIRE in order to maximize fertilizer production and distribution.
"3. Direct the Department of Agriculture (DA), Department of Environment and Natural Resources (DENR), and other relevant government agencies to assist the industry in availing alternative sources of raw materials, i.e.., fast track issuance of mining permits for pyrite and sulfur.
"4. Direct the fertilizer industry to maximize its production so that the volume produced in excess of the domestic demand could be used by the government as leverage for buying rice and corn from countries ( i.e. Vietnam and Thailand) which also badly need fertilizer for their domestic production.
"5. Direct government financial institutions, such as the Development Bank of the Philippines (DBP), Land Bank of the Philippines(LBP), United Coconut Planters Bank (UCPB), Trade and Investment Development Corporation of the Philippines (TIDCORP) to support the fertilizer manufacturers, importers, dealers, distributors, or cooperatives by increasing its exposure for additional working capital. With the 300 percent increase in fertilizer prices, existing credit facilities are no longer sufficient to finance the same volume as last year. Adequate credit lines will ensure timely and efficient distribution of fertilizer to the farmers."
There is no doubt about the importance of fertilizer in rice production. As we try to cope with the impending rice shortage, we rage at the misuse of over P1 billion which was supposed to go to farmers for their fertilizer needs which instead went to buying of votes for Gloria Arroyo in the 2004 elections. Joc Joc Bolante, the agriculture undersecretary who engineered the diversion of funds would not have been able to do that without the approval of Gloria Arroyo.
Link to original article:http://www.malaya.com.ph/apr23/edtorde.htm
