The UN’s Food and Agriculture Organization (FAO) has estimated that the worldwide agricultural production must increase 60% by the year 2050
As we head further into the 21st century, the potential growth of the global fertilizer industry is becoming more and more evident. The UN’s Food and Agriculture Organization (FAO) has estimated that the worldwide agricultural production must increase by 60% by the year 2050. The global agricultural industry, the FAO concludes, is more than capable of feeding many people that will eventually populate this planet.
Fertilizers are the key to ensuring that 2.5 billion more people will be fed.
While we may not think about it on a day to day basis, fertilizers—the wonderful mix of organic and inorganic chemicals essential for the growth of plants— are used to produce food products like bread, pasta and rice, staples in both developed and emerging markets around the world.
According to GPCA estimates, the GCC fertilizer production capacity reached 31.4 million tons in 2012, a 10% increase from the previous year.
This is a remarkable figure considering that the global fertilizer industry grew by just 2.2% in the same period.
In fact, even during the global economic downturn, GCC fertilizer sector continued to grow, increasing by an average 13.1% per year since 2008. The majority of GCC fertilizer output is exported abroad, with 14.6 million tons being exported in 2012 alone, resulting in greater returns for the Gulf countries.
The region’s fertilizer producers enjoy a strategic location, between developed markets in the West and the emerging economies of Asia, is advantageous for regional and international trade flows.
The big question of course is can the GCC chemicals industry sustain this impressive growth in fertilizers? Clearly, there are challenges, facing this sector.
Global energy trends will test the ability of the Gulf’s fertilizer producers to further evolve and thrive. This will largely be determined by the availability and pricing of feedstock available to the regional industry.
The constraint in supply of feedstock to the GCC industry coupled with the imminent North American shale gas revolution will provide the United States, a major exporter of Middle East hydrocarbons, access to subsidized feedstock and the ability to harvest nutrients like nitrogen and sulphur—key components in fertilizers—locally. Analysts predict that by 2032, the shale gas revolution will result in the energy independence of the United States.
However, the overall outlook for the region’s fertilizer industry remains bright.
The International Fertilizer Industry Association (IFA) has singled out certain GCC markets where fertilizer production is likely to thrive. Considering Saudi Arabia and Abu Dhabi alone are expected to make major contributions in meeting global sulphur and phosphate demand, the region’s positive attitude towards economic diversification is evident.
How will shale gas affect the region’s fertilizer industry?
Which fertilizer projects will materialize within the next few years?
How can the fertilizer industry develop in an environmentally responsible way?
These issues, and many more, will be discussed by industry experts at the upcoming GPCA Fertilizer Convention on September 22- 24 in Dubai.
Held under the theme of “Facing Current and Future GCC Fertilizer Challenges”, the convention will provide insights and solutions on driving growth in an increasingly competitive global fertilizer market.
Last year, the event was a resounding success and we discussed how the GCC states have successfully converted their gas and sulphur feedstock advantage into a high-value downstream industry responsible for a significant proportion of the region’s non-oil exports, providing the much needed local jobs.
Also more than 16 billion people are moving from poor to middle class, which means there is a huge growth that is going to happen in agriculture and we could well play a pivotal role in the world food production methods.
Dr Abdulwahab Al-Sadoun is the Secretary General of the Gulf Petrochemicals and Chemicals Association (GPCA). GPCA is a dedicated non-profit association serving its members with industry data and information resources. It is the first such association to represent the interests of the petrochemicals and chemicals industries in the Arabian Gulf.
