The Fertilizer Situation

and Outlook in China

Weifeng Zhang and Fusuo ZhangChina Agriculture University

(86)1062733941

(86)13391561503

Wfzhang@126.com

Outline

• The situation of fertilizer in China

• The outlook beyond 2007

• Challenges for fertilizer

development in China

Unexpected Rapid Development of

Chinese Fertilizer Industry

Note: Data for 1981-2006, The Statistics Bureau of China

Data for 2007-2010, forecasted by industry survey and crop based expert model

0

10

20

30

40

50

60

70

1981 1985 1989 1993 1997 2001 2005 2009

Nu

tire

nt (M

t)

Agriculture consumption

Production

Development trend of nitrogen fertilizer in China

+15%

Growing and Changing of N

fertilizer industry

0

5

10

15

20

25

30

35

40

45

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

N (

mil

lio

n t

on

)

Others

ACL

AP

AN

AS

NPK

Urea

ABC

Different trends of main N fertilizer

products

Urea ABC ACL AN AS

Capacity in 2005 47.83 50.00 7.00 1.70

Production 2005 42.23 40.06 4.44 3.57 0.95

Production 2006 48.54 38.59 9.08 3.20 1.00

Growth rate in 2006 +15% -3.7% +105% -10.4 +5%

Gross weight Unit: Mt

Note: Data from the Nitrogen fertilizer association of China

Quickly development of Urea

40

45

50

55

60

65

2005 2006 2007 2008 2009

Ca

pa

city

of

Ure

a

(M

t)

+4.31

+4.05

+5

+2.29

Note: Data from the Nitrogen fertilizer association of China

Strong trends to export of Urea

-500

0

500

1000

1500

2000

2500

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

F

Ten

th

ou

san

d t

on

es

N

Export

Import

Production

Trends of Urea market of China

Note: Data from the Nitrogen fertilizer association of China and statistic bureau

Grain

55%

Vegetable

17%

Sugar

2%

Others

3%

Cotton

4%

Fruits

14%

Oil

5%

Where is the potential demand of N

fertilizer? Industry

5%Grassland

1%

Crop land

87%

Fishery

3%Foresty

4%

Note: Calculated by the crop based experts’ model

Nitrogen fertilizer distribution in different part of China

Growing production and Remarkable

changing structure of phosphate fertilizer

Developing trends of phosphate fertilizer of China

0

2

4

6

8

10

12

14

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

P2O

5 (

mil

lio

n t

on

)

NPK

TSP

NP

MAP

DAP

SSP and FMP

-13%

+26%

+19%

+23%

Note: Data from China phosphate fertilizer industry association and statistic bureau of China

Strong capacity for AP

0

2

4

6

8

10

12

14

16

2006 2007 2008

Cap

aci

ty

(M

illion

ton

)

DAP

MAP+2 +1.2

+2

Forecast for the capacity of DAP and MAP in China

Note: Data from the China Phosphate fertilizer industry association

Forecast based on the industry survey

Changes of DAP market

-100

-50

0

50

100

150

200

250

300

350

400

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

F

Ten

th

ou

san

d t

on

es P

2O

5

Export

Import

Production

0.5Mt

5Mt

Note: Data from China statistic bureau and China phosphate fertilizer association

-50

0

50

100

150

200

250

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

F

Ten

th

ou

san

d t

on

es P

2O

5

Export

Import

Production

Changes of compound fertilizer market

Note: Data from China statistic bureau and China phosphate fertilizer association

Development of NPK industry

The total production capacity of compound fertilizer would be 200 million ton

in 2007 and 300 million ton in 2008. But the real production is only 20 million

tons

Note: Data from China phosphate fertilizer association

Where is the potential demand?

Grain

49%

Others

6%

Vegetable

17%

Cotton

4%

Fruits

16%

Oil

6%

Sugar

2%

Calculated by the crop based experts’ model

Potential demand for:

Maize

Potato

Vegetable

Fruits

Oil rape and peanut

Distribution of phosphate fertilizer in China

We need more K , but…….

0

1

2

3

4

5

6

7

8

1990199

1199

2199

3199

4199

5199

6199

7199

8199

9200

0200

1200

2200

3200

4200

5200

6

2007

F

Am

ou

nt

of

K2O

(M

t)

0

50

100

150

200

250

300

Pri

ce

CIF

/t

Imported SOP

Imported MOP

Production

Import Price

Note: Data from China statistic bureau and China Potash fertilizer association

Where is the potential demand?

Grain

38%

Others

8%Sugar

2%

Oil

2%

Fruits

30%

Cotton

1%

Vegetable

19%

Note: Calculated by the crop based experts’ model

Potential demand for

Rice and maize

Potato and soybean

Vegetable

Sugarcane

Oilseeds and peanut

Distribution of Potash fertilizer in China

Outline

• The situation of fertilizer in China

• The outlook beyond 2007

• Challenges for fertilizer

development in China

1. Increasing population and food demand

0

20000

40000

60000

80000

100000

120000

140000

160000

1949 1959 1969 1979 1989 1999 2009 2019 2029

Gra

in p

rod

uct

ion

10

00

0 to

n

Po

pula

tio

n10000

Grain demand

Population

2010

+32 million people

+41 million tone grain

2020

+95 million people

+116 million tone grain

2030

+152 million people

+156 million tone grain

(Data from National Statistics Bureau)

Li et al.(2001) predicted, that “In 2030 we have to have at

least 72 million tons of NPK fertilizer to meet the demand of

food production and agricultural development.”

More and more subsidies for grain

producers

Items 2006 2007 2008

Subsidy (billion Yuan) 26.7 42.7 More

Subsidy per ha (Yuan/ha) 300 450

Subsidy per unit nutrients

(Yuan/ton)

300 600

Fertilizer prices changed compared

to 2004(Yuan/ton nutrient )

800 1000 More

Note: Subsidies includes direct subsidy for grain production, and indirectly

subsidy for raw material consumption, such as oil, fertilizer and pesticide

used for grain production.

More than 50% fertilizers were used on cash crops in China in 2005

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1980 1985 1990 1995 2000 2005

63

%

84

%

Grain

crops

Cash

crops

Land use changes

Nutrient applied on each crop

2. Increasing cash crop production

Note: Data from statistic bureau and farmer survey

The elasticity of fertilizer consumption on planting structure

Factors Rice Wheat Corn Potato Oil crop Cotton Sugar Tobacc

o

Fruits and

vegetable

Total 5.132 -2.068 2.222 2.37 0.996 0.931 0.951

N 4.686 -2.054 2.594 2.418 1.048 0.901 0.821

P2O5 6.585 -2.017 0.767 0.887 0.946 1.142

K2O 6.086 0.997 1.523 1.003 -0.534 2.634

5

)ln()ln()ln()ln(

)ln()ln()ln()ln()ln()ln()ln()ln(

111098

76543210

AfvaAtaAsbaAca

AoaApaAsaAmaAwaAraAaaCF

Planting structure changes affect the fertilizer demand

Planting area changed in 2005 and

2006 in China

448

613

168

496

-582

-467

88

426

347

218

-25

79

-800

-600

-400

-200

0

200

400

600

800

Rice Maize Wheat Vegetable Oil Crop Soybean Fruit Potato Cotton Sugar Tobacco Tea

Are

a c

han

ged

(000 h

a)

Totally, 1% increased in 2006

Fertilizer demand changed in 2005 and

2006

Total increased N , P2O5 and K2O is 550kt, 237 kt and 239kt

86112

32

141

-64

838 49

8158

-213

27

50

14

59

-15

-8

14

31

29

32

8

50

16

8

52

26

33

11 44

-100

-50

0

50

100

150

200

250

300

Rice Maize Wheat Vegetable Oil Crop Soybean Fruit Potato Cotton Sugar Tobacco Tea

Fer

tilize

r d

ema

nd

ch

an

ged

(00

0 t

on

)

K2O

P2O5

N

Note: Calculated based on the crop based experts model of China

3. Increasing animal production

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1990 2000 2010 2020 2030

%

Vegetable and FruitsAnimal foodGrain

0

100

200

300

400

500

600

China USA Japan

Fo

od

co

nsu

mp

tio

n p

er

cap

ita

kg

/year

Grain Meat Milk Egg Fish

Note: Data came from the Statistics Bureau of China and FAO

Forecasted data from the reference of Liu Jiang (2000); Xu Shiwei (2003)

Food consumption in different country Food demand in China

Compared with 1980, grain production increased 89%, while

the production of meat, egg and milk increased 6.4, 11.2 and

20.8 times respectively in 2005

total Production of Grain (106t)

total Production of meat (105t)

total Production of milk (104t)

total Production of egg (104t)

Trends of grain production, meat production, milk production and egg production

Data from China statistic bureau

4. Increasing production of bio-energy crops

Data source:

Medium term forecast for biofuel development,

- China reform and development committee, 2006

2010 (Mt)

(Biofuel accounting for 1% of total

energy demand)

2020(Mt)

(Biofuel accounting for 4% of total

energy demand)

Biofuel

Production

Crop

demand

Fertilizer

demand

Biofuel

Production

Crop

demand

Fertilizer

demand

Ethanol 25.76

corn0.77 10

28.8

corn3.48

Diesel 0.53.68

soybean0.49 2

14.7

soybean1.96

Sum 2.5 9.44 1.26 12 43.5 5.44

Forecast of chemical fertilizer production and demand by China in 2010

43.0

16.0

3.5

31.9

12.49.4

0

5

10

15

20

25

30

35

40

45

50

N P2O5 K2O

Nu

trie

nts

(M

t)Production

Demand

Outline

• The situation of fertilizer in China

• The outlook beyond 2007

• Challenges for fertilizer

development in China

1. Impact of changing environmental

policies

“Create a no fertilizer county” — Miyun County

Director 24 2001-3-28

“Pesticide and fertilizer are not allowed to be used within 5 km to the sea in Dalian city” — Dalian Environmental Director 2002-6-24

“The pesticide and nitrogen fertilizer consumption should be reduced by 30% and 20% in Tai Lake in 2010 ”— Jiangsu Government

Director 97 2007-9-10

More and more………………………….

Non-point source pollution

Four fold increase in N inputs to estuaries since 1980

Increased N inputs contribute to eutrophication, decreased fish production, and toxic algal bloom (red tides)

The occurrence of red tides increased from 10/yr in the 1960s to 300/yr now (Norse and Zhu,2004)

Eutrophication

year

y = -0.9308x + 1892.1

R2

= 0.8502

0

25

50

75

100

125

150

175

200

1980 1985 1990 1995 2000 2005

Fer

tili

zer

ap

pli

cati

on

rate

(k

g/h

a)

20

25

30

35

40

45

50

55

60

PF

PN(k

g g

rain

/kg N

)

Substantial decrease in fertilizer use efficiency ---Low PFP

Partial factor productivity: PFPN = kg harvest product per kg N applied

Grain yield and N rate of rice crop

*FAO, 2004

China

Japan

South Korea

6.26

6.42

6.79

~200

70

110

Grain yield* N rate(t ha-1) (kg ha-1)

Country

288

Fertilizer application

(kg/ha)

2t

4t

4.3t

3t

12Y

6t

0

1

2

3

4

5

6

7

1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Cro

p y

ield

t/h

a

21Y

10Y

11Y

17Y

1t

107

183

28

Time span (yrs) for each

increment of 1 t crop yield

The challenge - Can we increase crop yield and

nutrient use efficiency at the same time? How?

National Program for Soil Testing and Fertilizer Recommendation

Soil Testing

Fertilizer prescription

Fertilizer production

Fertilizer distribution

Fertilizer application

Field experiment

200 Million RMB covers 200 counties in 2005, 500 Million RMB covers 600

counties in 2006, and 900 Million RMB covers 1200 counties in 2007

Action of The Ministry of Agriculture

Aims

Increase inFertilizer use efficiency: 3-5% ;

Crop yield 5%;

Recycling rate of organics: 40-50%;

45

50

55

60

65

70

2005 2010 2020 2030

Ferti

lizer d

em

an

dM

t11.7 million tons fertilizer can be saved by the

above actions

Fertilizer demand as affected by different efficiencies

+22%

+8%

+13%

+39%

+23%

+15%

Note:

Increased demand of cash crops is not included

grain demand is 520 Mt, 580 Mt and 640 Mt in 2010,2020 and 2030

Efficiencies (AE) in three practices are 7.5kg/kg,12.5kg/kg and 20kg/kg

+5.6%

+2.1%

Farmers’

practice

(7.5kg/kg)

Soil testing

action (12.5

kg/kg)

Intern.

BMPs

(20 kg/kg)

(W Zhang

Unpublished)

Nutrient amount of organic wastes in China(2000,104t)

Source N P2O5 K2O Amount Relative%

Excreta 1614 1029 1102 3745 51.30

Straw 690 210 1164 2064 28.27

Green manure 28 0 0 28 0.38

Oil cakes 186 36 38 260 3.56

Garbage 300 180 600 1080 14.79

Sludge(DW) 51 55 17 123 1.68

Total 2869 1510 2921 7300 100

2. Reuse of organic wastes impacts chemical fertilizer production

(Sources: Gao et al., 2002; Zheng et al., 2004)

Increased crop residues returning

On province-weighted average,

returning rates of harvested crop

straw were 23.5% in 1994 and

34.8% in 2000, respectively.

Field Animal House

Air N

Water N

Extension biogas tech

-37%

-42%

-20%

-30%

Fertilizer Energy

Energy

Field Animal House

Lost to air

Lost to Water

Current

Extension of biogas technology in China

Fertilizer Energy

Energy

Extension of biogas technology

Items 2005 2010 2015 Potential

Farmer biogas 10000 1807 4000 6000 14600

Biogas in animal plant 3556 4000 8000 40000

Coal saved 10000 t 3006 6531 9886 24588

Urea saved 10000 t 331 719 1089 2707

DAP saved 10000 t 141 306 464 1153

Mop saved 10000 t 238 517 783 1947

Calculated with data from Biofuel Strategy of China 2007~2015

Potentially, biogas can substitute 37% energy demand

in rural area, and substitute 46.7% N 45% P2O5 and

106.8% K2O demand of crop land

•The challenge – Fertilizer overuse is an issue,which leads to reduced income, low productivity and non-point source pollution

What are the determinants of the use of fertilizers by farmers?High input and high output policy leads to higher use

Modern varieties make it possible to apply more fertilizer

extension leads to higher use

•Perspectives:–Reform policies :agriculture and fertilizer industry

–Develop and extend fertilizer saving technologies–Train farmers

–Reform current public agricultural extension system:

•Stop the business of public agricultural extension agents

–Make new technology policy:

•Encourage the development of fertilizer-sensitive technologies

AcknowledgmentsMOA (No. 2003-Z53)

Thanksfor your attention !

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