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Mineral Fertilizer Distributionand the Environment

International Fertilizer Industry AssociationUnited Nations Environment Programme

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Mineral Fertilizer Distributionand the Environment

International Fertilizer Industry AssociationUnited Nations Environment Programme

INTERNATIONAL FERTILIZERINDUSTRY ASSOCIATION28, RUE MARBEUF75008 PARIS - FRANCE

TEL: +33 153 930 500FAX: +33 153 930 545/ 546/ 547E-mail: [email protected]: http:www.fertilizer.org

UNITED NATIONS ENVIRONMENT PROGRAMMEDIVISION OF TECHNOLOGY, INDUSTRYAND ECONOMICS39-43, QUAI ANDRE CITROËN75739 PARIS CEDEX 15 - FRANCE

TEL: +33 144 371 450FAX: +33 144 371 474E-mail: [email protected]: http:www.uneptie.org

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Mineral Fertilizer Distribution and the Environmentby K.F. IsherwoodInternational Fertilizer Industry AssociationParis, March 2000.

Copyright. 2000 IFA. All rights reserved.ISBN: 2-9506299-4-6

The text of the document is available on IFA's Internet site.

Further copies can be obtained from:IFA28, rue Marbeuf75008 Paris, FranceTel: +33 153 930 500Fax: +33 153 930 545 /546 /547E-mail: [email protected]: http:www.fertilizer.org

Printed in France.Layout: Claudine Aholou-Pütz, IFAGraphics: Hélène Ginet, IFA

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Contents

PART 1. THE ISSUES

Preface 1

1. Global environmental context 31.1 Environmental Agenda 31.2 Cause for action 41.3 Trends in looking for solutions 51.4 Actions by various stakeholders 51.5 Fertilizer distribution, an important part of the product life cycle 6

2. Forms and conditioning of fertilizers 72.1 Definitions 72.2 Factors influencing fertilizer distribution systems 82.3 Forms of fertilizers 92.4 Conditioning of fertilizers 10

3. Costs and management systems 133.1 Marketing costs 133.2 Management systems - India 15

4. Transport 184.1 International trade in fertilizers and their raw materials 184.2 Sea transport 194.3 Transport regulations 204.4 The transportation system in the USA 214.5 Environmental aspects 22

5. Fertilizer losses 235.1 Information on fertilizer losses 235.2 The extent of fertilizer losses 235.3 Factors determining fertilizer losses in handling and storage 245.4 The reduction of fertilizer losses 25Annex 1: The stacking of fertilizer bags 26Annex 2: Loss reduction rules for fertilizers in bags 27Annex 3: Loss reduction rules for bulk fertilizers 28

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6. Environment 296.1 Codes of practice 296.2 Toxic impurities 306.3 Waste disposal 316.4 Safety 316.5 Fire 326.6 Environmental compliance 326.7 Community relations 34Annex 36

7. Quality and services 387.1 The importance of fertilizer quality 387.2 Granule quality 387.3 Complex fertilizers 387.4 Bulk blends 397.5 Advice and services 407.6 A case study on distribution-sector services offered by a fertilizer manufacturer 42

8. Consumer protection legislation 458.1 An overview 458.2 Some examples 468.3 Regulation of particular fertilizers 518.4 Sanctions 528.5 Labeling - an example, France 52

References and further reading 55

PART 2. CASE STUDIES

Introduction 57

1. Regional overviews 581.1 West Europe 581.2 Central and East Europe 611.3 North America 631.4 Latin America 641.5 Sub-Saharan Africa, SSA 651.6 Asia 65

2. Country overviews 67Argentina 69Australia 70

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Austria 71Bangladesh 72Belgium 74Brazil 75Canada 76China 77Denmark 79Egypt 80France 81Germany 82India 83Indonesia 85Ireland 86Japan 87Korea Republic 88Malawi 89Netherlands 90Norway 91Pakistan 92Philippines 94South Africa 95Spain 97Sri Lanka 98Thailand 99Turkey 100United Kingdom 101United States 102Zimbabwe 105

About IFA and UNEP 106

Mineral Fertilizer Distribution and the Environment 1

This publication is the third in the IFA/UNEPseries of Mineral Fertilizers and the Environment.The first concerned Fertilizer Production and theEnvironment (1998), the second Fertilizer Useand the Environment (1998) and this publicationcompletes the chain from factory to farm bydealing with the distribution sector.

The relevance of fertilizer production to theenvironment, with the potential for harmfulemissions, and that of fertilizer use and theenvironment, with the potential for nutrient lossesto the environment, are clear. The relevance isnot so evident in the distribution sector, but it justas important.

Not only is the potential environmental impactof fertilizer distribution often under-estimated,but so too is its economic impact. Underfavourable circumstances the cost of distributingand marketing fertilizers amounts to a third ofthe production cost. Under unfavourablecircumstances it can amount to three times theproduction (or import) cost. Not only is the costsubstantial, it is also a cost which can beinfluenced. In the case of a modern, well-run,large-scale fertilizer plant the possibilities offurther cost savings are minimal, whereasincreased efficiency in the distribution andmarketing sector is often still possible.

The potential negative environmental impactof certain aspects of mineral fertilizer distributionare evident, for example accidents in storagefacilities, spillage, misuse of the products andlosses of nutrients to the environment during

transport and storage. The distribution systemcan also have positive impact; if the farmer is tohave the fertilizer at the time and in the form herequires it for optimum use, an efficient fertilizerdistribution system is essential.

In Soil Degradation: a Threat to DevelopingCountry Food Security by 2020 (InternationalFood Policy Research Institute, IFPRI, 2020 Brief58, February 1999) S.J. Scherr writes, Policies forhigh-quality rain-fed lands include better integratingtechnology development and extension forproductivity growth on the one hand with good soilhusbandry, agricultural machinery use, andagrochemical management on the other; developingmarket-based mechanisms to improvedistribution systems for fertilizers that reducecost and improve nutrient balance; andencouraging complementary use of organic nutrients.

The consumer protection aspects should notbe overlooked. Mineral fertilizers are productswhich can easily be adulterated and the farmer isnormally unable to check the quality. The qualityand labeling of mineral fertilizers is carefullyregulated in the developed countries and theregulations are enforced. In developing countries,even where regulations exist, they are rarelyenforced adequately, due to lack of will and/ormeans. The result is inefficient, wasteful andenvironmentally harmful use.

Norman Borlaug, the Nobel prize-winner,speaking to the Fertilizer Society of South Africain April 1997, after emphasizing the essentialrôle of modern agricultural production not only

Preface

PART 1. THE ISSUES

2 Part 1: The Issues

in providing sustenance to the world but also forsocial stability, recommended that (the fertilizerindustry) should:

• police its own members and advise lawmakers onappropriate legislation to help avoid productadulteration and price gouging, which affectsfarmers, and to ensure that fertilizer is producedand used in environmentally responsible ways,

• strive to ensure that efficient and effective inputdelivery systems are developed to serve small-scale African farmers,

• be much more aggressive in conducting thenecessary research (economic, social, political) toadvise policy makers (national and international)on the best policies to develop efficient fertilizersupply systems and application practices byfarmers.

The investment and operating costs of anefficient fertilizer distribution system are higherthan might be thought. The fertilizer distributorrequires a margin which is sufficient to enablehim to finance these costs. Furthermore, thefertilizer retailer is in direct contact with hisfarmer-customer. He is the best placed to give

advice on the efficient use of the products he sells- if he knows what advice to give i.e. training isessential. In most developing countries themargin thought appropriate for a retailer is totallyinadequate.

In developed countries fertilizers have beenon the market for 150 years, whereas indeveloping countries fertilizer use started toincrease only in the 1960s. Today theirconsumption has overtaken that of developedcountries but their distribution systems have notkept pace, with resultant waste and inefficiencies.

In developed countries, the distribution sectoris increasingly regulated for environmentalcompliance. The situation in the United States isan example.

The purpose of this publication is todemonstrate these aspects of fertilizer distributionand to describe its complexities, in the hope thatthe relevant authorities, with the fertilizerindustry playing its full role as steward of itsproducts, and all others concerned, will pay moreattention to this crucial link in the development ofa globally sustainable agriculture.


1. Global environmental context

1.1 Environmental Agenda

The environmental agenda now has importantpolicy and regulatory functions in internationalsociety and many countries. Agenda 21, adoptedby United Nations Conference on Environmentand Development, focused world attention on theclose links between the environment andsocioeconomic development. It not only identifiesthe environmental issues that should beaddressed globally, but also lists the fundamentalelements to ensure the implementation of Agenda21.

Policy leadership is given by variousinternational bodies, such as the United NationsCommission for Sustainable Development(UNCSD), the United Nations EnvironmentProgramme (UNEP), or by regional organizationssuch as the Organization for EconomicCooperation and Development (OECD) and theEuropean Commission. Some environmentalissues may be subject to international agreementand conventions, such as the Basel Convention onthe Control of Transboundary Movements ofHazardous Wastes and Their Disposal, MontrealProtocol on Substances that Deplete the OzoneLayer. The international environmental agendaoften influences national government decisions. Itmay provide operational guidelines, such asguidelines on transportation of dangerous goods,or encourage institutions to change operatingpractices. For example, banks and otherinstitutions responsible for setting financialconditions are becoming more environmentallyconscious.

Environmental issues in Agenda 21

• Protecting the atmosphere

• Managing land sustainability

• Combating deforestation

• Combating desertification and drought

• Sustainable agriculture and ruraldevelopment

• Conservation of biological diversity

• Management of biotechnology

• Protecting and managing the oceans

• Protecting and managing fresh water

• Safer use of toxic chemicals

• Managing hazardous wastes

• Managing solid wastes and sewage

• Managing radioactive wastes

Some implementation issues in

Agenda 21

• Capacity building

• Strengthening the role of business andindustry

• Promoting education, public awarenessand training

• Integrated decision-making

• International law

• National and international institutionalarrangement

• Financial resources and mechanisms

• Information

• Science for sustainable development

• Local authorities’ initiative in support ofAgenda 21


1.2 Cause for action

Action concerning environmental protection isdriven by understanding of the seriousness of theproblems globally. United Nations EnvironmentProgramme (UNEP) monitors and reportsregularly on the state of global environment.These reports serve as constant warning tointernational communities, country governments,public, as well as industry, on the degradation ofenvironment caused by human activities. Thesereports also call for action by all stakeholders toprotect the environment for the wellbeing ofhuman for many generations to come.

Environmental degradation is of globalconcern as it not only affects people’s health andliving environment, but also damages a country’sprospects for economic and social growth. Forexample, agri-food production activities, in whichthe fertilizer industry plays an important role,have the capacity of damaging the naturalresources on which they rely (e.g. water, soil,

ecological system). Damaging the naturalresource base affects production levels, which inturn alters overall world food supply. This canlead to potential economic and social crises.

Public awareness and concern forenvironmental degradation have increasedsignificantly and globally since 1992 when theRio Declaration on Sustainable Developmentcame into being. The global community is nowmuch more aware and supportive of actions bygovernment and often becomes involved in directactions with companies at local level. Numerousefforts are now made to look for solutions toenvironmental problems that human encounter inthe course of economic and social development.

Examples of global conventionsconcerning environment

• Convention on Biological Diversity

• Convention on International Trade inEndangered Species of Wild Fauna and Flora

• Convention on the Conservation ofMigratory Species of Wild Animals

• Vienna Convention for the Protection of theOzone Layer

• United Nations Framework Convention onClimate Change

• United Nations Convention to CombatDesertification in those CountriesExperiencing Serious Drought and/orDesertification, Particularly in Africa

• Convention on Wetlands of InternationalImportance especially as Waterfowl Habitat

• Convention Concerning the Protection of theWorld Cultural and Natural Heritage

• United Nations Convention on the Law ofSea Some facts about the state of

environment as reported by the GlobalEnvironment Outlook 2000

• Global emissions of CO2 reached a new highof nearly 23,900 million tonnes in 1996 -morethan in 1995 and nearly four times the 1950total.

• Human activities now contribute more to theglobal supply of fixed nitrogen than do naturalprocesses

• Losses from natural disasters over the decade1986-96 were eight times higher than in the1960s.

• The countries projected to suffer fromserious shortfalls in food supply are alsothose faced with rapid growing populationand urbanization, low productivity agriculture,high debt and insufficient wealth to importfood.

• In 1995, 25 per cent of the world’sapproximately 4,630 mammal species and 11percent of the 9,675 bird species were atsignificant risk of total extinction.

• If present consumption patterns continue,two out of every three persons on Earth willlive in water-stressed condition by the year2025.


1.3 Trends in looking forsolutions

Increasingly, environmental protectionprogrammes focus on addressing the sources/causes of the problem. For example, thepreventive approach has been recognized as aneffective and preferred strategy in many parts ofthe world. Cleaner Production, introduced byUNEP in 1989, represents the shift from end-of-pipe approach to pollution prevention.

Environmental programmes in governmentand industry are also becoming more integratedand address a range of issues simultaneously,such as resource management, environmentalmanagement of industrial estates, industryecology, etc.

The interconnected nature of environmentalproblems has led to a life-cycle approach. Thisentails looking at all steps in the productionchain, as well as the product itself, e,g. fromdesign to disposal. The objective is to see whenthe main environmental impacts arise and wherealong the chain the most cost-effective action canbe taken to mitigate the impacts.

1.4 Actions by variousstakeholders

Governments are looking at the integratedmanagement of environmental issues. Discussionsat the European Commission concerning theintegration of industry pollution management areleading to a product-oriented environmentalpolicy framework. While some currentregulations are targeted at a specific part of aproduct, for instance, fertilizer composition, theenvironmental impacts of raw materialproduction and the transport of end products andits distribution may be considered by a product-oriented regulatory framework.

The life-cycle approach also calls forpreventive action by industry itself throughsystematic management of issues. In addition toenvironmental management systems, companyenvironmental reporting, environmental healthand safety systems, new industry environmentalmanagement initiatives such as extendedproducer responsibility, supply chainmanagement, are good examples of an integratedlife cycle approach.

While efforts are made increasingly byindividual companies to improve theirenvironmental performance, it has also beenunderstood that some problems can only beaddressed by collective action by an entireindustry sector. More and more, collectiveinitiatives by various industries are taking shape,such as environmental codes in the mineralsindustry and the environmental statements by thefinancing and insurance sectors respectively.Some of the industry initiatives are going beyondthe traditional sector boundaries to combineefforts of all sectors within an area of economicactivity. For example, within the area of agri-foodproduction, an International Agri-food Networkcalled IAFN has been formed. This network iscomposed of international associations from theseeds breeding, farming, fertilizer, cropprotection, food processing, machinery, dairy, etc.

Cleaner Production is the continuousapplication of an integrated preventiveenvironmental strategy applied to processes,products and service to increase eco-efficiencyand reduce risks for humans and theenvironment. It applies to:

• production processes: conserving rawmaterials and energy, eliminating toxic rawmaterials and reducing the quantity andtoxicity of all emissions and wastes,

• products: reducing negative impacts alongthe life cycle of a product: from raw materialsextraction to its ultimate disposal,

• service: incorporating environmentalconcerns into designing and deliveringservices.


The increased environmental awareness hasalso led to significant joint efforts amongstakeholders including governments, industries,NGOs and communities.

1.5 Fertilizer distribution, animportant part of the productlife cycle

The above discussion presents the global contextin which this documents is developed. Havingpublished several technical documents, e.g.“Fertilizer Industry and the Environment”, “TheFertilizer Industry, World Food Supplies and theEnvironment”, “Mineral Fertilizer Use and theEnvironment”, IFA and UNEP have extendedtheir joint effort to addressing the environmentalissues associated with fertilizer distribution.

This report focuses on the process oftransport, storage and handling of differentfertilizer products, the factors that influencing thefertilizer distribution systems and the currentenvironmental and safety measures in practices. Itattempts to go beyond the production process tohelp the fertilizer industry understand andmanage better the environmental impacts of, andrelations between, fertilizer production, transportand storage.

While the fertilizer distribution systems aredescribed in detail, it is not the focus of thisreport to present a systematic and quantitativeanalysis of all the environmental impacts offertilizer distribution systems. More in-depthstudies involving other stakeholders such asfertilizer distributors will need to be carried out ifsuch an analysis is to be achieved and technicalguidelines for good practices are to be developed.

The Global Reporting Initiative (GRI) wasestablished in late 1997 with the mission ofdesigning globally applicable guidelines forpreparing enterprise-level sustainability reports.Participants include corporations, non-governmental organizations, consultants,accountancy organizations, businessassociations, universities, and otherstakeholders from around the world. The GRIseeks to establish a common framework forenterprise-level reporting on the linked aspectsof sustainability: the environmental, theeconomic and the social. It seeks to elevateenterprise-level sustainable developmentreporting to the level of general acceptanceand practice now accorded financial reporting.GRI also seeks to develop and advocategreater stakeholder awareness and use of suchreports.


2. Forms and conditioning of fertilizers

large-scale, often integrated plants. Smaller scaleprocesses include:

• Compaction.

• The steam or water granulation of dry mixes,sometimes called the granulation or fusionblend process.

Fluid fertilizers may be divided intoanhydrous ammonia, clear solutions andsuspensions. The latter are normally multinutrientfertilizers, the suspension being used in order toincrease the nutrient concentration of theproduct.

The “Intermediate Bulk Container” or“IBC” or “mini-bulk sack” is a “big bag”, normallycontaining between 500 and 1000 kg offertilizer.

In this publication, phosphate and potash maybe expressed as their elemental forms P and K, oras their oxide forms, P2O5 and K2O. Some of theabbreviations used for fertilizer products are:

AN Ammonium nitrate

AS Ammonium sulphate

CAN Calcium ammonium nitrate

UAN Urea ammonium nitrate solution

MOP Muriate of potash= potassium chloride

DAP Diammonium phosphate

SSP Single superphosphate

TSP Triple superphosphate

NPK A complex fertilizer containing allthe three nutrients.

Note: In this publication:

The term “distribution” relates to themovement of fertilizers from the plant to thefarm, not to distribution in the field.

Mt = million tonnes.

Kt = thousand tonnes.

2.1 Definitions

The terms used in this document to describe thedifferent forms of fertilizers are as follows:

Straight fertilizers, containing a declarablecontent of only one of the plant nutrientsnitrogen, phosphorus or potassium.

Compound, multinutrient fertilizers, containingat least two of the nutrients nitrogen,phosphorus or potassium, which may be furtherdivided into:

- complex fertilizers, obtained by chemicalreaction, in which all the nutrients are presentin each granule (also called “chemically mixed”and “chemically granulated” fertilizers), and

- mixed fertilizers, being physical mixtures ofdifferent nutrients, without a chemical reaction.

Mixed fertilizers may, in turn, be divided into:

- powder mixtures (now rare for agriculturaluse in Europe and the USA),

- blends of different materials of matchinggranule size, which may be delivered to thefarm either in bulk (bulk blends) orin bags.

Today, the farmer normally demandsgranulated compound fertilizers. Granulatedcomplex fertilizers are normally produced in


2.2 Factors influencingfertilizer distribution systems

There is an infinite number of ways of gettingfertilizers from the plant to the farm if one takesaccount of the possible combinations of options intransport, storage, handling, the form of thefertilizer, the conditioning etc. Every situation isunique and there is no “best” system. The cost ofgetting fertilizers from the plant to the farmaccounts for a substantial proportion of the farm-delivered cost when all the items are taken intoaccount. Furthermore, while the manufactureroften has little scope for making furthereconomies in the production costs, thedistribution system may offer furtheropportunities.

It is not just a question of economics. Theefficiency of getting fertilizers from the plant tothe farm determines whether the products areavailable when and where the farmer requiresthem, and whether he has access to productssuited to the crop and soils to which they will beapplied. This affects the efficiency of the use inagriculture of the products, with impacts on foodproduction and the environment.

Natural conditions

Important factors influencing the fertilizerdistribution system include the geography of thecountry, climate, the structure of agriculture andthe type of farming.

West Europe may be cited as an example,where the proportion of the national areaaccounted for by arable and fertilized grasslandranges from a high of 58% in Denmark to 21%or below in Spain, Greece and Portugal. Fertilizedgrassland as a proportion of the effectiveagricultural area varies from 88% in Ireland,through 54% in the UK and the Netherlands tovirtually zero in Greece. Farms over 50 ha rangefrom 80% of the total farmed area in the UK to5% in Greece. As a proportion of the totalnumber of farms, farms over 50 ha account for33% of the total number of farms in the UK,to 0 to 2% in Greece, Italy, Portugal and the

Netherlands. Evidently, the small farms in theNetherlands are mostly intensively farmed,whereas those in the southern Europeancountries can be classed as peasant farms.

Infrastructure

One of the most important factors influencingfertilizer distribution is the development andstandard of the road and railway system, theavailability of water transport, or even a pipelinesystem (USA). In many developing countries thedensity of the roads is scarce (Africa 5 km/100km2, Asia 45 km/100 km2, United States 95 km/km2, Europe 350 km/km2).

In the industrialized countries the life of atruck is considerably longer than in Africa, forexample, due to the much better infrastructure. Itmight be mentioned, however, that the life of atruck depends also on how it is maintained. Inseveral Asian countries trucks have a long lifebecause of the caring attention they receive fromthe families who own them.

Seasonality

The timing of fertilizer application is determinedby the overall cycle of crop growth, by weatherconditions and by the type of agricultural activity.Nitrogen, for example, is required mostly duringthe period of active crop growth. The applicationof phosphate and potash fertilizers is notconcentrated to such a degree into one shortperiod. Nevertheless a peak also occurs during arelatively short period.

In the case of West Europe, around 80% ofthe fertilizers used, i.e. about 35 million tonnes offertilizer material, have to be made available forthe beginning of the season. However, the mostefficient way to operate a fertilizer productionplant is to manufacture all year round. Until a fewyears ago, the problems of matching continuousproduction with seasonal consumption weresolved by using a progressive price structure, i.e.one which offered products at a discount in theoff-season, thus allowing the retailers andcooperatives to recover the cost of fertilizerstorage. As the market share of importers has


risen, however, pressure on fertilizer prices hasincreased and the system of progressive pricinghas become more difficult to maintain. Retailersand cooperatives are nowadays less willing tostore fertilizers, because they want to minimizethe financial risk involved.

The product consumption patternand nutrient concentration

The consumption pattern of the differentproducts has changed. Since 1973/74, most ofthe increase in world nitrogen consumption isaccounted for by urea, most of the phosphate bydiammonium phosphate and the potash market isdominated by potassium chloride. Each of theseproducts has a relatively high concentration ofplant nutrients. The higher the concentration ofplant nutrients, the lower the distribution, storageand handling costs per unit of nutrient and this,no doubt, has been an important factor in thepreference. Urea has the added advantage that itmakes use of by-product carbon dioxide from theammonia manufacturing process. These are notagronomic criteria.

2.3 Forms of fertilizers

Complex fertilizers

Complex fertilizers, produced by both theammonium phosphate and the nitrophosphateroutes, have many advantages. They have highquality, stable granules, with all the nutrients ofthe guaranteed formula present in each granule.Their quality is carefully controlled to industrialstandards, which guarantees that their nutrientcontent is within the tolerance limits specified inrelevant fertilizer regulations. The granules arefree-flowing, resistant to moisture and physicaldamage, easy to handle and can be appliedevenly. The products are screened to ensure thatthe granule size conforms to a tight specification.Anti-caking agents are applied. Secondarynutrients and micronutrients can be easilyincorporated. A wide range of grades is available,to suit any agricultural situation.

Evidently, this quality has its price andcomplex fertilizers are more expensive thanblends of commodity materials. Themanufacturer has a wide choice of raw materialsbut the processing and conditioning has to bepaid for. The number of grades requirescomplicated distribution and inventory control.The investment cost for a new verticallyintegrated plant is high.

Blends

Bulk blends account for some 80% of solidcompound fertilizers in the USA compared with25% in Europe. The development of blends inthe USA is due partly to the location of fertilizerproduction and consumption, which favourshandling in bulk - liquid and solid - and it favoursblends. The production points of the primarymaterials are located far from each other,phosphates in Florida and the South East, potashin Canada or New Mexico, nitrogen on the GulfCoast. These materials need to be broughttogether in yet another location, the majorconsuming area of the Corn Belt. The fertilizeringredients, produced in large, cost-effectiveplants, are transported to the area of consumptionand mixed there. The river transport facilities tothe Corn Belt and, in the case of fluid fertilizers, awell-developed pipeline system, have facilitatedthese developments.

The growth of blending has been favoured bymergers and acquisitions, the closure of complexfertilizer plants, the wider-availability of low-costconstituents, and the improved quality of theseconstituents particularly as regards the granulesize, uniformity and stability, and the availabilityof “big bags”. It is estimated that 4 million tonesof blends were produced in 1987, 5.6 milliontonnes in 1997. To these figures must be addedthe blended fertilizers produced by several largefertilizer manufacturers in West Europe in fullyautomated, large-capacity plants, producing anexcellent product, often bagged and sold throughthe established marketing networks. In Ireland,for example, all the NPK compounds areproduced in this way.


A major advantage of the blending system isthe relatively low initial investment required,unlike the case of the integrated complexfertilizer plant. The plants now available aresimple and robust. Leading companies can supplypurpose-built installations that can be as simple asa mixer on a concrete pad or a highly automatedand integrated plant capable of producing 200kt/a of blended product. Blending plants arerelatively inexpensive to build and operate, theycan be located almost anywhere as long asgranular materials can be transported to theirlocation. Production can be switched on and offaccording to seasonal demands and shortproduction runs are possible. Almost any grade,suitable for almost any soil and crop requirement,can be made from a relatively small number offertilizer materials. Advantage can be taken oflow prices for the fertilizer ingredients on theinternational market.

A problem with blends, especially bulkblends, is the segregation of the constituentsduring transport and storage, unless the granulesizes are well matched. Bagging can limitsegregation. Also the effective economicoperating radius for bulk deliveries is limited.While further progress can be made, there hasbeen a considerable improvement in the qualityof bulk blends. Codes of good practice have beenprepared.

Granulated and compacted blends

Dry mixing of powdered fertilizers can be tracedback to the early 1900s but difficulties of storage,handling and dustiness etc. precluded theirwidespread acceptance. A relatively newtechnology is to compact powdered dry mixes ofstraight fertilizers or their intermediates to formgranules.

Granulated or fusion blends, have becomewell established in India. Almost all raw materialscan be used and a variety of gradesmanufactured.

2.4 Conditioning of fertilizers

50 kg bags

In the 1920’s and 1930’s fertilizers in WestEurope were handled in large jute bags (about100 kg). These were popular with farmers sincethey could subsequently be used for otherpurposes. From the late 1940’s these werereplaced by 50 kg paper bags which, in turn,were replaced by plastic bags in 1960’s. It wasfrom the late 1960’s that the large-scaledevelopment of mechanized systems of handlingfertilizers developed in countries where theagricultural structure provided a strong demandfor such systems.

Bags offer several advantages. They are easyto transport, store, measure and identify. Theyprotect against moisture and limit segregation ifthis is a problem. They permit a guarantee ofweight and quality and help to protect thecustomer against fraud and adulteration of theproduct. Palletization facilitates handling andshrink-wrapping provides additional protectionduring storage. All these measures evidently addto the cost, but this is a cost which can, undersome circumstances, be justifiable.

The general use of welded plastic sacks hasled to a simplification of storage conditions.Although it is may be possible to store these bagsin the open air for a few weeks, covered with aplastic cover to protect them from rain and thesun, it is preferable to shelter them in a cleanstore, isolating them from the ground end thewalls, to avoid substantial humidity differencesand rodent attacks.

In regions where farmers do not need highlymechanized systems, due to the small size of thefarm, difficulty of access etc., the traditional 50 kgbag is likely to remain the main distributionmethod. Its simplicity and flexibility outweighpossible cost-savings in dispensing with the bag.Free bags are usually transported manually to thetrailer, then to the spreader.


The physical effort of handling 50 kg bags isresolved by the use of “big bags” or palleted bags,if the farmer is equipped with suitable liftingequipment on his tractor. In West Europe at least,the palletization of bags is now common practice.Palletization avoids breakage in the distributionchain and the fertilizer can be delivered onpallets to the farmers. Storage on the farm canthen be effected in different ways; traditionalstorage in a hanger, on pallets, or on towedtrailers.

Bulk

The bags and the bagging operation add to thecost of the finished product. Handling in bulkfacilitates mechanical handling, so that the effortis reduced, less labour is required and thehandling speed is increased. However, this toohas a cost, which is greater than is sometimesrealized, especially if the total cost, from plant tofarm, for the total quantity delivered, is taken intoaccount. For example, the investment cost perunit quantity handled may be higher due tosmaller loads and the need for special vehiclesand conveyors. Store-houses which provide moreprotection than that needed for bagged materialmay be required. Furthermore, unless it is wellmanaged, transport and storage in bulk can leadto high product losses.

In Europe, bulk is justified when more thanabout 50 tonnes is handled on the farm, with atthe most three grades. Storage can be effected onraised hoppers, or in stalls in a store, protectedfrom humidity, of easy access, with access waysand a height sufficient to permit delivery andreloading of the fertilizer.

For up to 15/20 tonnes handled peragricultural worker per year, bulk is notindicated. Above 50 tonnes, bulk isrecommended. Between the two, the big bag isoften a viable solution.

The user of bulk can obtain his suppliesdirectly from the distributor, either from his store,or from raised silos from which the fertilizer fallsinto his trailer through gravity. This solution is

valid only for short distances between the pointof supply an the field (not more than a kilometreper tonne of fertilizer transported). The reloadingof bulk stored on the farm implies most often theloading of trailers using a tractor bucket, of aconveyor or a screw conveyor, or sometimessimple gravity. Various adaptable accessories ofcommonly available equipment permit manualunloading of fertilizer from the trailer into thespreader.

Intermediate Bulk Containers, IBCs

The use of IBCs, which are intermediate betweenbulk and the 50 kg bag, has become significant insome countries. Their handling can be completelymechanized, they are easy to store, the factory tofarm investment cost is considerably less thanthat of bulk, and the bags can be labeled. IBCspermit a substantial time saving by eliminatingarduous handling. Relative to bulk, IBCs permit asubstantial economy in investment in handlingand storage facilities.

These are often of 500 or 1000 kg, and are,as their name implies, intermediate between the50 kg bag and bulk. Their advantages are that:

• their handling can be completely mechanized,

• they are easy to store,

• the factory to farm investment cost isconsiderably less than that of bulk,

• in the case of bags, they avoid the cost of apallet and/or shrink wrapping,

• they are handled fewer times than 50 kgbags, hence losses are reduced.

The disadvantages are that:

• the distributor and the farmer must have afork-lift or similar,

• the big bag is more expensive than theequivalent number of 50 kg bags,

• investment in bagging facilities is required.

IBCs have found a place especially wherehandling as solid bulk was not previouslyestablished.


Fluid fertilizers

Fluid fertilizers such as urea ammonium nitrate,UAN, offer the farmer the advantage of reducedmanual handling and the opportunity to applyfertilizers and some plant protection products atthe same time. UAN is easy to handle and spreadaccurately. However, they require special storagefacilities, transport containers and applicationequipment.

Fluid fertilizers have found less favour inWest Europe than in the USA. If the liquidfertilizers are transported by road tankers, whichis the case in Europe, there can be bottlenecks,particularly at the peak season, especially sincefarm storage is normally limited. In the USAliquid solutions are transported over longdistance by pipeline. Fluid fertilizers requireadaptation of the distribution system; this isexpensive in a market with little demand growth.In Europe the total investment cost for liquids(transport, storage and handling) tends to behigher than that of solid fertilizers. Under USconditions the converse is the case.

In the USA, the major UAN producers ownlarge fleets of UAN railcars. Mild steel UANstorage tanks at terminals have a 4,500-9,000tonne capacity, but major terminals have tankswith 27,000 tonne capacity. The current cost of anew 27,000 tonne UAN storage facility (carbonsteel tank, containment dike, pumps, piping, andelectrical fittings) is approximately US$ 1 million,compared with US$ 450 000 for solid bulkstorage warehouses of traditional construction ofabout 9,000 tonne capacity. At the retail level,storage tanks for UAN vary in size from 450tonnes for small dealers up to 1,800 tonnes forlarger dealers.

In Europe, UAN is most commonly used inFrance. The product is normally stored in tankscontaining of 15 to 50 000 litres, in anti-corrosion treated or stainless steel or reinforcedplastic. There are also 3000 litre tanks for short-

term storage or transfer to the field. Storagefacilities of less than 100 m2 are subject torelevant departmental health regulations, above100 m3 they are subject to authorization.

As solid fertilizers spreaders fluid fertilizerequipment should be thoroughly cleaned afteruse. In order to avoid blockages and corrosionthe equipment should be emptied and rinsed andthe pumps cleaned after each period of use.

Suspensions

Solubility properties limit the concentration ofclear liquid solutions, but the concentration canbe increased by preparing suspensions. Thestorage of suspensions requires equipment forregular agitation at intervals of a few days, usingcompressed air. Most often, it is the regionaldistribution station which assures the storage ofbase products and the preparation of gradesshortly before use. They have a limited radius ofoperation from the mixing unit (about 15 mileson average in the USA). As with clear liquids,suspensions are used more commonly in the USAthan in Europe where they have to compete withestablished and efficiently produced NPK solidsand with blends.

Gaseous fertilizers - Anhydrousammonia

In the USA, 32% of nitrogen application is in theform of anhydrous ammonia. The product has theadvantage of a low price per unit of N, but itrequires special equipment for transport, storageand injection, i.e. high-pressure storage tanks andinjection machinery. Strict precautions need to betaken in its handling, and regulations have to berespected. These considerations together with theproblem of distributing the product by road haveprevented development of the use of the productin Europe. The use of directly applied anhydrousammonia developed to a significant extent only inDenmark, but even there it is no longer used.


3. Costs and management systems

figures. The reported margins are so low that it isevident that the retailers provide little or noservice.

The following text is extracted from theSummary results of the survey on fertilizer marketingcosts and margins in Asia and the Pacific, 1996/97by Edgar Dante, FADINAP, Agro-chemicals Newsin Brief, July-September 1998.

Transportation costs

Fertilizer is a bulky product, thereby requiring highcosts for transportation. In this survey, transport costrefers to the cost of transporting a ton of fertilizerfrom port or factory to the survey area. Transportcosts ranged from as low as US$ 2.0 per ton in Fijito a high of US$ 45.8 per ton in Indonesia. Suchdifferences do, of course, reflect not only variations intransport cost per km but more so the distances thatfertilizer is carried. The relatively low transport costin Fiji is understandable for a very small country.However, in Indonesia, fertilizers have to betransported by boat and truck for an averagedistance of 1,600 km from factories in Palembang tothe main consuming areas in Java. Transport costsin this country accounted for 84 per cent of totalmarketing costs.

An important factor contributing to high overalltransport costs is the insistence of some governmentsthat fertilizer be made available to all farmers evenin the most remote areas. Not only does this increaseaverage fertilizer transport costs, but the higher foodproduction which results from fertilizer availabilitymust, in turn, be transported to the markets atsimilarly high costs. This means that those foodproducers who, by reason of their location, are bestplaced to produce for the market are penalized byhaving to absorb the costs associated with transportto and from remote areas.

3.1 Marketing costs

FADINAP, the “Fertilizer Advisory, Developmentand Information Network for Asia and thePacific” of ESCAP/FAO/UNIDO, has carried outregular surveys of fertilizer marketing costs andmargins in the countries of Asia and the Pacific.

The cost of transport is normally the largestsingle item in the total marketing costs. In manyof the countries the percentage of transport costsin the total marketing costs is around 50%. Thesecond most important item is storage costs,including the cost of financing the storage of theproduct.

(In West Europe, it has been estimated thatlogistical costs, including handling, transport andstorage, represent about 20% of the price paidfor fertilizer by the farmer. Road, rail, canal, riverand sea transport systems are used, depending onthe local infrastructure).

In the FADINAP survey, in most cases, theassessment of the costs is complicated by theinvolvement of the public sector and open andhidden subsidies. The hidden subsidies may be inthe form of special rates from publictransportation companies, reduced storage costs,the overhead costs of public institutions etc.

Countries do not appear to identify all costsassociated with marketing when calculating theselling price to the farmer, many costs being lostin general operating expenses of parastatal orgovernment ministries and others, such asopportunity cost of capital, being ignoredcompletely.

Trade margins are recorded but are very lowin most cases. In some cases fertilizers aredistributed by government agencies, in othersprivate traders are reluctant to report accurate


Storage and financing costs

There is a need to store fertilizer at almost every levelof the distribution system, that is, at import,wholesale and retail points. Closely related are costsof financing of stocks, which cover the interest duringthe period between purchase and sales of fertilizer.This cost item constituted a significant element in thetotal marketing costs in many countries. In somecountries, financing costs were not reported or wereeven neglected. In such cases, financing cost may beconsidered to form a part of the reported margins forimporters, wholesalers and retailers.

Long storage periods imply significant interestcharges, which unfortunately many countries failed toaccount. The failure to identify the opportunity costsof capital, not only gives a misleading impression ofthe efficiency of the marketing system, but also resultsin either the farmer being undercharged for fertilizer,or in the levels of subsidy being understated.

Other costs

Other costs include various components not coveredin the above, such as administration charges,clearance and handling costs for imported fertilizers,promotion activities, overhead charges, interestcharges, etc. In some countries, a number of theseitems are incorporated in the transport, storage andfinancing costs.

Marketing margins

The Philippines gives a good indication of the totalmarketing margins of importer, wholesaler andretailer which was about US$ 10 per ton,representing about 14 per cent of the gross marketingcosts of US$ 73. This total marketing cost of US$73 was 31% of the retail price of US$ 234. Thisbeing imported material, some US$ 20 of sea freightmight be added to the gross marketing cost, to bringit to 40% of the retail price.

In Bangladesh, wholesalers and retailers oflocally produced urea earned a total of US$ 12 perton as margin.

Table 1 gives investment and operating costsfrom a US case study. The case study concerned

the establishment of a marketing and deliverysystem, covering an area of 30 km radius, andwhich covered 60% of the farmed land. The areawas located 200 km from the fertilizer factory.There was a two-step delivery system(intermediate regional storage and local storage).The median fertilization rate was 120 kg NPK/ha.

Marketing and delivery costs in this casestudy amount to between 30% to 50% of the ex-factory cost of the fertilizer.

Table 1. Case study: investment andoperational costs of fertilizer distribution

Investment cost element US$

Buildings

Storages 2,000,000

Laboratory 120,000

Offices 100,000

Trucks 800,000

Operation cost element US$/t

Labor and staff 18.0

Transportation 8.5

Depreciation 5.0

Financial costs 5.5

Insurance 1.4

Market promotion 5.0

Return on sales 15.0

Total 58.4

Source: IFDC

(The total is of the same magnitude as thatobserved in the Philippines, mentioned above).

Integration of the delivery system forfertilizers with that of other agricultural inputs(plant protection products and animal feed) andfarm outputs may substantially decrease theoperational costs of the delivery system.


3.2 Management systems -India

The following text is an example from Indiaedited and extracted from Distribution. AnImportant Arm of Marketing by K. Parthasarathi,Fertilizer Marketing News, Vol. 29 No. 12.,Fertiliser Association of India, New Delhi,December 1998.

The distribution system

An ideal distribution system is one that enables theright product to be available at the right time, insufficient quantities and at most economical cost atthe consumption centres. In India, the distributionfunction assumes greater importance than in manycountries for the following reasons:

a. Production is concentrated in coastal areas forreasons of logistics;

b. Imports also are concentrated in the same coastalcentres;

c. The area of consumption is spread over a verylarge area, mostly inland;

d. Production is continuous while consumption isseasonal;

e. Transport facilities are inadequate and have tobe shared with many other commodities;

f. Silo and transit storage capacities are limited;

g. Extensive retail network;

h. Inadequate attention is paid to customer service;

i. Promotional activities are inadequate due tofinancial constraints.

The demand and supply of fertilizers aresubstantial and the products are easily inter-changeable. A good distribution system facilitateseffective customer service.

Distribution costs

Unlike manufacture, distribution lends itself easily totrade-off economies i.e. where a deliberate increase inunit cost of one activity can result in greater savingsby way of reduced unit costs of another activity oractivities.

Therefore, the distribution function is an areawhere constant scrutiny of costs and of strategy canresult in real economies. The major items indistribution costs are:

a. Terminal costs, cost of packaging, handling atfactories or transit area;

b. Inland freight;

c. Warehousing costs such as inventory holding,storage rental, depot handling, documentationetc.;

d. Cost of re-bagging, standardization at thewarehouse, loss due to handling, pilferage etc.;

e. Covering risks against accidents and naturalcalamities.

Since the inventory carrying cost is a majorcomponent of distribution costs, every effort has to bemade to reduce this cost item. A careful balancebetween demand and supply by means of effectivedemand forecasting is necessary.

Need for integrated approach todistribution

The channels of distribution are the same for bothindigenous and imported fertilizers. All aspects ofdistribution must be integrated to achieve economies.Such an integration should be inter and intra -organizational, inter and intra-regional etc. involvingproducers, importers, the transporters and theconsumers, in order to achieve operational economy.A long-term plan based on the experience of eachagricultural season permits optimization andeconomies in the distribution network.

The regional warehousing concept has gainedground. It creates buffer stocks which permit the mosteffective distribution in a region where large volumesare involved over a short period. Such a system helpsto minimize damage to material and packing, apartfrom meeting the demand effectively.

Distribution planning andmanagement

The planning and management of distribution havebecome complex operations and involve selection andapplication of the best combination of different


independent alternatives. The operation is concernednot only with the price paid for the product, or withthe selection of the agencies for activities such astransportation or warehousing, or with simplyavoidance of wastage or damage in handling orpacking, but also with the impact of the entire groupof activities considered collectively. Handlingmethods, packaging alternatives, time in transit,warehousing and inventory costs, costs of intra-plantand port movements, operational innovations toovercome seasonal or chronic bottlenecks, lead timeto create infrastructure and the costs of operating thesame, flexibility to shift stocks to meet sudden andsharp demand or withdraw from drought hit areasetc., are all part of distribution planning andmanagement.

There is need for careful and accurate calculationof transportation or handling costs and their relationwith other factors such as inventory and other costsand customer service requirements. This calls fortechnical skills and managerial expertise. Withcomputerization, a manufacturer can chooseappropriate distribution and transportation models.

Today the Fertilizer Distribution Manager isinvolved in a broad and complex range of activities,far beyond those of a transport manager.

Transportation

The three main activities related to transport logisticsare :

• Loading from plants or ports;

• Dispatch by rail or by road;

• Unloading at rail terminals, warehouses etc.

Fertilizer is just one of the bulk commoditiestransported by rail or by road. Movement by rail is,by and large, from point to point, in unit trains.Nearly 40% of the total fertilizer traffic is conveyedby rail. A substantial rail network throughout thecountry helps in the speedy movement of thematerial. However, owing to ever-increasing pressureof traffic and lack of commensurate resources, therailway infrastructure is under tremendous strain,due to demand from other sectors. Therefore, to meetthe challenge, the railways authorities are

implementing gauge conversion and are alsointroducing an ‘Own Your Wagon’ scheme. To keepthe operational cost as low as possible, movement byrail is the preferred route. Movement by road isgenerally confined to nearby areas, except foroccasions when long distance transportation isnecessary due to an inadequate supply of wagons.

Unloading at rail terminals is still done usingconventional methods. This takes a longer timeleading to retention of wagons at the terminals,thereby incurring higher demurrage charges. Toimprove the handling at the terminals, the followingareas needs to be given attention:

a. Explore new types of wagons which can carryhigher tonnage and withstand high speeds;

b. Examine a multimodal transport systemwherever possible i.e. river, sea, rail and road;

c. Palletisation of fertilizer bags with a liftingcapacity of two tonnes each;

d. Sliding door wagons could be explored to loadpallets;

e. Acquire forklifts for each loading and unloadingterminal;

f. Explore movement of fertilizers in bulk - developa matching infrastructure.

Handling at ports

In the context of the total rationalization oftransportation of fertilizers, it is imperative to adoptan integrated approach in respect of both domesticproduction and imports. In India, the ships carryingimported fertilizers are handled at eleven major andas many as fifteen minor ports to economize indistribution and make the fertilizers available in theshortest possible time. The total imports of urea,DAP and MOP are expected to reach 12.8 milliontonnes during 2001-02, depending on the domesticprice. At present the rated capacity for fertilizerhandling is around 8.0 million tonnes at the majorports and nearly 2.0 million tonnes at the minorports. Decontrolled fertilizers are mostly handled atselected ports. Therefore the optimum port capacityutilization requires a perfectly matched rail - roadtransport capacity at the port.


The operational constraints at the ports seriouslyaffect the discharge and evacuation of fertilizers. Theports have high labour costs, low productivity,inefficient equipment maintenance and obsoletetechnology. Although overall operations at the portshave shown improvement in terms of the shipturnaround time and output per ship berth day, theyhave been showing signs of stagnation in the last fewyears. As a first step forward to improving porthandling, the major port trusts have been delegatedpowers which are similar to those delegated to publicenterprises. It is being considered to convert some ofthe ports into public limited companies to give themmore autonomy in their functioning. Also, some ofthe berths have been privatized to help developinfrastructure facilities on long term basis.

Storage

Warehousing is an integral part of distribution.Since the inventory carrying cost (ICC) is a majorcomponent of distribution costs, every effort has to bemade to reduce this element. However, this is a verydelicate issue which requires a fine balance ofconflicting interests i.e. making the fertilizersavailable in the required time frame and the need toreduce ICC. The conflict is all the greater in view ofthe skewed pattern of fertilizer consumption in ourcountry. In order to reduce the ICC, the importer,particularly of decontrolled fertilizers, tries to bringin the material as close to the peak consumptionperiod as possible. Of course, the trend of fertilizerprices in the world market and fixing of concessionprices also have an important bearing on the timingof the imports. Nearly, 60% of the material isimported in April to September and remaining 40%during October to March.


4. Transport

chemicals News in Brief, FADINAP, July-September 1996.

During the last decade the cost andenvironmental aspects of dry bulk handling (inshipping) have come more into focus owing to theever increasing competition in the industry, and theenvironmental awareness among people all over theworld. The crude traditional ways of handling drybulk have gradually been replaced by moresophisticated, efficient, and environmentally safesystems which satisfy both the operator’s costrequirement and the emission limits set by theauthorities.

The cost of bulk commodities in general is to ahigh degree influenced by the transportation cost.This is particularly true in the case of inexpensivecommodities such as cement and aggregates, wherethe transportation cost could reach the same level asthe cost of the commodity itself. Phosphate rock witha cost ranging from US$ 50 to US$ 70 per ton alsohas a very big transportation cost component in thetotal cost, while fertilizers at a cost of say US$ 150are to a lesser degree dependent on thetransportation cost. Included in the transportationcost is the cost of loading and unloading the ship inport. This cost has two components, the direct cost ofthe loading or unloading operation, and the cost ofhaving the ship idle in port. The latter can reach veryhigh levels when ineffective handling systems areused, and the operator is forced to pay excessivedemurrage penalties particularly for the unloadingoperation, which is often complicated and timeconsuming.

Unfortunately, many times, only low capacity,low cost unloading equipment is considered whenplanning to import a terminal, a decision which, at alater stage can prove to be very costly for theimporter. Not only can the unloading capacity be acost increasing factor but the size of the unloadingequipment can also limit the ship size to

4.1 International trade infertilizers and their rawmaterials

Fertilizers and their raw materials are animportant constituent of sea-borne bulk trade.They take fourth place among bulk commoditiesin world shipping trade after iron ore, coal andgrains. In 1996 some 112 Mt of fertilizers,phosphate rock, potash and sulphur wereshipped, accounting for 6% of all sea-borne bulktrade. The grain trade, for comparison, amountedto 199 Mt. The lower the value of the shippedmaterial, the greater the incidence of transport inthe landed cost. Evidently phosphate rock at anFOB cost of US$ 50 per tonne has a biggertransport component than DAP at US$ 200 pertonne, but both materials can be considered to berelatively low-value bulk commodities. It istherefore most important that the port handlingsystem should be modern and effective, withsufficient capacity to maximize the efficiency ofhandling and to minimize demurrage penalties. Itis also important that spillage should beminimized, for both economic and environmentalreasons.

A notable feature of international trade infertilizer materials is the development of themovement of urea, the ammonium phosphatesand potassium chloride. It is no coincidence thatthese are all products with a high nutrientconcentration, and the main constituents ofblends. A simple calculation demonstrates that anincrease in concentration from 30% to 40%results in a 25% reduction in the transport andhandling costs, an increase from 40% to 50% inconcentration in a 20% reduction.

The following text is extracted fromImprovements in Fertilizer Handling Technology andEquipment by L. Jarskog and K. Bowley, Agro-


uneconomical vessel tonnage, which will furtheraggravate the situation. Modern handling systemsusing state-of-the-art technology can accommodateships of any size and provide high unloadingcapacity in a most cost effective way.

The ever increasing requirements forenvironmentally safe bulk handling operations canonly be satisfied with thoroughly engineered plantsusing enclosed dust free continuous systems. Existingold bulk operation equipment in various ports,seldom corresponds to the environmental standardrequired today, and are costly to operate because ofthe spillage and dust problems. The spillage and dustemission from bulk operations are not only anenvironmental problem but also an important costfactor. The spillage has to be picked up from time totime and the area exposed to the dust cleaned on aregular basis. Furthermore, the spillage representsloss of valuable material which has to be paid for bysomeone, in the end.

4.2 Sea transport

As with most bulk products, the shipping offertilizers and fertilizer raw materials is affectedby economies of scale. Normally, the larger thecargo carried, the lower the transport cost pertonne. However, an importer must also considerthe port facilities available at the port ofdischarge - the length of the jetties available,method and speed of unloading and whether ornot port storage is available. These factors willdetermine the maximum size of cargo that can besafely handled.

In West Europe, for example, much of thepotash moved from Hamburg to fertilizerfactories within Europe is moved in relativelysmall shipment sizes of about 3-5,000 tonnes.The shipping cost is somewhat higher than couldbe achieved with larger shipment sizes but on theother hand stocks at the receiving port can bekept at a manageable level. This can becompared with urea from the Black Sea to Chinawhere shipments are normally about 50,000tonnes. This reduces the shipment cost over the

long sea haul to a minimum but means thatsubstantial storage must be available at Chineseports of discharge. At some Chinese ports,substantial quantities of bagged urea must bestored outside under tarpaulins which is neverideal.

A major factor that leads to high freight costsin many ports is the slow speed of discharge. Forexample, if the shipment size is 20,000 tonnesand the discharge rate is only 1,000 tonnes perday then it will take about 20 days to unload theship. If the discharge rate can be increased to, say5,000 tonnes per day, then this reduces the timerequired to only 4 days. Extra days add to thecost of lay days and demurrage which can be ofthe order of US$ 8-10,000/day. Factors thatincrease/reduce the speed of discharge are:

• Number and type of cranes available and thegeneral reliability of equipment;

• Types of hoppers and conveyors;

• Size of bulk store available at quayside;

• If there is no bulk store, the speed of baggingat quayside; if bagging is under cover then itis less affected by weather conditions. Ifbagging is alongside the ship then wetweather will halt operations and cause delays;

• If the bagged fertilizer must be immediatelyloaded onto trucks and moved out of the portarea, then the availability of a steady supplyof empty trucks will be a major factordetermining the speed of discharge.

• It is also normally cheaper to ship in bulkthan in bags although, of course, the port ofdischarge must have suitable equipment todischarge bulk cargoes. Another argument infavour of bulk is that bagging is almost alwayscheaper in developing countries where labourcosts are lower. If the country has bag makingcapacity and can produce bags of the rightquality, these are also likely to be cheaper inthe developing country. There is also a savingof foreign exchange.


4.3 Transport regulations

Transport regulation is often supra-national beingembodied in international agreements such as theIMDG Code for sea transport, the Europeanagreement on the carriage of dangerous goods byroad (ADR) and the Regulations concerning thecarriage of dangerous goods by rail (RID). TheUnited Nations have published Recommendationson the Transport of Dangerous Goods (the so-called “Orange Book”).

Controls on the transport of fertilizers arelimited to those products which are classified ashazardous (dangerous) goods. In general termsthis means those products classified as “oxidizing”due to the high concentration of ammoniumnitrate (UN classification Group 5.1). There is amuch smaller group of products which canexhibit self sustaining decomposition, wherethermal decomposition, once started, willcontinue even if the source of heat has beenremoved. Such products are known as “cigarburners” (UN classification Group 9).

Probably the most important aspect of all thetransport legislation and the one which iscommon to all modes of transport, is the need forcareful labeling of packages so that the type anddegree of hazard can be readily identified in anycountry. In the case of bulk loads, by land or sea,the relevant information must be included in thedocumentation which must stay with the materialand be readily available to the authorities at alltimes.

One of the most comprehensive publicationsdealing with classification is the IMDG Code andthe classifications in this Code (Explosive, Toxic,Corrosive, Flammable, Oxidizing etc) areaccepted throughout the world. Classification isgenerally based on recognized test proceduressuch as those in the United Nations “OrangeBook”. The IMDG Code gives specifications forhazard labels and placards, with full illustrations.These specifications and symbols are used invirtually all national labeling legislation. It formsthe basis for EC Directives on Classification,

Packaging and Labeling of Dangerous Substances(Directive 67/548 EEC and subsequentAmendments).

International transport law is upheld throughthe United Nations and internationalorganizations such as IMO. Sanctions mightinclude the prevention of vessels from enteringharbours or preventing lorries or trains fromcrossing national borders.

Sea transport

All sea transport is governed by IMO which issupported by all maritime nations in the world.Regular updating of the IMDG Code ensures thatnew materials and hazards are covered. TheCode imposes restrictions on the types of vesselwhich may be used, the quantities which may becarried and the form in which they may behandled.

Classification is based on a number ofproperties such as explosive, oxidizing and toxic,with appropriate methods of test to establish theclassification. Within the classifications products,such as fertilizers, may be sub classifiedaccording to composition.

The IMDG Code is also concerned with otherhazards such as cargo stability and provides testmethods for properties such as the angle ofrepose of bulk materials.

Road transport

Internal transport is normally covered by nationalregulations which may be based on internationalagreements such as ADR in Europe. Suchregulations not only cover the labeling of theproducts but also the definitive marking of thevehicles, specification of the documentationrequired and, in many cases the need for drivertraining in case of emergencies.

Rail transport

As with road transport, internal rail movementsare normally subject to local regulation, withcross border transport covered by internationalagreements such as the RID in Europe. These


agreements also cover the labeling of packagedgoods and transport documentation.

Inland waterway transport

Cross-border traffic is covered by internationalagreements such as the European provisionsconcerning the international carriage ofdangerous goods by inland waterways (ADN) orregional agreements such as the Regulations forthe carriage of dangerous substances on theRhine (ADNR).

Air transport

Because of the large scale trade in fertilizermaterials, there is virtually no air transport offertilizers apart from small sample quantities.Such transport is covered by the International AirTransport Association (IATA) rules.

4.4 The transportation systemin the USA

Annual distribution of 48 million tonnes offertilizers from factories and ports toapproximately 13,000 retail outlets is a complexand costly year-round process. The efficient bulkcommodity distribution system that has beendeveloped over time in the United States hasenabled fertilizer to be efficiently distributed,particularly into the main fertilizer use areas ofthe Midwest. However, transportation costs areincreasing and are likely to continue to do so.Cost-effective road transport distances areapproximately 100 miles. Beyond this distance,rail and barge transport are considerably morecost effective. There has been considerableconsolidation in these two transport areas. Forexample, in 1970 there were over 50 class I railcarriers; by 1980 the number was 20, and in1997 there are only six. Four carriers account for80% of all rail freight. The typical dry cargo-fertilizer rail car has a capacity of 90 tonnes).Dedicated unit trains are used where possible, forexample in transporting potash from Canada andDAP from Florida to the Midwest. Anhydrous

ammonia and UAN rail tankers are owned byseveral fertilizer companies in addition to thoseowned by railroad companies.

The large barge companies own, lease, orcontract with river terminals, but many riverterminals are operated independently. Theaverage barge transportation and handling costsbetween New Orleans, Louisiana, and St. Louis,Missouri averaged about US$ 11 per tonne in1997, of which half was accounted for bytransport and half by loading and unloading. Incomparison, typical transport costs for rail androad from New Orleans to St. Louis wereapproximately US$ 33/tonne and US$ 52/tonnerespectively.

In the barge industry, the number of coveredbarge operators declined from 42 in 1990 to 37in 1996. The five largest companies operate7,400 barges with a typical capacity of 1400tonnes in a single hold. This represents about65% of the total U.S. covered barge fleet of11,300 barges. There are an additional 6,000open barges. Three of these largest bargecompanies are owned by grain companies;fertilizer and other dry cargo provide uprivershipments. It is estimated that about 15 milliontonnes of solid fertilizers are transported by bargeeach year, representing approximately 16% of alldry cargo.

Only about 10% of all AN is shipped bybarge. AN is the only solid fertilizer cargo that isregulated for barge transportation. Bargeshipments must follow the AN safety protocol.

Each barge containing AN (bulk or bagged)must have on board the following documentation;a permit to haul, bill of lading, draft survey,Material Safety Data Sheet (MSDS) andEmergency Response Procedures and Contacts(telephone/telefax/address). These documents areplaced in a water-tight canister that is fastened tothe bow of each AN-containing barge in a tow.Additionally, the tow boat for an AN cargo mustalso carry an MSDS and emergency responsepapers. The shipper of record must also informthe Coast Guard of each loading.


4.5 Environmental aspects

The following text is extracted from ResponsibleCare: 1997 Environment, Safety and Health Report,BASF, Germany:

Reliable delivery is an important factor behindBASF’s success. Our customers need to know thatgoods they order will reach them on time andundamaged. We package our products as securely aswe can to ensure that nothing happens to them enroute - an arrangement that benefits not just BASFand its customers but the environment in general.“Wanting products to arrive safely at theirdestination is the same as wanting them to cause noenvironmental damage on the way”, explains Dr.Wolfgang Dubiel, a transport expert working forBASF Logistics. “We also want to ensure punctualdelivery”.

But non-polluting transport means more thanjust secure packaging. The choice of carrier, too,plays a major part in ensuring safety and protectingthe environment. When quantities are too small to besuitable for transport by ship, BASF uses therailroad whenever it is technically feasible andeconomically acceptable to do so. Admittedly, goodsare as safe on a truck as they are on a train, but thegrowing volume of traffic on Europe’s highways is asound reason for BASF to prefer rail to road. Indoing so, the company hopes to help avoid the threatof gridlock on the highways. Wolfgang Dubielsummarizes BASF’s logistical strategy: “Whereverpossible, we try to use the railroad for longer

journeys and resort to trucks only for short-hauldeliveries to customers”.

The following text is extracted from D.M.Martin and R.S.N. Carne (1997):

The other requirements of Product Stewardshipcan be detailed in documentation prepared forsuppliers of contract services related to haulage andstorage. Prior to accepting a haulier, the haulier musthave agreed to operate to the legal requirements oncarriage of the Company’s products and havereceived and accepted the Company’ particularrequirements. There is often an interesting tension inthis process around the legal responsibilities of thehaulier who has his own expertise in handling andtransport and the Company which with its knowledgeand Duty of Care in relation to the product, wants toleave that which is really the job of the haulier in hischarge. Currently, the responsibility for protectingand helping a haulier loading and then sheetingdown his vehicle is a topic of concern where thestatement “the back of the lorry is the hauliers workplace” may not be the whole of the story. The positionwill probably continue to evolve with cases being“determined by the circumstances of any incident”.

Accepting a haulier or store to handle theCompany’s products should therefore be formalisedby pre audit, in the case of stores, and documentedconfirmation of receipt of the Company’s HaulageManual and agreement to work to it, in the case ofhauliers. On-going audit is important to determinecontinuing operation to the required standards.


5.1 Information on fertilizerlosses

There is little plausible information on the extentof fertilizer losses during the distribution process.In a paper presented at an FAO/FIAC meetingheld in Rome in 1982, the following commentswere made:

“While fertilizer development, testing, promotionand application have received widespread attentionfrom engineers, scientists and manufacturers,problems associated with fertilizer conservation andloss prevention have not received significantattention. This is reflected in the meager dataconcerning physical losses and lack of discussion ofsuch problem in fertilizer circles” (T. Byrd andS.K. Reddy 1992).

This is still frequently the case in developingcountries. It is difficult to obtain reliableinformation on losses. Handling losses at theplant are normally minimal; most of the spilledmaterial is recycled although where incidentalcosts are reimbursed by governments toindividual manufacturers could result in morecareless management in this respect. However,once the product has left his hands, even indeveloped countries, the manufacturer has littleincentive to monitor the physical losses.

The person with title to the fertilizer at eachstage of the distribution process is normallyfinancially motivated to ensure that the losses arekept to a minimum. This is not, however, the casein many developing countries where officialbodies are often responsible for fertilizerdistribution, among other responsibilities.Sometimes the responsibility is shared betweendifferent official bodies and losses can be easilydissimulated. It is therefore not surprising that itis difficult to obtain reliable information on the

true extent of losses and the greater the loss, themore difficult it is to obtain the information.

5.2 The extent of fertilizerlosses

In FADINAP’s 1996/97 marketing costs survey(E. Dante, 1998) estimates of physical lossesincurred during handling, transportation andstorage of fertilizer were normally based on acertain percentage of the total value of theproduct. He showed that it is likely that thecountries do not have an accurate appreciation ofthe actual losses, and therefore the cost item isalways underestimated. Survey results showedthat physical losses ranged from US$ 0.1 to US$3.7 per ton. In Fiji, this cost accounted for asmuch as 5% of the total marketing costs.

The main reasons for fertilizer loss arespillage caused by torn bags, which results inquantitative loss and pollution, damage whichresults in qualitative loss, and theft. Improvedmanagement supervision is essential if losses areto be reduced. In particular, a clear demarcationof responsibility at each stage of transfer is vitalto ensure that individual responsibility for lossescan be identified. Adequate documentationfacilitates monitoring, discourages fraud andencourages efficient performance. There is littleincentive for workers to be concerned aboutreducing losses if management has no means oftracing such losses. It is also important to usedurable fertilizer bags to avoid huge losses duringtransport and handling.

IFA surveys made during the 1980s indicatedthat in developed countries, losses of baggedfertilizers are negligible. In the U.K. a figure ofless than 0.5% was mentioned. The losses withbulk fertilizers were higher; a figure of 0.5% ateach handling was estimated (USA) or in France,

5. Fertilizer losses


as much as 2% at the distributor’s store. Ofcourse, these losses are offset by the saving ofbagging costs and convenient mechanicalhandling. Spillage at the manufacturer level isnormally recycled (at a cost). Storage losses at thefarmer level are believed to be minimal.

During the central planning period lossesduring distribution and storage in the FormerSoviet Union were very high, and especiallyduring the transport of bulk fertilizers (sometimeson open rail wagons). Figures of 20% losses, andmore, were cited. The financial incentive toreduce losses is now much greater but it issuspected that further progress needs to be made.

5.3 Factors determiningfertilizer losses in handlingand storage

In general, the losses can be divided into:

Physical lossesDue to torn, burst or decomposed bags, splitseams, spillage of bulk.

Product damageCaking, loss of plant nutrients following lengthystorage, adsorption of humidity, granule or prilldamage, dust, segregation, exposure to weather.

And the extent of losses depends on anumber of factors:

The fertilizer typeSome fertilizers are more susceptible to physicaldegradation than others (e.g. hygroscopicfertilizers).

Fertilizer qualityThe resistance of the granules to stress andhumidity and their freedom from dust. Quality ofthe granule coatings.

Pack qualityLosses are more likely with single-ply plastic bagsthan with the evidently more expensive bags witha heavy-duty outer bag and an inner liner. Single-ply bags may be adequate for the domestic

marketing developed countries, but not forexport.

GeographyDeterioration of fertilizers is favoured by hot,humid conditions.

Form of the fertilizerLosses with bulk fertilizers are greater than withbagged fertilizers, except where the latter arehandled very carelessly.

Storage facilitiesFor bagged fertilizers, the stores can be simplebut for bulk fertilizers reinforced walls, air-conditioning, etc. are required. The investmentcost of such stores is consequent.

Handling in the storesIf bagged fertilizers are stacked too high, cakingmay result. The skilled use of suitable mechanicalequipment can reduce losses, but its misuse canincrease them (e.g. the crushing of granules bymachines in a bulk store).

Number of times handledThe more often the fertilizers are handled thegreater the losses. T. Byrd and S.K. Reddy (1982)quote an estimate that (in certain developingcountries) the average bag is handled 10 timesand averages 20 holes per bag.

Bad planningIf the procurement is badly planned in relation todemand, the fertilizer may be stored for longperiods, with consequent deterioration.

MotivationIncentives may be given to labourers handlingthe fertilizers, for example to avoid the use ofhooks when handling bagged fertilizers at ports.It is essential that the distributing organizationshould have the financial incentive to avoidlosses.

TheftStolen (or smuggled) fertilizers may be well usedfrom an agronomic point of view but, inundermining the financial basis of the distributing


organization, are likely to result in poorermanagement.

As the above list indicates, losses are morelikely to occur in developing countries, with hothumid climates, an insufficient infrastructurewhich necessitates the fertilizer being handledseveral times, with inadequate stores, a shortageof skilled labour and management, distribution bypeople with little motivation to minimize thelosses. Losses are particularly high at ports,especially if hooks are used to handle the bags.J.J. Schultz and W.E. Clayton (1981) cite a case inWest Africa, on an occasion when there wereinsufficient trucks to remove the fertilizer, a lossof 5 to 10% of bagged fertilizer occurred at theport alone, due to the use of hooks, recklessoperation of the fork-lift and crane, no attempt toclear up spillage, etc.

5.4 The reduction of fertilizerlosses

Good practices for the reduction of losses aregiven at the end of this section, respectivelyconcerning the reduction of losses of fertilizers inbags and during the shipment of bulk fertilizers.These tables show that fertilizer losses can oftenbe reduced by simple measures and improvedtraining, at a cost which is a very smallproportion of the value of the fertilizer lost. Thefollowing factors are very relevant in this context:

AwarenessThe lack of awareness of the importance offertilizer losses cannot be over-emphasized. Theextent of fertilizer losses in individual countriesneeds to be assessed more objectively and thenrelated to losses in terms of money, foreignexchange and food in order to demonstrate thedamage to the national economy. The subject offertilizer losses should be included systematicallyin marketing and distribution trainingprogrammes.

It has been observed that losses of food, evenunder very difficult conditions are less than those

of fertilizers. The people handling them do notappreciate that the fertilizers can produce severaltimes their weight in food. If fertilizers are heavilysubsidized this too tends to diminish the valueattached to them. It is therefore important toeducate the people involved in the handling offertilizers, concerning their value.

TrainingTraining is necessary at all levels of responsibility;port workers, supervisors, warehouse staff,managers, dealers, fields sales personnel,advisers, farmers. Such training is likely to repaymanifold the time and money invested. It isrecommended that a sufficient proportion of thetotal amount allocated to physical facilities andsales costs should be devoted to training. Thetraining may be given by the nationalorganizations and international agencies, fertilizercompanies and consultants. Preferably all ofthem.

Proposals concerning a training program andthe people to be trained, made by T. Byrd andS.K. Reddy (1982) are:

Key personnel to be trained:

• Personnel involved in import (including dockworkers) and transport activities.

• Storage personnel.

• Sales personnel (including retailers andadvisers).

• Farmers.

(Perhaps the fertilizer retailer should beadded to this list).

The techniques and methods used should beadapted to the type of trainee.

Content of the training programmes:

• Create awareness of the importance offertilizer losses.

• Suggest simple and inexpensive measures andtechniques to prevent and minimize losses.

• Provide promotion and instruction material,which should include assessments of thelosses in financial and food terms.


MotivationDistribution margins must be adequate. It issometimes not realized by public authorities thatthe retail margin is not all profit. It has to pay forthe return on investment in the facilities (e.g.storage and handling), the risk, labour, servicesand management. In many countries, the marginpermitted to the distributor is insufficient. Hecannot invest in suitable storage facilities, and haslittle reason to put much effort into thedistribution of fertilizers. In Bangladesh, withliberalization of fertilizer dealing, betterincentives to dealers, consolidation of distributionpoints, a dealer training program, etc., losses werereduced from 7% to 2%.

Annex 1: The stacking offertilizer bags

The height of a stack of bags should not exceed10 to 13 layers and the bags should be placed oneach other alternating the direction of theirlongest dimension, as is in the following figure:

Allow plenty of space around the stacks. Haveseparate stacks for different types of fertilizer.

First layer and alternate layers

Second layer and even layers

Stacking of 50 kg bags

2 31 5 64

6 75 9 108

7 8 9 10

1 2 3 4


Annex 2: Loss reduction rules for fertilizers in bags1

1 FAO/FIAC Working Party on Fertilizer Marketing and Credit (1982)

Type of Loss Cause of Loss Reason Remedies

1. Spillage a. Torn bags Using hooks during off-loading atquayside

Introduction of mechanical equipmentUsing special gripsPaying incentives to demurrage gangs for notusing hooks

Using too thin and sharp slings duringoff-loading of vessel

Introduction of loading netsBroad slingsPalettization

Usage of faulty transport and handlingequipment (protruding nails, splinters,sharp edges, etc.), as well as unsuitablesupercargo

Check all equipment and correct accordinglyTrain staff in charge to detect and reportsuch faultsProhibit supercargo

Uneven storage floor surfaces, sharpcorners, damage to bags inflicted bycareless manoeuvring with handlingequipment

Improve storage conditionsTrain storage and handling staff

b. Burst bags Dropping of bags from excessive height Use appropriate handling equipmentTrain handling staff

Excessive pressure due to over-highstacking

Provide adequate storageTrain store men in adequate storagetechniques

Faulty bags Return bags to supplier for analysis andeventual refund

c. Decomposed bags Excessive storage without dueprotection against weathering

Provide adequate storage facilitiesImprove requirement forecasting andordering to reduce storage period

Direct contact with moist floor Provide dunnage for storage facilitiesincluding open air storage

Lack of ultra violet stabilization forconsignments to tropical countries withlong open air storage periods

Specify ultra violet stabilization whenordering

d. Split seams Pulling of bags at one corner, dumpingfrom excessive heights, etc.

Train handling staff and improve supervisionPurchase of modern handling equipment

Faulty closure (twine too thin, heat sealnot adequate

Return bags to supplier for analysis andeventual refund

2. Damage a. Moisturepenetration throughholes in bags (caking)

Torn bags, burst bags, decomposed bagsand split seams

Any of the above as applicable

b. Other chemicalchanges

Excessive storage period underinadequate conditions

Improve sales-forecasting and ordering toreduce storage periodImprove storage facilities

3. Theft Lack of security measures in transit andstorage

Improve control and record-keeping systemCheck security measures and improve safetyfacilities


Annex 3: Loss reduction rules for bulk fertilizers

It is of vital importance that fertilizers in bulk are protected against humidity of all kinds, to keepthem free from lumps and free-flowing. If this is not done, large quantities will certainly be destroyed,causing difficulties both for oneself in handling and also for those who will later have to spread thefertilizer on the fields.

Bulk material must not be discharged while it is raining. When unloading into trucks or rail wagons,the loading area must be clean and dry. Look out for remaining grain.

The floor of the warehouse must be asphalt, or better, concrete. It must be of such a nature thathumidity cannot penetrate from the ground. New concrete structures should be cast using“Corrocem” inhibition to make the concrete resistant to chemical aggression.

All untreated concrete areas which come into contact with the fertilizer must be treated with animpregnation preparation. This is to protect the concrete when the fertilizer is stored as bulk for along time. For short-term exposure, 1-2 weeks, this is not specially required. Such impregnation willmake it easier to keep the warehouse clean and prevent the formation of lumps due to changes ofthe humidity in the concrete.

If a conveyor with a tripper, or something similar, is used for storing material in a bulk store, it shouldbe moved so that the material is spread fairly uniformly to avoid granule size separation. If this is notdone, it will be observed that the small granules will be concentrated at the top of the pile or alongthe crest of the pile, whereas the large granules will be concentrated at the foot of the pile.Separation or segregation, as this effect is called, may result in noticeable variation in rates ofapplication and spreading width when the material is spread on the fields.

As soon as possible and not later than one day after the material has been stored, it must be coveredwith plastic sheeting. This should be 0.10-0.15 mm thick and preferably 6 m wide. The joints mustoverlap by about 0.5 mm.

In order to avoid unnecessary air circulation doors and other openings must be kept shut as far aspossible.

The floor and driveways in the warehouse must be kept free of fertilizers. Moisture and dissolvedfertilizers are best removed with dry sawdust.

When removing material from the warehouse, no more than necessary of the plastic sheet must beremoved. The bulk material must be covered again immediately after the work has been finished.

If material is moved by payloader, the driver must be instructed that:

a. the shovel must be shaken immediately after each loading;

b. the wheels must not be driven into the material as this will crush the material to dust.

Urea especially has a tendency to cake during storage, and urea and also other grades shouldtherefore be screened before they are bagged. Screening should also be done in the case of bulksupply to farms. At times the lumps may amount to a considerable percentage of the total material. Itis therefore important that the screening surface is made sufficiently wide and long, as many lumpswill be broken by passing over the screen. This partial flow may attain as much as 5-10 percent of themain flow. A sieve aperture of 8 x 15 mm is recommended.


6.1 Codes of practice

A number of codes of practice relevant to thedistribution of mineral fertilizers have been issued.

For example, the Fertiliser Manufacturers’Association in the U.K. has issuedrecommendations for the prevention of waterpollution from storage and handling of a) solidfertilizers and b) fluid fertilizers. Extracts from thesolid fertilizer code are given in the annex to thischapter.

In the solid fertilizer code, special reference ismade to ammonium nitrate. Ammonium nitratefertilizers are not themselves combustible, but asthey are oxidizing agents they can assist othermaterials to burn, even if air is excluded. Ifinvolved in a fire, they may melt and decomposewith the release of toxic fumes. Under the impactexperienced in normal handling, ammoniumnitrate fertilizer will not explode but there is arisk of explosion if it is allowed to heat up in aconfined space e.g. in drains, pipes, plant ormachinery particularly if it becomescontaminated. Any site which contains or is likelyto contain more than 25 tonnes of ammoniumnitrate must be reported to the Local FireAuthority and the Local Office of the Health andSafety Executive (HSE). A warning sign must beposted at the site entrance as required by theDangerous Substances (Notification and Markingof Sites) Regulations 1990. Any site whichcontains or is likely to contain more than 350tonnes of ammonium nitrate fertilizer requiresthe operator to be able to demonstrate safeoperation. For any site with more than 2500tonnes the operator is required to submit a‘Safety Report’ and ‘Emergency Plans’ to theHealth & Safety Executive. Reference may bemade to the FMA Handbook on the Safe Storage ofAmmonium Nitrate-Based Fertilizers.

(In some countries such as Germany, Finlandand the Netherlands, the maximum quantity ofammonium nitrate which can be stored inindividual heaps is below 100 tonnes. This makesthe marketing of straight ammonium nitratefertilizer commercially non-viable in thosecountries).

In the FMA fluid fertilizer code detailedguidelines are given, but attention is drawn to sixmain points:

• Fixed or mobile stores must be sited withcare.

• Any spillage which occurs must be properlydealt with to avoid pollution.

• Stores, valves and pipework must be properlymaintained and inspected and records kept.

• Field tankers must have their hatches/lidssecurely closed before being moved.

• Valves must be secured so that they can onlybe opened by authorized personnel.

• Have a spillage contingency plan. Know whatto do in an emergency.

Fluid Fertilizers can be applied to the fieldvery accurately, thereby avoiding unwanted andpotentially damaging applications to hedgebottoms or ditches. As with all nutrient sourcesincluding solid fertilizers and organic manuresand wastes, care must be taken with their storage,transfer and transportation. A major spill of fluidfertilizers can be much more harmfulenvironmentally than some broken bags.

To take another example, The FertilizerInstitute, TFI, in the USA has issued an InlandBarge Survey Procedures Manual, Fall 1997.

There are chapters on:

• Terminology and Definitions

• Conditions of the Barge Survey

• Field Measurement Procedures

6. Environment


• Calculation Procedures

• Report Formats

• Safety.

Codes of practice are prepared to help preventthe illegal use of fertilizer products. The illegaland improper use of fertilizers is a particularconcern of the fertilizer industry. Detailedguidelines were issued on the safe storage ofammonium nitrate following the April 1995Oklahoma bombing incident.

The ARA (Agricultural Retailers Association)and TFI have issued a brochure entitled DeterTheft of Anhydrous Ammonia use with farmcustomers, employees and the general public. Thestolen anhydrous ammonia may be used formaking a powerful, illegal narcotic calledmethamphetamine.

In the United States substantial quantities ofanhydrous ammonia are applied directly in thefield. Anhydrous ammonia is a compressed gasunder relatively high pressures and many safetyfeatures must be included in the equipment.Ammonia is not poisonous but it can have drasticadverse effects on human tissues that come intocontact with liquid ammonia. Safety precautions,clothing and practices must be strictly observed.One simple recipe for making methamphetamine,readily available on the Internet, requires severalcommonly available precursors, includinganhydrous ammonia.

6.2 Toxic impurities

CadmiumTo date, with the exception of limitations to thecontent of cadmium (Cd) in phosphate fertilizersin some of the smaller fertilizer markets of WestEurope, the impurities present in mineralfertilizers have not been regarded as posing aparticular risk and, with the exception of one ortwo countries, such as Canada and recentlyAustralia, their content has not been regulated.

The cadmium in phosphate fertilizers, on theother hand, has received a great deal of attention,

partly due to the fact that cadmium is the subjectof one of OECD’s “Risk Reduction Monographs”.Several OECD countries, albeit among thesmaller users of mineral fertilizers, have regulatedthe maximum amount of cadmium allowed inphosphate fertilizers. The Scandinavian countries,and Switzerland have imposed low legal limits. Tocomply with these levels, the products must bemanufactured from phosphate rock orintermediates with a low Cd concentration. Thesecountries, however, account for less than 1% ofworld consumption. In view of the limited globalavailability of low-cadmium phosphate rock,comparable limits in major phosphate consumingcountries would have had serious economicconsequences, on both agriculture and on theeconomies of some of the phosphate-producingcountries, out of proportion to the immediate risk.Nevertheless, the problem has been recognizedby the fertilizer industry and, as indicated above,longer term effective solutions are being sought.

Austria, Belgium, Canada and Finland haveregulated the total permissible input of Cd intoagricultural land from fertilizers, sludge and othermaterials.

All state governments of Australia havelegislated or drafted amended fertilizerregulations and all of these contain limits as tothe level of cadmium allowable in fertilizers.Some are more stringent than others. All willrequire the level of cadmium and certain othertoxic elements to be clearly stated on thefertilizer bag or advice note and some include arequirement for warning labels to be included forCd, Hg and Pb to the effect that continued usemay result in soil contamination and produceexceeding the Minimum Permissible Content,MPC. Regulations have been introduced in theStates of Victoria and Tasmania which require themaximum cadmium, lead and mercury contentsof fertilizers to be declared on the product’spackage or label.

In addition, a warning statement is requiredwhere the concentration of cadmium, lead ormercury in the fertilizer exceeds that typically


present in agricultural soils. These levels havebeen set at:

• 1 mg cadmium/kg product,

• 20 mg lead/kg product,

• 5 mg mercury/kg product.

The Fertilizer Industry Federation ofAustralia, FIFA, has prepared a training kit toassist in raising the awareness of fertilizer dealersand their staff to the implications of the presenceof these impurities in fertilizer products and thefactors they need to take into account whengiving advice on fertilizer use.

In the case of cadmium, it is not simply aquestion of how much cadmium is applied to thesoil, which is sometimes a small proportion of thenaturally-existing cadmium, but how much istaken up by the crop. An example of the effort tolimit the cadmium level in food, is the recentissue of an extension brochure which outlinesmanagement practices to minimize the uptake ofcadmium by potatoes by the CooperativeResearch Centre for Soil & Land Managementand the CSIRO Division of Soils. The strategiesvary but may include:

• using irrigation water with lower chloridelevels,

• choosing varieties that take up less cadmium,

• liming,

• adding zinc enriched fertilizer at planting,

• changing to lower cadmium content fertilizer,

• reducing phosphorus fertilizer rates (if soilphosphorus levels are adequate).

Radioactive elementsPotassium and phosphate rock contain small,naturally occurring amounts of radionuclides. Inthe EU, a 1996 Directive stipulates limits for thehandling and storage of such materials, whichinclude fertilizers. There is no risk to the generalpublic but it is advisable to supervise workerexposure conditions in large bulk storagefacilities.

6.3 Waste disposal

Within the European Union the management ofwaste is considered to be a key task. Productionof waste is on an upward trend and thusmeasures are aimed at prevention, recycling andthe development of an infra-structure for safedisposal.

In many countries fertilizers are distributed inpackages rather than in bulk. Plastic sacks madefrom polyethylene or polypropylene are mostcommonly used because of the need to maintainthe quality of the fertilizer. These bags range insize from 25 kg up to Intermediate BulkContainers of 500 kg or 1 tonne capacity. Paperand/or hessian sacks can be used but are notsuitable for nitrate containing fertilizers.

Used fertilizer sacks can be re-used for manypurposes at the farm level but in due time asurplus is likely to accumulate. Legislationrequiring the establishment of plastic recyclingschemes has been introduced in some countries(for example Germany). In other countries (forexample UK) voluntary recycling schemesinvolving both the producers and the users(fertilizer producers) of the plastic sacks havebeen introduced.

In the UK, suppliers responsible for handlingmore than 50 tonnes of packaging per year havea recovery obligation under the provisions of theProducer Responsibility Regulations 1997.Farmers are excluded from this requirement, butshould ensure that all waste packaging is legallydisposed of and not burnt. Use should be made ofplastics recovery schemes whenever possible orcommercial waste disposal.

6.4 Safety

The European Community has implemented aDirective (91/115 EEC) which requires the issueof Product Safety Data Sheets. These sheets servetwo purposes. They inform those concerned inhandling chemicals of the hazards involved andthey also provide the basis for risk assessments.


Safety data sheets must be provided at all stagesin the distribution chain. The Directive sets out indetail the safety information to be given and theway in which it must be set out. To help fertilizermanufacturers some national and internationalorganizations have prepared general data sheetsso that the information given for particularfertilizers and intermediates is consistent. Forexample, the Fertiliser Manufacturers’ Associationin the UK has prepared a series of safety datasheets for ten different fertilizers.

The European Fertilizer Manufacturers’Association (EFMA) has issued a publicationentitled Guidance for the Compilation of SafetyData Sheets for Fertilizer Materials, 1996, whichprovides model safety data sheets and guidancefor:

• Ammonium, anhydrous

• Ammonia, solution

• Ammonium nitrate fertilizer

• Ammonium nitrate solution

• Ammonium sulphate

• Calcium ammonium nitrate

• Diammonium phosphate (DAP)

• Monoammonium phosphate (MAP)

• Nitric acid

• NPK fertilizer (ammonium nitrate based)

• Phosphoric acid

• Sulphuric acid

• Urea.

6.5 Fire

In most industrialized countries very strictregulations must be complied with in the event offire in a fertilizer store. Typical regulations for thestorage of ammonium nitrate are referred to insection 6.1. above.

The above-mentioned EFMA safety datasheets included instructions on fire-fightingmeasures to be taken if fertilizer is involved in afire. For example, breathing the fumes should beavoided. In general, if water containing fertilizers

enters drains or watercourses, the localauthorities should be informed immediately.Molten fertilizer should not be allowed to runinto drains. Especially in the case of ammoniumnitrate and compound fertilizers containingammonium nitrate, contamination by oils or othercombustive materials should be avoided. Etc.

6.6 Environmentalcompliance

The following text is taken from J.J. Shultz andD.W. Rutland Impact of Environmental Legislationon the Supply and Cost of Fertilizer, presented atThe Fertilizer Institute’s World FertilizerConference, September 1992.

Approximately 13000 retail outlets serve thenation’s approximately 2.2. million farmers. Nearly5000 of these retail outlets operate dry fertilizerblending and/or fluid fertilizer mixing facilities.These 5000 facilities have fertilizer raw materialand product storage capacity equivalent to about46% of their combined total annual sales.

From these figures, it is clearly seen that thesmall, and often resource-poor, fertilizer retailers,because of the large amount of storage capacity theymanage and control collectively have a major impacton the performance and costs incurred by the basicproduction units. If the economic viability of asignificant number of these retailers is threatened byrestrictive and costly environmental compliance, theimpact will be quickly felt not only by the basicproducers but by the farmer customers as well.

The economic impact has been estimated ofenvironmentally driven storage and handlingregulations recently enacted in the State of Indiana(U.S.A) affecting fertilizer and pesticide retailers. Theregulations pertain principally to the managementand containment of fertilizer and pesticide dischargesfrom the retailers premises. These estimates indicatethat the incremental cost of environmentalcompliance may add the equivalent of US$ 2.0 toUS$ 3.6 to the cost of each short ton of product soldif all costs are charged only to the fertilizercomponent of the retailers business. The lower value


is based on annual fertilizer sales volume of 9,000short tons, and the higher value is based on anannual sales volume of 3,000 short tons.Additionally, the incremental capital investmentrequired to achieve the desired level of compliancewas estimated at about US$ 45,000 for the small(3,000 stpy) facility and about US$ 79,000 for thelarge (9,000 stpy) facility. This additionalinvestment amounts to a 63%-67% increase overthe retailers current base investment (excluding land,delivery and field application equipment, andworking capital).

These estimates illustrate the magnitude of theadditional investments that would be incurred by alarge number of retailers in order to meet newenvironmental regulations. In the State of Indiana(U.S.A.) alone, about 425 fertilizer retailers areaffected by the newly enacted regulations. The totalnumber of fertilizer dealers in the United Statesengaged in some type of fertilizer processing (fluidmixing and/or dry blending) that would be affectedby such regulations is about 5,000. It is quite likelythat many other key agricultural states either have, orwill soon have, in place legislation similar to that ofthe State of Indiana.

The following text is extracted from a paperpresented six years later at the meeting of theFertilizer Industry Roundtable, Maryland,October 1998. The paper is entitledEnvironmental Compliance at the Retail FertilizerOutlet, by Michael R. Kenna, IMC Agribusiness,USA.

As recently as ten years ago full scaleenvironmental compliance was something that, forthe most part, was only found in large internationalcorporations such as Dupont, General Motors andIBM. Although many of the environmentalregulations that the fertilizer industry is faced withtoday were in effect ten years ago, it was unusual ifnot impossible to find even mid-size and larger retailfertilizer organizations that had corporateenvironmental policies. Part of this phenomena isbecause historically agriculture has been largelyexempt from certain Federal regulations, primarilythose related to the environment and transportation.Today, environmental compliance is a fact of life for

the long term survival and growth of any viablebusiness. Lines between the traditional roles of healthand safety, environmental, industrial hygiene andtransportation are often blurred. Environmentalmanagers are no longer expected to focus onenvironmental issues alone. Specific tasks and dutiesare now more related to overall risk managementand incorporated into “Management Systems”.Environmental, Health and Safety (EHS)professionals no longer work as separate entitiesattempting to guide top management of companiesthrough the compliance maze. Instead, progressivecorporations involve all personnel in integrated riskmanagement systems to ensure compliance, whileachieving sustainable growth in today’s rapidlychanging business culture. For example, the IMCAgriBusiness Environmental, Health and Safety(EHS) staff includes professionals that not onlyhandle EHS issues, but also insurance, workerscompensation, liability claims, department oftransportation issues, technical services, engineeringand construction activities. The (EHS) department atIMC AgriBusiness has grown from five persons in1988 to a current staff of 31 full time employees.

A quick look at the volume of environmentalregulations from Washington D. C. will paint apicture of the job at hand. United StatesEnvironmental Protection Agency (EPA) regulations,found in Title 40 of the Code of Federal Regulations(40CFR), consist of fifteen volumes withapproximately 17,000 pages of text. There are overthirty separate environmental compliance subjectsthat directly affect the fertilizer industry. Incomparison, the Department of Labor regulationsunder the Occupational Safety and HealthAdministration (OSHA) 29CFR, and the FederalMotor Carrier regulations under the Department ofTransportation (DOT) 49CFR are contained inabout three volumes with approximately 2800 pagesof text.

Several things complicate all of these regulationsand make compliance even more difficult. Many ofthe agencies have regulations that address the sameissues as other agencies, but the compliancerequirements are not comparable. For example, termsrelating to hazardous chemicals such as flammable,


toxic and even hazardous may be defined andinterpreted very differently by the EPA, OSHA andthe DOT. There are examples where corporations arecaught in the classic regulatory Catch-22 whereseparate governmental agency regulationsconcerning the same issue are contradictory. Finally,regulations are not static but constantly in flux withchanges appearing in the Federal Register every day.It is no wonder that smaller retail companies and theso called “Mom and Pop” stores operate on the fringeof compliance, and more often than not are unawareof the regulations. Certainly it can be argued that thisregulatory pressure, among other key factors, isplaying a part in the overall consolidation that isoccurring in the industry.

For those that have seen the future of the retailfertilizer business, and have the vision to plan forgrowth in the midst of these regulatory obstacles,Integrated Risk Management systems are asnecessary as sales, production, accounting, credit andinformation systems.

(Here Mr. Kenna gives some practicalexamples).

These are a few examples of federal and stateregulations that can have significant financial impacton the retail fertilizer industry. Compliance with theseregulations, although burdensome, can be achievedwith a coordinated effort and corporate commitment.The cost of compliance is not always associated withhighly technical equipment or costly capitalexpenditures. Often individual decisions and dailyroutine practices can have the greatest positiveimpact. An integrated approach to regulatorycompliance achieves the desired goal, with the addedbenefits of improved performance and operatingefficiencies.

6.7 Community relations

An article which appeared in the AgriculturalRetailer, (USA), April 1999, dealt with theproblems retailers in the USA face with thepublic release, in mid-1999, of government-mandated Risk Management Plans (RMP),

involving increased public scrutiny of retailers’facilities.

In this article, Mike Neal reported that hiscompany, IMC AgriBusiness, wants to make surethat company’s retailers are well prepared to answertough questions and to turn this situation into along-term opportunity. It was feared that someretailers may not have the public relations skills orunderstand RMPs well enough to answer questionsquickly and correctly. Neal stated that all retailersneed to understand the key elements of RMPs andthe related community relations aspects. Hence, hiscompany is organizing training sessions for IMCretailers nationwide. The sessions will bring retailersup to date on the regulation and make them a littlemore comfortable talking to the public.

Priority locations are in areas with higherpopulations and where the surrounding public isnon-agricultural. For example, they may be on theedge of a metropolitan area where people are notfamiliar with the agricultural business and certainlynot with anhydrous ammonia. But dealershipsadjacent to urban areas are not the only ones thatneed to be prepared for heightened public awarenessof their facilities. In a small community, people willnot call senior management at the corporate level.They will ask the people in their community.

The RMPs will be made publicly available on theInternet. Media and other activist groups maydemand to see the off-site consequence analysisunder the Freedom of Information Act. Media willprobably be the first to approach retailers aboutRMP information. Then, after the information getsout, people close to the facility and some customerswill start asking questions. If they answer withincorrect information or delay the response, peoplewill find other sources, which may not represent theretailer’s best interest.

The US Agricultural Retailers’ Association,ARA, has produced a tip-sheet for its membersabout how to handle community relationssurrounding RMPs. It will provide tips andinformation that retailers can immediately put touse in their organization before the RMP


information is publicly released. And it willexplain how retailers can maintain goodcommunity relations.

By talking to key groups of people, such aselected officials, key business people and the localschool board, before the RMP’s are publiclyreleased, retailers gain two benefits. First, retailerscan familiarize community leaders with their

operations, explaining how they train repeatedlyand what safety programs they have in place.Second, they can provide a source for answers,ensuring retailers will be called on forinformation, instead of other sources who maynot have accurate information. By identifying andcommunicating with the key groups, retailers canlay the groundwork for long-term relationships.


Annex

Extract from the Code of Practice for the prevention of water pollution from storage and handling of solidfertilizers, Fertiliser Manufacturers’ Association, FMA, U.K., May 1998.

The code concerns solid fertilizer storage facilities at manufacturers premises, merchant stores, portauthority stores and farm stores.

• The suitable location of fertilizer stores and storage sites, including uncovered storage areas is criticalto reducing the risk of potential contamination of watercourses or groundwater in the event of aspillage or other incident. It should not be assumed that existing sites, including plants, stores andstorage areas are correctly sited, even if no pollution incident has arisen. Ideally, no site should extendto within 10 metres of a watercourse. This requirement should certainly apply to new sites.

• Existing sites and preferably all new sites should be in areas where groundwater vulnerability is lowand not in highly sensitive areas. Sensitive areas are in the proximity of boreholes, wells, springs, aquiferoutcrops, soakaways, swallow holes, quarries or within 50 metres of abstraction for potable supply.

• Consideration should be given as to where any spilled fertilizer, firewater and/or general yard-washingsand run-off would flow in the event of a spillage or other incident, including vandalism. Avoid locatingsites near drains, channels and pits where molten ammonium nitrate from a fire could becomeconfined.

• Fertilizer stores and storage areas should be sited away from public access to minimize the risk ofinterference or vandalism. Sites should be made as secure as feasible, with consideration given to‘intruder deterrent’ lighting and fencing.

• Good, well-constructed, vehicular access for large delivery and emergency vehicles is essential.

• Sites for outdoor storage should be level and free from protruding stones. They should not be liable toflooding.

• The area surrounding any site must be protected from potential pollution. Containment is desirable inall areas where watercourses and groundwater are vulnerable. Pollution is most likely to be caused byspilled fertilizer being washed away by rainwater or from firewater used to control a fire at the site.

• Locate storage areas away from sources of heat or fire to minimize the risks of a fire involvingfertilizer.

• An inventory of all fertilizer stored should be readily available in the event of fire.

• The store should be kept clean at all times and inspected regularly and particularly when maintenanceis being carried out.

• It is recommended that all floor and ground surfaces should be level and free from sharp objectswhich might tear or puncture bags. Rats and other rodents should be controlled to avoid damage tobags.

• All bags should be handled with care to avoid damage. Pipes should be fitted over sharp edged tines onfork-lift trucks to avoid damage to the lifting loops. Damaged bags should be placed immediately intosecondary bags to prevent further spillage.

• Intermediate bulk containers (IBCs) should be stored in stable stacks (avoiding excessive height),according to the Recommendations for Handling Flexible IBCs, published by the Flexible IBC Association.IBC stacks should be positioned so that the base of the stack remains dry.

• 50 kg bags should preferably be stored on pallets to allow rapid relocation if necessary.

• Ensure regular inspection and maintenance of electrical equipment and fittings.

• All products stored outside for prolonged periods should be protected using shrink wrapping, coversor tarpaulins.


• Spillages and sweepings should be cleared up promptly and disposed of in slurry pits or spreadthinly on growing crops or grassland. On no account should spillages be hosed away or allowed toenter directly into surface drains or watercourses or to gradually wash into soil.

• Manufacturers and suppliers should ensure that all employees and subcontractors involved in thestorage, sale, distribution and application of fertilizers are adequately informed of the risks and theappropriate procedures designed to avoid the pollution of watercourses and groundwater. Allemployees and subcontractors should be adequately informed about the appropriate action to takein the event of a fire involving fertilizers with a high ammonium nitrate content.

• Manufacturers and suppliers should provide advice and assistance to their customers andcontractors to encourage an awareness of the importance of careful storage, handling and use offertilizers to prevent pollution. Attention is drawn to obligations under the Consumer ProtectionAct 1987, to provide customers with Product Safety Data Sheets.

In particular concerning ammonium nitrate - but the same standards may be applied to all fertilizers:

• Fertilizer sweepings (particularly of ammonium nitrate fertilizer) should not be allowed to becomecontaminated with combustible materials. Sawdust should not be used as an absorbent to cleanfloors.

• Ammonium nitrate fertilizers should be stored in a single storey, well ventilated buildingconstructed from materials that will not burn, such as concrete, bricks or steel. The store should becleaned both before deliveries of fertilizer are taken in and before any other materials are to bestored in the building.

• To prevent contamination and avoid risk of fire, ammonium nitrate fertilizers should be stored awayfrom incompatible materials such as farm chemicals, oil and grease and combustible materials suchas wood and straw. Storage near gas pipelines should also be avoided.

• Ammonium Nitrate Fertilizers, stored outside, should be protected from extreme temperaturechanges which can cause product degradation.

• Ammonium nitrate should not be stored in bulk other than at the site of manufacture. In the UK,the Fertilizers Regulations 1991 require that all Ammonium Nitrate Fertilizers supplied to farmersmust be in packaged form.

• The Carriage of Dangerous Goods by Road Regulations 1996 specify that vehicles used totransport 500 kgs or more of ammonium nitrate fertilizer carry the appropriate warning placards,fire extinguishers and written hazard information.

• The Carriage of Dangerous Goods by Road (Driver Training) Regulations 1996 require the driverof a vehicle carrying ammonium nitrate fertilizers on a vehicle having a permissible maximumweight exceeding 3.5 tonnes, to hold a vocational training certificate.

• Partial exemption from the requirements is allowed where not more than 10 tonnes of fertilizer isbeing moved between pieces of land occupied for agricultural purposes, within a radius of 12 km, inan agricultural vehicle.


7.1 The importance offertilizer quality

The influence of the quality of the fertilizergranule on the evenness of application of thenutrients is well documented. The optimum ratesof fertilizer nutrient application required bydifferent crops/soils have been established byinnumerable field trials throughout the world andthe importance of respecting these rates by theeven distribution of the nutrients is evident.

A good quality, solid fertilizer has a low dustcontent, a consistent bulk density for each type offertilizer, consistent particle size distribution,maintenance of quality during long term storageand consistency of quality at every purchase. It isfree flowing, free from excess moisture and thegranule resists breakdown. Blends need to have abalanced and even particle size spectrum,combined with adequate grain hardness andresistance to abrasion. The production of granularrather than prilled fertilizers has also beenaccelerated by the development of blending. Therequirement for good quality granular or largeprilled material has increased. The potashindustry continues to invest in compactioncapacity.

The quality of fertilizers is likely to becomeincreasingly important as fertilizer use legislationis implemented in different European countries.Farmers will seek the most efficient responsefrom the nutrients they are permitted to apply.

7.2 Granule quality

The quality of the granule is important. Thegranule size should be homogenous. A 4 mmgranule is 64 times heavier than a 1 mm granuleof the same product, with an evident impact onits trajectory once it leaves the spinner - a

fertilizer granule leaves the spinner disc at up to90 kph. In Europe, where 90 to 95% of thefertilizer spreaders are of the centrifugal type, theinfluence of the quality of the granule on theevenness of distribution of the nutrients is welldocumented. Mixtures of different materials, ofdifferent particle size, shape, weight, density andsurface texture, tend to segregate during handlingand application. This can result in uneven fieldapplication, with a loss of crop which faroutweighs the fertilizer cost saving.

The wider the spreading width of a fertilizerapplicator, the more important is the quality ofthe fertilizer granule. In major arable areas, inFrance, for example, farmers are tending to usecentrifugal spreaders with a wide spreading width(24 metres for example) in order to reduce theirapplication costs.

Legislation covering fertilizer quality isnormally restricted to the chemical composition.Physical characteristics such as particle size,storage quality etc., are normally governed bymarket forces and the local conditions.

The Fertiliser Manufacturers’ Association(FMA) in the UK has developed and implementedthe independently evaluated “SP FertilizerQuality Mark” scheme for straight nitrogenfertilizers. It reflects the spreading qualities of thefertilizer.

7.3 Complex fertilizers

Complex fertilizers, with their nutrientschemically combined, with high quality, stablegranules, and each nutrient of the guaranteedformula present in each granule, offer manyadvantages. Their quality is carefully controlledto industrial standards, which guarantees thattheir nutrient content is within the tolerancelimits specified in relevant fertilizer regulations.

7. Quality and services


The granules are free-flowing, resistant tomoisture and physical damage, easy to handleand can be applied evenly. The products arescreened to ensure the granule size conforms to atight specification. Anti-caking agents are applied,and the surface of the granules is often treatedwith a powdery substance to improve flowability.Secondary nutrients and micronutrients can beeasily incorporated. Complex fertilizers also offersome protection against adulteration and fraud. Awide range of grades is available, to suit anyagricultural situation.

Evidently, this quality has to be paid for andcomplex fertilizers are more expensive thanblends of commodity materials. But the costsaved by purchasing a sub-standard product caneasily be outweighed by the loss of yield and cropquality, under practical farm conditions. A 2-3%yield loss on most crops will more than outweighany financial benefit from buying cheap, poorquality fertilizer. Work in the UK hasdemonstrated that the financial loss from theinaccurate spreading of poor quality fertilizers ongrass can amount to half the fertilizer cost. Also,excess nutrients, especially nitrogen, not taken upby the crop, are likely to be lost to theenvironment. Uneven fertilization means over-fertilization (pollution) of some areas, under-fertilization (loss of yield/quality) of others.

In more remote regions, and particularly inland-locked countries of Africa, the cost of gettingfertilizers to the farm are such that economies atthe expense of the quality of the fertilizerpurchased have only a small proportional impacton the farm-gate price, but can have a majorimpact on the efficiency of the product.

7.4 Bulk blendsA high quality bulk blend is of similar quality to acomplex fertilizer, but there are many possibilitiesof it not reaching this quality. It is essential thatthe different components of a bulk blend shouldhave similar physical characteristics, especially asregards the granules. The need for andapplication of trace elements is increasing and it

is difficult or impossible to mix small amounts oftrace elements evenly in the blended mix. Thedistribution on the field can range from zero totoxic levels. A partial solution is to coat themicronutrients onto one of the fertilizeringredients. In the USA, the computer-controlledchemical impregnation of blends, for examplewith micro-nutrients, can be effected duringapplication.

In West Europe at present there is nodistinction between blended and complexfertilizers in the European fertilizer directives.The EC Directive on Sampling and Analysis givesno special precautions for blends and somemodifications need to be made. In fact the controlof the quality of blends is complicated by thedifficulty of obtaining a representative sample.Considerably more samples are required, taken atrandom. Once suitable techniques have beenintroduced into regulations, it is reasonable toexpect that good blends will give similar results tocomplex fertilizers and that bad blends will beshown to be deficient - their producers may haveto over-formulate which would prove costly.Tighter control on the quality of blend can comefrom two directions - legislation and marketforces. Codes of practice have been developed forthe guidance of blenders and if these arefollowed the overall quality of blends shouldimprove and then it will be purely market forceswhich decide the outcome.

Codes of practice for blends have beendeveloped by the European Blenders Association,prepared by Graham E.N. Lance, entitledHandbook of Solid Fertilizer Blending. Code of GoodPractice for Quality.

The following are some of therecommendations:

In order to produce blends of high quality it isnecessary that the components should be:

• chemically compatible,

• physically compatible,

• measured in precisely,

and the resulting blend should be handledcarefully in order to avoid segregation of the differentcomponents.


It is evidently necessary that the blend shouldconform with its guaranteed chemical composition.The components should be sampled and analyzedsystematically on receipt. The Critical RelativeHumidity of the different components is an importantcriterion in their choice, both alone and in admixture.In particular, mixtures of urea and ammoniumnitrate should be avoided. For good storage, therelative humidity of the air should be below that ofthe components of the fertilizer. The componentsshould be chemically compatible. Problems can beencountered with mixtures of:

• urea and the superphosphates,

• ammonium phosphate and superphosphate.

The granule size of the constituents should becarefully matched to reduce segregation. Variousmethods of measuring granule size and frequency areavailable. Base grades of binary and ternaryfertilizers may be used. They can reduce the problemof segregation.

Other quality characteristics, such as apparentvolumetric mass, flowability, the spherical properties,hardness, crushing strength, dust content, resistanceto moisture uptake and resistance to caking shouldbe taken into account. Various precautions can betaken to reduce segregation during handling.

The Fertilizer Institute in the USA hasprepared revised guidelines for producing goodbulk quality blends, focusing on the Size GuideNumber (SGN) and the Uniformity Index (UI).Particle hardness is significant in the case of P2O5

fertilizers; products made from low impurity acidsmay be softer or less uniform. Fertilizer qualityhas also improved with the use of better coatingagents.

The Fertilizer Institute in the USA also hasproduced a Bulk Blend Quality Control Manual,which covers:

• Selecting materials

• Computing formulas

• Plant design and equipment

• Plant operations and housekeeping

• Fertilizer plant safe operations

• Personnel responsibilities

• The sampling and physical test methods.

7.5 Advice and services

Product Stewardship

Rosemary O’Brien of CF Industries, CFI, USA,stated in a paper presented at the IFA AnnualConference, held in Toronto in May 1998: Themessage is that all of us must create the future thatwe want. Otherwise we are going to have to resignourselves to another generation of costly reactivemanagement that hurts in every way possible, withthe media, public perception of our products, withbusinesses, in dealings with our government, and ofcourse it hurts the bottom line. We have to be theones to frame a new environmentalism for the 21stCentury. We can either take these activities as athreat and be victimized by them, or we can look atthe economic opportunities and profit from them. Weat CFI believe we have to test our products, find outwhat is in them, make sure we are the neighbour ofchoice, that our products are products of choice forour customers. We have to make sure that ourproducts are safe and that we are following soundmanagement practices and that we act asenvironmentally responsible as we can. It is a newway of business for CFI. Change is happening, it ishappening fast and if we wake up to this change andtake advantage of it, it will be a real opportunity.

To improve the efficiency of fertilizer use is amajor challenge. Inefficient fertilizer use not onlyincreases their negative environmental impactunnecessarily, but also represents a waste ofnatural resources and a substantial economic loss.There is scope for improved products, but in mostdeveloping countries fertilizer use is so inefficientthat the greatest medium-term gain could be hadfrom improving the way in which currentlyavailable fertilizers are used. Many techniques forachieving this are known, but often they are notput into practice, due partly to inadequatecommunication to farmers of information oncorrect techniques, and partly due to a lack ofmotivation on their part to adopt them.


Producers

Some large fertilizer producers in the USA areinvesting substantially in the establishment ofservices to accompany their products.

Reported in “Farm Chemicals”, May 1999, AlGiese of Cenex/Land O’ Lakes, CLO, stated:Farmers are looking increasingly for technology-based services (biotech crops, site-specific programs,weather systems), as well as for value packagesrather than individual components - productbundling, co-selling, buying incentives, and crop/animal value enhancement. Responding to atransformed agricultural infrastructure will requireequal parts of products, efficiency, people, andtechnology.

CLO found that the most successfulcooperatives did not spend a tremendous amountof time buying expensive technology orinfrastructure. They simply identified a potentialcustomer base for the services, developed abusiness and marketing plan, and implementedthese plans. Much of the initial infrastructure toactually implement these processes was leasedfrom others.

Dealers

The fertilizer retailer is in direct contact with thefarmer and is well placed to give advice on theuse of the products he sells. In France, forexample, farmers receive approximately 70% oftheir advice from the distribution sector,especially the co-operatives. In order to givecorrect advice, the distributor must himself bewell informed. Training programmes for fertilizerdealers are organized in many countries, and inthree countries are least, there are nowprogrammes to provide certification schemes forpersons giving advice on fertilizer use to thefarmer. These advisors are often personnel of thedistribution organizations.

In the USA, the introduction of new cropvarieties into which pest resistance and herbicidetolerance have been introduced bybiotechnological techniques has reduced the costof crop protection inputs at the grower level by

30% for soybeans. Retail and distributionbusinesses have already seen a 10-15% drop incrop protection product sales with little reductionin overhead or other expenses. To compensatefor this shortfall, input distributors and dealersare looking for new, revenue generating productsand services to offer customers.

Information Technology

Today, approximately 40% of the farms in theUnited States and 70% of dealers are connectedto the Internet. Forty percent of the on-linefarmers have purchased products on the Internet.Dealers are beginning to help farmers to executeand fulfill production contracts. They areinvesting in information management systems.The change in demand for information andservices offers significant new opportunities fordistributors and retailers whose historical sourcesof revenue are decreasing due to adoption of thebio-engineered seeds.

US growers and dealers use the Internet foreverything from quick price discovery to placingan order. They can even use an on-line auctionservice to anonymously dispose of products thatthey did not use for the highest price, and requestthe lowest bid for products they wish to buy. TheInternet provides worldwide access for searchinglibraries and universities for knowledge. Farmerscan get operating loans to purchase inputs andcontract to sell crops using the system.

Advisor Qualification

It is now officially accepted in certain countriesthat individuals giving advice to the farmershould be appropriately qualified. In the U.K., theFACTS scheme has been established jointlybetween the FMA, the distribution sector and theMinistry of Agriculture, for the certification andtraining of farm advisers. In order to beregistered the advisor has to pass an examination.In the USA and Canada, a Certified Crop Adviser(CCA) program has been established. It isadministered by the American Society ofAgronomy (ASA).


7.6 A case study ondistribution-sector servicesoffered by a fertilizermanufacturer

The Farmers’ Service Programme ofSPIC, India

Southern Petrochemical Industries Corporation(SPIC)’s fertilizer plant at Tuticorin in Tamilnadu,India, was commissioned in 1975 to manufacturenitrogenous and phosphatic fertilizers. Today,SPIC is one of the few fertilizer companies inIndia which markets all the three major nutrients,nitrogen, phosphorous and potash. SPIC alsomarkets fertilizer grade ammonium chloride andvarious agro-chemicals, bio-fertilizers, botanicalsand microbial-pesticides.

Besides marketing critical agri-inputs, SPIChas taken several steps to improve the livingstandards of the farming community. SPIC plays akey role in disseminating the latest scientificinformation on the efficient use of inputs in orderto reap a good harvest and earn larger profits.

Programmes are ‘tailor made’, with a focus ontechnology transfer in agriculture, the need forbalanced fertilizer application in order toencourage sustainable and environmentallyfriendly agriculture and the use of both organicand inorganic inputs in an integrated manner.The programmes can be grouped as follows:

• Agro Service Centres

• Farm Journal

• Farmers’ Training Centre

• Input Diagnosis and Farm Advisory Cell.

Agro Service Centre (ASC)

The concept of establishing ASCs was establishedduring 1987-88 with the prime objective ofimproving the socio-economic status of thefarmers through improved agricultural practicesand by intensifying allied activities utilizing theavailable infrastructural facilities.

The design of programmes is based on abench mark survey conducted to assess the

agricultural potentials such as crop intensity,input use pattern, agricultural machinery use andthe economic status of farmers of the programmearea. Each centre has 10 satellite villages as acore area within a radius of 10 to 15 km from themain centre, for ease of access and effectivecommunication. The programmes are broadlyclassified as:

• Agricultural Development Programmes

• Rural Development Programmes

• Special projects specific to the area

Each Centre is managed by a qualifiedTechnical Officer equipped to organize andconduct the schedule of programmes. TheTechnical Officers are guided and supervised byDevelopment Officers positioned at the area level.

Necessary infrastructural facilities such aspurpose designed buildings, tractors withaccessories, agricultural implements and plantprotection equipment are provided to the Centrefor use by the farmers through the franchisedagent, who maintains the facilities by collectingnominal charges. All agricultural inputs, such asseeds, fertilizers, agrochemicals, soil amendmentsare made available under one roof.

ProgrammesAgricultural development programmes such ascrop seminars, demonstrations, soil testingcampaigns, seed treatment campaigns, animators’meetings and group discussions are conducted forthe benefit of farmers. Rural developmentprogrammes such as animal husbandrycampaigns, medical camps, eye and dental campsand general health care programmes areconducted in order to enhance the quality of life.

In association with M/s Oriental InsuranceCompany, SPIC has launched a special packageinsurance scheme called “SPIC Oriental Farmers’Insurance Scheme” (SOFIS) at very nominalpremium rates, for the benefit of ASC farmers.Besides crops, agricultural pump-sets, cattle,housing, bullock-carts, personal accidents andagricultural inputs etc. are covered under thisscheme. Each village will have a trained


Animator who will be the change agent for thefarmers.

We have so far established 44 ASCs covering440 satellite villages in the primary marketingterritory. Several thousand farmers havebenefited from this programme. The well-known“Training and Visit” (T&V) system is followed todisseminate the technology among the farmers.

Farm journal

In modern agriculture, keeping up-to-date withadvanced scientific knowledge is very importantfor profitable farming. The crop productiontechniques developed at the research institutesshould be communicated to the farmers throughthe right medium. Our farm journal “ SPIC FarmNews” has been doing exactly this for the farmersof the Southern peninsula. Through this platform,we propagate integrated farming with a specialfocus on the cultivation of high income crops.Reflecting the success of what must be a uniqueexperiment, a large number of farmers haveenrolled as subscribers to the journal inTamilnadu and Andhra Pradesh. Every year, a“Face-to-Face” farmers’ workshop is organized topropagate new agricultural themes highlighted inthe Journal and the farmers are given anopportunity to have a meaningful interaction withrelevant specialists/successful entrepreneurs. Thisacts as a spring-board for other enthusiasticyoung, dynamic farmers to launch new market-oriented ventures. We have played a catalytic rolein organizing a successful vegetable growers’club, fruit growers’ club and animal husbandryunits for dairy, poultry, goat and fish farming.

SPIC Farmers’ Training Centre

SPIC has established two Farmers’ TrainingCentres, in Tamilnadu and Andhra Pradesh. Themain objective of the training programme is tomotivate and develop confidence in the minds ofyoung, educated farmers to take up farming as achallenging profitable proposition. Emphasis isplaced on teaching farmers to consider agricultureas a business enterprise and to view crop farmingas a part of an integrated farming system.

The Centre is equipped with all amenities fortraining, including a model farm, with dairy,poultry, goat and pig units attached. Technicalexperts are drawn from the Agricultural andVeterinary Universities, Research Stations andother reputed institutions. Successful farmers andentrepreneurs share their experience with thetrainee farmers. The training programme doesnot end at the Centre. Many of the farmerstrained at the Centre have started businessventures such as fish farms, rabbit units, poultryfarms and commercial vegetable cultivation. Sofar around 500 training programmes have beenconducted for the benefit of 15000 farmers.

Post training follow-upWe keep in constant touch with the trainedfarmers through our field personnel and AgroService Centres and give them necessaryguidance on the technology adoption process.This has given very good dividends to thefarmers and they have realized enhanced cropyields in paddy, groundnut, sugarcane and cottonranging between 20% and 30%.

Input diagnosis & farm advisory cell

A modern Agricultural Input DiagnosticLaboratory was established at our headquarters,at Chennai, in 1994 with a facility to analyze thequality and suitability of the various inputs suchas soil, seeds, fertilizer (both organic andinorganic), and water. The main services offeredby the Centre are :

• Soil testing service for needy farmers, free of cost

• Diagnosis of soil, plant and irrigation waterdeficiencies and an advisory service

• Assessment of quality parameters ofagricultural inputs such as seeds/ fertilizersand give them advice (other than legal advice)

• Organization of a Mobile Soil Testingprogramme for farmers

• Reclamation of alkali and acids soils toimprove soil fertility

• Preparation of a soil fertility map and land useadvisory service

• Farm consultancy for commercial farming.


Cotton : a field demonstration. A seed storage bin for a women farmer.

Teaching farmers to take soil sample. Seed treatment for paddy, a demonstration.

Neem products for animal pest control. At SPIC’s eye camp.

SPIC’s Farmer Service Programme, India


8.1 An overview

As in all economic sectors, the consumer, in thiscase the farmer, must be protected by consumerlegislation. Small farmers are particularlyvulnerable to unscrupulous dealers andmanufacturers. Farmers have no reliable meansof testing the product and once it is applied to thesoil it is too late to check for adulteration.

If the farmer is to know exactly what he isbuying and whether the product is suitable forhis needs, the information given on the bag and/or in an accompanying leaflet should includeinformation on the identity of the product, theweight, the nature and composition,recommendations for storage, recommendationsfor use. There should be an efficient system forthe control of fraud including adulteration, non-conformity with the label, under-weight and thepresence of toxic substances.

Many countries, and all developed countries,have fertilizer legislation for the national market.Such legislation may take the form of a list offertilizers which may be marketed, with details ofcomposition and information to be provided atthe time of sale. Alternatively it may require aregistration or licensing process wherebymanufacturers have to provide specifiedinformation to the relevant Government body,which will then approve or reject the product.With the latter system, there is usually an appealsprocedure.

In most consumer protection legislation thereis a requirement for the declaration of nutrientcontent. This means that the actual nutrientcontent supplied must be that stated on thedocumentation or label, within a definedtolerance. The tolerance may be a single negativetolerance, indicating an absolute minimumnutrient content, or it may be a plus and minus

tolerance, thus giving a range of nutrient content.The tolerance is provided to allow for samplingand analytical error and to some extent, formanufacturing variability.

Approval to market fertilizers may becontrolled by product registration and lists ofapproved products, (as in Denmark, Germany,India, the Philippines, the Republic of Korea),conformity with specifications as in the EuropeanUnion and Japan, or “truth in labeling” as in theUSA. In the USA individual state laws, amplifiedwith administrative regulations, spell outprocedures for registering products, licensingfirms, information to be given on labels, etc.

For consumer protection legislation, thesampling and analysis methods are generally laiddown or referred to in the regulations. Forexample, in the European Community, aDirective was first issued in 1977 setting out thesampling procedures and the chemical analysismethods to be used for EEC fertilizers. Theseand subsequent Directives are transcribed intothe national regulations of each Member State,which may also contain additional methodsrequired by the national legislation for non-EECfertilizers. In the USA, the methods of analysisare those recommended by the Association ofOfficial Agricultural Chemists, AOAC.

Fertilizer legislation and regulations arenormally enacted in two stages:

• An Act, Law, Ordinance or Decree. Theseprovide the legal basis for enforcement andanalytical procedures, legal powers of entryfor control officials, the institution of legalaction, criminal or civil. These are basicprinciples which once established rarelyrequire change.

• Regulations (Orders, Standards, Rules) madeunder the Act etc. by the national executivebody, generally the relevant Government

8. Consumer protection legislation


department. These are relatively easy tomodify as required. They contain detailedinformation on individual fertilizer productsas well as technical instructions on matterssuch as sampling technique and analyticalmethods.

Fertilizer composition may be controlled by:

• Registration of approved individual products(e.g. Denmark, France).

• Specifications of products which may bemarketed, including permitted tolerances onthe declared nutrient contents (e.g. EU) - the“list principle”.

• Conformity with what is stated on the label“truth in labeling” (e.g. USA).

8.2 Some examples

United States

The first workable inspection and control law wasthe Massachusetts Fertilizer Control Act of 26May 1873. By 1902, 29 states had fertilizer lawsand control laboratories. Most defined labelingrequirements. State officials had the authority totake samples and there were severe penalties forviolations.

Intentional frauds were largely eliminated.Usually, when a state adopted a law, the numberof brands dropped dramatically but the tonnagewas largely unaffected.

A major problem was the variability of resultsfrom the methods of analysis used. TheAssociation of Official Agricultural Chemists wasformed in 1884 to work out a solution. Onceagreed, the methods of sampling and analysisbecame binding on the members. ThisAssociation, now known by its acronym, AOAC(International) still provides the official methodsof analysis.

Fertilizers are state-regulated products. Forty-eight states have their own laws, amplified withadministrative regulations, spelling outprocedures for registering products, licensing

firms, the information to be given on labels etc.Two states, Alaska and Hawaii, have no fertilizerlaws.

Fines may be imposed by the state chemist,who may sample the product at any time. Thefines can amount from one to three times thevalue of the product, depending on the state. Thesupplier can appeal, and then the dispute goes tocourt, but this is rare.

The Association of American Plant FoodControl Officials, AAPFCO, has establishedguidelines for state fertilizer bills, fertilizer terms,definitions etc. It has also drafted a model“fertilizer bill”, for the guidance of legislators inthe different states of the U.S. The penaltiesinclude compensation to customers, cancellationof the license, seizure of product, prohibition ofsale etc. with the possibility of court proceedings.

Hester (1996) described the nature andfunction of AAPFCO. It is an organization offertilizer control officials from each state in theUnited States, who are actively engaged in theadministration of fertilizer laws and regulations,as well as research workers employed by thesestates, who are engaged in investigationsconcerning mixed fertilizer materials and/or theircomponent parts and also the effect of any ofthese

The Association’s purpose is to achieveuniformity by consensus in providing a forumthrough which members may unite to:

1. Promote uniform and effective legislation -definitions, rulings, and enforcement practices;

2. Encourage and sponsor the adoption of themost effective and adequate sampling andanalytical methods for fertilizer materials;

3. Promote accurate labeling of fertilizers;

4. Exchange information and discuss and co-operatively study issues confronting membersof the Association and the industry;

5. Cooperate with members of the industry topromote the safe and effective use offertilizers and the protection of soil and waterresources.


European Union

Fertilizers are regulated at EU level by means of“Directives”, which are binding on member states,but the countries themselves must implementthem. The national legislatures transpose EUDirectives into national laws.

A fundamental objective of the EU FertilizerDirectives is that fertilizers must contain thequantity and ratio of nutrients which have beendeclared. The regulations for EU fertilizers, i.e.determining which fertilizers may be soldthroughout the EU, are based on the listprinciple. An original 1976 Directive, coveringstraight and compound nitrogen fertilizers,phosphate fertilizers and potash fertilizers, hassubsequently been extended to cover secondarynutrients (calcium, magnesium, sodium andsulphur), trace elements, liquid fertilizers andsome slow-release nitrogen products. See table 2.The legislation ensures the quality of the product,thereby protecting the consumer whileencouraging free trade throughout the EU.Fertilizer types, nutrient contents and toleranceare, for example, covered by specifications.

Consideration is being given to a furtherextension to cover organic and organo-mineralfertilizers.

In the case of straight ammonium nitrate, EUspecifications are directed in particular towardsproduct safety. Specifications which are relevantinclude granule or prill size, porosity, pH, organicmatter content, chloride and coppercontamination and detonability.

These directives include type designation,data on the method of production, minimumnutrient contents, and the nutrient contents to bedeclared (including forms and solubility).

Table 3. is an example extracted fromDirective 76/116/EEC.

Separate Directives lay down specificprocedures for sampling and the analyticalmethods used to check compliance. They are asdescribed in table 4.

Table 4.

Products which conform with thespecifications may be labeled “EU Fertilizers” andmay be marketed in any EU country, providethey do not infringe national laws (e.g. on safety),and are labeled in the language of the country.

The following ISO standards also definefertilizer sampling procedures:

“Fertilizers-Sampling-Minimum mass ofincrement to be taken to be representative of the

Table 2. European Directives

Directive Scope

76/116 Straight and compound NPKfertilizers

80/876 Ammonium nitrate fertilizers

88/183 Fluid fertilizers

89/284 Secondary nutrients (Na, S, Mg,Ca)

89/530 Trace elements (B, Cu etc.)

93/69 Additional ureaform fertilizers

96/28 Additional “dossier” fertilizers*

* The dossier scheme facilitates the addition of individualfertilizers to EU schedules. A dossier on a new product issubmitted to the National Executive Body for onwardtransmission to Brussels. The dossier must containinformation on health, environment and safety; agronomicdata; methods of analysis. The procedure is described in ECnotice 94/C 138/04.

Directive Scope

77/535 Sampling and methods ofanalysis

87/94 Sampling and analysis - AN

87/556 Sampling - fluid fertilizers

89/519 Methods of analysis - secondarynutrients

93/1 Methods of analysis - traceelements

95/8 Methods of analysis - traceelements


total sampling unit”. Technical Report 7553, July1987.

“Solid Fertilizers and soil conditioners -testsieving”. ISO 8397 February 1988.

National legislation covers productclassification, packaging and labeling, productliability and consumer protection. Some specifythe information which must be included on thebag to ensure that the user is provided withadequate information, while other legislationrequires, in certain instances, that safety datasheets be provided. These provide information onproduct properties, health and ecotoxicologicalhazards. EU manufacturers have published a setof model data sheets covering 13 fertilizermaterials and products. Individual companiesbase their own sheets on these in order to avoidany conflict in the data provided.

The situation in some individual EU countriesis as follows:

Denmark (Brink, 1996)The first Fertilizer (and Feedingstuff) Act inDenmark dates from 1898. Fertilizer control hasbeen practiced by an independent body since1962, but at a modest level, for the registration ofproducts and control of the labeling. In order tocomply with the EU directives, the Fertilizer

Supervision Department of the Ministry ofAgriculture was strengthened. Fertilizer control isnow the responsibility of the Plant Directorate.

The designation “EU-Fertilizer” is notcompulsory for marketing a fertilizer withinDenmark. At present there are no definitions orstandards for the physical quality of fertilizers.

Products are registered with the PlantDirectorate. A “Fertilizer Catalogue” is issuedonce a year. Some 300 samples are takenannually, as described in Directive 77/535, usingthe methods of analysis prescribed in theDirective. All samples are analyzed for the maincomponents.

The most frequent contraventions aredifferences between declaration and analyticalcontent, omission of registration and non-legalstatements on the label. A direct fine may beimposed or there may be prosecution in moreserious cases. However, the results are publishedand this alone has a positive impact, leading toself-control.

A major problem is the long delay betweensampling and the availability of the results of theanalysis. It would be very expensive to build thelaboratory capacity to shorten the timeappreciably.

Table 3.


FranceThe application of mineral fertilizers in Francebegan with phosphate fertilization in the 1840s.Soils in France were very deficient in phosphateat that time. It was difficult for the farmer tocheck the quality of the product and abuses soonoccurred. An 1888 law concerned the repressionof fraud in the fertilizer and soil amendmenttrade.

The 1888 law was passed at a time whencrop yields were much lower than today, tractionwas by animals and there was a high level ofrecycling of nutrients on the farm. The mainobjective of the law was to control quality asregards the content of straight N, P and Kfertilizers and Ca and Mg soil amendments.

A law of 1905, concerning the suppression offraud, was also applicable to fertilizers. Fertilizershad to conform to the guarantees stated on thebag; if not, the offense of fraud was committed.

During the course of the 1900s, there hasbeen enormous progress in agriculturaltechniques, with higher yields and hence greaternutrient removal, mechanization and lowernutrient recycling on the farm and much lessrestitution of organic matter. The regulations havebeen modified as new needs have becomeapparent; for example the law was modified in1972 to cover micronutrients and organicamendments. Official methods of analysis forfertilizers were published in 1934. The methodsof analysis have subsequently been were greatlyrefined by AFNOR (Association française denormalisation). In 1979, a new law waspromulgated, concerning the “organization of thecontrol of fertilizers and crop inputs”. A “Comité‚d’homologation des matières fertilisantes etsupports de culture” of the Ministry ofAgriculture, established by the law of 1979, isresponsible for the registration of products.

According to the law of 1979, for a fertilizerto be imported or offered for sale in France, itmust:

• either conform to the specifications given inthe EU directives,

• or conform to standards which are alreadyestablished, or registered for the mostcommonly used products,

• or otherwise be registered, if it does not fallwithin the scope of the above-mentionedcategories.

It is the responsibility of the manufacturer/importer/dealer to demonstrate to theAdministration, by means of documentary proof,that his product conforms with the regulations.He must also prove that the permitted tolerancesare not utilized in a systematic manner. If theproduct does not comply, the law on thesuppression of fraud is applicable. In all casesthere must be proof of the effectiveness andharmlessness of the product.

The French standards currently in force areas follows:

NF U 42-001 and its supplements andmodifications concerningfertilizers

NF U 42-002 (parts 1 and 2) and NF U 42-003 (parts 1 and 2)concerning fertilizerscontaining trace elements.

NF U 44-001 concerning calcic ormagnesian amendments.

NF U 44-203 concerning mixed productsbased on calcium ormagnesian amendments andfertilizers.

NF U 44-051 concerning organicamendments.

NF U 44-071 concerning mixed productsbased on organicamendments and fertilizers

NF U 44-551 concerning crop supports.

The texts of the regulations used forapplication of the law establish specifications forthe composition of the products (forms andminimum content of nutrients), the labeling ofpacks and the controls to be carried out. Theobligatory French standards and the EuropeanUnion directives transcribed into French law arepart of the regulatory texts.


The United Kingdom

In the United Kingdom, the original “Fertilizerand Feedingstuffs Act” dates from 1893.Developments in agriculture and in the nature offertilizers required progressive expansion of thecoverage of the Act and it was followed by newActs in 1906, 1926 and 1970 (the AgricultureAct), and regulations have been issued on morethan 20 different occasions since 1897. The latestwere “The Fertilizers Regulations 1991”, “TheFertilizers (Sampling and Analysis) Regulations1991”, “Planning (Hazardous Substances)Regulations 1992”, “Fertilizers (Amendment)Regulations 1995” and “Carriage of DangerousGoods by Road Regulations (1996)”.

In the United Kingdom, an Act is the basiclaw, which provides a framework for subsequentregulations. The Act is passed by Parliament, afterintensive discussion with all the partiesconcerned. Once the Act is promulgated,implementation by means of regulations is theresponsibility of the relevant Ministry, normallythe Ministry of Agriculture, Fisheries and Food.The Ministry is obliged to discuss proposedregulations with the persons or organizationslikely to be affected.

Details are not specified in the Act, which isbased on the expectation that, in courts, thejudgment will be that of a “reasonable man”.

The Agricultural Act of 1979 obligesmanufacturers, importers or traders to complywith definitions of specific fertilizers laid down inthe regulations. Rules for inspection, samplingand analysis are prescribed. Subsequentregulations concern aspects such as labeling,tolerances and packaging.

As regards penalties, in recent years there hasbeen a move away from criminal prosecutiontowards administrative sanctions. This increasesthe chance of a successful prosecution becauseproof under civil law is “on a balance ofprobabilities” (51% certainty) and not, as undercriminal law “beyond reasonable doubt” (99%certainty).

India

The Indian Fertilizer Control Order, the FCO, waspromulgated four decades ago to ensureequitable distribution of fertilizers to all farmers(Tripathi, 1997).

About 20 grades of fertilizers are consumed inIndia. The most important are urea, DAP, SSP,MOP and various grades of complex fertilizers.Sporadic shortages and the value of the products,especially of P fertilizers, provide possibilities foradulteration, misbranding and black marketing.There is compulsory registration of fertilizermanufacturers, importers and dealers, andspecifications of all fertilizers manufactured,imported and sold in the country must be given. TheFCO also provides for the regulation of themanufacture of fertilizer mixtures, packing andlabeling, appointment of enforcement agencies,setting up of quality control laboratories andprohibiting the manufacture, import and sale of non-standard or adulterated fertilizers. There is provisionfor the cancellation of registration certificates and forfines, and imprisonment from 3 months to 7 years.Being a subordinate legislation, it has flexibility andhas been amended a number of times to bring it up-to-date. A revised FCO was promulgated in 1985.

Trade was initially regulated by LicensingOfficers appointed by the State Governments forissuing licenses to dealers and registrationcertificates to manufacturers of mixtures. In 1969the licensing system was replaced by registration, fordealers and manufacturers separately.

Over time there have been several changes inspecifications and permitted grades and a number ofmicronutrient fertilizers were prescribed for the firsttime in October 1996. Tolerance limits areprescribed.

Inspectors have the power of search and seizure.In 1984 there were 52 fertilizers listed in Schedule1, 43 laboratories in different states and one CentralFertilizer Control Laboratory.

Prior to 1973, the Government fixed prices indifferent states for different types of customers. InOctober 1973, the retention price scheme with


uniform prices for all states was introduced.Additional costs were permitted for small bags. InAugust 1992, all fertilizers except urea weredecontrolled. After decontrol in August 1992 aprovision was made for each importer to provideinformation about imports of DAP and MOP.

The FCO provisions can be grouped as follows:

• Definition of terms.

• Price control.

• Regulation of manufacture and sale.

• Enforcement authorities.

• Specifications and tolerance limits.

• Sampling.

• Packing and marking on bags.

• Cancellation of dealers and manufacturers’certificates.

By 1996/97 there were 61 laboratories with acapacity of more than 100 000 samples. During thepast 10 years the number of non-standard sampleshas varied from 5.3% to 7.7%. However, 16% ofNPK mixtures were non standard, varying from 5%to 73% according to the state.

The decontrolled fertilizers are exempted fromprice, movement control and supply plan, but theremaining provisions of the FCO still apply.

According to Tripathi, the main weaknesses atpresent are:

• Inadequate laboratory capacity.

• Lack of full time inspectors.

• Multiplicity of grades - about 22 grades of NP/NPK fertilizers having the same nutrient ratiocause confusion.

• No private testing facilities for dealers andfarmers.

• No classification of offenses into minor andmajor nature.

• Short weight is not an offense under FCO.

• Weak prosecution system - successfulprosecutions are rare.

Remedial measures, apart from increasinglaboratory capacity and enforcement proceduresinclude:

• Restriction of granulated NP mixtures and theirnumber of grades.

• Popularizing a quick testing kit for suspect stocks.

• Short weight to be declared an offense.

• Creating awareness amongst farmers ofconsumer courts.

8.3 Regulation of particularfertilizers

Blends

In West Europe at present there is no distinctionbetween blended and complex fertilizers in theEuropean fertilizer directives. The EU Directiveon Sampling and Analysis gives no specialprecautions for blends.

The US position is that the conformity of thesample with the nutrient content claimed by theseller is a sufficient indication of the quality of theblend. In the USA, the AOAC sampling methodsare designed to collect a sample that representsthe uniformity and nutrient content of a batch offertilizer. A non-uniform batch of fertilizer, whensampled by AOAC methods, will yield adeficiency analysis, whether the product is ablend or a complex fertilizer.

Slow and controlled release fertilizers

In the United States, Europe, Israel and Japan awide range of slow and controlled releasefertilizers is produced and distributed. There areregulations on definitions and classification in theindividual member states, but as yet there is nouniversally accepted consumer-protection forthese products. Only Japan has introducedobligatory test methods.

In the USA, the AAOFCO has issueddefinitions for controlled-release fertilizers. Theyare working to prepare model legislation of so-called “Efficiency Design“ (ED) products,meaning a product with characteristics thatminimize the potential losses of nutrients to theenvironment. A task force, together with TheFertilizer Institute, TFI, has been established todefine methods of analysis, labeling, enforcementetc.


In Western Europe, slow release fertilizers arenot included in the list of EU fertilizers. A taskforce of the Centre Européen de Normalisation(CEN), which, among other activities, advises theEuropean Commission, is preparing proposal onthe classification of these fertilizers. There isconsultation between the AAFPCO/TFI taskforce and the CEN task force.

Organic manures and fertilizers

Until the early 1980s there were few regulationsconcerning the disposal of organic manures butpollution of water, in particular from intensivelivestock units, made regulation essential. Todaymost OECD countries have regulationsconcerning the storage and disposal of manures.The regulations deal particularly with emissioninto water courses, but in some cases the fieldapplication of organic materials is covered. Insome countries there are limits to stockingintensity per ha. The use of sewage wastes isregulated in most countries, particularly onaccount of the risk of heavy metal content.

Organic and organo-mineral fertilizers are thesubject of regulations in all member states of theEU but as yet there is no harmonization at theEU level. The definition and specification of thesefertilizers pose difficult problems. Many materialsare based on animal residues and sewage sludges,which adds to the difficulties. Organic fertilizersare offered on the market not only in developedcountries but also in developing countries,especially in Asia, sometimes with extravagantclaims. In these countries adequate standards andregulations are lacking.

8.4 Sanctions

Enforcement may be international, national orlocal, depending on the type of legislation.Sanctions may be under criminal or civil lawdepending on the offense. Sanctions include fines,in serious cases imprisonment or sometimescompensation to the consumer (purchaser). Thenational regulations also specify the ways inwhich the legislation is to be enforced, covering

the qualifications and powers of the inspectorsand the qualifications of the analysts.

Each type of legislation requires anappropriate group of enforcement officials,samplers and analysts as well as recognizedofficial methods of sampling and testing. Inaddition, each production site should have asystem of quality control and environmentmonitoring. The sampling and test procedures forthe latter may not necessarily be the same as forenforcement but the results obtained should beequivalent.

The legislation may be enforced in a numberof different ways through fiscal incentives,taxation, subsidies, environmental liability, civillaw and market forces in general. In mostdeveloped countries, state and local advisoryorganizations are fully involved. Sanctions mayinclude fines, in serious cases imprisonment,publication of offenders or in some casescompensation to the consumer (purchaser).

Consumer protection law is generallynationally (federally) enforced although the actualcontrol may be devolved to local authorities. Inthe USA the federal government sets theguidelines but each state has its own legislation.

8.5 Labeling - an example,France

In France, fertilizer materials, the packing, labelsand documents which accompany deliveries inbulk must include the legal designations definedin the texts, the French standard or the EUDirectives. These designations are, for example,the type of fertilizer, the declared content of eachnutrient therein, the form in which theseelements are present and their solubility, finenessof grinding of the product etc. The designationsare of two kinds: obligatory and optional. All areintended to inform, in a practical and transparentmanner, the purchaser and user of mineralfertilizers. These designations are noted on theinvoices so that the products may be marketedwithout ambiguity.


Designations

Straight nitrogen fertilizers

The content is expressed in nitrogen N as a %of the weight of the gross product.

Straight phosphate fertilizers

The content is expressed as P2O

5 as a % of the

weight of the gross product.

The different phosphatic fertilizers arecharacterized by their solubility in specificreactants; in addition, for certain phosphaticproducts, a fineness of grinding is specified.

Straight potash fertilizers

The content is expressed as potassium oxide(K2O) as a % of the weight of the gross product.

Compound fertilizers (NPK, NP, PK, NK)

The declaration of the fertilizer nutrients ismade following the same principle as for each ofthe straight nitrogen, phosphate or potashfertilizers.

Particular methods of declaration are allowedfor according to whether the compound fertilizercontains one or several phosphate constituents(see NF U 42-001 “complementary tableconcerning the phosphate component” anddirective 76/116/EEC “compound fertilizers,indications for the identification of fertilizers”).

Organo-mineral compound fertilizers mustcontain at least 1% of organic nitrogen of animalor plant origin but not synthetic organic nitrogen.This latter form of nitrogen enters into thecomposition of a special category called “nitrogenfertilizers, compound fertilizer containingnitrogen and synthetic organics”. These fertilizerscontaining synthetic organic nitrogen arespecified in annex 2 to NF U 42-001 Standardand in appendices I and II of EEC Directive93/69.


"Commercial designation", optional, must be clearly separated from the "designation of the type" which is obligatory.

Designation of the type of fertilizer2

Identification of the product and reference to the regulation1

Declaration of content of the major nutrients (form and solubilities)3

Weight4Name and address of the marketing organization5

The numbers 1 to 8 correspond to the order of priority on which the indications must be indicated according to the standard serving as a reference. Mention is obligatory when the address of the bagging

and weighing firm is not that of the firm marketing the product.

Manufacturer's logo

Commercialdesignation

Trade nameof the product

6Chlorine content

7Declared content of secondary nutrients, SO3, MgO (solubilities)

8Code identifyingthe packer

How to read the label Mentions

ENGRAIS COMPOSE GRANULE

FERTITERENGRAIS NF U 42-001

Engrais NPK14-10-22

50 KG NETEMB 12 345

Sté des engrais X, Y ...(adresse)

14% d'azote (N) total dont6,2 nitrique

7,8 ammonical

10% d'anhydride phosphorique (P2O5)soluble dans le citrate d'ammoniumneutre dont 9,5 soluble dans l'eau

22% d'oxyde de potassium (K2O)soluble dans l'eau

20% d'anhydride sulfurique (SO3) totaldont 19 soluble dans l'eau

Pauvre en chlore

OBLIGATORY OPTIONAL

A

B

B

A

A

An example - France


Beig M.F. Fertilizer Import, Marketing &Distribution (in Pakistan): Issues and PolicyAlternatives Agriculture and Fertilizer Use by2010, NFDC Conference, Pakistan, 5 pp., NFDC,Islamabad.

Brink M. (1996). Regulatory Control ofFertilizers (in Denmark), Fertilizer SocietyProceedings No. 393, December 1996.

Byrd Jr. T. and Reddy S.K. (1982). MinimizingFertilizer Losses: Role of Contemporary MarketingSystems and In-Service Training, FAO/FIACmeeting, Rome, March 1992.

Dante E. (1998). Summary Results of theSurvey on Fertilizer Marketing Costs and Margins inAsia and the Pacific, 1996/97, FADINAP, Agro-chemicals News in Brief, July-September 1998,11 pp., Bangkok.

EFMA (1996). Guidance for the Compilation ofSafety Data Sheets for Fertilizer Materials, 124 pp.,EFMA, Brussels

EFMA (1998). Guidelines for TransportingNitric Acid in Tanks, 60 pp., EFMA, Brussels.

European Blenders’ Association (1997).Handbook of Solid Fertiliser Blending; Code of GoodPractice for Quality. Prepared by G.E.N. Lance.32 pp. Le Pontoury, 50530 Montviron, France(for the French version; the English version isavailable from FMA, Thorpe road, PeterboroughPE3 6GF, UK.)

FADINAP (1995). Summary Results of theSurvey on Fertilizer Marketing Costs and Margins inAsia and the Pacific, 1996/74. Agro-chemicalsNews in Brief, July/September 1998. FADINAP,Bangkok.

FAO/FIAC (1990). Fertilizer Retailing Guide.51 pp., FAO, Rome. (also available in French)

FAO/FIAC (1985). Logistics of FertilizerMarketing. 11 pp. FAO, Rome.

FAO (1985). Manual on Fertilizer Distribution.FAO Fertilizer and Plant Nutrition Bulletin No. 8.114 pp. FAO, Rome.

FAO (1994). Demand Forecasting forFertilizer Marketing. 50 pp. FAO, Rome.

Fertiliser Manufacturers’ Association Guide tothe Independent Evaluation of Solid StraightNitrogen Fertiliser. FMA, Peterborough, U.K.

Fertiliser Manufacturers’ Association (1998).Code of Practice for the Prevention of WaterPollution from the Storage and Handling of FluidFertilizers, 25 pp., FMA, Peterborough, UK.

Fertiliser Manufacturers’ Association (1998).Code of Practice for the Prevention of WaterPollution from the Storage and Handling of SolidFertilizers, 32 pp., FMA, Peterborough, UK.

Heather D.J. and G.E.N. Lance (1994).Legislation Affecting the Production, Distribution,Storage and Use of Fertilisers in the 1990s, TheFertiliser Society Proceedings No. 352, U.K.,1994.

Hester L. (1996). AAPFCO- Regulatory UpdateFertilizer Industry Round Table, Savannah, USA,October 1996.

IFA/UNEP (1998). The Fertilizer Industry, theEnvironment and World Food Supplies. 66 pp, IFA,Paris.

IFA/UNEP (1998). Mineral FertilizerProduction and the Environment (second edition),Parts 1 and 2, IFA Paris.

IFA/UNEP (1998) Mineral Fertilizer Use andthe Environment, 51pp. IFA, Paris.

References and further reading


IFDC and UNIDO (1998). Fertilizer Manual,615 pp. Kluwer Academic Publishers, Dordrecht,the Netherlands.

Isherwood K.F. (1996) Fertiliser Supply fromFactory to Farm: a Global Review. The FertiliserSociety, Proceedings No. 386, 27 pp., York, UK.

Jarskog L. and Bowley K. (1996).Improvements in Fertilizer Handling Technology andEquipment. Agro-chemicals News in Brief, July/September 1996. FADINAP, Bangkok.

Kenna M.R. (1998). Environmental Complianceat the Retail Fertilizer Outlet. The FertilizerIndustry Round Table Meeting, Annapolis,Maryland. 10 pp.

Lance G.E.N. (1996). Theory of FertiliserBlending. Proc. Fert. Soc. No. 387, December1996.

Martin D.M. and Carne R.S.N. (1997). ProductStewardship, The Fertiliser Society, ProceedingsNo. 406, 23 pp., York, UK.

O’Brien, R. (1998). The Impact ofEnvironmental Legislation on Fertilizer Use in theUSA, Fertilizer Demand Meeting, IFA AnnualConference, Toronto, May 1998. IFA, Paris.

Parthasarathi K. (1998). Distribution. AnImportant Arm of Marketing Fertiliser MarketingNews, Fertiliser Association of India, New Delhi, 5pp., December 1998.

Saiful Islam M. (1996). Fertilizer Situation inBangladesh. Agro-chemicals News in Brief.,September 1996, FADINAP, Bangkok.

Schultz J.J. and Clayton W.E. (1981). FertilizerBagging and Blending. Some Experiences inDeveloping Countries. ISMA Regional Conference,Brazil, October 1981. IFA, Paris.

The Fertilizer Institute, TFI (1996). Bulk BlendQuality Control Manual, Washington, Spring1996.

The Fertiliser Society (1996). Fertilisers fromFactory to Farm, Proceedings No. 394, 32 pp.,York, UK.

Tripathi N. (1997). Status of Fertiliser QualityControl in India, Fertiliser Marketing News. May1997.

UNIFA (1997). La Fertilisation, 7th Edition.Chapitre XI, les Engrais. UNIFA, Paris, France.

A list of series booklets giving safetyrecommendations concerning the storage andhandling of fertilizers and their intermediatesissued by The European Fertilizer Manufacturers’Association (EFMA) and International FertilizerIndustry (IFA) is as follows:

• Safety Recommendations for the Large ScaleStorage of Anhydrous Ammonia. 1985.

• Safety Recommendations for the Storage ofHot Concentrated Ammonia Nitrate Solutions.1985.

• Safety Recommendations for the Use ofAnhydrous Ammonia in Agriculture. 1985.

• Summary of Recommendations for the SafeHandling of Fertilizers containing Nitrogen.1985.

• Recommendations Concerning Rubber Hosefor Use with Ammonia. 1987.

• Recommendations for Safe Storage andHandling of Wet Process Phosphoric Acid.1990.

• Hazardous Properties of Ammonia. 1990

• Selected Tests Concerning the Safety Aspectsof Fertilizers. 1992.

• Handbook for the Safe Storage of AmmoniumNitrate Based Fertilizers. 1992.


As mentioned in Part 1 of this publication, thedistribution sector not only accounts for asubstantial proportion of the delivered cost offertilizers, but also it is often the only part of theplant to farm system whose costs can beinfluenced significantly. Yet it is a sector whichreceives inadequate attention. In addition, it is theretailer who is in direct contact with the farmerand who is therefore well placed to give adviceon the use of the product he sells. Also it is in thedistribution sector that value can be added tofertilizers by providing remunerated services tothe farmers. The increasing environmentalawareness, with productive agriculture one of themain targets for criticism, together with thepossibilities offered by information technology,are resulting in an increasing sophistication inagricultural techniques, a sophistication whichcan be serviced by the distributor who is in directcontact with his farmer-customers. Theinformation given in this publicationdemonstrates the growing importance of thefarmer services provided by the retailer in certaincountries, particularly North America, and theiralmost total absence in most other regions.

In this part, information is assembled on thefertilizer distribution systems in differentcountries and regions of the world. The countryinformation demonstrates the very wide range of

systems established for the distribution offertilizers, especially in countries where their usehas been established for well over a century.

Unfortunately, even in many developedmarkets, the profit margins available on mineralfertilizers permit only minimal service. In WestEurope, for example, until the mid-1970s thefertilizer industry could fairly be called“knowledge-based”. Subsequently, it has tendedto become a commodity-based industry,increasingly taking low-cost basic fertilizers fromregions with natural resource advantages. In theUSA, it is largely the distribution sector,especially the co-operatives, which are taking thelead, although there are exceptions.

Hence, while the need to improve theefficiency of fertilizer use becomes increasinglyurgent, the means of achieving improvements aregrossly inadequate. Fertilizer manufacturers nolonger have the financial means to providesubstantial services while governmental advisoryand research services have been run down inmany countries. In many cases, the retailer notonly has inadequate margins to finance servicesbut also requires to be trained.

There is no evident solution to this dilemma,but if some remedial action is not taken thepraiseworthy aim of “sustainable agriculture” willnot be achieved.

Introduction

PART 2. CASE STUDIES

58 Part 2: Case Studies

The regions described in this overview are asfollows:

1. West Europe

2. Central and East Europe

3. North America

4. Latin America

5. Sub-Saharan Africa

6. Asia

1.1 West Europe

In the 1920’s and 1930’s fertilizers in WestEurope were handled in large jute bags (about100 kg). These were popular with farmers sincethey could subsequently be used for otherpurposes. From the late 1940’s these werereplaced by 50 kg paper bags which, in turn,were replaced by plastic bags in 1960’s. It wasfrom the late 1960’s that the large-scaledevelopment of mechanized systems of handlingfertilizers developed in countries where theagricultural structure provided a strong demandfor such systems.

The general use of welded plastic sacks hasled to a simplification of storage conditions.Although it is may be possible to store these bagsin the open air for a few weeks, covered with aplastic cover to protect them from rain and thesun, it is preferable to shelter them in a cleanstore, isolating them from the ground end thewalls, to avoid substantial humidity differencesand rodent attacks.

One feature of the fertilizer industry of WestEurope is the importance of complex fertilizers.In the case of nitrogen, a substantial proportion,about 74 %, must be applied in straight form foragronomic reasons, for example on grass or as atop-dressing. In the case of phosphate, 84% is

applied as granulated NPK/PK/NP complexfertilizer. The complex fertilizers are produced byboth the phosphoric acid and nitrophosphateroutes. However, many phosphoric acid plantshave closed in recent years due partly toeconomics and partly to the problems of disposalof phosphogypsum. Many complex fertilizerplants have closed and others use bought-inphosphoric acid.

The use of bulk blends has developed inrecent years, favoured by mergers andacquisitions, the wider-availability of improvedintermediates, particularly as regards the granulesize, uniformity and stability, and the availabilityof “Intermediate Bulk Containers”, IBCs.

Table 1. Estimates of bulk blends as a %of total fertilizer deliveries

Denmark 9%

France 8%

Germany 4%

Netherlands 7%

Norway 0

Spain 8%

UK 10%

Source: IFA

To these must be added the blended fertilizersproduced by several large fertilizer manufacturersin West Europe in fully automated, large-capacityplants, producing an excellent product, oftenbagged and sold through the establishedmarketing networks. In Ireland, for example, allthe NPK compounds are produced in this way.

The present position and trends in some WestEuropean countries are shown in table 2.

1. Regional overviews


Table 2. Proportions of different systems

has become significant. In Norway almost halfand in the UK more than half of fertilizers arenow delivered to the farm in IBCs . In the moresoutherly countries, 50 kg bags still predominate.

In West Europe liquid fertilizers haveachieved real importance only in France. Theconsumption of fluid, suspension fertilizers isvery small.

In West European countries, the proportionof fertilizers sold directly by the producer to thefarmer is small. More fertilizers physically godirectly from the producer to the farmer than areindicated by the figures, but they are invoiced bythe distributor (see table 3).

The following information on individualcountries illustrates the diversity of fertilizerdistribution systems in West Europe:

Denmark

94% of fertilizer is supplied form the producerin bulk and 6% in bags, mainly for horticulture.88% goes direct to the farm, 5% to dealerswarehouses. 40% is delivered by truck, 50%collected directly by spreader, either hired fromthe wholesaler or farm-owned.

In certain countries, Denmark, Germany andthe Netherlands, solid bulk fertilizers nowaccount for over 80% of the total market.Autumn applied PK compounds are oftendelivered in bulk. The use of IBCs, which areintermediate between bulk and the 50 kg bag,

Direct by Wholesaler Cooperatives

producer /retailer

Belgium 5 87 8

Denmark 0 36 64

Finland 0 40 60

France 0 45 55

Germany 0 41 59

Ireland 0 48 52

Italy 4 46 50

Norway 0 30 70

Netherlands 0 55 44

Spain 5 80 15

Sweden 0 20 80

UK 18 62 20

Denmark Germany Nether- Norway Spain France UK Irelandlands

To the farm

Bulk 83ö 80ö 83ö 1 20ö 34ö 8

Bulk blends 9 4ö 7 ö 0 8 ö 9ð 10

Loose bags 0 0 0 0 58ø 2ø 0

Palleted bags 7ø 3ø 10ø 51ø 10ö 21ø 16 71

IBCs 0 0 0 48 ö 0 18 ö 65 21

Fluids 1 13ö 1 ö 0 3 16 9

To the distributor

Bulk solid 91 84ö 100 ö 55 82ö 69ö 10*

(Totals may not add exactly to 100 due to rounding)*blends

Source: IFA

Table 3. (in pourcentage %)


France

Nitrogen is sold 54% as solid straight fertilizer,28% as liquid and 18% as compounds. Ureaammonium nitrate solutions, UAN, account for17% of the total fertilizer market. P and K are70% in compound form. Bulk accounts for 43%of total fertilizer, of which 8% to 10% is blends.The shares of Intermediate Bulk Containers(18%) and bulk (43%) are increasing, whereasthose of palleted bags (21%) and loose bags (2%)are falling. Liquids at 16% are stable. 65% of theproduct leaves the factory in bulk, some of thisbeing bagged before distribution to the farm.

Germany

80% of fertilizers are delivered to the farm inbulk, plus 4% of blends. Fluid fertilizers accountfor 13%, palleted bags for 3%. 94% of thedomestically produced bulk fertilizer leaves theplant by rail (although much of the importedfertilizer is transported by road or water).

Ireland

The majority of sites, whether manufacturing orblending are situated around the coast or a fewmiles inland. About 60% of Irish fertilizer isimported in one form or another. 71% of themarket is supplied in 50 kg bags, 21% in 500 kgIBCs and 8% in bulk. The 50 kg bags aregenerally shrink wrapped on 2-tonne pallets. Inview of the lack of grain production there is alack of storage facilities and it is an advantagethat the fertilizer can be received in packages.The choice for the blender or manufacturer wasbetween building large and costly storagefacilities or using plastic packages.

Netherlands

For grassland, most product is delivered in bulkto silos on the farm. These silos are partly usedfor cattle feed during the winter months. 80% to85% of fertilizers are in bulk, with smallerdeliveries late in the season in 50 kg bags. IBCsare little used. Palleted bags account for 10%, aproportion that is tending to decline. 90% of the

bulk goes to the first destination by barge. Forarable farms, 60 to 70% of deliveries are in bulk,less than 5% is in IBCs, the remainder in 50 kgbags.

Norway

Norway is exceptional in that 51% of fertilizersare delivered to the farm in palleted bags, theremainder in 600 kg IBCs . Much of the fertilizeris transported to the first destination by coastalshipping.

Spain

Three quarters of the fertilizer leaves the plant inbulk but most of this is bagged and only 20% isdelivered to the farm in bulk, plus 8% in blends.58% of the fertilizer is delivered in loose bags, aproportion which is tending to fall to the benefitof the other systems. 10% is delivered to the farmin palleted bags.

UK

The United Kingdom is exceptional in that 80%of the fertilizer is delivered to the farm in IBCs ,normally of 500 kg. 20% is delivered on palletedbags. The proportion of IBCs is tending toincrease at the expense of palleted bags. Alltransport is by road.

Customer services

From its inception in the middle of the nineteenthcentury until the mid-1970s, the West Europeanfertilizer industry was, at least in large part, aknowledge-based industry. Since then it hastended to become increasingly a commodityindustry. The result has been considerablerestructuring of the fertilizer industry in WestEurope and a very large reduction in theindustry’s agricultural research and extensionactivities. In the process, many intellectualresources have been lost. However, there areexceptions (see the study on Spain).


1.2 Central and East Europe

Under the centrally planned system whichprevailed until 1989, fertilizers were allocatedrather than sold. Today farmers have to pay forthe fertilizers, and the distributor has to pay thesupplier. Previously, the fertilizers weredistributed by state-owned organizations. Intheory, fertilizers were made available to thelarge state and co-operative farms based onagronomic recommendations derived from soiltests etc. In practice, without economic discipline,the recommendations were often not put intopractice, for various reasons.

With the transition to market economies, thestate distribution organizations have been largelyprivatized but an efficient distribution sector hasstill to emerge.

The structure of agriculture varies greatly,with large farms remaining predominant in theCzech and Slovak Republics, Hungary and thewest and north of Poland, small farms in the eastof Poland and Romania and a confused situationin Bulgaria. There are still problems of landownership and title to land in some of thecountries.

Under the centrally planned system, fertilizerswere delivered largely in bulk or as liquids todistribution centres, or often directly to the largestate and cooperative farms. However, in view ofthe drastic fall in fertilizer consumption and thechanges in the distribution systems and in theagricultural structures, new patterns areemerging.

The situation in the agricultural marketingsector is unsatisfactory. If the farmer cannot sellhis produce at a satisfactory price he is unlikelyto buy inputs. Under the centrally plannedsystem, a single state-owned firm in each countryhad a complete monopoly over the purchasing,processing and distribution of the mainagricultural commodities. Today, in all thecountries of the region, there has beenprivatization of the distribution sector but, inmany cases, the state organizations have been

replaced by oligopolistic or monopolistic privatefirms. Farmers’ incomes continue to be reducedunnecessarily by inefficiencies in the downstreamsector. The entry of private firms to compete withthe regional monopolies has been hindered bylack of capital and management skills.

Bulgaria

Nitrogenous fertilizers are supplied to thedomestic market essentially in bags, althoughsome (stabilized) ammonium nitrate and TSP aresupplied in bulk.

Czech Republic

Large farms receive fertilizers in bulk, smallerfarms in hill areas in loose bags. Some 70% offertilizers leaves the plant in bulk, some of whichis subsequently bagged. Some 60% of fertilizersare delivered to the farm in bulk. In the 1980s70% was in liquid form, today the proportion is30%. Today the share of liquids is again tendingto increase, as is that of bulk, at the expense ofloose bags.

Hungary

In recent years there has been an increase inbulk. Liquids are not increasing - there is a lack offarm storage and not enough machinery suitablefor application on the large farms. The averagefarm size is 300 ha.

Poland

Today about 6% of fertilizer is in liquid formusing plant protection sprayers for application onsmall farms - while not ideal the liquids appliedin this way are at least applied more efficientlythan solids usually are. 80% of fertilizers are in50 kg bags. Bulk blends in 1997 amounted to200 Kt product, 8% to 10% of totalconsumption. 6% is in IBCs , whose use isincreasing.

Romania

Fertilizers are supplied to the domestic marketessentially in bags. Some quantities are taken inbulk by farms located close to the plants.


The Russian Federation

(Extracted from an FAO Special Report,9 November 1998)

Cereal yields have demonstrated a weakdownward trend in the past 8 years, with thestrongest downward trends in wheat and barley.These trends reflect the historic concentration ofcereal production in the large-scale enterprises.Even before the 1998 financial crisis, most large-scale enterprises were operating at loss-making orbreak-even levels, kept afloat only by soft loanterms and ineffective debt recovery. Lowefficiency can be attributed to many factors,including weak development and penetration ofupstream and downstream market structures,unfavourable local land and price policies andpoor farm management.

The upstream services are erratic andconstrained by poor management and high risks(of non-payment) associated with the provision ofinputs. A variety of trading organizations hasemerged on the domestic market, including large-scale private grain traders and smaller localoperations, partly supplanting the parastatalprocurement agencies. However, the benefits of amore competitive wholesale trade have yet to berealized in terms of transparent market signals atthe farm-gate.. The reasons for continuedweaknesses in the downstream sector arecomplex and vary from oblast to oblast. The mostfrequent constraints are as follows:

• Farm enterprises are not free to choose thedestination cereal elevator. Regionalauthorities often allow deliveries only tospecific elevators, where they can control bothvolumes and delivery prices, usually to thedisadvantage of producers;

• Erratic market intervention in all parts of themarketing chain, including state procurement,internal tariff and non-tariff trade barriers andprice regulation increase risks andtransactions costs for traders, reflected inrelatively high marketing margins;

• Legal structures for recording and enforcingforward contracts are under-developed, sodefault risk for linked credit (or in-kind inputs)for sales deals is high.

The lack of comprehensive price information,and non-existent futures market may also lead tounder-bidding. Farm enterprises are often ill-informed of the prevailing farm-gate and elevatordelivery prices. Although the Ministry ofAgriculture and Food has a price informationpilot project, the data (from around 30 oblasts)are not widely distributed.

It is unrealistic to expect efficient farmmanagement under these circumstances, in spiteof soft but essentially rationed farm credit.Furthermore, the rapid transfer of farmownership into joint stock companies was notaccompanied by effective management shakeouts.With unclear ownership, incentives for efficientmanagement are often lacking. Anotherfrequently cited reason for the inefficiency is thatmanagers are unfamiliar with the “laws of themarket economy”, particularly complex for grainproducers.

Since there are significant economies of scale,the large-scale enterprise sector dominates cerealproduction, as well as sugar beet and oilseeds.Official estimates suggest that only 7 percent of1997 cereal output came from private farms orhousehold plots, the lowest proportion in all theCIS countries, although the share has increasedconsiderable since 1991. In contrast, potato andvegetable crops are mainly cultivated onhousehold plots and private farms. Production onsuch plots has been increasing in both relativeand absolute terms in recent years.

Customer services

In general, services provided by the distributionsector to the farmer are very poorly developed inthis region. This presents a challenge and anopportunity.


1.3 North America

Dry fertilizers accounted for nearly 90% of alldistribution in the USA in 1960, and nearly 77%of all dry fertilizer was handled in bags. By 1983,the ratio had shifted to 51% of fertilizerdistribution being handled in dry form, with lessthan 14% of that total distributed in bags.Distribution of fluid fertilizers comprised 7% oftotal fertilizer in 1960. Today, fluid fertilizers,including anhydrous ammonia, accounted forabout 40% of the total.

At the beginning of the 1960’s, complexeswere the predominant form of compoundfertilizers also in the USA, although they tendedto be produced in relatively small plants. In themid-1960s there were approximately 200 NPKcomplex fertilizer i.e. ammoniation/granulationplants, in operation in the United States.According to the 1994 IFDC survey, there arenow 25 plants in operation. In 1994 theyproduced some 1.6 million tons product, which iswell below their design capacity of 3.7 milliontons.

The development of blends in the USA is duepartly to the location of fertilizer production andconsumption, which favours handling in bulk -liquid and solid - and it favours blends. Theproduction points of the primary materials arelocated far from each other, phosphates inFlorida and the South East, potash in Canada orNew Mexico, nitrogen on the Gulf Coast. Thesematerials need to be brought together in yetanother location, the major consuming area of theCorn Belt. The fertilizer ingredients, produced inlarge, cost-effective plants, are transported to thearea of consumption and mixed there. The rivertransport facilities to the Corn Belt and, in thecase of fluid fertilizers, a well-developed pipelinesystem, have facilitated these developments.

A comparison between the USA and WestEurope is given in the following table.

Table 4. Proportions of fertilizer applied

The following text is extracted from an IFDCreport (1997).

The consolidation of the fertilizer productionsystem in the United States into fewer and largerplants has been matched to some degree byconsolidation in the distribution, wholesale, andretail system and also in the number of farms. Atjust under 2.1 million in June 1996 there were14% fewer farms than in 1981. Average farm sizehad risen to about 200 ha (470 acres). Thenumber of customers served is shrinking at thewholesale, retail, and farm levels.

In the USA, retail operations are in somecases operated by basic producers or are localcooperatives which are members of regionalcooperatives. Two regional cooperatives are basicfertilizer producers. In addition, privateindependent retail operations are increasinglybeing consolidated into larger chains of retailoutlets, and in the past few years many of theseretail chain operations have been bought by basicproducers. There are still many independentretail chains and single small businesses.

USA WestEurope

Anhydrous ammonia (% of N) 32 % neg.

N solutions (% of N) 23 % 9 %

Fluid compounds 21 % neg.

(% of compounds)

Bulk blends 80 % 25 %

(% of solid compounds)

Source: TFI and IFA


1.4 Latin America

In Mexico the government subsidized fertilizersheavily during the 1970s and 1980s. In the1980’s, Fertimex was the only Mexican (state-owned and managed) fertilizer producer andimporter. Some 150 different distributorsserviced the needs of the market; all of them hadspecific territories and a relatively simplefunction, namely the provision of sufficientwarehousing and transport facilities to meet therequirements of Fertimex production units. Thedistributor received a pre-arranged commissionfor every bag sold to the farmers. Competitionwas not an issue. Prices were fixed by thegovernment.

In 1989, following the guidelines of theNational Development Plan, the marketingsystem was reorganized and Fertimex withdrewfrom the secondary and tertiary distributionsystems. Subsidies were gradually withdrawn.Probably 30% to 40% of the former Fertimexdealers remain operational today. (DistributingFertilizers in Mexico, by L.M. Romero Gonzalez,Fertilizer Focus, FMB, May 1997).

Similarly, the fertilizer distribution sector hasbeen privatized in Venezuela, with thedevelopment of an extensive bulk blendingprogramme.

Customer services

In a paper presented at The Fertilizer Institute’sConference held in New York in September1999, Dr. R.J. Rennie of Agrium Inc. describedhis company’s activities in developing a fertilizerdistribution system in Argentina. AgroServiciosPampeanos S.A. (ASP) is a newly formedagricultural retailer based largely on Agrium US’sCrop Production Services model. Its 18 FarmCentres, spread throughout Argentina, aredeveloping the bulk and blended granularfertilizer market. ASP is introducing soil testingand fertilizer recommendations, bulk fertilizerblending and prescription application ofagricultural chemicals. In addition, ASP has astrong storage and distribution infrastructure.

Each of the 18 farm centres has a blender and 7bins with 300 t of storage capacity. 16 of the 18farm centres are on rail. The rolling stock,imported from the USA, includes AgChem’s TerraGators, Rogators and various tenders. ASP wasalso the first agricultural retailer to receive a bulkchemical blending license. ASP also undertakesextensive research plots to demonstrate thebenefits of their products.

At an IFA conference held in Buenos Aries inOctober 1999, Brazil, Mr. M. Barbosa Neto ofFertilizantes Serrana SA, Brazil, compared theestablished model of fertilizer retailing in Brazilwith a typical system in the United States,illustrated by the two following diagrams:

2. Service Provider (e.g. USA)

Manufacturer(Basic Fertilizers)

Farmer

Service Provider(Fertilizers, chemicals, seeds and a wide range of services)

(6000 to 10000 tpa)

Bulk(-50 km)

Bulk Blending / Packaging(30000 to 600000 tpa)

Manufacturer(Basic Fertilizers)

Farmer

Co-operatives and merchants(Fertilizers, agro-chemicals)

Dry bag(-500 km)

60% 40%

1. Producer/Distributor (e.g. Brazil)


1.5 Sub-Saharan Africa, SSA

Until 1990, the governments of almost all thedeveloping countries of Africa were heavilyinvolved in the fertilizer sector. This meant a highlevel of regulation, licensing, price control andimport monopolies. Special public sectorstructures, mostly aid-financed, were establishedin the 1970s and 1980s for the distribution offertilizers. These structures were generallyinefficient. Fertilizer subsidies were widespread insub-Saharan Africa, both implicit, due toovervalued exchange rates which made importscheaper, and explicit through direct payments.

However, the subsidies were a heavy burdenon the limited financial resources of thesecountries and during the 1980s the World Bankimposed financial structural adjustmentprogrammes (SAPs) in 24 countries in Africa, andanother 9 countries were affected by similaroperations. Almost all these operations includedconditions relating to agricultural subsidies. Theirremoval was justified on the grounds that theydistorted the allocation of resources, precludedprivatization of the distribution sector and thatthe burden on the national budget was too great.

There were then moves to privatize andderegulate the distribution systems, but theprivatization of fertilizer distribution in Africancountries with a relatively low level of fertilizerconsumption on food crops has not provedsuccessful. (The large estates and the export cropsectors in Africa often have their ownarrangements for obtaining their fertilizersupplies). In the case of the food crop producer,the would-be private dealer is working in anunfavourable economic environment. Demand islow, irregular and dispersed, there is considerablefinancial and credit risk, stock turnover isrelatively slow, there are high financing charges,the demand is seasonal and the product is cheapbut bulky. Dealers in a privatized fertilizermarketing system evidently want to concentrateon business in high consumption, easy-accessareas. Small farmers practicing agriculture close

to subsistence level may be left without access tofarm inputs.

Fertilizer prices for the African farmer areoften high and food crop prices low. The quantityof grain required to purchase one kg of nitrogenvaries from 6 to 11 kg, compared to about 2 or 3in Asia. The cost of imported fertilizer is highbecause of the small volumes and the cost ofdistribution is substantial, due to hightransportation costs, lack of storage facilities andinefficiency. The cost is particularly high in land-locked countries. However, the results of FAO’sFertilizer programme in the 1970s and 1980sdemonstrated that the response to fertilizers atthe low levels of application normally practiced issubstantial and the fertilizers, if well used, may beeconomic in spite of the high price. This wascertainly the case in high rainfall areas.

Customer services

Few services are provided to farmers by the retailsector in this region. Even in the highly-developedfertilizer market in the Republic of South Africa,the services are deteriorating despite a need forthe opposite.

1.6 Asia

In India 66% of fertilizers are distributed byprivate retailers and 34% by government outletsand co-operatives. There is a total of 261 000retail fertilizer outlets, of which 71 000 areprivate and institutional and 191 000 private,serving more than 627 000 villages. The policyof the Government of India is to encourageprivate retail outlets for fertilizer distribution.

In Pakistan there are some 9000 privatedealers and public sector provincial marketagencies with 463 sales points. In 1998 69% offertilizers were distributed through privatewholesalers and retailers, the remainder by co-operatives and government outlets. The objectivesare decontrolled prices, deregulated markets,reasonable rail tariffs and rail movement priorityand an improved road network.


In Bangladesh, fertilizer distribution has beenprogressively privatized over a period of years,with the assistance of USAID and other donoragencies (Saiful Islam, 1996). There are some112 000 retailers active in the fertilizer trade,1300 wholesalers and 40 importers/distributors.The sector employs some 170 000 people.However, the transition has not been without itsproblems.

In China, the distribution of fertilizers isessentially government-controlled. The ChinaNational Agricultural Means of Production andthe All-China Federation of Supply and MarketingCooperatives manage the distribution ofagricultural inputs. Until recently fertilizers weresold only through authorized local agriculturalmaterial supply companies, at fixed prices tofarmers.

In mid-November 1998, the State Council ofChina issued a circular calling on implementationof a new fertilizer distribution system to increaseprofitability for fertilizer producers and guaranteefertilizer supplies for farmers. The reform hasgiven fertilizer producers the freedom to setprices in line with market fluctuations and to sellproducts directly to farmers.

Customer services

A feature of the Indian fertilizer industry is theextent of farmer-support given by the largerproducers. A number of fertilizer manufacturersrun Farmers Service Centres (over 600 in all).The different agricultural inputs are all availableunder one roof. Among the services offered areadvisory services, soil testing facilities and hireservices for heavy machines. companies.


Africa - Sub-Saharan

4. Involve the private sector in planning thedemo programme, field days, etc.

5. Meet certain travel expenses of private sectorpersonnel when they are involved in jointactivities with the extension service.

6. Work with IFDC and IFA in understandingbetter the fertilizer supply situation and withNGOs in training retailers.

7. Develop a formal collaborative programmewith Monsanto for promoting no-tilltechnology among small scale farmers.

8. Generally promote a spirit of collaborationaimed at promoting public/privatecollaboration.

He recommends that retailers should handle aseries of products, seeds, fertilizers, agro-chemicals,as well as other agricultural supplies, rather thanconcentrate on a single input.

2. IFDC. Source: “A Strategic Framework forAfrican Agricultural Input Supply SystemDevelopment”, IFDC, Muscle Shoals, Alabama,USA, 1999.

Some “constraints to sustainable input supplysystems in Sub-Saharan Africa” were identified.The constraints were broadly categorized as:

• Policies and regulations which oftendiscriminate against the private sector anddiscourage competition-,

• Unsound government investments, often withdonor acquiescence, in new projects whileneglecting maintenance and rehabilitation ofexisting infrastructure and supportingservices;

2. Country overviews

The following are the recommendationsconcerning fertilizer distribution in Sub-SaharanAfrica of (1) Sasakawa Global and (2) IFDC:

1. Sasakawa Global. Source: “The SasasakawaGlobal 2000 Experience with Small-ScaleFarmers in Sub-Saharan Africa” by Wayne L.Haag, Journal of the Fertilizer Society of SouthAfrica, FSSA, 1999.

The agricultural input supply systems

Inputs must be available and affordable to smallscale farmers. This is usually not the case in mostof the countries Sasakawa is active.

Most of the SG2000 policy related effortsinvolving national political leadership and donororganizations relate to this issue. There isprogress, but only very limited and far to slow.

While the policy issues are being worked oncontinuously, SG2000 also works with theprivate sector to encourage the development ofinput delivery systems. The Demo(nstration)Programme itself stimulates a demand for the useof inputs. In this process, working relationshipsare established with input wholesalers andretailers. The following are some ways in whichwe have attempted to stimulate the input deliverysystem:

1. Purchase of inputs for the demonstrationsfrom the private sector rather than fromgovernment or other sources.

2. Encourage the wholesalers to furnish productson credit to retailers. In some cases we haveprovided modest loan guarantees.

3. Providing resources to improve a retail outlet.Investment in remodelling the sales site,making sign boards for advertising, etc.


• Insufficient knowledge and skills in both thepublic and private sectors.

In addition, more specific constraints reportedin the literature, country studies and surveysinclude:

• Inadequate, ineffective, and inefficientfinancial and other facilitating services;

• Inadequate incentives for inputs marketing,farm production, and output marketing;

• Unfair competition practices such as the useof subsidized distribution by public sector andsome NGOs;

• Distrust of private sector traders andmiddlemen;

• Resistance to change by privileged individuals(the rent seeking coalition benefitting from thestatus quo;

• Lack of market information andcommunications;

• Low and variable commercial demand;

• Abrupt subsidy removal and other policydiscontinuities undermining private sectorconfidence;

• Frequency of pan-territorial pricing whichremoves incentives for private sector responseto remote area demands;

• Inconsistent and poorly enforced regulationscombined with active corruption andpatronage;

• Poor contract enforcement;

• Inadequate physical infrastructure andcommunications capacity;

• High costs of input delivery and productmarketing due to the distances involved andinadequate transport infrastructure;

• Lack of technical knowledge and businessskills in all agribusiness sub-components;

• Limited coordination of donor activities.


Argentinaby Ricardo Melgar, Fertilizar April 1999

Most fertilizers currently consumed in Argentinaare imported (90%). Wholesale importers, about6 firms, and the urea producer, Profertil, selldirectly to the large farmers in bulk or in bags.This accounts for about 50% of the total. Theanother half is sold to retailers, who supplyfarmers. Cooperatives account for only about10% of the total consumption. A small portion(less than 5%) is imported directly by users fromneighbouring countries.

In 1998, about 30 to 35% of theconsumption was in bulk, with a growing trend.This season it is expected to increase to 40%.Fluid fertilizers, N solutions and anhydrousammonia, amount to about 40 000 tonnes orless than 3% of consumption, but fluids also havea growing trend.

The importers take cargoes at the ports nearthe consumer areas and the internal movement isby truck. A small proportion (less than I0%) ismoved by rail There is no barge transport.

There is only one producer of urea, PASAS.A. which in turn is also a big importer, having amarket share of 25%. In year 2000 Profertil’slarge new plant will come on stream but thedistribution system should not change much. Theowners of the big company Profertil are YPF andAgrium, each of which has its own retail system.

Both PASA and Profertil comply with the ISOquality (ISO 9000) and environmental(ISO14000) norms. Distributors (Wholesale orretailers) are required to meet environmentalsafety rules in most cases only for newinstallations.


1. Distribution network

Product is either collected (mainly by road) fromproducers’ storage / dispatch facilities or fromproducers’ or distributors’ regional storage anddistribution centers.

2. Sales to the farmers

3. Forms of deliveries

Estimates of physical losses of sold fertilizersbetween the factory or port gate and the farm:Average 0.5 %.

Australiaby B.G. Hunt, formerly of the Fertilizer Industry Federation of Australia, FIFA July 1995

From the plant Trend*

Bulk (solid) 61 % ö

Bulk blends 18 % ö

Palleted bags 11 % ø

Big bags 10 % ø

* ö Increase ø Decrease

4. Transport

Peak distribution months:In temperate zones: March to June.Tropical zones: Overall pattern is fairly even withvarious crops balancing out.

Transport to the first destination:

Rail Road Water

Bags 1 % 21 % -

Bulk 6 % 71 % 1 %

Weighted average distance to first destination:

275 km 170 km 300 km

% of total retail sales

Direct by the producer 68

Private wholesalers/retailers 64

Co-operatives 6



Agrolinz’s sales in Austria are to privatewholesalers and co-operatives using Agrolinzsales people.


3. Forms of deliveries to the firstdestination

Austriaby Eichinger Horst, Agrolinz Melamin GmbH April 1999


Rail Road Water

Bags 5 % 18 % -

Bulk 25 % 40 % 12 %


200 km 170 km 220 km




Big bags** neg. ö

Fluids neg.




Co-operatives 33

Total 100

Summary %

Public sector -

Private sector 67

Co-operatives 33

Total 100

4. Transport to the first destination

5. Fertilizer distribution and theenvironment

The department for Quality, Environment,Security and Health (QESH) of Agrolinz haswritten an “Integrated Management Handbookfor Quality and Environment”.


Bangladesh

Extracted from “Fertilizer Production and Use inBangladesh”, by Dr. Md. Shariful Huq, KarnaphuliFertilizer Co. Ltd. (KAFCO), published in FertilizerFocus, May 1999.

Fertilizer distribution

With the objective of increasing fertilizerapplication, balancing the nutrient ratio andensuring timely availability, the Government hasimplemented a number of major policy reformsin the fertilizer distribution system. Marketingand distribution, including importationresponsibilities, have now been totally vested inthe private sector.

However, the importation of urea, whichstarted in 1996-97, is being made through BCICon behalf of the Government of Bangladesh, dueto its importance stemming from its extensive useand the regulation of domestic market prices.

The private sector has been entrusted withvarious responsibilities such as educating farmerson soil fertilization using chemical fertilizers,market research and quick dissemination ofinformation, with the Government supporting theimplement of programs and providing the policyframeworks. It is expected that continuing effortsby the private sector, adoption of free marketpolicies, unrestricted imports and a demand-supply based pricing policy will help to maintaina sustained growth rate in the use of fertilizersand result in increased awareness of theimportance of balanced fertilization, improvingthe N:P:K use ratio.

The following text is extracted from “IFDC’sExperience in Development Programmes inDeveloping Economies with Special Reference toAfrica” by Amit H. Roy and John H. Allgood, IFDC,published in the Journal of the Fertilizer Society ofSouth Africa, FSSA, 1999.

“IFDC began its work in Bangladesh in 1978.At that time, most analysts considered there waslittle hope of Bangladesh ever growing enoughbasic food to feed its people. The food supply wasdependent upon donor aid, but malnutrition wasstill severe. The overall goal of our work was toincrease food production through increasedfertilizer use on an equitable basis. At the timethe project began, the Bangladesh AgriculturalDevelopment Corporation (BADC) wasdistributing about 730 000 tonnes per year offertilizers to Bangladeshi farmers. Among otherinefficiencies, late arrival of imports was common,advisory services for farmers were non-existent,physical losses of fertilizers were high, and farmeraccess to fertilizers required traveling longdistances to reach supply points. With three long-term expatriate staff and significant staff ofBangladeshis (about 200 at one point), IFDCinitially sought to improve the efficiency ofBADC. Simultaneously, IFDC began work tostimulate private sector participation in fertilizerretailing. Subsequently, based upon the privatesector’s performance and expected furtherbenefits that would accrue to increased privatesector involvement in the wholesale anddistributor level, the government in a phasedmanner relaxed essentially all policies thatimpeded private sector investment andparticipation in fertilizer importation andmarketing. IFDC provided technical guidance tothe government on policy issues, and workedwith the commercial banks to assist private sectorentrepreneurs in better understanding the nature


of the fertilizer business and encouraged thebanks to expand their lending practices to includethis emerging business sector. Assistance was alsoprovided to private enterprises to develop theirfertilizer knowledge and business acumen and tointensively promote improved fertilizer usemanagement through training, farm-leveldemonstrations, and point-of-purchaseadvertising. During the life of the FertilizerDistribution Improvement Project in Bangladesh,the following significant achievements wererealized:

1. Fertilizer use increased by an average of 8%per year reaching 2,3 million tonnes ofproduct by 1994.

2. By 1994, all fertilizer marketing inBangladesh was in the hands of the privatesector, with active participation of anestimated 108,000 fertilizer retailers/stockists, 13 000 wholesalers, and 1 400distributors.

3. Between 1988 and 1994 the government ofBangladesh saved an estimated US $119million due to subsidy removal.

4. The commercial banks added this sector totheir loan port-folio and during the life of theproject loaned US $389 million towardworking capital to fertilizer enterprises, with a99% recovery rate.

5. Improved efficiency and increased farmerprofits by about 35%.

Most importantly, the improved use offertilizers was one of the keys (along with

expansion of irrigation and use of high-yieldingvariety seeds) to Bangladesh achieving self-sufficiency in rice production in the early 1990s.

The Fertilizer Distribution Improvementproject was key to improving food security andpromoting economic development in Bangladesh.The project was also instrumental in influencingthe development assistance efforts of the donorcommunity. The project is recognized as a modelof the transition from a government controlledand operated fertilizer marketing system to amarket-oriented system with involvement of theprivate sector. Some of the key lessons learnedfrom the project are:

1. Policy changes can change the economicefficiency of the agriculture sector.

2. Competitive market forces play a major rolein stimulating agriculture sector efficiencies.

3. Donors and project implementation staffworking in concert with the government isessential for project success.

4. Technical assistance, training, and access tocredit are essential to entrepreneurialdevelopment.

5. The benefits of policy reforms must beexplained continuously to the public andprivate sectors.

6. Consideration must be given to governmentemployees displaced by the transition to amarket economy.

7. Timely and systematic information flows areessential to project success.”


Belgiumby F. Carbonnelle, S.A. Engrais Rosier April 1999


3. Forms of deliveries to the firstdestination


Dealer

Farmer

CooperativeWholesaler

Manufacturer

90%

16%14%

65%5%



Palleted bags 4,7 % ø

Big bags** 3,9 % ö

Fluids 14 % ð

* ö Increase ø Decrease ð Constant** 500 kg


Road

Bags 100 %

Bulk 100 %


150 km



Co-operatives 30

Government outlets 10

Total 100

Summary

Public sector 10

Private sector 60

Co-operatives 30

Total 100



Engrais Rosier S.A. is a member of VAL-I-PAC, aregistered organism for the recycling of packages.


Brazilby M.A. Barbosa Neto, Fertilizantes Serrana S.A. March 2000

The Brazilian fertilizer industry has three basictypes of enterprise:

(i) Exclusively producing companies, i.e. thoseproducing a basic raw materials (e.g.phosphate rock), or intermediates (ammonia,sulphuric acid and phosphoric acid) and basicfertilizer manufacturers (MAP, DAP, TSP,SSP, urea, ammonium nitrate).

(ii) Semi-integrated enterprises, which buy indomestic or imported raw materials andintermediates to produce straight, complexand mixed NPK fertilizers.

(iii) Exclusively mixing enterprises, which acquireall their raw materials and intermediates fromthird parties, only producing NPK mixtures.

The segments which produce and marketNPK mixtures, comprising enterprises of the types(ii) semi-integrated or (iii) exclusively mixtureproducers, have invested, in recent years, inplants with an annual production capacity from100 to more than 600 thousand tonnes, in aneffort to obtain substantial economies of scale.

The fertilizer distribution system in Brazil isstrongly based on the logistics of up-gradingintermediate fertilizers to produce formulations.The formulations are produced near to producingunits for fertilizer raw materials in the case ofdomestic production, or next to ports in the caseof imported fertilizers.

80% of fertilizer distribution is accounted forby the sale of formulations, 65% of fertilizers

being sold to rural producers in the form ofmixtures of granulated products, of whichgranulated grades account for 5%, powderformulations for 10%. Straight fertilizers accountfor 20% of the total market.

Almost all fertilizers are sold in 50 kg bags,with a very small proportion in 1000 kg bags orin bulk. Only a few large rural producers havethemselves the necessary infrastructure to handlefertilizers in 1000 kg big bags or in bulk.

60% to 65% of fertilizers are marketeddirectly by the mixing enterprise to the ruralproducer, while co-operatives account for 20 to25% and merchants for scarcely 10% to 15%.

This distribution system permits the deliveryof product over long distances, over an averageradius of 500 km, relying on road transport andoften profiting from return freight by transportinggrain from agricultural areas to the exportingports.

On the other hand, the segment of thefertilizer industry responsible for the marketing ofproduct directly to the rural producer lacksconsumer services in view of the weakrelationship between the enterprise and theclient.

In consequence, the Brazilian rural producershave had to equip themselves with all thestructure required for receiving, storing, internaltransport and application of fertilizers.


Canadaby R. L. Larson, Canadian Fertilizer Institute May 1995


3. The main fertilizer distributors

Basic producers, importers, private wholesalers/retailers, Co-operatives.


Independant Retailers

Cooperatives

Grain/Petroleum Co.

Company

Retailers System

Basic Producers

Domestic

FarmersDistributors /

Wholesalers

Importers 1.2 mt

(12)

3.4 mt

Export 15.2 mt

USA 10.5 mtOffshore 4.7 mt

The Canadian fertilizer production anddistribution system is shown in the diagram. Inmost cases the distribution network begins with aproducer’s plant or a port/terminal withoutbound shipments by rail or truck to theproducers’ offsite warehouses and to a lesserextent by truck direct to dealers’ plant.Distribution is generally a direct producer toretailer system although a distributor orwholesaler may sometimes be involved (usuallyin the case of imports).


Independant Dealers 40

Grain or Petroleum companyretail systems 35

Co-operatives 25

Total 100


In China, the distribution of fertilizers isgovernment-controlled. The China NationalAgricultural Means of Production Corporation(CNAMPGC) and the All China Federation ofSupply and Marketing Cooperatives manage thedistribution of agricultural inputs. Fertilizers havebeen sold at fixed prices to farmers. However,increases in distribution costs together with rigidtrading and pricing mechanisms have resulted inmarketing inefficiencies.

The China National Chemical Import andExport Corporation, Sinochem, is the state-ownedimport/export trading company in China with atotal turnover in 1995 of US$18.2 billion. In1996, Sinochem imported about 18 milliontonnes of fertilizer including 6 million tonnes ofurea, 4.5 million tonnes of DAP and 3.5 milliontonnes of potash. In 1997, total imports weresomewhat lower at 16 million tonnes as ureaimports fell away to only 3.5 million tonnes. TheChina National Agricultural Means of ProductionGroup Corporation (CNAMPGC) (at both nationaland provincial level) distributed about 83 milliontonnes of fertilizer in 1990 and about 105-115million tonnes in 1996 and 1997.

In 1993, backed by a technical assistancegrant from the Asian Development Bank, theChinese authorities began to develop the legaland regulatory framework to establish a fullymarket-based fertilizer industry and distributionsystem. The CNAMP had already lost some of itsmonopoly on fertilizer distribution and importswere freed up to some extent so that by the endof 1993 Sinochem’s share of imports was downto about 70% of the total for both urea and DAP;imports of potash meanwhile were still fullycontrolled by Sinochem.

Throughout 1994 however, due to atightening of international supply and demand,market prices of urea and DAP began to risesharply. Fearing farmer discontent, thegovernment imposed a series of price ceilings onfertilizers. But international prices continued torise and there were many complaints about theprofiteering of the independent traders.

Finally, in September 1994, in an effort toincrease central purchasing power, thegovernment reimposed the import monopoly anddecreed that all fertilizer imports including thosedone by the Central CNAMP and the ProvincialCNAMPs would be brought together again andhandled by SINOCHEM. Import quotas wouldbe allocated by the State Planning Authority. Atthe same time, domestic fertilizer producers wereinstructed to sell at least 90% of their outputthrough the AMPC network in each province.The remaining 10% could be sold through otherchannels at regulated prices monitored by theprovincial price committees.

In mid-November 1998, the State Councilissued a circular calling on implementation on anew fertilizer distribution system to increaseprofitability for fertilizer producers andguarantee fertilizer supplies for farmers. Thereform has given fertilizer producers the freedomto set prices in line with market fluctuations andto sell products directly to farmers.

In this reform, Sinochem was granted theright to engage in internal trade of chemicalfertilizers. CNAMPGC was granted importingrights for chemical fertilizers as well asSinochem.

China


The following is an extract from an article whichappeared in Fertilizer Focus, May 1999, page 52,by the China National Agricultural Means of Pro-duction Group Corporation, CNAMPGC.

CNAMPGC, which is directly affiliated to the AllChina Federation of Supply and MarketingCooperatives, is China’s only corporation operatingon a nationwide basis that specializes in supplyingfertilizers, pesticides, plastic sheeting and otheragricultural materials.

CNAMPGC first began supplying products to theagriculture sector some forty years ago. Today, itsregistered capital totals 148 million yuan (RMB)and its fixed assets are valued at one billion RMB.During the past three years, its annual fertilizerturnover has totalled around 10 million tonnes andits annual sales have been around RMB 15 billion.

CNAMPGC is active throughout China. Itoperates seven wholly owned subsidiaries (located inShenyang, Tianjin, Shanghai, Guangzhou, Chengdu,Shenzhen and Hainan), 29 offices located in themain ports and at large fertilizer plants and sevenlarge warehouses in the main transit centres ofChina. The floor area of these warehouses and theirstorage capacity aggregate to 100,000 squaremetres and 170,000 tonnes respectively. In addition,CNAMPGC owns 80,000 square metres of openstorage, five railway sidings and two piers that canaccommodate vessels of 10,000 tonnes capacity. Intotal, the corporation employs nearly 2,500 people,of which about 135 are located at its Beijingheadquarters. These organizations and facilities,

coupled with the local agricultural means ofproduction corporations and supply and marketingcooperatives at the grass root level, form an efficientnetwork for product dispatch and distribution.

In 1994, the State gave CNAMPGC the right toact as an importer and exporter of a range ofproducts, but excluding fertilizers. However, inNovember 1998, the State granted CNAMPGC theright to import fertilizer on its own behalf, using thecentral quota granted to CNAMPGC, and to act asthe fertilizer import agent for local fertilizer buyers,enabling CNAMPGC to become a fertilizer-importing channel into China alongside Sinochem.At the time of writing, the immediate and effectivepreliminary work involved in this expansion ofCNAMPGC’s role had been completed and theordering and purchasing of fertilizer for the springseason was well underway. To date, CNAMPGC hasalready carried out all the activities associated withits new position, including the opening of letters ofcredit, vessel chartering, insuring the fertilizer cargoto point-of-discharge in China, bagging and selling,experience that will be very useful as this side of itsbusiness expands.

CNAMPGC has not concentrated solely ondeveloping its main businesses; it has diversified intoother areas, often areas allied to its main activities,as opportunities have arisen. Activities related to itsfertilizer activities include 15 fertilizer compactionplants and three bulk blending plants (either whollyowned by the corporation or as joint-ventures) andthree bulk fertilizer bagging plants.


Denmarkby Mogens Nielsen, Kemira Denmark May 1995



Kemira Import

Farmer

KFK Private Superfos Local Co-op. DLG

2. Sales to the farmers 4. Transport

Peak distribution months: March, April.


Rail Road Water

Bags 40 % 50 % 10 %

Bulk 40 % 50 % 10 %


100 km 100 km 200 km



Co-operatives 64

Total 100

From the plant Trend* To the farmer Trend

Bulk (solid) 91 % ö 83 % ö

Bulk blends - 8 %

Palleted bags 9 % ø 7 % ø

Fluids 1 %



Egyptby Yosry El Khayat, Abu-Qir Fertilizers & Chemical Ind. Co. May 1999


The company has annual contracts with itsdistributors. The majority are private sectortrading companies. They provide the companyregularly with their orders destined for theircustomers all over the country. The companydispatches the orders to the requireddestinations, generally by trucks and some byrailway.





The company already has the ISO 9002 QualityManagement Certificate since July 1996. Now itis going to have the Environment ManagementCertificate ISO 44001. The company appliesstrict regulations concerning fertilizers handling.There is no legislation specifically for fertilizer dis-tribution. But the law nr. 48 year 1986 governs allaspects concerning pollution control whether sol-ids, fluids or gaseous.



Co-operatives 30


Total 100

Summary

Public sector 10

Private sector 60

Co-operatives 30

Total 100


Rail Road Water

Bags 10 % 90 % -


600 km 350 km -

From the plant To the farmer

Loose 50 kg bags 100% 100%


FranceMay 1999


The distributors, particularly the cooperatives,play an important role and 70% of the advice tofarmers is given by the distributors.


Cooperatives Traders

Producers

Cooperative Unions Wholesalers Traders Cooperatives

Farmers


Estimates of physical losses of sold fertilizersbetween the factory or port gate and the farm:0%.

Peak distribution months: February - April.



Co-operatives 55

Total 100



Loose bags 2 % ö


Big bags 21 % ö

N solutions 16% ø

* ö Increase ø Decrease ð Constant


Germanyby W. Wichmann, BASF May 1995


2500 Cooperatives 1500 Retailers

10 Importers6 Producers

3 Retailer Groupings5 Wholesalers11 Central Cooperatives

Ca. 55000 Farmers





Bulk Blends 4 % ö 4 % ö

Palleted bags 3 % ø 3 % ø

Fluids 13 % ø 13 % ø



Rail Road Water

Bags 6 % 8 % -

Bulk 94 % 92 % 100 %


275 km 150 km n.a.



Co-operatives 59

Total 100

4. Transport

Peak distribution months: October, November,December, January, March.


Indiaby Pratap Narayan, The Fertiliser Association of India April 1999

Domestic Fertilizer

Farmers

Own Outlets Primary Societies Own outlets

Agro IndustriesCorporations

CooperativeMarketing

Federations

Cane / OtherFederations

Imported Fertilizer

NitrogenousFertilizers

Phosphatic &Potassic

Fertilizers

Institutional Agencies Wholesalers Retailers Marketers

Producer ofNPK &

Mixtures, etc

ProducerPool

HandlingAgencies





% of total retail sales (1995-96)

Direct by the producer negligible

Private wholesalers/retailers 68 %

Co-operatives 32 %

Government outlets negligible

Total 100

Summary* Material %

Public sector 33

Private sector 51

Co-operatives 16

Total 100* Sectorwise sale by fertiliser manufacturersand importers.



Rail Road Water

Bags 70 % 30 % Nil

Bulk Nil Nil Nil


858 km 378 km Nil


Loose50 kg bags almost 100 % almost 100 %

Fluids negligible ö negligible ö



IndonesiaPT Pupuk Sriwidjaja October 1992


KIOS KSOwned Cooperative (KUD)

Inland StorageDeposit

FertilizerBagging Unit

Plant

Farmers

PT Pusri as the only distributor of the subsidizedfertilizers in Indonesia, uses a system called ‘PipeLine Distribution System’ that constitutes the linkof distribution from the producer to theconsumers.




Co-operatives 74


Total 100

Summary

Public sector 74

Private sector 26

Total 100


Bulk (solid) 63 %

Bulk blends

Loose bags 1%

Palleted bags 17 % 100 %

Big bags

Fluids




Rail Road Water

Bags - 76 % 24 %

Bulk - - 100 %

4. Transport

Peak distribution months: October - December.


Ireland

by B. Barnes, Irish Fertilizer Industries May 1995

2. Sales to the farmers1. Distribution network

Producer / Blender

Co-operative / Retailer

Farmer



Co-operatives 57

Total 100


Japanby T. Muraoka, JUASIA-Japan Urea & Ammonium Sulphate Industry Association April 1999



4. Transport


There are no particular environmental problemas far as storage and handling are concernedsince almost all fertilizers (except raw materials)are in bags.

The fertilizer distribution is carried out by co-operatives and private retailers withoutgovernment regulations.

The most important current issue is therestructuring of the co-operatives’ distributionsystem in, i.e. they are conducting a “merger” ofco-operatives so as to enlarge distribution pointsand to minimize cost of storage, transportation,interest etc.

Unit Co-operatives

Farmers

PrefecturalEconomic

Federations

ZEN-Noh(National Pruchasing

Federation)

Makers or Importers

Prime Wholesalers

Retailers

Wholesalers




Co-operatives 90

Total 100

Summary %

Private sector 10

Co-operatives 90

Total 100


Rail Road Water

Bags 3 % 86 % 11 %


300 km 200 km 600 km


Loose bags 54 % ø 100 %

Palleted bags 39 % ö



Korea Republicby Jeong-Kyu JOO, KFIA-Korea Fertilizer Industry Association January 2000


Rail Road Water

Bags 25 % 65 % 10 %


280 km 120 km 220 km

1. Fertilizer distribution system

In principle fertilizers are traded freely in Korea.Since they are seasonal commodities and arebulky and heavy, fertilizers are dealt with mostlyby NACF (The National Agricultural CooperativeFederation) which has large storage facilitiesnationwide. NACF handled 96% of the productsin 1998, private retailers 4%.

Speciality fertilizers for horticulture, liquidfertilizer, by-product fertilizer, soil amendments,are sold by NACF and private retailers incompetition.




Fertilizers are packed in bags for distribution, sothere are no problems in handling and storage,and no adverse impacts on the environment.

The producers of fertilizers use freightagencies to transport their fertilizers to thestorehouses of each local cooperative, and TheKorea Express Company which is the largesttransportation company in the country,undertakes 87% of the transportation. Otherfreight agencies carry the remaining 13%.

NACF is trying to reduce the transport costsof fertilizers by establishing a fertilizer pallet poolsystem by year 2000. In an effort to reduce theexpense of the stock management, they plan toreduce stock-holding but not below levels whichwould be prejudicial to the supply/demandbalance of fertilizers.




Co-operatives 96

Total 100

Summary

Private sector 4

Co-operatives 96

Total 100


Loose bags 2 % ø 100 %

Palleted bags 98 % ö


Makers

NACFNational

AgriculturalCooperativeFederation

PrimaryCooperatives

Private Retailers

Farmers


MalawiBy Alex R.G. Shemu, Norsk Hydro Malawi (Pvt) Limited October 1999



100 % per road.

Weighted average distance to first destination:800 km



Loose bags: 100%

4. Transport

5. Important aspects andrequirements

House-keeping, stacking, storage conditions,stock-keeping, handling, protective clothing,separate storage of nitrogen fertilizers, transportincluding suitable trucks, supervision of loading,unloading and transit. The official quality controlof imported fertilizer is needed.

DistributorAgentCo-op.

PrivateWholesaler /

Retailer

Selling Depot

Gov

ernm

ent

Customer (Estates)

Factory

Farmers

Plant

75%5% 20%

25% 50%




Co-operatives 10


Total 100

Summary

Public sector 10

Private sector 80

Co-operatives 10

Total 100


Netherlandsby J. Hakvoort, DSM March 1995




Producers

Private Retailers Private Wholesalers Regional Coops Cooperatives

Farmers



Co-operatives 44

Total 100


Bulk (solid) 98 % 83 %

Bulk blends 2 % ö 7 % ö


Big bags 1 % ö

Estimates of physical losses of sold fertilizersbetween the factory or port gate and the farm:0%.

4. Transport


Care is taken that during transport, there is noloss of material affecting the environment. Specialcare is also taken to store and handle the materialscientifically to avoid any seepage, caking, etc.The labourers are advised not to use hooks.

At presently the price, sale, quality anddistribution of fertilizers is governed by Fertiliser(Control) Order which came into force in 1957and has been amended from time to time.

Transport from producers to the firstdestination:

Rail Road Water

Bulk - 10 % 90 %


100 km 150 km


Norway

by R.A. Nordberg, Norsk Hydro AS April 1999




4. Transport


Health, Environment and Safety documents areavailable to customers and transporters.

Advice on storage and handling is availablethrough information brochures.

Private wholesalersCo-operatives

Retailers

Farmers



Co-operatives 76

Total 100


Bulk (solid) 56 % ð 1 ð

Palleted bags 20 % ð 39 ø

Big bags** 24 % ð 60 ö

Fluids

* ö Increase ø Decrease ð Constant** 600 kg


Rail Road Water

Bags - 7 % 33 %

Bulk - - 60 %


- 200 km 900 km


Pakistanby Nisar Ahmad, National Fertilizer Development Centre (NFDC) April 1999


Public Sector Private Sector

Outlets (only from Provincial

Agencies)

Co-operatives

Importers Local Producers

Strategic Warehouses Regional

Local Depots

Sugar mills& Ginners

Dealers

Farmers

NFCEngroDHFFCPAK-ChinaFFC-Jordan

Arranged by FIDand Private Sector

Provincial Agenciesand NFML

EngroDCLFFCPAK-ChinaJBLNFGTBRRPan PacificKJ&B




4. Transport


In private sector Dawood Herculus, EngroChemical Pakistan Ltd and Fauji FertilizerCompany have obtained ISO-90002 certification.Engro Chemical Pakistan Ltd has completed aproject costing Rs. 90 million and aftercompletion of another project worth Rs. 100million it will fully comply with the NationalEnvironment Quality Standards. FFC have madeconsiderable effort and investment to ensure thatthey are environmentally and ecologicallyfriendly.

Some new importers started to importfertilizers. There is no agency responsible tocheck the quality and contents required. Fertilizeradulteration is committed by dealers in bigmarkets and during peak demand period. Thereis a need for legislation but provincialgovernments are not yet supporting the proposal.

6. Comments

Two new plants: NFC producing 346,000 tonnesof urea and FJFC producing 550,000 tonnes ofurea and 450,000 of DAP started production atthe end of the year 1998. By this addition, thecountry will be self-sufficient in respect of ureafor the coming 1-2 years.




Co-operatives 7,5

Government outlets 6,5

Total 100

Summary

Public sector 31,6

Private sector 66,4

Co-operatives 2

Total 100


Loose bags 100 % 100 %


Rail Road Water

Bags 6 % 94 % -


440 km 560 km -


PhilippinesFertilizer and Pesticide Authority May 1994



3. Froms of deliveries

4. Transport

Peak distribution months : May-July andNovember-January.

Raw materials Finished fertilizers

Foreign Supplier

Industrial UsersCooperativesBig Retailers

Outlets

ImportersManufacturers

Farmers

Distributors



Co-operatives 10

Total 100




Rail Road Water

Bags - - 100 %

Bulk - - 100 %


South Africaby J.F. Ranwell, The Fertilizer Society of South Africa October 1992




The most common bag sizes: 500 kg.

Estimates of physical losses of sold fertilizersbetween the factory or port gate and the farm:Negligible.

4. Transport

Peak distribution months:

Summer crops: August-September toNovember-December.

Winter crops: February to April.

Customer Farmer

Order

Dispatch

Factory

DepotsCo-operatives

Dry - 20%Dry - 20%

Dry - 60%Fluid - 100%




Co-operatives 30

Total 100

Summary

Public sector -

Private sector 100

Co-operatives -

Total 100

To the farmer Trend

Bulk (solid) 4 % ö

Bulk blends 72 % ø

Loose bags

Big bags** 4 % ö

Fluids 20 ö

* ö Increase ø Decrease** 500 kg or more


Rail Road Water

Bags 30 % 70 % -

Bulk - 100 % -


The following text is extracted from a paper by Dr.J.B. Skeen, former Managing Director of KynochLimited, published in the 1999 Journal of theFertilizer Society of South Africa, FSSA.

“The dissemination and application of theresearch based agricultural technical knowledgegenerated from many quarters contributed hugely tothe development of a commercial farming industrythat made South Africa one of the elite few netexporters of food in the world. Naturally there weremajor limitations to the application of this vast, highquality data the most important of which was that thesmall rural farmer did not share in its benefits.Private business could not profitably serviceunderdeveloped rural areas as costs far exceededbenefits to shareholders. While most of the data andprinciples arising from agricultural productionresearch is directly applicable and adaptable tounderdeveloped rural farming situations, thedissemination thereof, which is an education andpromotion problem, is where the focus of resourceshas to be made in future. Agricultural developmentand growth among small scale and resource poorfarmers requires a major effort to provide adequateextension services to these people. Because of the lowcost benefit ratio, these farmers will have to relyheavily on Government funded extension services.Private industry will probably continue to pay onlylip-service to fulfilling this need unless tax or otherincentives are put in place to justify the cost.Regrettably over the last 10 years State controlledextension services have virtually collapsed as avalue-adding organization. It has deteriorated into ahigh cost institution with no benefit to its customers,the farmers. The deployment of Governmentextension officers among commercial farmers is nowalmost non-existent while those operating in formerhomelands are poorly trained and have little impacton agricultural development. A major challenge tothe Department of Agriculture and also to the inputindustry is to innovatively create an effectiveextension system that adequately servicesunderdeveloped rural situations.

Simultaneously with the demise of Stateagricultural extension services there has been acritical downsizing in research, development andextension effort at universities, co-operatives and theprivate sector. In the case of universities the cutbackhas been as a result of reduced funding from theState. Emphasis is now placed on the need forresearch to be partially self-supporting. Insofar as

co-operatives are concerned, the 'raison d’être' ofmany of these organizations has changed and willdoubtless continue as an increasing level of local andinternational competition has forced them to rethinktheir structures and activities. Take-overs andmergers in this sector are expected to increase astheir viability becomes threatened by competitiveforces and many are unwilling, indeed unable, tosupport the costs of many services, includingagricultural advisory services.

A similar development is beginning to take holdin the fertilizer industry to the detriment of thefarming community and the agricultural industry asa whole. In an endeavour to remain competitive,local fertilizer manufacturers are having to trimoverhead costs to maintain a competitive costposition against the predatory effects of opportunistimporters. These suppliers have been takingadvantage of current low international prices toundercut the activities of domestic producers. Theirproducts are supplied to the farming industry atmargins that are not required to cover the broadrange of services traditionally offered by localproducers which includes agricultural technicalsupport. The consequence has been a decline in theavailability of research and technical servicepreviously supplied to customers as part of amarketing mix. Ironically, however, in a world whereprice wars and product parity have turnedcompetition into an endless round of pit-bull fights itwill not be feasible in the long run to make moneywith products alone anymore. Companies are beingpositioned in developed agricultural economies notsimply as sellers of products but as providers ofservices. Added value comes from helping customersfarm efficiently by applying the correct combinationof quality fertilizer, inter alia, at the right time. Thesuccessful dealer of the future is one that will remainahead of customer needs and who, in their turn, willdemand more added value for their money. Thisadded value does not only include technologicaldevelopments and other advisory services although itis a major part of it. Under present circumstances thelocal fertilizer industry is becoming hard-pressed toreward shareholder investment while still providing afull range of customer services. Regrettably free tradeis turning many agricultural input industries intosellers only and not producers of services. Thissituation presents itself at a time when farmers arebeginning to cry out for greater technical assistanceas they themselves grapple with uncontrolledcompetition in the marketing of their products.”


Spain

by J. Pardo, Fertiberia SA June 1999

1. Distribution network 2. Sales to the farmers


4. Transport

5. Fertilizer Distribution and theEnvironment

Solid nitrogen fertilizers with 20% N or abovemust meet the TPC standards and fulfill specificstorage regulations.

Liquid fertilizers must be stored in tanksmade of specific materials to avoid corrosion.Some of them are specifically built to meetdifferent security regulations.

Note on Fertiberia’s Services

Fertiberia offers a full range of services, aimed atimproving the professionalism and efficiency ofthe network, as well as giving technical andprofessional assistance to Spanish agriculture.

Fertiberia also provides training for theaccredited dealers. There is training in theagronomy of fertilizers and sales techniques forthe salesmen, and also in management techniques.The dealers have the services of five Fertiberiaagronomists. The dealers also have agronomists,some 30 to 35 in all.

Soil, leaf and water analysis services areoffered free-of-charge. The analyses are carriedout at Fertiberia’s Huelva plant. At present some12000 analyses are carried out annually, thecapacity being 30000 p.a. Fertiberia is the onlyfertilizer company in Spain to offer this service.

Farmer

Domestic Producers / Imports

Wholesaler Cooperative

RetailerOnl

y d

omes

tic p

rodu

cers




Co-operatives 44

Total 100

From the plant Trend* To the farmerTrend

Bulk (solid) 87 % ð 55 % ö

Loose bags 2 % ø 15 % ø

Palleted bags 7 % ö 23 % ö

Fluids 4 % ö 7 % ö

* ö Increase ø Decrease ð Constant** kg


Rail Road Water

Bags 1 % 8 % -

Bulk 6 % 94 % -

(includes important products)


400 km 300 km -


Sri Lankaby D.R. Wijayatilleke, National Fertilizer Secretariat March 1993




Sub Agents

Local Production Imports

Central / regional Warehouses

Cooperatives Government Outlets Independant Traders Authorized Agents

End users

Farmers (78%) / Plantations Large Farms (22%)

36% 7%6%30%

5%95%




Co-operatives 6


Total 100

Summary

Public sector 31

Private sector 69

Total 100


Rail Road Water

Bags 10 % 90 % -

Bulk - - -


10 km - -



The most common bag sizes: 50 kg, 25 kg, 10-5kg.

4. Transport

Peak distribution months:

October - January (Maha season)

June - July (Yala season)


Thailandby Kaboon Sakulyong, Thai Central Chemical Public Co., Ltd. April 1999




4. Transport

5. Fertilizer distribution and theenvironment• Almost all fertilizers are packed in 50 kg

water-proof strong plastic bags. Producershave to print the registration numbers of thefertilizer with nutrient content and crop onwhich they are to be applied on the bags,which are strictly controlled by governmentofficers.

• The fertilizer warehouses of producers,importers and wholesalers also have to beregistered.

• Wholesalers and retailers of fertilizers have tobe registered with the government.

• Government give tax and VAT exemption forfertilizers business.

• The Domestic Trade Department is controlsthe retail prices of fertilizers.

Producer / Importer

Wholesalers

Farmers

Retailers

Government

Co-operatives




Co-operatives 15


Total 100

Summary

Public sector 10

Private sector 75

Co-operatives 15

Total 100




Rail Road Water

Bags - 95 % 5 %


- 400 km 700 km


Turkeyby S. Bayraktar, Toros Fertilizer and Chemical Industry May 1999

1. Distribution network (1998)

Fertilizers are distributed by producers andimporters through their dealership, organizations,cooperatives and agricultural crop processingorganizations (such as sugar factories, canningindustries, etc.)


Private Dealers Private Dealers

Individual Sugar F.Individual Cooperatives

Sugar F. UnionCooperative UnionsMarketing Companies

Imported FertilizersDomestic Fertilizers

Producers Wholesalers

Farmers


Estimates of physical losses of sold fertilizersbetween the factory or port gate and the farm:0.2 %.

4. Transport

Peak distribution months:September - November, February - April.




Co-operatives 32


Total 100

Summary

Public sector 22

Private sector 46

Co-operatives 32

Total 100


Loose bags 100 ð 100 ð



Rail Road Water

Bags 3 % 90 % 7 %


500 km 250 km 1500 km


United Kingdomby D. Heather, Fertilizer Manufacturer’s Association July 1999


4. Transport


Major manufacturers have their own codes ofpractice for this purpose.

Other codes are available from the UK’s Healthand Safety Executive.

6. Brief information on recent orproposed legislation/regulationsrelevant to the fertilizer distribution

The carriage of Dangerous Goods by RoadRegulations 1996.


Note: Private wholesalers/retailers and co-operatives have the same function (UK co-opshave a different structure and purpose to those ineg. France and Germany)


Farmer

Importer ProducerBlender

Co-operative RetailerProducers

Retail subsidiary



(including retail subsidairies)(incl. fluids and blends)


Co-operatives 20

Total 100

Summary

Private sector 80

Co-operatives 20

Total 100



Big bags** 74 % ö

Fluids*** 16 %

* ö Increase ø Decrease** The most commun bag size: 90 % +500 kg*** combined (and including deliveries toblenders)


Rail Road

Bags 2 % 98 %

Bulk - 100 %


300 km 170 km


United Statesby Scott Simpson, International Fertilizer Development Center April 1999

1. Distribution Network

Farmers2.0 Million

Bas

ic P

rodu

cers

Con

sum

ers

Man

ufac

ture

rs &

Ret

ail D

istr

ibut

ors

AN, AS, Urea,UAN Solutions

166 - 140 - 124

TSP, DAP, Map,Other AP

30 - 26 - 24

Potash

8 - 11 - 6

Ammonia

48 - 49 - 43

Phos Acid

20 - 21 - 19

Regional FluidRegional NPKGranulation50 - 37 - 23

Ag Related Retail*

Outlets8000 - 12000 +

Fluid Mixers3000 +

Bulk Blenders6000 +

Numbers represent operating plant locations - Fertilizer Year 1988, 1992 and 1999.* . IFDC estimates the total retail outlets selling fertilizers in bag or bulk for farm or non-farmuses to be in excess of 17000 based on 1998 survey data.


Raw materials flow from the basic producersand/or regional dry/fluid producers to retailfertilizer dealers who, in turn, sell these fertilizermaterials to approximately 2.0 million farmers.The consensus is there are between 8,000 and12,000 retailers that actually blend or mixfertilizer materials at retail agribusiness locationsfor distribution to the agricultural sector.However, IFDC estimates, based on a 1998survey, there are in excess of 17,000 outletswhere fertilizer materials are actually sold in bagor bulk for both agricultural and non-agriculturalpurposes.

2. Sales to farmers

Data for this topic was last obtained in 1992 byTVA and has not been collected since that time. Afterdiscussions with several in the U.S. industry, thefeelings were the old numbers may still be fairlyreflective of today’s distribution percentages;however, since no accurate data exists, the U.S.numbers should be shown in a range.

2. Forms of Deliveries (1998Consumption Data)

Trends indicate that dry bulk products have beenincreasing relative to fluids and dry baggedproducts for the past several years. Dry baggedproducts have been decreasing over time;however, this market should stabilize at or nearcurrent levels based on a relatively stable lawnand garden market. The fluid market, withincreasing long-term trends, has stabilized thepast 4 to 6 years.

3. Transportation

Four transportation modes are used in the UnitedStates: barge, rail, truck and pipelines for thetransport of ammonia. Initial movement of drybulk fertilizer materials from basic productionlocations is primarily by barge or rail withmovement by barge the mode of choice becauseof its lower transportation cost. There are 18States which border the inland waterway systemin the United States. Fertilizer consumption inthese States accounts for over 70% of the totalconsumed. It is therefore reasonable to assume asubstantial portion of U.S. fertilizer is initiallytransported by barge. Transportation to the retailagribusiness site is usually by rail or truckdepending on the retailers geographic location.

There are two major ammonia pipelines thattransport product from major producing areas tomajor use areas. The first extends from thePanhandle of Texas to Minnesota and the secondfrom Louisiana to Nebraska. Product is stored interminals along the pipelines and then moved byrail or truck to retail agribusiness sites.

4. Fertilizer Distribution and theEnvironment

Information demonstrating the fertilizer industry’sconcern for safety and the environment duringthe storage, handling and transport of mineralfertilizers:

There are specific regulations under OSHA1910.111 for the safe storage and handling ofanhydrous ammonia. USDOT regulates allhazardous materials in transport, and as a result,the fertilizer industry must placard vehicles,maintain shipping papers, and other markingrequirements. In addition the fertilizer industry


Direct by the producer <3

Private wholesalers/retailers 55-65

Co-operatives 35-45

Total 100

Summary

Private sector 100

From the plant

Dry bulk (solids/blends) 54 %

Fluids * 39 %

Dry bagged 7 %

* Including mixtures, anhydrous ammonia,


must train employees for hazardous materialshandling under USDOT regulations. USEPA,under the Clean Air Act, Section 112r requiresrisk management plans and programs foranhydrous ammonia facilities. The industry alsohas a voluntary “Be Aware For America” programaimed at monitoring the distribution and sale ofammonium nitrate in the U.S.

5. Brief information on recent orproposed legislation/regulations rele-vant to fertilizer distribution

Currently there are several proposed regulationsat DOT that would affect fertilizer distribution.An increase in the hazardous material registration

fee, requirements for inspection, andmaintenance of vehicles has just been finalizedby DOT. Fertilizer distribution has experiencedsome recent problems involving the theft ofanhydrous ammonia for illicit drug manufacture.There have been some regulatory proposals putforth that would require facilities to increaseperimeter security at the State level.


Zimbabweby R.J. Gaiger, ZFC Limited April 1999


ZFC Limited has two factories in Harare at whichit drymixes and granulates powdered rawmaterials into a range of NPK compounds. AN,MOP, SOP and SSP are also sold as straights. Itemploys 30 technical sales representatives whosell directly to the end user. Twentyrepresentatives service the commercial (largescale) farming sector and ten representativesservice the Small Scale (peasant) sector. About20 000 tonnes blended NPK’s are also producedand sold.



4. Transport


The main problems are the reduction and controlof dust generation and emission and thecontainment of contaminated run-off waterduring the rainy season.

Legislation on pollution in general exists but isseldom enforced. It does not contain specificreferences to the fertilizer industry. A newEnvironment Act has been drafted and is morespecific with regard to industries which can be asource of pollution.


Rail Road

Bags 35 % 65 %


150 km 120 km




Co-operatives 1

Total 100

Summary

Private sector 99

Co-operatives 1

Total 100


Bulk blends 8 % ö 8 % ö

(50 kg bags)

Loose bags 91 % ø 91 % ø

(50kg bags)

Big bags** 1 % ö 1 % ö

Note: Trends are very gradual* ö Increase ø Decrease** Most commun bag size: 500 kg


IFA - International FertilizerIndustry Association

IFA, the International Fertilizer IndustryAssociation, comprises around 500 membercompanies world-wide, in over 80 countries. Themembership includes manufacturers of fertilizers,raw material suppliers, regional and nationalassociations, research institutes, traders andengineering companies.

IFA collects, compiles and disseminatesinformation on the production and consumptionof fertilizers, and acts as forum for its membersand others to meet and address technical,agronomic, supply and environmental issues.

IFA liaises closely with relevant internationalorganizations such as the World Bank, FAO,UNEP and other UN agencies.

IFA’s mission

• To promote actively the efficient andresponsible use of plant nutrients to maintainand increase agricultural productionworldwide in a sustainable manner.

• To improve the operating environment of thefertilizer industry in the spirit of freeenterprise and fair trade.

• To collect, compile and disseminateinformation, and to provide a discussionforum for its members and others on allaspects of the production, distribution andconsumption of fertilizers, their intermediatesand raw materials.

28, rue Marbeuf75008 Paris, FranceTel: +33 153 930 500Fax: +33 153 930 545 /546 /547E-mail: [email protected]: http: www.fertilizer.org

UNEP - United NationsEnvironment Programme

The Production and Consumption Unit of UNEPDTIE in Paris was established in 1975 to bringindustry, governments and non-governmentalorganizations together to work towardsenvironmentally-sound forms of industrialdevelopment. This is done by:

• Encouraging the incorporation ofenvironmental criteria in industrialdevelopment.

• Formulating and facilitating theimplementation of principles and proceduresto protect the environment.

• Promoting the use of low- and non-wastetechnologies.

• Stimulating the worldwide exchange ofinformation and experience onenvironmentally-sound forms of industrialdevelopment.

This Unit has developed a programme onAwareness and Preparedness for Emergencies atLocal Level (APELL) to prevent and to respondto technological accidents, and a programme topromote worldwide Cleaner Production.

39-43, Quai André Citröen75739 Paris Cedex 15FranceTel: +33 1 4437 1450Fax: +33 1 44 37 1474E-mail: [email protected]: http:www.uneptie.org

About IFA and UNEP

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