International Fertilizer Association: Fertilizer costs will remain high in the next few years

According to Michel Prudhomme, president of the International Fertilizer Association (IFA), the growing demand for food in developing countries, coupled with the dramatic rise in the commodity futures market, may lead to continued rising prices of raw materials for fertilizer production in the coming years.
Prudhomme said that between 2007 and 2008, the amount of nitrogen fertilizer increased by 4.6%, the amount of phosphate increased by 4.5%, and the amount of potassium increased by 5.9%.
He said that two-thirds of the increase in fertilizer use in the past five years was concentrated in Latin America, especially Brazil, Argentina, and Mexico. In Brazil, only nitrogen supplies are sufficient, and other fertilizers must rely on imports. Other Latin American countries also face such problems.
Thorleif Enger, an IFA official, recently stated that the current status of the fertilizer market is a complete manifestation of the supply and demand situation and the global supply is very tight.
Prudhomme said that by 2010, the fertilizer market will remain tight. He said that at present the capacity utilization rate of the fertilizer industry is 90%.
Brazil is heavily dependent on imports of fertilizers and is therefore seriously affected by the current supply and demand side of fertilizers. In 2007/08, Brazil’s crop production hit a record high, but high production costs have led to a reduction in planting profits.
The increase in food prices has prompted the Central Bank of Brazil to increase its inflation target this year to more than 5%, compared to the target of 4% at the beginning of the year. High fertilizer prices have caused food costs to rise.
Some farmers in Brazil have sued the fertilizer company and claimed that they control the supply so that fertilizer prices are high.

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