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March 2016
IBISWorld Industry Report

Global Fertilizers &
Agricultural Chemicals
Manufacturing
Global Fertilizers & Agricultural Chemicals Manufacturing
March 2016
About This Industry ................................. 2 Cost Structure Benchmarks ......................... 18

Industry Definition .........................................2 Basis of Competition .................................... 20
Main Activities ...............................................2 Barriers to Entry ........................................... 21
Similar Industries ..........................................2 Industry Globalization .................................. 22
Additional Resources ....................................3 Major Companies .................................... 23
Industry Performance .............................. 4 Syngenta AG................................................ 23
Executive Summary ......................................4 Yara International ASA ................................ 24
Key External Drivers .....................................4 Bayer AG ..................................................... 25
Current Performance ....................................5 The Mosaic Company .................................. 26
Industry Outlook............................................7 Other Players ............................................... 27
Industry Life Cycle ........................................9 Operating Conditions .............................. 29
Products & Markets ................................. 10 Capital Intensity ........................................... 29
Supply Chain ................................................10 Technology & Systems ................................ 29
Products & Services .....................................11 Revenue Volatility ........................................ 30
Demand Determinants ..................................13 Regulation & Policy ...................................... 30
Major Markets ...............................................14 Industry Assistance ...................................... 31
International Trade........................................15 Key Statistics ........................................... 32
Business Locations .......................................16 Industry Data................................................ 32
Competitive Landscape ........................... 17 Annual Change ............................................ 32
Market Share Concentration .........................17 Key Ratios.................................................... 33
Key Success Factors ....................................17 Jargon .......................................................... 33
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About This Industry

Industry Definition
This industry formulates and prepares fertilizer products, pesticides (e.g. herbicides, insecticides and
fungicides) and other agricultural chemicals (e.g. insect repellents, sheep dips, fly sprays and flea
powders). Key markets serviced include the agricultural sector, households and various commercial and
industrial users.
Main Activities
The primary activities of this industry are:
Manufacturing fungicides
Manufacturing herbicides
Manufacturing insecticides
Manufacturing nitrogenous fertilizers
Manufacturing other agricultural chemicals
Manufacturing phosphate-based fertilizers
Manufacturing potash-based fertilizers
The major products and services in this industry are:

Fertilizers
Pesticides
Other agricultural chemicals
Similar Industries
C1912-GL - Global Petrochemicals Manufacturing
This industry manufactures petrochemicals; the industry's products are used in the production of
consumer goods, automotive components and various durable and non-durable goods.
C1921-GL - Global Basic Inorganic Chemicals Manufacturing

This industry produces inorganic chemicals.
C1922-GL - Global Basic Organic Chemicals Manufacturing

This industry produces organic chemicals.
L6724-GL - Global Biotechnology

This industry applies living organisms or molecular and cellular techniques to develop products that are
used in agriculture, food, industrial and medicine production.
Additional Resources
For additional information on this industry:
www.ecpa.eu
European Crop Protection Association
www.fao.org
Food and Agriculture Organization of the United Nations
www.cropprotection.org.uk
Crop Protection Association
www.fertiliser-society.org
International Fertiliser Society
www.fertilizer.org
International Fertilizer Industry Association
Industry Performance
Executive Summary
The Global Fertilizers and Agricultural Chemicals Manufacturing industry produces synthetic fertilizers,
pesticides and other agricultural chemicals. Therefore, it plays an essential role in ensuring that the world's
agricultural production systems are economically efficient in the short term and sustainable in the long
term. Over much of the past decade, the industry enjoyed moderate growth led by three main drivers: feed,
food and biofuels.
In 2011 and 2012, fertilizer and agrochemical demand started to rebound strongly in both traditional and
emerging markets, where food pressures have led to calls for higher agricultural productivity and crop
yields. Based on data from the Food and Agriculture Organization of the United Nations, industry
production also has continued to recover from the low levels of 2010, although it is still at less than 85.0%
of installed capacity. Tight agricultural commodity markets and increasing agricultural prices through the
majority of this period have also benefited the industry. However, fertilizer prices have fallen over the
period. Consequently, industry revenue is expected to grow at an annualized rate of only 0.5% to $157.0
billion over the five years to 2016, including a 9.5% decrease in 2016. Despite overall revenue growth, the
industry will continue to contend with a changing climate, fluctuations in key agricultural commodities and
a trend toward greener practices.
Over the next five years, the industry's performance will hinge on strong demand growth from the United
States and an expected increase in demand from emerging economies in Asia and the Americas, and new
industry operations in Asia, Africa and the Middle East. Furthermore, farmers will increasingly demand
industry products as agricultural production increases. However, continued volatility in energy prices
could have a negative effect on industry operators. Within the pesticide segment, variables like the flow-on
effects of biotechnology developments and the growing sizes of the areas dedicated to genetically modified
(GM) crops are expected to increase industry demand. In the five years to 2021, industry revenue is
anticipated to grow at an annualized rate of 3.0% to $182.3 billion. The industry is expected to display a
lower degree of volatility, but demand and supply imbalances will influence industry performance on a
year-to-year basis.
Key External Drivers

The key sensitivities affecting the performance of the Global Fertilizers & Agricultural Chemicals
Manufacturing industry include:
Global population
Farmers across the globe use fertilizers and pesticides to produce goods that are ultimately purchased by
consumers across the world. Therefore, as the global population increases, overall demand for industry
products rises as farmers plant more crops. The global population is expected to increase over 2016,
representing a potential opportunity for this industry.
World price of crude oil

Manufacturers use a high level of energy to produce pesticide chemicals. Since most energy is derived from
oil, the price of oil has a significant effect on the industry's energy costs. An increase in oil costs can hurt
profit margins and cause some operators to raise their pesticide prices, which can deter customers. The
world price of crude oil is expected to decrease in 2016.
World price of natural gas

Natural gas is the main raw material used to produce nitrogen fertilizer, which is one of the most heavily
demanded fertilizers. As the price of natural gas rises, so does the cost of manufacturing nitrogen fertilizer.
Often, the cost increase is passed on to buyers in the form of higher prices, which can deter sales. The
world price of natural gas is expected to decrease during 2016.
World price of wheat

The price of wheat is indicative of the volatility across the global agriculture sector. Weather conditions and
changes in international and domestic commodity prices can affect agricultural production and prices.
These factors flow on to farm incomes, affecting demand for industry products. In particular, global crop
prices for grains and oilseeds influence agricultural incomes and planting patterns. When farming income
decreases, farmers typically spend less on industry products. The world price of wheat is expected to
decrease during 2016, representing a potential threat to the industry.
Current Performance
The performance of the Global Fertilizers and Agricultural Chemicals Manufacturing industry relies on a
range of factors, the most important of which are agricultural output and income levels. A sizeable
proportion of demand for industry products comes from the global agricultural sector. In fact, the
agricultural sector generates about 90.0% of industry revenue, according to data sourced from the
International Fertilizer Industry Association (IFA) and IBISWorld estimates. Therefore, crop acreage,
yields and prices all play key roles in determining demand.
Although these traditional variables are significant, other variables have grown in importance during the
past five years, including the rise of genetically modified (GM) crops. These crops are often herbicide-
tolerant and insect-resistant, which reduces the need for conventional pesticides. On the other hand,
growth in the size of crops planted for biofuel purposes is having a positive effect on the industry. Between
2010 and 2012, the industry had to contend with the global economic crisis, a climate crisis and a food
crisis. Within emerging economies, food security remains of paramount importance, which creates strong
demand for the industry, especially from China and India. In the five years to 2016, overall industry
revenue is expected to grow at an annualized rate of 0.5% to $157.0 billion, including a projected 9.5%
decrease in 2016 alone as the price of fertilizer decreases. Profit is expected to account for 5.6% of industry
revenue.
Volatile growth rates

Over the past five years, the profitability of agrochemical manufacturers has fluctuated amid volatile
energy costs and increasingly tight regulations in many mature markets. In addition, industry participants
relying on oceanic and rail transportation to acquire raw materials and move finished agrochemical
products have had to contend with rising transportation costs, which continue to pressure industry profit
margins.
In the pesticide product segment, the increasing number of generic products available on the world stage
has affected profitability, as have the increased costs associated with research and development (R&D).
Pesticide manufacturers have also been hurt by falling product prices over the past few years, particularly
for agrochemical commodity products like glyphosate. At the start of this period, demand from farmers
was very low, pushing down global prices for fertilizers. Despite efforts by suppliers to cut production,
excess supply dominated the market.
For these reasons, several players in the pesticide and fertilizer product segments have undertaken cost-
cutting strategies in recent years, including closing older and less-efficient plants, cutting employment and
reducing product portfolios. For instance, the Potash Corporation of Saskatchewan cut back its potash
production at the start of this period, enabling the company to achieve gross margins of 60.0% despite
lower prices. However, in 2011, fertilizer prices were again on the rise for much of the year, supported by
tight supplies. As a result, the number of industry establishments is expected to decrease slightly at an
average annual rate of 0.3%, reaching 7,169 in 2016.
Competing demands for food

According to the Potash Corporation of Canada, global food production accounts for 50.0% of fertilizer use.
Consequently, fertilizer use plays an integral role in feeding the ever-increasing world population. Farmers
in emerging economies in Asia and South America are increasing their fertilizer use to support food
production for their large and growing populations. According to the IFA, China and India alone are
estimated to account for 40.0% of global fertilizer use; the emerging world as a whole is estimated to
account for nearly two-thirds. However, slowing demand from these emerging markets constrained
international trade in recent years. In the past five years, exports and imports of agrochemicals are both
expected to decrease at an average annual rate of 3.1%, reaching $100.9 billion in 2016.
However, in light of mounting fossil fuel constraints, an increasing number of crops are being grown for
biofuel production instead of food production. The United States and Brazil are key producers of biofuels.
In Brazil, ethanol produced from sugar cane is estimated to account for over 25.0% of the world's
bioethanol, according to Silicon Valley Bank. Government mandates, such as the US Energy Independence
and Security Act and the European Union's Renewable Energy Directive, will continue to increase the use
of crops for fuel purposes.
Over the past decade, global food prices have risen, leading to concerns regarding food security. During
2012, food security was at the center of the G20 agenda, with efforts now being made to adopt action plans
aimed at not only increasing farm production levels, but also reducing food prices and price volatility. In
the case of grain, consumption exceeded production in 2012 for the eighth time in 12 years, despite
increasing grain production over the past decade, according to data sourced from the Earth Policy
Institute. As governments take steps to increase crop production while reducing the associated
environmental impact, food security issues will continue to have implications for the types of crops planted
and the use of agrochemicals to boost productive, resource-efficient agriculture.
Intense Competition
Intense competition has characterized the industry over the past five years. In the case of pesticides,
several key products have lost patent protection and generic products have flooded the market as a result.
A number of products, including 500 active ingredients, have been discontinued due to increasingly
stringent regulations. Some of these were deemed obsolete by the World Health Organization, while others
failed to meet newer, more stringent toxicity standards. In addition, a number of manufacturers sought to
cut their portfolios, ceasing production of older products. Some of these older products were withdrawn
because they were no longer profitable enough to warrant the costs of approval. Others were superseded by
newer, more effective and less toxic products.
In addition, mergers and acquisitions (M&As), particularly among the industry's major players, have been
on the rise. Operators have sought to reduce R&D and manufacturing costs amid falling profitability. For
example, two Russian fertilizer giants, Uralkali and Silvinit, merged in 2010 and now control 10.0% of the
global potassium market. Additionally, Mosaic acquired the phosphate business of CF Industries in 2013
for $1.4 billion. These strategic alliances are allowing companies to take advantage of new technological
innovations and the changing environment, especially among potash producers. In mid-2013, the
withdrawal of Uralkali from the Belarusian Potash Company heightened price competition among fertilizer
producers, causing the price of potash to drop from $395.00 per ton in early 2013 to an estimated $307.00
per ton in April 2015. Another sharp decrease in the price of potash in 2016, a key industry product, is
expected to cause revenue to fall in 2016 and has kept industry revenue growth in check over the period.
Due to increasing competition, potash prices at lower than historical averages, higher input costs and
rising M&A activity, operators in many developed markets are reducing their workforce. In contrast,
employment growth is occurring in emerging economies, leading to overall growth in industry
employment. In the five years to 2016, industry employment is expected to rise at a very slow annualized
rate of 0.1% to 557,671 workers.
Industry Outlook
Over the five years to 2021, the Global Fertilizers and Agricultural Chemicals Manufacturing industry's
performance will depend on variables mostly outside the control of individual participants. These include
the level of agricultural income (particularly in key emerging economies), evolving international trade
patterns, changes in environmental laws and regulations, trends in end-user demand, evolving
consumption patterns and intensifying competitive pressures, including competition from substitutes.
However, global demand for most major agrochemical nutrients will remain relatively robust, at least in
2017.
New technologies derived from agricultural biotechnology, genomics and biopharming will spur a new
phase of product innovation within the crop protection product segment. Technological advancements will
also facilitate a change in product profiles, as pesticide players continue to move away from traditional
crop protection activities in favor of biotech platforms, such as genetically modified seeds. As a result, the
number of industry establishments is anticipated to increase in the five years to 2021 at an average annual
rate of 2.2%, reaching 7,991 plants.
Growth spurred by the United States

Supported by an expanding US economy, the global industry is expected to return to long-term growth,
with revenue forecast to increase at an annualized rate of 3.0% to $182.3 billion over the five years to 2021.
Industry revenue is forecast to grow 2.6% in 2017 alone. While agricultural commodity prices are not
expected to return to their recent highs, they will remain above 10-year historical averages. However,
certain key agricultural commodities will experience significant price fluctuations, which may discourage
farmers from using fertilizers and crop protection products.
In line with the industry's maturity, employment growth will likely be moderate as operators in most
developed economies increase headcounts only modestly amid the changing operating environment.
However, growth in emerging economies and in the United States will likely offset these declines. Over the
next five years, industry employment is forecast to grow at an annualized rate of 1.7% to 606,717 workers.
Emerging economies will remain a key growth market as consumption continues to rise in line with a
growing population base, increasing standards of living and demand for more diversified diets. As a result,
the level of international trade during this outlook period is expected to remain strong. In the five years to
2021, exports and imports are anticipated to increase at an average annual rate of 2.0%, reaching $111.5
billion. The future performance of the global agricultural sector will continue to have a significant influence
on fertilizer and agricultural chemical manufacturers. In particular, there will be a growing reliance on
fertilizers and agricultural chemicals to sustain the world's growing population.
Environmental concerns
The industry will have an increasingly important role within the context of the Organisation for Economic
Co-operation and Development's (OECD) green growth strategy for food and agriculture and the United
Nations Environment Programme. A number of industry participants are highlighting the integrated role
that improved agricultural productivity can play in achieving a more sustainable and green global
economy, as well as in meeting the needs of food security.
Concerns about climate change are expected to result in the introduction of greater regulatory controls.
Indeed, the regulatory backdrop that frames the industry will have a key bearing upon performance,
particularly for participants that operate in the more mature and heavily regulated markets in developed
economies. Concerns regarding the effects of industry products on the environment will also place greater
emphasis on environmentally benign or reduced-risk products. They may also result in the further
elimination of various active ingredients used in manufacturing pesticides. The European Union's (EU)
Thematic Strategy for the Sustainable Use of Pesticides could introduce a new hazard-based approvals
process (as opposed to the previous risk assessment model), which may have far-reaching consequences
for the industry. At the same time, there may be an increasing reliance on biopesticides, which are more in
line with the principles of the EU's Sustainable Use Directive.
Environmental costs are high for industry participants in many developed markets and are anticipated to
rise over the next five years. These costs will ultimately weigh on profit and decrease the competitiveness of
businesses operating in these markets. Compliance costs account for 2.0% to 3.0% of the industry's
operating costs.
Government policies regarding agricultural subsidies, export taxes (particularly in China) and resource
taxes may also have a bearing on the industry. Changes to agricultural subsidies as a result of the 2012 US
Farm Bill and reforms to the EU Common Agricultural Policy came into effect beginning in 2014 and will
continue through 2020.
Growing consumer concerns in developed economies about the environmental impact of fertilizers and
pesticides and the simultaneous rise in demand for environmentally friendly food will encourage greater
regulatory controls in crop production. Therefore, growing consumer concerns will result in producers
creating less-harmful chemicals that can be recycled or disposed of in a clean manner. This will require
greater investment in research and development over the next five years.
Industry Life Cycle

This industry is in the mature stage of its life cycle.
Life Cycle Stage

Technological development is slow in some product segments
Tighter regulatory policies have been introduced over the past 10 years
A spate of mergers and acquisitions has occurred
The Global Fertilizers and Agricultural Chemicals Manufacturing industry is in the mature stage of its life
cycle. Product and market segments are clearly defined, and technological developments within the
fertilizer-manufacturing segment tend to be confined to improving manufacturing efficiency or complying
with increasingly stringent environmental controls, as opposed to introducing new products. In the case of
pesticides, the increasing emphasis on introducing new products that meet regulatory approval has raised
research and development costs to extremely high levels.
At the same time, the industry has come under increased pressure from intense competition, which has
resulted in a spate of mergers and acquisitions to reduce costs and remain competitive. Within the
pesticide segment, a number of players have formed strategic alliances in a bid to remain competitive,
increase market power and reduce the risks associated with the high cost of researching and developing
new technologies.
Increasing demand for food, animal feed and fuels is currently stimulating the industry. For example, the
growing affluence of consumers in emerging economies, such as India and Brazil, is leading to an increase
in demand for high-quality foods and animal protein, which is translating into increased fertilizer use. At
the same time, the emergence of the biofuels industry is also stimulating fertilizer use. Over the 10 years to
2021, industry value added (IVA), which measures the industry's contribution to the overall economy, is
expected to grow at an annualized rate of 1.2%. World GDP is expected to grow at a rate of 3.6% over the
same period. This slower growth is explained by the recent volatility in global potash prices, as well as
fluctuating demand due to slower economic growth in Europe and emerging markets.
Products & Markets

Supply Chain
Key Buying Industries
A0119-GL - Other Global Agriculture

Various agricultural industries, including growers of wheat, corn, soybeans, sugarcane and cotton, are key
users of fertilizers and pesticides.
Key Selling Industries
C1912-GL - Global Petrochemicals Manufacturing

The Global Petrochemical Manufacturing industry supplies inputs into fertilizer manufacturing.
C1921-GL - Global Basic Inorganic Chemicals Manufacturing

The Global Basic Inorganic Chemicals Manufacturing industry supplies inputs into fertilizer and agricultural
chemical manufacturing.
C1922-GL - Global Basic Organic Chemicals Manufacturing

The Global Basic Organic Chemicals Manufacturing industry supplies inputs into fertilizer and agricultural
chemical manufacturing.
Products & Services
Fertilizers 68.0%
Other agricultural chemicals 4.0%
Pesticides 28.0%
Fertilizers
The fertilizer product segment covers a wide range of products that service a variety of markets. Fertilizers
are typically made from three key plant nutrients: phosphorus, nitrogen or potassium. They also contain
secondary plant nutrients such as calcium, sulfur and magnesium.
Nitrogenous fertilizer production is based on the manufacture of ammonia, which is used as an essential
raw input for the manufacture of granulated fertilizers, ammonium nitrate and liquid fertilizers. With
nitrogen as the most popular applied nutrient, nitrogen fertilizers can be applied in the form of urea,
nitrates, ammonium compounds or pure ammonia. Granulated fertilizers, such as urea (a soluble organic
compound containing 46.0% nitrogen), are widely used in agriculture as feed supplements. Urea also is
used by the industrial sector for manufacturing urea-formaldehyde resins. Ammonium nitrate is used in
fertilizing or additional fertilizing during the vegetation period and can be applied to any type of soil.
Nitrogen-based fertilizers are used in the production of maize, barley, sorghum, rapeseed, soybeans and
sunflowers. Over the past two decades, nitrogen use efficiency has improved significantly in North
America, Western Europe and North-East Asia.
Phosphate fertilizers are manufactured by adding acid to ground phosphate rock. In the past, single
superphosphates were one of the main forms of fertilizer used. However, there has been a shift from such
low- analysis products in favor of high analysis (high phosphorus content) fertilizers such as diammonium
and mono-ammonium, which are made via a process known as ammonization. These fertilizers contain
double or triple the phosphorus of the traditional single superphosphates, and are used to generate higher
yields in pastoral activities. They are often applied to fields in the spring or fall as a primary source of
phosphate nutrients and secondary source of nitrogen. Today, diammonium phosphate (DAP) is the most
widely used high analysis phosphatic fertilizer in the world, followed by mono-ammonium phosphate
(MAP), which is the fastest growing phosphate product worldwide. The third most widely used high-
analysis phosphate fertilizer worldwide is granular triple superphosphate.
A third product group is potash fertilizers. Applied to areas affected by a potassium deficiency, such as soils
in high rainfall areas that are intensively cropped or used for irrigated pastures, potash fertilizers are
mainly derived from geological saline deposits. As with the other two main product groups, demand for
higher-concentration potash products, such as potassium chloride (muriate of potash) and potassium
magnesium sulfate, has increased over the past five years. Two key producing nations are Canada and
Russia, reflecting the existence of large potash deposits.
Pesticides
This segment produces a wide range of products that service a variety of markets. The major product
categories falling within the pesticides segment are herbicides, insecticides and fungicides. The largest
category within the pesticides segment is herbicides. Herbicides are designed to kill weeds and have been
used for about 70 years. Herbicides also are used outside of farms in areas, such as industrial sites,
roadsides, fence lines, recreational areas and railroads. Although the usage of herbicides in the aggregate
has declined in the past five years, the use of glyphosate herbicides has increased in line with the rising
level of glyphosate-tolerant biotech crops being planted.
Fungicides are used to fight plant diseases that can have severe adverse effects on crop yields and quality.
Fungicides are extensively used in agriculture and the home and garden for several purposes, including
protection of seed grain during storage; protection of mature crops, berries and seedlings; and suppression
of mildew. There are estimated to be just less than 200 active ingredients within this sub-segment,
although just 20 of them account for nearly 60.0% of the market. Insecticides are designed to prevent
excessive pest infestation. They are divided on the basis of their chemical structures and include
organochlorines, organophosphates, carbonates, pyrethroids and inert growth regulators.
Within the pesticides segment, herbicides are estimated to account for 43.0% of the crop protection
market, fungicides 28.0%, insecticides 23.0% and others 6.0%. This segment also is broken up on the basis
of proprietary patented products versus generic products. Proprietary patented products account for about
30.0% of the market as do generic products with sales having plateaued in recent years. The remainder is
derived from the sale of proprietary products, which are off patent but still sold by the originating
company.
Other agricultural chemicals
The industry manufactures a range of agrochemicals that have non-crop usages. These include self-applied
garden products, turf products, pest control products and industrial weed control products. Demand for
this segment, which accounts for about 4.0% of revenue, has increased over the past five years.
Demand Determinants
The agricultural sector (i.e. farming) is the major market for fertilizer manufacturers. Other markets
include nurseries, golf courses and landscapers. Thus, the demand for fertilizer products closely correlates
to the condition of the farm economy and the level of farm sector income. In turn, this factor is largely
influenced by weather conditions. In years of poor weather conditions, pastures and crop harvests are
reduced or abandoned; consequently, fertilizer use is limited or not necessary. In contrast, in times of
favorable weather conditions and high commodity prices, farmers are willing to apply more fertilizers on
crops in anticipation of higher yields and higher incomes. In the case of abandonment of planting, fertilizer
is stockpiled for ensuing years.
Changes in international and domestic commodity prices also can markedly affect production, price and
subsequently farm incomes. Thus, the relative price of fertilizers is also an important factor. High fertilizer
prices may cause farmers to shift their resource allocation to cheaper, lower-yielding substitutes or
otherwise reduce their consumption of fertilizers.
Individual government agricultural policies, world economic conditions, and world trade of fertilizers and
agricultural products further affect demand from year to year. In addition, the level of industry demand
may be determined by the community's perception of agricultural chemicals and their effect on the
environment.
Demand for pesticides and other agricultural chemical products is determined by general factors, such as
local climate, soil conditions and the prevalence of certain agricultural diseases and parasites. Demand is
influenced by particular developments within the upstream agricultural sector, including the level of
domestic farm incomes, which are partly affected by commodity crop prices. Moreover, lower prices or a
cut in the level of subsidies available to farmers may adversely affect the level of demand for crop
protection products. The type of crop grown and the size of the area sown also have implications for the
level of demand for various pesticides and agricultural products. For example, in periods of high
agricultural output, demand for agricultural chemicals will tend to rise because more crops will need
protection. At the same time, corn is a key crop that is often treated twice per growing season. Therefore,
the amount of corn planted per season will have a strong influence on the level of demand.
There are increasing pressures to cut the level of subsidies available to farmers within some countries.
Should these subsidies be cut, this may serve to negatively impact demand levels for various industry
products. According to the International Fertilizer Industry Association, countries that are subsidizing
fertilizers account for an estimated 55.0% of world demand. Government regulations regarding the
planting of GM crops may also impact the level of demand for biotech-based products.
Major Markets
Wheat growers 17.0%

Other cereals producers 16.0%
Rice growers 15.0%
Fruit and vegetable growers 15.0%
Corn growers 15.0%
Non-agricultural users 12.0%
Cotton growers 5.0%
Soybean growers 5.0%
Agricultural sector
The agricultural sector is the largest consumer of fertilizer and agricultural chemical products. Key
cropping industries include corn, wheat, and rice, reflecting the fact that they are the staple foods of the
world's growing population. According to data sourced from the International Fertilizer Industry
Association (IFA), wheat accounts for 17.0% of global fertilizer use, with rice, maize and fruit and
vegetables accounting for an additional 15.0% each. The type of fertilizer used by each product will vary.
For example, while cereals combined are thought to account for 55.0% of world nitrogen fertilizer use, they
account for just under 40.0% of potassium fertilizer consumption, according to IFA data. In turn, key users
of potassium-based fertilizers include oil palm, sugar crops and fruit and vegetable growers who together
account for about one-third of potassium fertilizer consumption.
Within the crop protection product segment, key crops include vegetables, cereals, maize, soybeans, rice
and cotton. Key fertilizer users are corn, wheat and rice growers. In recent years the relative importance of
these market segments has been impacted by a number of variables, including the development of new
biotech-based crop protection products and growth in biofuels. The latter will likely increasingly influence
crop planting patterns within the foreseeable future, and lead to an increase in plantings of maize in the
United States, Brazil and Argentina, cereals and rapeseed in Northern Europe, canola in Canada,
sugarcane in Brazil, and palm oil in Indonesia and Malaysia.
Non-agricultural sector
The non-agricultural market segment is comprised of a number of smaller markets reflecting the diverse
nature of the products manufactured by the industry. For example, fertilizers are sold to households,
landscapers and nurseries. Industrial, commercial, government and residential users purchase pesticides
and other agricultural chemicals for pest control, industrial weed control, public health, forestry and
timber treatments, and in various turf and ornamental applications.
International Trade
Exports in this industry are high and decreasing.

Imports in this industry are high and decreasing.
A significant degree of international trade occurs between the world's largest producing nations and the
largest consuming nations. The United States is estimated to be the world's largest producer of phosphate-
based fertilizer due to its large phosphate rock reserves, while China is the world's largest producer of
nitrogen-based fertilizers and the world's largest producer of ammonia.
India and China are among the world's largest importers of ammonium phosphates and potash. The
United States is the world's largest importer of ammonia (accounting for between 35.0% and 40% of world
trade). Trinidad is the world's largest ammonia exporter, accounting for nearly one-quarter of global trade.
According to IBISWorld estimates, less than 15.0% of global nitrogen-based fertilizer is traded, compared
with 75.0% of potash. According to major player PotashCorp, there are just 12 major potash-producing
countries, compared with about 40 phosphate-producing nations and 60 nitrogen-manufacturing
countries.
Over the past decade, trade of products with higher nutrient concentrations (e.g. urea and potassium
chloride) and processed phosphate products (e.g. ammonium phosphate, MAP, DAP, and phosphoric acid)
has increased. According to the Food and Agriculture Organization of the United Nations, Morocco's MAP
and DAP exports are expected to increase 70.0% over the next five years, while its exports of phosphate
raw materials will decline as production capabilities shift toward the finished product.
There has also been a change in the roles played by participating trading countries. For example, the
Middle East has gradually been increasing its production of nitrogen-based fertilizers. In 2006, the region
accounted for 30.0% of all urea exports; by 2016, to the region is expected to increase its share to over
50.0%, according to the Middle East Economic Digest.
One area of growing global concern for international trade within the industry is the increasing prevalence
of counterfeit products, particularly regarding public health and environmental concerns. This problem is
becoming increasingly widespread in both emerging and developed markets. In Europe, counterfeit
pesticides are estimated to account for between 5.0% and 10.0% of the total crop protection market; in
emerging markets, counterfeit products can count for as much as half of all pesticides. In the case of
fertilizers, counterfeiting is exacerbated by the lack of internationally accepted or standardized methods
that can be used to sample or analyze fertilizers. In 2011, over 2,500 tons of counterfeit products were
seized by EU and non-EU authorities.
Changes in individual government policies can also influence trade patterns on a year-to-year basis. The
Chinese government taxes exports of urea to maintain adequate domestic supplies. As China is the world's
largest urea exporter, these changing policies have significant ramifications for global urea supplies and
prices.
Business Locations
Region %
North America 35.1
North Asia 23.0
Europe 13.5
India & Central Asia 13.3
South America 6.5
Africa & Middle East 5.5
South East Asia 2.1
Oceania 1.5
The Global Fertilizers and Agricultural Chemicals Manufacturing industry has a wide geographic spread,
with various emerging countries playing a prominent role on the global stage. Nonetheless, North America,
North Asia and Europe dominate production, accounting for an estimated 71.6% of industry volume. That
said, the geographic spread varies among product segments. For example, within the fertilizer segment,
production tends to be located near raw material sources (e.g. ammonia, phosphoric acid or mined
potash). For potash production, Canada, Russia and Belarus account for nearly two-thirds of all production
due to their vast ore reserves. In fact, Potash is produced in only 12 countries across the globe as deposits
are rare. Canada exports nearly 80.0% of its production, but supplies just under 10.0% of the world's
fertilizer materials. Similarly, phosphate rock is mined in just 30 countries, although the top 12 producing
countries, including the United States, China and Morocco, are estimated to account for the bulk of all
phosphate production. In the case of nitrogen-based fertilizers, natural gas deposits are more common,
giving rise to a far greater number of producing countries. For example, urea, which is one of the most
common nitrogen fertilizers, is produced in over 60 countries.
This illustrates how the geographic spread of nitrogen fertilizer manufacturing has gradually shifted over
the past few decades. Prior to the 1970s, this product segment was dominated by traditional producers
located in Western Europe, North America and Japan. Since the 1970s, nitrogen fertilizer manufacturing
has shifted from Western Europe, North America and Japan to the largest consuming nations, including
China, India and Indonesia, and toward some gas-rich countries located in the Middle East.
Competitive Landscape
Market Share Concentration
Industry concentration is low.
The Global Fertilizers and Agricultural Chemicals Manufacturing industry has a low level of market share
concentration. In 2016, the top four players will account for less than 40.0% of industry revenue. This is
despite the existence of a dozen or so global players that dominate in most geographic market segments.
However, concentration levels will vary between product segments. For example, within the pesticide
segment, the top six producers (i.e. BASF, Bayer, Dow, DuPont, Monsanto and Syngenta) are estimated to
supply about 75.0% of the global market. Within the fertilizer product segment, there are 10 companies
that dominate: PotashCorp, Mosaic, Uralkali, Belaruskali, OCP, Yara, CF Industries, Israel Chemicals,
Agrium and the K&S Group. Industry consolidation has increased over the past years as an increasing
number of operators have merged or been acquired. For example, BASF acquired the Sorex Group and
Mosaic acquired CF Industries' phosphate business.
Key Success Factors

The key success factors in the Global Fertilizers & Agricultural Chemicals Manufacturing industry are:
Guaranteed supply of key inputs

A guaranteed supply of key inputs, such as natural gas, can enable year-round production and a higher
competitive advantage.
Access to the latest available and most efficient technology and techniques
Access to the latest technology can lower manufacturing costs and allow firms to produce higher quality
products for the market, thereby increasing competition among producers.
Availability of resources
Proximity to key materials, such as phosphate, ammonium, sulfur and natural gas, allows for a better profit
margin as it reduces transport costs and provides greater security in supply.
Having marketing expertise

In this highly competitive industry, brand awareness and marketing are important in order to gain market
share.
Economies of scale
Increasing price competition has extended the need to generate economies of scale in a bid to maintain
profit margins.
Cost Structure Benchmarks
Purchases 61.0%
Wages 13.7%
Rent & Utilities 4.5%
Depreciation 3.6%
Marketing 1.5%
Other 10.1%
Profit 5.6%
The Global Fertilizer & Agricultural Chemicals Manufacturing industry primarily services the agricultural
sector. Demand from emerging markets is expected to pick up over the next five years, providing industry
operators with a steady source of demand. However, firms in this industry are also facing heightened
regulation across the globe, especially in the use of pesticides causing pressure on profit margins.
Profit
Profitability is influenced by a number of variables, such as input costs, investment costs, transportation
costs, as well as distribution and energy costs. As these costs have fluctuated during the five years to 2016,
so have profit margins. Increased regulation and environmental costs have also hurt profit. Furthermore,
the industry has been adversely impacted by the sharp drop in potash prices that occurred in 2013.
However, recently potash prices have begun to recover allowing for average industry profit margins to
slowly pick up. Profit accounted for 6.5% of revenue in 2011 and it is expected to account for 5.6% of
revenue in 2016.
Purchases
Purchases are the most significant expense item. In 2016, they account for about 61.0% of revenue.
Purchases include raw materials such as phosphate rock, elemental sulfur, sulfuric acid, ammonia and
more. Due to tightening supplies and strong demand, raw material costs have risen in recent years.
The cost of energy, mainly natural gas, is another significant expense that has risen in recent years. Energy
costs are particularly critical to manufacturing ammonia and nitrogenous fertilizers, but phosphate
fertilizer manufacturing is less energy intensive. Energy costs can display high volatility. For instance, the
hike in crude oil prices between 2010 and 2012 led to corresponding increases in the cost of ammonia,
which adversely affected industry profitability. The price for natural gas within the United States, though,
has dropped significantly during this period due to domestic supply which has caused many industry
operators located there to consider building or expanding their nitrogen facilities. This has resulted in
many firms purchasing heavy equipment and systems for their new facilities.
Wages
Wages are the next largest item, accounting for about 13.7% of revenue in 2016. Over the past five years,
total industry wages is expected to decline slightly as the industry relies more heavily on technology. In
comparison, depreciation accounts for about 3.6% of revenue. The level of depreciation reflects the high
level of capital tied up in manufacturing equipment, including chemical pumps, storage tanks, vent
equipment and sulfuric and phosphoric acid production equipment.
Other costs
The industry is subject to an array of environmental laws and regulations, which have implications for its
cost structure. The compliance costs associated with these regulations are included within the "other"
expense item. In recent years, environmental expenses have risen due to increased scrutiny by regulating
bodies especially in the European Union. Additionally, firms in this industry are anticipated to spend on
average 4.5% on rent and utility. Moreover, transportation costs are a significant component of the final
purchase price.
Basis of Competition
Competition is high and increasing.
Internal
Many of the products produced by the Global Fertilizers and Agricultural Chemicals Manufacturing
industry are commodities that are available from a number of sources. As a result, the market is highly
competitive, and competitors tend to compete on the basis of being low-cost producers. In these instances,
price is the major basis of competition. In turn, variables that influence price include raw material prices,
the degree of integration, the scale of production and the cost of the transportation infrastructure used. In
the case of the latter, transportation costs can be a significant cost component, meaning that producers
strive to keep these costs down. The quality of the product and the security of supply can form another
basis of competition, as can the existence of established relationships with customers. For example, major
player Agrium covers the entire crop input value chain via its three separate business units of retail,
wholesale and advanced technologies.
Companies that provide value-added services, such as customer service centers for soil testing, have
become increasingly important in recent years. The majority of major manufacturers offer widespread
distribution networks to ensure that farmers receive the most accessible service possible. For example,
Agrium operates nearly 850 retail outlets, 72 terminals and 19 distribution facilities located in the United
States, Canada, Argentina and Chile. There are in excess of 9,000 farm retail centers catering for growers
within North America; therefore, a good relationship with downstream retailers can provide a competitive
advantage.
Manufacturers can blend fertilizers to provide the appropriate nitrogen and phosphate levels to meet
farmer requirements. Farmers are becoming more knowledgeable and realizing the importance of
fertilizers in maintaining the appropriate nutrient balance in their land to maximize productivity of crops
and pastures. Therefore, the manufacturer's ability to provide these purpose-specific fertilizers and
fertilizer blends, including those for specialty crops, also forms a basis of product competition.
The industry is dominated by European and North American-based agribusinesses or subsidiaries of global
chemical conglomerates. These include the likes of Syngenta, Monsanto, Mosaic, Yara, BASF, Bayer, Dow
and DuPont. At the same time, there is increasing participation by smaller players that operate on a
national or regional basis, particularly within the generic product segment.
External
External competition for industry manufacturers is limited. Nonetheless, industry manufacturers face
some external competition in the form of substitute goods. For example, industry operators compete with
fertilizer substitutes, such as compost.
Barriers to Entry
Barriers to entry are high and increasing.
Barriers to Entry checklist Level/Impact
Industry Competition High

Industry Concentration Low
Life Cycle Stage Mature
Capital Intensity Medium
Technology Change Medium
Regulation and Policy Heavy
Industry Assistance Low
SOURCE: IBISWORLD
Barriers to entry for the Global Fertilizers and Agricultural Chemicals Manufacturing industry are high and
include capital as well as research and development (R&D) requirements. The initial capital outlays
required to enter this industry can be quite significant. Firms in this industry generally require in excess of
$500.0 million to construct a competitive fertilizer plant. For example, nitrogen plants capable of
producing 1.0 million metric tons of nitrogen products cost between $700.0 million and $1.0 billion and
take two to three years to build, while phosphate plants can cost over $1.5 billion and take three to four
years to build.
Significant R&D expenditure pose another barrier within the pesticide product segment. It can take up to
ten years and millions of dollars for a new, environmentally sound crop protection product to be brought to
market. Moreover, the ability to maintain a technological edge is critical. Players need to invest increasing
amounts of resources into R&D and new plants and equipment to remain competitive.
The high concentration of manufacturers also can pose a significant barrier. Chemical heavyweights
DuPont, Dow and Syngenta dominate the pesticide segment. With established products (protected in many
cases by patent arrangements) and manufacturing operations, these major players command a significant
proportion of the market. They also tend to operate at lower costs, which new operators find difficult to
compete with effectively. Similarly, a few players (i.e. Mosaic and Agrium) dominate the fertilizer product
segment. These large manufacturers possess established brand and product identification. Moreover, a
number of these players are fully vertically integrated, meaning they are involved in the manufacture,
wholesale and retail of fertilizer products.
The industry is subject to an array of environmental laws and regulations. As consumers become more
aware of the adverse effects of chemicals on human, crops and animals, the degree of regulation pertaining
to the fertilizer manufacturing industry will rise. This factor will continue to increase barriers to entry.
Raw material and input costs are also significant, particularly with the increasing cost of natural gas. In the
case of potash and phosphate fertilizers, the availability of raw materials can act as a significant barrier to
entry. With nitrogen fertilizers, access to ammonia and cheap natural gas supplies is crucial.
Industry Globalization
The level of globalization is high and increasing.
Industry globalization is high, with a number of larger operators generating revenue from both developed
and emerging markets. For example, the Mosaic Company generates two-thirds of its revenue from non-
US markets. Major operators tend to have establishments in North America and Western Europe.
However, over the past five years there has been a gradual emergence of new second-tier players from new
regions, such as Russia-based Eurochem. Additionally, operators are increasingly targeting Asian and
South American markets.
As the relative importance of the agricultural sector continues to fall in various developed countries, such
as in the United States and Europe, industry participants are shifting their focus toward new geographic
markets. A number of pesticide manufacturers are gearing products toward the Asian agricultural market,
and in particular toward crops such as rice, which is a staple food for 60.0% of the world's population. In
China, which feeds nearly 20.0% of the world's population from 7.0% of the world's arable land area,
pesticide manufacturers are targeting grain crops and cotton, the demand for which has increased on the
world stage following China's entry into the World Trade Organization. Yara, one of the world's leading
fertilizer manufacturers, is targeting the emerging markets in China and Brazil. Other industry companies
have also sought to expand their global reach by penetrating new markets.
Many industry products, including nitrogen-based fertilizers, are considered to be a global commodity
since they are produced and traded in most global regions. Commonly traded forms of nitrogen fertilizers
include ammonia and urea. In fact, given its relative safety in terms of handling, storage, transportation
and usage, urea is the most widely traded nitrogen fertilizer.
Major Companies
Market
Major Player
Share
Syngenta AG 8.5% (2016)
Yara International ASA 8.5% (2016)
Bayer AG 7.5% (2016)
The Mosaic Company 5.0% (2016)
Other 70.5% (2016)
Syngenta AG
Market Share: 8.5%
Syngenta AG (Syngenta) was the world's first stand-alone agribusiness company, with operations in all
major areas of crop protection and seeds. As it stands today, Syngenta is a leading player in the global crop
protection market and the third-largest player in the high-value commercial seeds market. The company
has its headquarters in Basel, Switzerland and employs about 26,000 people in 90 countries.
Having made a number of acquisitions in recent years in the seeds market, the company is also active in
genetically modified organisms, with a focus on North and South America. Syngenta is currently seeking to
build on the combined strength of its crop protection and seeds businesses to develop a fully integrated
offering on a global basis. To this end, the company began integrating the commercial operations of its
seeds and crop protection divisions in February 2011.
Syngenta came into being in November 2000 following the merger of the global agribusinesses of Novartis
(Novartis Agribusiness) and AstraZeneca (Zeneca Agrochemicals). This merger was a result of weak sales
for Zeneca Agrochemicals due to controversy regarding its genetically modified seeds business. The
company's main products include selective and nonselective herbicides, fungicides, insecticides,
professional products, seed care and seeds.
Financial performance
Over the five years to 2016, revenue is expected to fluctuate, however, average growth will be almost 0.0%
to $13.3 billion. According to the company, strong performance reflects steady gains in market share and
strong product innovation, however, decreasing fertilizer prices erased gains in sales volumes. An
increased focus on emerging markets has also driven growth in its crop protection business.
Syngenta AG - financial performance*

Revenue Growth Net Income Growth
Year $ million % change $ million % change
2011 13268.0 N/C 2009.0 N/C
2012 14202.0 7.0 2256.0 12.3
2013 14688.0 3.4 2086.0 -7.5
2014 15070.0 2.6 2857.0 37.0
2015 13411.0 -11.0 1841.0 -35.6
2016 13290.8 -0.9 2067.1 12.3
SOURCE: ANNUAL REPORT AND IBISWORLD
NOTE: *ESTIMATES
Yara International ASA
Market Share: 8.5%
A global chemical company specializing in the production, distribution and sale of nitrogen chemicals,
Norway-based Yara International (Yara) identifies as the world's largest supplier of mineral fertilizers. It
also is the world's largest producer of ammonia, nitrate and complex NPK fertilizers, accounting for 20.0%
of the world's ammonia. Additionally, the company has the world's largest storage capacity for fertilizer.
Yara has a physical presence in 50 countries and sells its products in 150. Yara's upstream operations
include ammonia and urea plants, nitrate fertilizer production and procurement of third-party-produced
fertilizers via strategic supply contracts and joint-ventures. The company is also involved in producing
industrial gases and nitrogen-based chemicals, which are produced as coproducts in the fertilizer
production process and sold as part of its industrial segment. The company employed about 8,050 people
in 2014.
According to the company, its competitive strengths are derived from its leadership position in the
ammonia value chain and its large-scale ammonia-urea production base in low-cost natural gas regions via
its joint ventures in Qatar and Trinidad and Tobago. In addition, production sites are located in Norway,
Sweden, Denmark, Germany, France and Italy. Over the past few years, Yara has sought to target specialty
fertilizers for high-margin cash crop segments located in fast-growing markets. In late 2008, Yara
temporarily halted production at several facilities in Italy, France, the Netherlands and the United
Kingdom, and permanently closed plants in Lithuania and Italy. Production was also curtailed during
2009. However, production was back to near full capacity in 2010, with finished fertilizer production up
15.0% from the previous year.
Yara was founded as Hydro Agri, a subsidiary of Norsk Hydro, in 1905. In 2004, it was spun off from Norsk
Hydro as an independent company. Since then, it has undertaken several acquisitions. In October 2008, it
acquired Canadian nitrogen producer Saskferco in a move designed to strengthen its production and
marketing position in North America. This was supplemented by smaller purchases, including a 25.0%
share in Agrico Canada. It also undertook a 50-50 joint venture in Libya (Lifeco) in February 2009,
although production was suspended in early 2011 as a result of civil unrest.
Over the five years to 2016, company revenue is expected to increase at an average annual rate of 4.7% to
$13.4 billion. The company's most recent strategic growth goal is to increase volume by 8.0 million tons by
2016. This is to be achieved via brownfield and greenfield expansions and production optimization
programs. Yara's industrial and environmental solutions businesses will also be key growth drivers and will
account for a growing proportion of the company's earnings, as government regulations and environmental
requirements tighten.
Yara International ASA - financial performance*

Revenue Growth Operating Profit Growth
2011 10616.0 N/C 1749.3 N/C
2012 11165.2 5.2 1475.2 -15.7
2013 11236.9 0.6 1029.3 -30.2
2014 12557.5 11.8 1361.2 32.2
2015 13895.4 10.7 1751.4 28.7
2016 13373.7 -3.8 1567.7 -10.5
NOTE: *ESTIMATES
Bayer AG
Industry Brand Names: Bayer CropScience
Market Share: 7.5%
A subsidiary of Germany-based Bayer AG, Bayer CropScience AG (formerly Bayer Crop Protection) is a
research-based agrochemicals and biotechnology company and global provider of crop solutions, products
and services. Bayer CropScience came into existence in mid-2002 following the purchase of Aventis
CropScience (an Aventis-Schering joint venture). Through the acquisition, Bayer gained access to the key
segments of biotechnology and seeds, which provide added potential for higher earnings and growth. As
with many of its rivals, the company is increasingly focusing on this area. The company had about 21,000
employees in 2014.
In addition to its traditional crop protection products, Bayer CropScience also is involved in
nonagricultural pest and weed control and, increasingly, seed breeding and plant traits. The company is
split into two core segments: crop protection/bioscience and environmental science. The crop protection
segment manufactures fungicides, herbicides, insecticides and seed treatments. Bayer CropScience holds
the leading position in both insecticides and seed treatments. It is also the world's second-leading supplier
of fungicides and the third-largest player in the herbicides market. The environmental science segment
combines professional pest control with the home and garden business. With innovation forming the core
element of Bayer CropScience's corporate strategy, the company invests heavily in research and
development. In October 2013, Bayer entered into an agreement with Pursell Industries to co-market
products to the US consumer lawn and garden market.
Over the five years to 2016, revenue is expected to increase at an annualized rate of 3.2% to $11.8 billion,
supported by higher crop protection sales. Underlying this growth, albeit limited, were new fungicide and
herbicide products. Over this period, the company has introduced about 10 new crop protection products.
In 2016, profit is expected to rise, driven by significantly higher volume, higher capacity utilization and
cost management programs.
Bayer CropScience - financial performance*

2011 10082.9 N/C 1688.6 N/C
2012 10779.1 6.9 2636.0 56.1
2013 11711.6 8.7 2900.4 10.0
2014 10241.3 -12.6 2520.3 -13.1
2015 11507.4 12.4 2840.8 12.7
2016 11804.8 2.6 2909.7 2.4
NOTE: *ESTIMATES
The Mosaic Company

Industry Brand Names: The Mosaic Company
Market Share: 5.0%
The Mosaic Company was established in October 2004, following the merger of IMC Global and Cargill's
former crop nutrition unit, which was predominantly a US business. The company, based in Plymouth,
MN, claims to be one of the world's leading producers and marketers of concentrated phosphate and
potash. Globally, it ranks number one in phosphate fertilizer capacity (13.0% of global production) and
phosphoric acid capacity (10.0% of global production), and number two for phosphate rock mining (8.0%
of global production). It is also the world's third-largest producer of potash, accounting for about 13.0% of
global capacity.
In fiscal 2010, Mosaic realigned its business segments into just two segments: phosphates and potash.
Prior to this move, it was organized into three business segments. Its former offshore segment is now
included as part of its phosphates segment. The company's phosphates segment owns and operates mines
and processing plants in Florida and Louisiana. Phosphate fertilizers include DAP, MAP and granulated
triple super phosphate (GTSP), which is sourced from third-party producers. Prior to its recent phosphates
restructuring program, Mosaic also produced GTSP. However, it now sources its needs from other third-
party producers. Its products are marketed worldwide to crop nutrient manufacturers, distributors and
retailers. In fiscal 2010, it produced 7.9 million tons of phosphate fertilizer, accounting for 56.0% of US
production. Roughly 39.0% of its phosphate product is shipped within North America, with the remainder
exported globally. Additionally, Mosaic acquired the phosphate business of CF Industries for $1.2 billion in
October 2013, which will allow Mosaic to produce more than 10.0 million tons of phosphate fertilizer per
year.
Mosaic's potash segment is responsible for the mining and processing of potash in the United States and in
Canada. Its potash products are marketed worldwide to crop nutrient manufacturers, distributors and
retailers. They are also used to manufacture mixed-crop nutrients and animal feed ingredients.
Over the five years to 2016, revenue is expected to decrease at an annualized rate of 4.5% to $7.9 billion.
Over the period, average potash and phosphate selling prices have fluctuated dramatically. Potash prices
fell sharply in 2013 due to heightened price competition. As a result, Mosaic has undertaken cost-cutting
measures to increase operating efficiencies due to significant operating costs and rising raw material
prices, including closing a number of its highest-cost plants. In May 2014, the company announced that it
planned to cut 500 jobs.
The Mosaic Company - financial performance*

2011 9937.8 N/C 2644.2 N/C
2012 11107.8 11.8 2611.1 -1.3
2013 9974.1 -10.2 2209.6 -15.4
2014 9055.8 -9.2 1311.8 -40.6
2015 8896.0 -1.8 1644.0 25.3
2016 7880.0 -11.4 1570.1 -4.5
NOTE: *ESTIMATES
Other Players
Potash Corp. of Saskatchewan Inc.
Estimated market share: 4.8%
Canada-based Potash Corp. (PotashCorp) is one of the world's largest integrated enterprises involved in
the production of fertilizers, animal feed supplements and industrial products (e.g. phosphoric acid used in
food products and industrial processes). It is the world's largest manufacturer of potash fertilizers, with an
annual capacity of about 13.3 million tons of potassium chloride, which amounts to 20.0% of total global
capacity and 17.0% of global production. Additionally, PotashCorp manufactures nitrogenous and
phosphate fertilizers, and is the world's third-largest producer of nitrogen. The company sells its products
in more than 50 countries, with half of its fertilizer (predominantly potash and phosphate) sold
internationally.
Over the past two decades, PotashCorp has undertaken a number of acquisitions, boosting its size and
scale. These acquisitions include purchases in Chile, Jordan, Israel and China. The acquisitions have also
been in line with its projection that much of the anticipated potash growth will occur in emerging offshore
markets. With regard to US manufacturing facilities, the company has plants in Florida, Georgia,
Louisiana, North Carolina and Ohio. Over the five years to 2016, company revenue is expected to decrease
at an average annual rate of 3.1% to $7.4 billion. During this period revenue has been very volatile. In 2010
and 2011, demand for fertilizer rose as farmers regained confidence and needed fertilizer after spending
more than a year destocking their inventories. In 2013, the company's revenue and operating income fell,
which was attributed to a sharp drop in potash prices. This sharp drop caused senior management at
PotashCorp to reconsider the viability of certain facilities. In December 2013, PotashCorp announced plans
to cut its global workforce by about 18.0%, affecting more than 1,000 workers, with the majority of layoffs
taking place in Canada as well as in Florida and New Jersey. However, since mid-2014, potash prices have
been regaining ground, benefiting the company's overall fortunes.
Monsanto Co.
Estimated market share: Less than 5.0%
Once the third-largest crop protection company, Monsanto Co.'s role in the industry is gradually
diminishing. It is still well known for its flagship herbicide product Roundup, a name synonymous with
pesticides. However, the company is currently positioning itself as a seeds and biotech company. With an
R&D budget equivalent to about 10.0% of revenue, the focus is predominantly on new biotech traits, elite
germplasm, breeding, hybrid development and genomics research. The company operates in two business
segments: agricultural productivity, which includes its more traditional glyphosate products (e.g. Roundup
and other herbicide products), and seeds and genomics. The latter segment comprises Monsanto's global
business of seeds, related biotechnology traits and genetic technology platforms.
The company sells its products to a variety of agricultural consumers, including individual growers, seed
companies, distributors, independent retailers, agricultural cooperatives and other major agricultural
chemical producers. The company also provides Roundup lawn and garden products for the residential
market. Monsanto, which has its headquarters in St. Louis, has about 22,000 employees. In 2016, relevant
industry revenue is expected to account for less than 5.0% of the total industry.
E. I. du Pont de Nemours and Co.

Estimated market share: Less than 5.0%
Founded in 1802, the Delaware-based E.I. du Pont de Nemours (DuPont) is the third-largest chemical
group in the United States, with 64,000 employees worldwide and facilities in 90 countries. It operates in
seven business segments, including agriculture and nutrition, electronics and communications,
performance chemicals, performance coatings, performance materials, pharmaceuticals, and safety and
protection. The majority (60.0%) of total company sales take place outside the United States.
Industry-specific products fall within the agriculture and nutrition division, which includes crop
protection, protein technologies and microbial testing. DuPont's crop protection segment manufactures
herbicides, fungicides, insect control products and plant growth regulators produced for the grain,
specialty crop, forestry and vegetation management sectors. The division also makes soy-based food
ingredients, liquid food packaging systems and food quality diagnostic testing equipment and services. In
2011, DuPont strengthened its agriculture and nutrition segment by acquiring Danisco, a maker of
enzymes used in food and biofuels. The enzyme market is expected to grow during the next five years as
producers of detergents, animal feed and food turn to bacteria and catalysts to improve yields and counter
input costs. In late 2015, DuPont announced plans to merge with Dow Chemical. In 2016, industry-specific
revenue will account for less than 5.0% of total industry revenue.
Operating Conditions
Capital Intensity
The level of capital intensity is medium.
n/a
n/a
As with other components of the chemical industry, the Global Fertilizers and Agricultural Chemicals
Manufacturing industry is characterized by a moderate to high level of capital intensity. This reflects the
fact that components of the industry tend to be technology dependent, which in turn requires a high level
of capital resources. Indeed, the increasing reliance on new technologies and the need for higher levels of
investment in R&D has been one of the underlying reasons for the recent spate of merger and acquisition
activity within the industry.
The industry requires significant capital to operate a manufacturing plant. The cost of building a new
facility can often be hundreds of millions of dollars, while an upgrade to ensure competitiveness or
economies of scale also requires large investments of capital. Industry operators spend about $0.27 on
capital for every dollar spent on labor. However, firms in this industry also require human resources,
particularly as they expand their R&D teams to remain competitive. Over the five years to 2016,
employment is expected to increase at an estimated annualized rate of 0.1%.
Technology & Systems

The level of technology change is medium.
The level of technological change varies between the two main product segments, reflecting in part the
differing nature of crop nutrient products (many of which are essentially commodities) and crop protection
products, which are often patented products.
Fertilizers
While the components of finished fertilizer products are relatively basic chemicals, manufacturers use
highly developed technologies to produce various fertilizer products. These technologies vary, in line with
the nutrients produced. In the case of bulk fertilizers, manufacturing plants tend to be large in scale,
capital intensive and dependent on economies of scale for profitability. In contrast, some small
manufacturing plants produce specialty products geared at particular geographic regions (with specific soil
or weather characteristics) or niche market segments. Fertilizers are essentially commodity products.
Nitrogen fertilizers are manufactured by combining nitrogen and hydrogen in the presence of a catalyst to
form ammonia. More than 95.0% of nitrogen-based fertilizers are derived from ammonia, which is then
used either directly as a fertilizer, or combined with phosphoric acid to produce MAP and DAP, with
carbon dioxide to form urea, or with nitric acid to form ammonium nitrate.
Fertilizer manufacturers focus on improving manufacturing technologies, increasing fertilizer production

and efficiency, and improving product quality. In recent years, manufacturers have upgraded their facilities
to meet more stringent environmental regulations and standards. The main area of recent technological
development has involved the development of purpose-specific fertilizers. Firms are incorporating trace
elements (e.g. copper, manganese, zinc, iron and cobalt) into fertilizers and developing new products for
specific applications. Special slow-release or coated fertilizers are being developed to help increase
productivity by reducing nutrient loss. These products control or delay the release of nutrients in line with
crop requirements.
Oil companies are also developing technologies to produce hydrogen from natural gas and other fossil fuels
in a more environmentally friendly manner. As a result, less fossil fuel will be required to produce the same
amount of hydrogen for fertilizer manufacturing. This development could significantly reduce production
costs. Manufacturers of nitrogen fertilizer are the largest users of hydrogen in the world. In addition,
industry research is directed toward maximizing the use of fertilizers. Industry operators are focusing on
quality to improve the effectiveness of fertilizer products that are suitable for a range of soil, climatic
conditions, crops and fields.
Pesticides
In contrast, the pesticides product segment tends to be more technology dependent, and has witnessed an
increasing reliance on new technologies, along with the subsequent need for higher levels of investment in
research and development over the past decade. At the basic manufacturing level, the manufacture of crop
protection products comprises three phases: manufacture of the active substance; formulation of various
products from these active substances; and packaging of the products to closely align them with local
customer needs.
There is a growing reliance on biotechnology and genetic engineering. In 2012 (latest data available), there
were 28 countries planting biotech crops over a total global area of 170.3 million hectares, with an
additional 31 countries importing biotech products for food and feed use, according to the International
Service for the Acquisition of Agri-Biotech Applications (latest data available). Key global genetically
modified crops include corn, soybeans, cotton and canola.
The first generation of agricultural biotechnology relevant to this industry involved the development of
insect resistance, disease resistance and herbicide tolerant products. Today, the newly evolving second
generation of agricultural biotechnology products focuses on specific improvements in plant and animal
traits based on modifications to highly complex, multi-generic pathways. Technologies used include
genomics, bioinformatics, combinatorial chemistry and marker-assisted breeding.
Another development is the gradual growth in biopesticides or natural pesticides in line with the
environmental issues currently facing the industry with regard to the misuse and overuse of the traditional
synthetic pesticides. Biopesticides, or biological pesticides, are pesticides derived from natural materials,
such as animals, plants and minerals, and are considered to be less harmful than conventional pesticides.
They include naturally occurring substances that control pests (biochemical pesticides), micro-organisms
that control pests (microbial pesticides) and pesticide substances produced by plants containing added
genetic material (plant incorporated protectants).
Revenue Volatility
Industry revenue volatility is medium.
In the five years to 2016, this global industry has demonstrated a moderate level of volatility, indicating
that participants are subject to a number of market factors outside of their control. For instance,
agricultural incomes, a key demand determinant, can be highly variable as they are susceptible to changes
in seasonal and climatic conditions and commodity prices. Determined by global demand and supply
forces, fertilizer prices can also be highly volatile, adding to the volatility of this industry.
Regulation & Policy

The level of regulation is heavy and the trend is increasing.
The Global Fertilizers and Agricultural Chemicals Manufacturing industry is subject to heavy
environmental, health and safety laws and regulations. Recent years have seen an increasing number of
laws designed to restrict the amount and type of pollutants released into the environment. In the case of
pesticides, efforts have focused on replacing the more environmentally damaging products with reduced
risk pesticides, which are deemed more benign. This has particularly been the case in the United States,
Europe and Japan. For example, in 2006, the EU adopted the Thematic Strategy on the sustainable use of
pesticides, which includes legislation on pesticide use so to reduce risks to human health and the
environment. In 2009, the EU adopted the Framework Directive on the sustainable use of pesticides,
which includes tighter regulations on pesticide use. Additionally in 2013, the EU enacted and enforced the
world's first continent-wide ban on neonicotinoids, the world's most widely used insecticides, due to
scientific studies linking the use of these pesticides to huge declines in the number of queen bees. Tighter
EU regulatory controls have contributed to the phasing out of about 500 active ingredients used in the
production of pesticides.
Growing environmental issues have added a further impetus for regulatory change. Recent years witnessed
growing consumer concerns about the environmental effect of fertilizers and pesticides, as well as the
simultaneous rise in demand for environmentally friendly food. This prompted calls for greater regulatory
controls, as attempts are made to achieve a higher degree of transparency and traceability in crop
production. As the global agricultural sector comes under increasing pressure to improve its economic and
environmental performance, the spotlight is increasingly falling on pesticide and fertilizer manufacturers,
not only in terms of the role they play in boosting agricultural productivity, but also their associated carbon
footprint.
There are a number of relevant international agreements that can affect industry participants in various
regions. These include the International Code of Conduct on the Distribution and Use of Pesticides, the
Stockholm Convention on Persistent Organic Pollutants, the Rotterdam Convention on the Prior Informed
Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade, the Convention
on Long Range Transboundary Air Pollutants and the Protocol on Persistent Organic Pollutants.
Industry Assistance
The level of industry assistance is low and the trend of industry assistance is steady.
There are no specific tariffs for this industry.
Industry support varies among countries. For example, US-based operators receive government assistance
in the form of various grants and R&D programs funded by the Environmental Protection Agency and
other government departments for projects that advance the environmentally safe use and handling of
fertilizers. Canadian-based potash producers benefit from recent tax relief legislation. In 2005, the
Saskatchewan government announced it would provide tax relief for new potash investment. This relief
involves a 10-year tax holiday from base payments on potash mine expansions of more than 200,000
metric tons of potassium chloride per year. In addition, the Canadian government is also providing a
capital investment incentive to promote these production expansions. Additionally, in 2010 Canada's
federal government blocked the acquisition of PotashCorp by BHP Billiton due to pressure from Brad Wall,
the premier of Saskatchewan. Industry operators further benefit from industry trade groups, including the
European Crop Protection Association and the International Fertilizer Industry Association.
Key Statistics
Industry Data
World price
Establish- Employ- of crude oil
Revenue IVA ments Enterprises ment Exports Imports Wages ($US per
($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) barrel)
2007 123,425.1 30,262.9 6,741 4,087 519,956 78,050.7 78,050.7 19,943.2 71.1
2008 172,331.6 37,558.2 6,890 4,143 535,123 121,063.0 121,063.0 20,418.7 97.0
2009 142,169.5 31,989.4 6,907 4,111 534,602 74,512.1 74,512.1 20,966.2 61.8
2010 138,645.6 33,764.8 7,108 4,139 531,205 89,237.1 89,237.1 20,958.7 79.6
2011 152,884.1 36,709.1 7,286 4,159 554,222 118,246.8 118,246.8 21,505.7 104.0
2012 165,902.1 37,801.1 7,276 4,155 553,461 119,826.8 119,826.8 21,860.6 105.0
2013 174,092.3 39,421.8 7,588 4,315 582,253 119,336.2 119,336.2 22,899.1 104.1
2014 170,561.0 37,464.6 7,460 4,266 577,421 110,670.2 110,670.2 22,601.3 96.2
2015 173,484.1 37,810.5 7,524 4,291 579,310 108,034.9 108,034.9 22,607.1 51.0
2016 156,954.0 35,970.3 7,169 4,138 557,671 100,886.8 100,886.8 21,464.2 47.7
2017 161,111.1 36,678.4 7,301 4,195 565,548 103,558.9 103,558.9 21,847.0 54.8
2018 164,099.4 37,411.4 7,462 4,282 573,820 103,835.2 103,835.2 22,192.2 59.6
2019 170,094.1 38,669.9 7,641 4,357 584,380 107,054.1 107,054.1 22,721.3 63.7
2020 174,840.0 40,069.8 7,809 4,449 594,497 108,856.3 108,856.3 23,186.9 66.0
2021 182,323.7 41,423.9 7,991 4,532 606,717 111,459.9 111,459.9 23,818.2 67.0
Annual Change
Establish- Employ- World price
Revenue IVA ments Enterprises ment Exports Imports Wages of crude oil
(%) (%) (%) (%) (%) (%) (%) (%) (%)
2008 39.6 24.1 2.2 1.4 2.9 55.1 55.1 2.4 36.4
2009 -17.5 -14.8 0.2 -0.8 -0.1 -38.5 -38.5 2.7 -36.3
2010 -2.5 5.5 2.9 0.7 -0.6 19.8 19.8 0.0 28.8
2011 10.3 8.7 2.5 0.5 4.3 32.5 32.5 2.6 30.7
2012 8.5 3.0 -0.1 -0.1 -0.1 1.3 1.3 1.7 1.0
2013 4.9 4.3 4.3 3.9 5.2 -0.4 -0.4 4.8 -0.9
2014 -2.0 -5.0 -1.7 -1.1 -0.8 -7.3 -7.3 -1.3 -7.6
2015 1.7 0.9 0.9 0.6 0.3 -2.4 -2.4 0.0 -47.0
2016 -9.5 -4.9 -4.7 -3.6 -3.7 -6.6 -6.6 -5.1 -6.5
2017 2.6 2.0 1.8 1.4 1.4 2.6 2.6 1.8 14.9
2018 1.9 2.0 2.2 2.1 1.5 0.3 0.3 1.6 8.8
2019 3.7 3.4 2.4 1.8 1.8 3.1 3.1 2.4 6.9
2020 2.8 3.6 2.2 2.1 1.7 1.7 1.7 2.0 3.6
2021 4.3 3.4 2.3 1.9 2.1 2.4 2.4 2.7 1.5
Key Ratios
Imports/ Exports/ Revenue per Wages/ Average
IVA/revenue demand revenue employee revenue Employees wage
(%) (%) (%) ($'000) (%) per est. ($)
2007 24.5 63.2 63.2 237.4 16.2 77 38,355.6

2008 21.8 70.3 70.3 322.0 11.8 78 38,157.0
2009 22.5 52.4 52.4 265.9 14.7 77 39,218.3
2010 24.4 64.4 64.4 261.0 15.1 75 39,455.0
2011 24.0 77.3 77.3 275.9 14.1 76 38,803.4
2012 22.8 72.2 72.2 299.8 13.2 76 39,498.0
2013 22.6 68.5 68.5 299.0 13.2 77 39,328.4
2014 22.0 64.9 64.9 295.4 13.3 77 39,141.8
2015 21.8 62.3 62.3 299.5 13.0 77 39,024.2
2016 22.9 64.3 64.3 281.5 13.7 78 38,489.0
2017 22.8 64.3 64.3 284.9 13.6 77 38,629.8
2018 22.8 63.3 63.3 286.0 13.5 77 38,674.5
2019 22.7 62.9 62.9 291.1 13.4 76 38,881.0
2020 22.9 62.3 62.3 294.1 13.3 76 39,002.6
2021 22.7 61.1 61.1 300.5 13.1 76 39,257.5
Figures are inflation-adjusted 2016 dollars

NOTE: UNLESS SPECIFIED, AN ASTERISK (*) ASSOCIATED WITH
A NUMBER IN A TABLE INDICATES AN IBISWORLD ESTIMATE AND
REFERENCES TO DOLLARS ARE TO US DOLLARS.
Jargon
AGROCHEMICALSA generic term for various chemical products used by the agricultural sector, including
pesticides, synthetic fertilizer, hormones and other chemical growth agents.
FERTILIZERS Chemical compounds applied to promote plant and fruit growth. Inorganic fertilizers are
composed of simple chemicals and minerals.
PESTICIDES A substance or mixture of substances intended to prevent, destroy, repel or mitigate any
pest.
WWW.IBISWORLD.COM Global Fertilizers & Agricultural Chemicals Manufacturing
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March 2016 34
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IBISWorld Industry Report

About This Industry ................................. 2 Cost Structure Benchmarks ......................... 18

www.ibisworld.com | www.ibisworld.com.au | www.ibisworld.co.uk | www.ibisworld.com.cn

About This Industry

The major products and services in this industry are:

C1921-GL - Global Basic Inorganic Chemicals Manufacturing

C1922-GL - Global Basic Organic Chemicals Manufacturing

L6724-GL - Global Biotechnology

For additional information on this industry:

Key External Drivers

World price of crude oil

World price of natural gas

World price of wheat

Volatile growth rates

Competing demands for food

Growth spurred by the United States

Industry Life Cycle

Life Cycle Stage

Products & Markets

A0119-GL - Other Global Agriculture

Key Selling Industries

C1912-GL - Global Petrochemicals Manufacturing

C1921-GL - Global Basic Inorganic Chemicals Manufacturing

C1922-GL - Global Basic Organic Chemicals Manufacturing

Products & Services

Other agricultural chemicals

Wheat growers 17.0%

Exports in this industry are high and decreasing.

North Asia 23.0

India & Central Asia 13.3

South America 6.5

Africa & Middle East 5.5

South East Asia 2.1

Key Success Factors

Guaranteed supply of key inputs

Having marketing expertise

Cost Structure Benchmarks

Rent & Utilities 4.5%

Barriers to Entry checklist Level/Impact

Industry Competition High

Yara International ASA 8.5% (2016)

Bayer AG 7.5% (2016)

The Mosaic Company 5.0% (2016)

Other 70.5% (2016)

Market Share: 8.5%

Syngenta AG - financial performance*

Yara International ASA

Market Share: 8.5%

Yara International ASA - financial performance*

Bayer CropScience - financial performance*

The Mosaic Company

The Mosaic Company - financial performance*

E. I. du Pont de Nemours and Co.

Technology & Systems

Fertilizer manufacturers focus on improving manufacturing technologies, increasing fertilizer production

Regulation & Policy

There are no specific tariffs for this industry.

2007 24.5 63.2 63.2 237.4 16.2 77 38,355.6

Figures are inflation-adjusted 2016 dollars

IBISWorld's reports are more than just numbers.

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