About 1,173 industry representatives attended the 82nd Annual Southwestern Fertilizer Conference in San Antonio July 28-Aug. 1, representing some 400 companies. Conference attendance was the second highest ever, trailing by only three the record attendance set in 2005.
This year’s conference featured only three General Session speakers, all of whom addressed the agronomic, economic, and political impact of 2007’s significant cropping pattern changes. The conference also featured a 90-minute program called Stimulus, which, under the direction of the Nutrients for Life Foundation, is a continuation and advancement of the Fertile Minds public relations program conceived to combat misperceptions about fertilizer.
Dr. Paul Fixen of the International Plant Nutrition Institute kicked off Tuesday morning’s General Session by detailing the agronomic impact of biofuels, noting that the nutrient demands for the growing biofuels industry could hypothetically result in increases of 13.5 percent for nitrogen, 18 percent for phosphate, and 20 percent for potassium in five to ten years. Genetic improvements could also result in a 3 percent increase in crop yields per year.
“We have left a 25-year era dominated by the mindset that over-production is a problem, and entered an era with renewed interest in sustainability,” Fixen said.
The surge in corn production to feed biofuels demand is not without risks, however, and Fixen noted concerns about the potential for environmental damage from much higher corn acreage. He said the industry is in a two-to-three-year experiment, during which it will be “under the magnifying glass” to see if more corn can be grown without increasing nitrates in ground and surface waters, and without increasing the hypoxic zone in the U.S. Gulf.
“We are under great scrutiny as an ag industry,” he said. “We must capture this production opportunity with good husbandry, not just of the field but of public opinion as well.”
Ken Nyiri of British Sulfur Consultants offered some forecasts for nutrient demand and markets. He predicted that the urea market has peaked and is falling due to more competition as greater capacity is built overseas. Nyiri broadened that assessment by saying the global nitrogen cycle has peaked, predicting excess supply and declining prices for the next year.
While noting tight phosphate stocks, Nyiri predicted declining DAP prices going into the next fertilizer year. This comes at a time, however, when DAP prices in the Midwest are hovering in the $425-$430/st FOB range, compared with a 17-year average published Midwest price of $203/st FOB.
As for potash, Nyiri said production is up, total demand is up, prices are up, and producer stocks are down. He said potash producers are “in the driver’s seat” and predicted continued higher prices, but not at as high a rate of increase as in recent months. He said the potash market will remain in balance in 2008 “as long as producers maintain discipline.”
TFI President Ford West talked of the key political issues facing the fertilizer industry, including the new farm bill, energy policy, chemical security, and environmental pressures. Regarding the farm bill, West said the big change is in who will draw benefits, noting congressional efforts to “drive the big guys out” and channel resources instead to smaller farmers and conservation.
West talked of the energy emphasis on more renewable sources such as wind, solar, and biofuels. He said that climate change is “politically real,” and the answer is “no” if policy discussions turn to energy sources tied to carbon.
West said no political solution is likely in the debate over the rail transportation of toxic-by-inhalation commodities such as anhydrous ammonia, and said the key question is whether a business solution can be reached between the railroad and chemical industries.
Regarding chemical security, West said the new Department of Homeland Security regulations will affect all segments of the industry. “It won’t matter if you’re the biggest or the smallest company, you’re going to have to communicate with DHS,” he said. The jury is still out on the economic impact of these rules, however.
West also gave an update on federal ammonium nitrate sales tracking legislation. He said “the train has left the station,” predicting that the much-talked-about AN sales tracking bill will be law by the end of the year, while the actual specifics of the rules may still be one to two years away.
West also gave a plug for the Stimulus educational program, calling it “the best effort in the world to talk about the positive impact of fertilizer,” and to “change the public perception of fertilizer.”