This is marketing research on the Agricultural Chemicals industry and can include information on the background, market structure, definitions, competitors, trends and developments of agricultural chemicals and is related to other farming, fertilizers and crops.

Table of Contents

[edit] Background

Often referred to as the keystone industry because nearly every other sector of the manufacturing economy uses its products, the U.S. chemical industry ranks among the world’s leading industries, with U.S. chemical companies accounting for an estimated one-quarter of total world chemical production. The industry includes hundreds of companies with over 12,000 plants that produce over 70,000 different chemical products, ranging from raw materials for other industries to a wide variety of finished consumer products. Chemical building blocks are used in nearly all nonfood consumer and industrial products. The industry is also capital-intensive, a large user of energy resources, and heavily regulated, factors that provide high entry barriers to new competition. U.S. chemical companies consume about 7 percent of total annual U.S. energy output. Most of the industry’s energy consumption involves natural gas and oil, with the balance consisting largely of electricity and coal.

World consumption of fertilizers totaled about 136 million tons in the late 1990s. Nitrogen fertilizers accounted for 59 percent of world fertilizer consumption, phosphate fertilizers for 24 percent, and potash fertilizers for 17 percent. The fertilizer industry is a relatively mature business in the United States, reflecting stagnancy or modest growth in the underlying American farm economy. The overall fertilizer business is highly seasonal, with the most sales occurring before the spring and fall plantings. Domestic demand is largely a function of the amount of acreage planted, with farmers’ planting decisions importantly influenced by grain prices, federal support programs, and weather conditions. Other important factors affecting this business include carryover inventories from the previous year, production costs, environmental concerns, and soil moisture. A bumper crop in the previous year typically results in lower prices and reduced plantings in the current year. However, when favorable weather causes increased grain and bean yields, additional fertilizer application is needed in the current year to compensate for soil nutrient depletion.

[edit] Market Structure

Foreign business is important, representing about one-third of U.S. industry shipments. Thus, changes in economic conditions abroad and fluctuations in currency exchange rates can materially affect the fertilizer business. China accounts for close to 33 percent of U.S. fertilizer exports; other Asia-Pacific markets, 37 percent; Latin America, 25 percent; and all other markets, 5 percent. Nitrogen is the most commonly used fertilizer, with anhydrous ammonia being the principal ingredient in most nitrogen fertilizers. Anhydrous ammonia is produced by combining atmospheric nitrogen with methane. Another related nitrogen fertilizer is urea, a combination of anhydrous ammonia and carbon dioxide. Because nitrogen-based compounds evaporate from the soil, nitrogen fertilizers must be applied each year, resulting in a relatively stable market for this commodity. Phosphate fertilizers are derived from phosphate rock. Phosphate rock is combined with sulfuric acid to yield phosphatic acid, which is further processed into DAP, the most widely used phosphatic fertilizer. Potash is mined primarily from deposits of potassium salts in Canada, Germany, Russia, the United States, and Israel. The United States exports about 55 percent of its phosphate fertilizer production, with about 30 percent of that volume going to China. About one-fifth of U.S. nitrogen fertilizer production is exported.

Despite its leading position, the United States is expected to relinquish its dominant position in phosphate fertilizers to Morocco eventually. With its phosphate deposits estimated at over 50 percent of world rock phosphate reserves, Morocco is currently the largest phosphate rock exporter, with most of its production going to Europe. China, the former Soviet Union, and India are also large phosphate fertilizer producing countries.

Agricultural chemicals has grown modestly in terms of number of establishments engaged in the industry. In five years, the number of companies has increased about 6 percent.

________________________________________________________________________________

At the same time, the number of workers in the industry has dropped. Employment over five years has decreased almost 15%, although this has likely risen since the middle of the decade.

This is a moderately concentrated industry with the 8 largest players responsible for approximately half the revenues in the agricultural chemicals industry.

Concentration of Revenue by number of firms in the industry is as follows:


Total Number of firms       Revenue as % of all firms in the industry

     4 largest                              36.0%
     8 largest                              51.3%
    20 largest                              72.1%
    50 largest                              85.2%

[edit] Market Metrics

Revenues tell a mixed picture. Although the overall industry has shown a contraction over the fiver year period, sub-sectors such as pesticides have done significantly better. The industry is healthy with major producers all coming in with approximatley 10% profit margins.

Broad Agricultural Chemicals

______________________________________________________________________________

More Narrow Focus

[edit] Industry Players

These are major players in this market, but it is not an exhaustive list of all key firms.

Revenues, Net Income and Market Capitalization are expressed in US$ Millions.

[edit] Recent Trends and Developments

Despite prospects for stagnant or declining levels of fertilizer consumption in the United States and western Europe, developing nations in Asia and Latin America represent important growth markets for fertilizers. According to the IFA, Asian countries accounted for 48 percent of fertilizer consumption, North America for 16 percent, western Europe for 16 percent, Latin America for 8 percent, and other areas for 12 percent in 1998–1999.

Strong demographic growth, rising income levels, and efforts to improve diets and general standards of living in developing areas in Asia, Latin America, and Africa should foster greater production of grains and other produce. This should result in increased use of fertilizers to lift production. The total world population is projected to grow from 6 billion in 1999 to over 7 billion in 2010, with most of the growth occurring in emerging or third world countries. Asia currently accounts for about half of world fertilizer consumption.

[edit] Sources

• Most current US government sources

[edit] Related ResearchWikis

Farm Machinery Marketing Research

Agricultural Equipment Marketing Research

Chemicals - Asia Markets - Marketing Research