The Fertilizer Situation and Outlook in China Weifeng Zhang and Fusuo Zhang China Agriculture University (86)1062733941 (86)13391561503 [email protected]

Outline • The situation of fertilizer in China • The outlook beyond 2007 • Challenges for fertilizer development in China

Unexpected Rapid Development of Chinese Fertilizer Industry 70

Agriculture consumption Production

Nutirent (Mt)

60 50 40 30 20 10 0 1981

1985

1989

1993

1997

2001

2005

Note: Data for 1981-2006, The Statistics Bureau of China Data for 2007-2010, forecasted by industry survey and crop based expert model

2009

Growing and Changing of N fertilizer industry 45

Others ACL

40 35

AP AN

N (million ton)

30

AS NPK Urea

25 20

+15%

ABC

15 10 5 0 1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

Development trend of nitrogen fertilizer in China

Different trends of main N fertilizer products Gross weight Unit: Mt

Capacity in 2005

Urea 47.83

ABC 50.00

ACL 7.00

Production 2005 Production 2006 Growth rate in 2006

42.23 48.54 +15%

40.06 38.59 -3.7%

4.44 3.57 9.08 3.20 +105% -10.4

Note: Data from the Nitrogen fertilizer association of China

AN

AS 1.70 0.95 1.00 +5%

Quickly development of Urea 65

Capacity of Urea (Mt)

+2.29

60

+5

55 50

+4.05

+4.31

45 40 2005

2006

2007

Note: Data from the Nitrogen fertilizer association of China

2008

2009

Strong trends to export of Urea 2500

Ten thousand tones N

2000

Export Import Production

1500 1000 500 0 -500 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 F

Trends of Urea market of China Note: Data from the Nitrogen fertilizer association of China and statistic bureau

Where is the potential demand of N fertilizer? Fishery Industry Grassland 3% 5% Foresty 1% 4%

Sugar Others 2% 3% Fruits 14%

Vegetable 17%

Crop land 87%

Grain 55%

Oil 5% Cotton 4%

Nitrogen fertilizer distribution in different part of China Note: Calculated by the crop based experts’ model

Growing production and Remarkable changing structure of phosphate fertilizer 14

P2 O5 (million ton)

12 10 8 6

NPK TSP

+23%

NP MAP

+26%

DAP SSP and FMP

+19%

4

-13%

2 0

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

Developing trends of phosphate fertilizer of China Note: Data from China phosphate fertilizer industry association and statistic bureau of China

Capacity (Million ton)

Strong capacity for AP 16 14 12 10 8 6 4 2 0

+2

DAP MAP

+2

2006

2007

+1.2

2008

Forecast for the capacity of DAP and MAP in China Note: Data from the China Phosphate fertilizer industry association Forecast based on the industry survey

Changes of DAP market 400 350

Ten thousand tones P 2 O5

300

Export Import Production

0.5Mt

250 200 150 100 50 0

5Mt

-50 -100 1981 1983 1985 1987 1989 1991 1993

1995 1997 1999 2001 2003 2005 2007 F

Note: Data from China statistic bureau and China phosphate fertilizer association

Changes of compound fertilizer market 250

Ten thousand tones P 2 O5

200

Export Import Production

150

100

50

0

-50 1981 1983

1985 1987

1989 1991

1993 1995

1997 1999

2001 2003

2005 2007 F

Note: Data from China statistic bureau and China phosphate fertilizer association

Development of NPK industry

The total production capacity of compound fertilizer would be 200 million ton in 2007 and 300 million ton in 2008. But the real production is only 20 million tons Note: Data from China phosphate fertilizer association

Where is the potential demand? Others Sugar 6% 2%

Potential demand for:

Fruits 16%

Maize Grain 49%

Potato Vegetable

Vegetable 17%

Fruits Oil 6%

Cotton 4%

Distribution of phosphate fertilizer in China Calculated by the crop based experts’ model

Oil rape and peanut

We need more K , but……. 8

5 4

250

Production

200

Import Price

3

/t

Imported MOP

150

CIF

6

Imported SOP

100

Price

Amount of K2 O (Mt)

7

300

2 1

19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 9 19 7 98 19 9 20 9 0 20 0 01 20 02 20 03 20 04 20 05 20 200 07 6 F

0

Note: Data from China statistic bureau and China Potash fertilizer association

50 0

Where is the potential demand? Sugar 2%

Others 8%

Potential demand for Grain 38%

Rice and maize Potato and soybean

Fruits 30%

Vegetable Sugarcane Vegetable 19%

Cotton Oil 1% 2%

Distribution of Potash fertilizer in China Note: Calculated by the crop based experts’ model

Oilseeds and peanut

Outline • The situation of fertilizer in China • The outlook beyond 2007 • Challenges for fertilizer development in China

1. Increasing population and food demand 160000

2010 +32 million people +41 million tone grain

Grain demand

Grain production 10000 ton Population 10000

140000

Population

120000 100000

2020 +95 million people +116 million tone grain

80000 60000 40000

2030 +152 million people +156 million tone grain

20000 0 1949

1959

1969

1979

1989

1999

2009

2019

2029

(Data from National Statistics Bureau)

Li et al.(2001) predicted, that “In 2030 we have to have at least 72 million tons of NPK fertilizer to meet the demand of food production and agricultural development.”

More and more subsidies for grain producers Items

2006 2007 2008

Subsidy (billion Yuan)

26.7 42.7

Subsidy per ha (Yuan/ha)

300

450

Subsidy per unit nutrients 300 (Yuan/ton) Fertilizer prices changed compared 800 to 2004(Yuan/ton nutrient )

600

More

1000 More

Note: Subsidies includes direct subsidy for grain production, and indirectly subsidy for raw material consumption, such as oil, fertilizer and pesticide used for grain production.

2. Increasing cash crop production More than 50% fertilizers were used on cash crops in China in 2005 100% 90%

Cash crops

80% 70%

50% 40%

84%

60%

Grain crops 63%

30% 20% 10% 0% 1980 1985 1990 1995 2000 2005

Land use changes

Note: Data from statistic bureau and farmer survey

Nutrient applied on each crop

Planting structure changes affect the fertilizer demand 5 ln( CF )

a0

a 8 ln( Ac )

a 1 ln( A )

a 2 ln( Ar )

a 9 ln( Asb )

a 10 ln( At )

a 3 ln( Aw )

a 4 ln( Am )

a 5 ln( As )

a 6 ln( Ap )

a 7 ln( Ao )

a 11 ln( Afv )

The elasticity of fertilizer consumption on planting structure Cotton

Sugar

Tobacc o

Fruits and vegetable

Factors

Rice

Wheat

Corn

Potato

Oil crop

Total

5.132

-2.068

2.222

2.37

0.996

0.931

0.951

N

4.686

-2.054

2.594

2.418

1.048

0.901

0.821

P2O5

6.585

-2.017

1.142

K2O

6.086

0.767

0.887

0.946

0.997

1.523

1.003

-0.534

2.634

Planting area changed in 2005 and 2006 in China 800 613 600

496

448

426 347

Area changed(000 ha)

400

218

168

200

88

79

0 -25 -200 -400 -467 -600

-582

-800 Rice

Maize

Wheat

Vegetable Oil Crop

Totally, 1% increased in 2006

Soybean

Fruit

Potato

Cotton

Sugar

Tobacco

Tea

Fertilizer demand changed in 2005 and 2006 300

K2O P2O5

250

N

Fertilizer demand changed (000 ton)

52 200 16 150 100 50

50

59

50

27 86

33 112

141 8 14 32

8 -8

0

26 14

31

38

49

11 29

44 32

81

58 -2

8 13

-64 -50 -15 -100 Rice

Maize

Wheat

Vegetable Oil Crop Soybean

Fruit

Potato

Cotton

Sugar

Total increased N , P2O5 and K2O is 550kt, 237 kt and 239kt Note: Calculated based on the crop based experts model of China

Tobacco

Tea

3. Increasing animal production Meat

Milk

Egg

Fish

600 500 400

%

Food consumption per capita kg/year

Grain

300 200 100 0 China

USA

Vegetable and Fruits Animal food Grain

Japan

Food consumption in different country

1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0

1990 2000 2010 2020 2030 Food demand in China

Note: Data came from the Statistics Bureau of China and FAO Forecasted data from the reference of Liu Jiang (2000); Xu Shiwei (2003)

Compared with 1980, grain production increased 89%, while the production of meat, egg and milk increased 6.4, 11.2 and 20.8 times respectively in 2005 total Production of Grain (106t) total Production of meat (105t) total Production of milk (104t) total Production of egg (104t)

Trends of grain production, meat production, milk production and egg production

Data from China statistic bureau

4. Increasing production of bio-energy crops 2010 (Mt) (Biofuel accounting for 1% of total energy demand)

2020(Mt) (Biofuel accounting for 4% of total energy demand)

Biofuel Production

Crop demand

Fertilizer demand

Biofuel Production

Crop demand

Fertilizer demand

2

5.76 corn

0.77

10

28.8 corn

3.48

Diesel

0.5

3.68 soybean

0.49

2

14.7 soybean

1.96

Sum

2.5

9.44

1.26

12

43.5

5.44

Ethanol

Data source: Medium term forecast for biofuel development, - China reform and development committee, 2006

50 45

43.0

Production

Nutrients (Mt)

40 35

Demand 31.9

30

25 20

16.0 12.4

15

9.4

10 3.5

5 0 N

P2O5

K2O

Forecast of chemical fertilizer production and demand by China in 2010

Outline • The situation of fertilizer in China • The outlook beyond 2007 • Challenges for fertilizer development in China

1. Impact of changing environmental policies “Create a no fertilizer county” — Director 24

Miyun County

2001-3-28

“Pesticide and fertilizer are not allowed to be used within 5 km to the sea in Dalian city” — Dalian Environmental Director 2002-6-24 “The pesticide and nitrogen fertilizer consumption should be reduced by 30% and 20% in Tai Lake in 2010 ”— Jiangsu Government Director 97

2007-9-10

More and more………………………….

Eutrophication Non-point source pollution  Four fold increase in N inputs to estuaries since 1980  Increased N inputs contribute to eutrophication, decreased fish production, and toxic algal bloom (red tides)  The occurrence of red tides increased from 10/yr in the 1960s to 300/yr now (Norse and Zhu,2004)

Substantial decrease in fertilizer use efficiency ---Low PFP 200

60

175

55

150

50

125

45

100

40

75

35

50

30 y = -0.9308x + 1892.1

25

25

2

R = 0.8502 0

20 1980

1985

1990

1995 year

2000

2005

PFPN(kg grain/kg N)

Fertilizer application rate (kg/ha)

Partial factor productivity: PFPN = kg harvest product per kg N applied

Grain yield and N rate of rice crop Country

Grain yield*

N rate

(t ha-1)

(kg ha-1)

China

6.26

~200

Japan

6.42

70

South Korea

6.79

110

*FAO, 2004

Time span (yrs) for each increment of 1 t crop yield

6t

7

t/ha

6

4.3t 4t

Crop yield

5

2t

3 2

11Y

10Y

3t

4 12Y

21Y

1t

288

Fertilizer application (kg/ha)

183

1

107 28

0 1945

17Y

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

The challenge - Can we increase crop yield and nutrient use efficiency at the same time? How?

Action of The Ministry of Agriculture National Program for Soil Testing and Fertilizer Recommendation 200 Million RMB covers 200 counties in 2005, 500 Million RMB covers 600 counties in 2006, and 900 Million RMB covers 1200 counties in 2007

Soil Testing

Fertilizer production

Fertilizer application

Fertilizer prescription Fertilizer distribution

Aims Field experiment

Increase in

Fertilizer use efficiency: 3-5% ; Crop yield 5%; Recycling rate of organics: 40-50%;

11.7 million tons fertilizer can be saved by the above actions Fertilizer demand Mt

70

Farmers’ +39% practice (7.5kg/kg)

65 +22%

60 +13%

55 +5.6%

Soil testing +23% action (12.5 kg/kg) +15%

+8%

50

Intern. BMPs (20 kg/kg)

+2.1%

45 2005 2010 2020 2030 Fertilizer demand as affected by different efficiencies Note: Increased demand of cash crops is not included grain demand is 520 Mt, 580 Mt and 640 Mt in 2010,2020 and 2030 Efficiencies (AE) in three practices are 7.5kg/kg,12.5kg/kg and 20kg/kg

(W Zhang Unpublished)

2. Reuse of organic wastes impacts chemical fertilizer production

Nutrient amount of organic wastes in China(2000,104t) Source

N

P2O5

K2O

Amount

Relative%

Excreta

1614

1029

1102

3745

51.30

Straw

690

210

1164

2064

28.27

Green manure

28

0

0

28

0.38

Oil cakes

186

36

38

260

3.56

Garbage

300

180

600

1080

14.79

Sludge(DW) 51

55

17

123

1.68

1510

2921

7300

100

Total

2869

Increased crop residues returning

On province-weighted average, returning rates of harvested crop straw were 23.5% in 1994 and 34.8% in 2000, respectively.

(Sources: Gao et al., 2002; Zheng et al., 2004)

Extension of biogas technology in China Current

Lost to air

Energy

Fertilizer

Field

Animal

House

Energy Lost to Water

Extension biogas tech

Energy

Air N

Fertilizer -37%

-20%

-42%

Field

Animal

Energy Water N

-30%

House

Extension of biogas technology 2005

2010

2015

Potential

10000

1807

4000

6000

14600

Biogas in animal plant

3556

4000

8000

40000

Coal saved

10000 t

3006

6531

9886

24588

Urea saved

10000 t

331

719

1089

2707

DAP saved

10000 t

141

306

464

1153

Mop saved

10000 t

238

517

783

1947

Items Farmer biogas

Calculated with data from

Biofuel Strategy of China

2007~2015

Potentially, biogas can substitute 37% energy demand in rural area, and substitute 46.7% N 45% P2O5 and 106.8% K2O demand of crop land

•The challenge – Fertilizer overuse is an issue, which leads to reduced income, low productivity and non-point source pollution What are the determinants of the use of fertilizers by farmers? High input and high output policy leads to higher use Modern varieties make it possible to apply more fertilizer extension leads to higher use

•Perspectives: –Reform policies :agriculture and fertilizer industry –Develop and extend fertilizer saving technologies –Train farmers –Reform current public agricultural extension system: •Stop the business of public agricultural extension agents –Make new technology policy: •Encourage the development of fertilizer-sensitive technologies

Acknowledgments MOA (No. 2003-Z53)

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