Phosphatic Fertilizers

SIC 2874

Companies in this industry

Industry report:

This category includes establishments primarily engaged in manufacturing phosphatic fertilizer materials, or mixed fertilizers from phosphatic materials produced in the same establishment.

This industry, which had 127 plants engaged in manufacturing phosphatic fertilizer materials, or mixed fertilizers from phosphatic materials, was valued at $17.3 billion in 2008. Industry-wide employment was 4,800 workers. Plants producing phosphatic fertilizers shipped $11.3 billion in fertilizer. States with the highest concentration of establishments were Florida, Georgia, California, and Texas.

Although the original sources of phosphorus for plant fertilization were guano (bird and bat excrement) and ground bone, a more plentiful source was found in phosphate rock, which was the only commercially important source of fertilizer phosphorus in the mid-2000s. The United States is the world's leading producer of phosphatic fertilizers. The Kola Peninsula in Russia is another primary source, and so is Morocco, which has phosphate rock deposits four times larger than those in the United States.

After mining, the phosphate rock must be refined and concentrated for use as fertilizer. Sometimes finely ground phosphate rock is applied directly to soil, but usually sulfuric acid is used to convert it into a more water-soluble form.

About 45 percent of the phosphatic fertilizer produced in the United States was used on the domestic corn crop, so corn acreage is one determinant of domestic demand. The U.S. Department of Agriculture estimated corn plantings had increased 1 percent from 2004 to 2005 and expected continued increases in the Corn Belt and Great Plains. However, other parts of the country were expected to decrease their corn acreage due to low corn prices and high fuel and fertilizer costs.

At the beginning of 2006, fertilizer prices were about 15 percent above the previous year's prices. Phosphate showed the sharpest price increase, up 26 percent. The increase in prices were due to increased natural gas costs, world demand, and ability to purchase raw materials. International demand was expected to continue to push up the prices of phosphorous and also potash.

In the mid-2000s the most widely used of the phosphatic fertilizers was diammonium phosphate (DAP). About 70 percent of the fertilizer used in the United States was DAP. About half the DAP produced in the United States in the early 1990s was exported to China, but as China began to become more self-sufficient, those numbers decreased. Beginning in 2000, the output of phosphate fertilizers in China rapidly increased. For example, the output of concentrated phosphate compound fertilizers was around 4.5 million tons in 2003, which was an increase of 22 percent over the previous year. In addition to China's increase in production and the resulting decrease in U.S. exports, Morocco and the Middle East attempted to capture market share during the mid-2000s. Thus although U.S. exports of DAP saw an annual growth rate of 3.7 percent through the 1990s, they decreased by 4.8 percent annually from 1999 through the mid-2000s.

Population growth and improving diets affected the global fertilizer business in the mid-2000s. Developing countries started moving away from diets consisting of mostly grain to high-protein diets of beef, poultry, and pork. These high-protein diets required an increase in the amount of grain produced, and this in turn caused an increase in the amount of fertilizer produced and demanded. Because phosphate fertilizer manufacture is driven by global supply and demand, it was expected to increase throughout the mid- to late 2000s, though only at a predicted rate of 2 percent annually in the United States.

There were 11 phosphates manufacturing plants with 1,164 employees and $5.5 billion in product shipments. Diammonium phosphate production manufacturers were valued at $500 million. There was one manufacturer of superphosphates, employing 25 workers and generating $10.6 million in revenue. Plant foods, mixed from plants making phosphatic fertilizer, operated 11 plants with product shipments totaling $10.2 million.

In 2007, the United States was the largest exporter of phosphate fertilizer, which provided healthy revenues for the U.S. phosphate industry. Although the United States was the largest producer of phosphate fertilizers, profits and declining export demand for diammonium phosphate (DAP) led to a decline in phosphate production. In fact, phosphoric acid (the chief feedstock for phosphate fertilizers) production declined 13 percent from 1999 to 2008. Volatile raw material costs early in 2008 led to higher fertilizer prices, thus adding to fertilizer manufacturers' bottom lines.

Industry Leaders

One of the largest producers of phosphate fertilizer in the United States in the mid-2000s was Mosaic of Faustina, Louisiana, which had the capacity to produce 5.3 million tons of product a year. Mosaic was formed in 2004 by the merger of Cargill Crop Nutrition, a business unit of Cargill and IMC Global. Other leaders included CF Industries of Plant City, Florida, with a 1.1 million ton capacity and sales in 2006 of $1.95 billion, and Potash Corporation (Saskatoon, Saskatchewan, and Northbrook, Illinois), which had sales in 2006 of $632 million. U.S. Agri-Chemicals of Bartow, Florida, and Simplot Phosphates, a subsidiary of J. R. Simplot Company, in Pocatello, Idaho, were also important phosphate fertilizer manufacturers in the mid-2000s. Cargill, Inc. was the United States' largest private corporation in the mid-2000s and the leading grain producer, in addition to a fertilizer manufacturer. Including all divisions, the company posted 2006 sales of $75.2 billion and had 153,000 employees.

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