Global Production of DAP

*Philippines ranked as 15th top producer.

[Source: Food and Agriculture Organization of the United Nations – Statistics Division, 2012]

Global Consumption of DAP (as of 2012)

[Source: Food and Agriculture Organization of the United Nations – Statistics Division, 2012]

Global Export of DAP

[Source: Food and Agriculture Organization of the United Nations – Statistics Division, 2012]

Philippines DAP Market from Year 2002-2012

Year Production Quantity (tonnes)

Import Quantity (tonnes)

Export Quantity (tonnes)

Non-fertilizer use (tonnes)

Consumption (tonnes)

2012-12-31 0 0 0 0 02011-12-31 77469 0 55009 0 224602010-12-31 0 137235 0 0 1372352009-12-31 0 59471 0 0 594712008-12-31 0 88570 4500 0 840702007-12-31 40686 105885 31812 0 1147592006-12-31 0 0 0 0 02005-12-31 91919 92998 101475 0 834422004-12-31 94429 91689 83876 0 1022422003-12-31 65820 163911 36500 0 1932312002-12-31 52668 112718 41011 0 124375

[Source: Food and Agriculture Organization of the United Nations – Statistics Division, 22 July 2015]

Foreign Trade of the Philippines in the Fertilizer Industry (1985-1994) in USD Millions

Source: National Statistical Coordination Board (1996)

1 export value based on BSP buying rate;2 import value based on BSP selling rate3 starting August 4, 1992, the average exchange rate refers to the weighted average rate under the Philippine Dealing System (PDS)4 preliminary data

Status of the Philippine Fertilizer Industry

Fertilizer plays a crucial role in improving crop production. A total of 1.7 million (M) tons of inorganic fertilizers were sold locally in 2004, with four fertilizer products representing 91% of the sales (Table 1). These include: urea (32%), complete or 14-14-14 (21%), ammonium sulfate or 21-0-0 (20%), and mono-ammonium phosphate or 16-20-0 (18%).

Table 1. SUPPLY-DEMAND OF FERTILIZER, CY 1995-2005 (Volume in Thousand Tons)

SUPPLY YEAR Production Imports Sales Export 1995 1,390 1,237 1,475 718 1996 1,613 1,202 1,637 528 1997 1,322 1,246 2,038 457 1998 1,181 787 1,545 439 1999 1,168 1,222 1,864 200 2000 1,069 1,260 1,840 233 2001 1,202 1,030 1,945 231 2002 1,340 910 1,805 362 2003 1,059 1,640 1,540 335 2004 1,073 8,872 1,671 364 2005 307 2,140 978 126

Source: FPA

Based on preliminary reports submitted by fertilizer companies, sales in 2005 reached 978,000 tons. Luzon accounted for 50-60% of the inorganic fertilizer market, Visayas 17-20%, and Mindanao 20-28%. Regions II

(Cagayan), III (Central Luzon), and IV (Southern Tagalog - Calabarzon and Mimaropa) are the biggest fertilizer markets representing nearly half of the total fertilizer consumption in the country.

An estimated 60% of fertilizer sales are used for food crops, principally rice and corn, with the remainder mainly applied to plantation crops such as banana, sugarcane, and pineapple.

Supply

Imports. Bulk (60%) of the inorganic fertilizer supply is imported. In 2004, the Philippines bought an aggregate volume of 8.8M tons of various fertilizer grades, with urea accounting for 30% and ammonium sulfate for 24%. Ammonium sulfate is imported when the international market price is lower than that of domestic production. The majority of the finished fertilizer grades are sourced from Saudi Arabia, Japan, Ukraine, China and Indonesia. Other important suppliers include Qatar, Malaysia, Singapore, Russia, Korea and Taiwan (Figure 1).

Figure 1. Urea Imports by Country of Origin, 2005 (Total: 570,286 tons)

Source of basic data: National Statistics Office (NSO)

As of 2005, there are 119 registered importers licensed by the FPA. Importers generally source directly from foreign suppliers or through indentors/traders. Among major importers are: AFC Fertilizer and Chemicals, Inc., Farmix Fertilizer, Soiltech Agricultural Products Corporation, La Filipina Uy Gongco, Modern Time Enterprises, and Norsk Hydro (Phil.).

Production. Domestic fertilizer production in 2004 totaled 1.1 M tons, largely in the form of 14-14-14 (33%), 16-20-0 (23%), 21-0-0 (15%) and 16-16-8 (12%) (Figure 2).

Figure 2. Inorganic Fertilizer Production by Grade, Philippines, 2004 (Total: 1,072,835 tons)

Source of basic data: FPA

The Philippines currently has three fertilizer manufacturing plants that produce various fertilizer grades for local use and for export; one is located in Luzon and the other two in the Visayas. These plants are into fertilizer blending, granulation and compaction. The fertilizers manufactured locally include 21-0-0, 16-20-0, 18-46-0, 0-18-0 (single superphosphate), 15-15-15, 14-14-14, 12-12-12, 16-16-8, 6-9-15, and 0-0-52 (sulfate of potash).

Three other chemical fertilizer plants ceased operation between the late 1970s and early 1980s due to uncompetitive production costs: Maria Cristina, Chemical Industries of the Philippines, and Planters Products.

Marketing and Distribution

The Philippine fertilizer industry operates largely under a free market system. Production, importation, marketing, and distribution of fertilizers are being handled by the private sector. Following the trade liberalization policy and the removal of levy and other restrictions, smaller companies engaged in agricultural trading were able to enter into the fertilizer market, once controlled only by a few private and government-assisted firms.

The marketing of fertilizers passes through three main levels, namely: (1) importers/ manufacturers; (2) distributors; and (3) dealers. All importations can only be made by FPA licensed importers and cover only products registered at the FPA.

As of 2005, there are about 369 fertilizer handlers (manufacturers, importers, repackers, exporters, distributors) licensed by FPA. The fertilizer distributors or wholesalers constitute the second level of fertilizer marketing, and usually cover several provinces or an entire region. They sell to dealers or outlets. A few importers are also distributors themselves and this provides them with the advantage of direct market access.

The dealers constitute the last step of the marketing channel and are the ones in direct contact with the farmers. Because of the free market system, most distributors also hold a dealer's license, and sell directly in areas where there are no dealers or in conditions where local dealers are weak, or selling to plantation accounts which do not require the networking advantage offered by the dealers. In many cases, it is therefore difficult to draw the line between distributors and dealers.

Imported fertilizers, as finished products in bulk or in bags, are discharged in major ports such as Manila and Poro Point in Luzon; Iloilo, Bacolod, and Cebu in the Visayas; and Cagayan de Oro, Davao, and General Santos in Mindanao.

Pricing

The selling price of inorganic fertilizers is generally affected by the prevailing international market price, foreign exchange rate, and the local supply and demand situation as influenced by factors such as changes in rainfall pattern, type of crop planted, calamities, and importer speculation.

Retail prices of six major fertilizer grades are presented in Table 3. Prices of fertilizers have been increasing for the past eleven years due to rising world prices and foreign exchange. Prices of urea had tripled from a low of P314/bag in 1999 to P950/bag in 2005 (Figure 4). Retail prices of all other grades had been increasing. The highest jump was recorded for 18-46-0 with the highest price of P1,400/bag in 2005 compared to P396/bag in 1995.

Table 3. Average Retail Prices of Fertilizers, CY 1995-2005 (6 Major Imported Fertilizer Grades) - In Pesos per 50-kilogram bag

Year Urea 21-0-0 16-20-0 18-46-0 14-14-14 0-0-60 1995 368.93 212.93 316.54 396.40 322.61 259.32 1996 378.05 217.16 325.97 409.21 332.78 279.83 1997 345.54 224.82 334.46 424.26 348.31 245.40 1998 365.64 239.03 285.89 468.13 390.59 340.72 1999 313.65 227.41 398.00 507.27 403.97 357.68 2000 365.43 231.87 398.87 515.57 402.72 379.23 2001 439.98 272.24 413.89 552.08 426.87 434.70 2002 424.44 269.81 422.71 564.71 435.82 460.44 2003 550.96 316.05 466.22 673.90 476.66 495.49 2004 741.75 489.91 634.65 863.46 659.83 663.08 2005 950.50 538.16 779.00 1,400.32 797.96 782.76

Source: FPA