7
AGRICULTURAL CHEMICALS
Hoped-for gain doesn't materialize PETER M. HEYLIN, Bureau Head, New York City
Previously predicted massive gains in domestic use of fertilizer failed to materialize thte year, but use will still increase about 12%
L
ast year was a good one for fertilizer and pesticide makers in this country. As in all recent years, their production and sales continued to push to even higher levels. They may enjoy similar gains this year. In the 1966 fertilizer year, which ended June 30, 1966, a total of 12.3 million tons of primary plant nutrients—N, P 2 0 5 , and K 2 6—was used in the continental U.S. This is 13.5% more than was used in the previous fertilizer, or fiscal, year. In calendar 1966, total pesticide production in the U.S. exceeded 1 billion pounds for the first time. Sales of organic pesticides by primary producers increased more than 18% from the previous year to reach $587 million. Domestic fertilizer producers were expecting even faster gains for the 1967 agricultural year as U.S. farmers girded to help meet growing world food problems. Although complete
uct. But it is clear that most fertilizer producers were expecting even greater things for fiscal 1967. For instance, as late as March—just three months before the end of the y e a r International Minerals & Chemical was predicting a 15 to 2 3 % boost in domestic primary plant nutrient use. And a U.S. Department of Agriculture official, who predicted at about the same time that U.S. supplies of plant nutrients in 1967 would be 15% above 1966, tells C&EN that industry friends thought he was being far too conservative. Two months later he was told he was sticking his neck out! The reasons behind this original high optimism are not hard to find. The 1966 agricultural year had been exceptional. The weather in 1966 had been generally good and farmers had had the money to spend on fertilizer and had spent it. Crops had been large. Also, the 13.5% increase in
data are not yet available, it is evident that the hoped-for massive increases in fertilizer use did not materialize. The gain in domestic consumption of primary plant nutrients is likely to have been about 12% for fiscal 1967— still very good, but not as good as much larger gains commonly predicted earlier this year. Pesticide sales are expected to show a solid increase for calendar 1967. But, again, it probably won't be as large as last year's 18% increment. However, military demands for herbicides for use in Vietnam will continue to give the industry an artificial boost. Greater things It may be a slight exaggeration to say that a major and mature industry can be disappointed with a 12% anual increase in consumption of its prod-
U.S. fertilizer consumption growing fastest in the upper Midwest; this corn-growing region now uses half of all U.S. fertilizer
1966
1960
1966
1960
1966
Average annual percentage growth of total 1960-66
52 256 512 1,082 939 327 347 163 195 3,873
43 203 574 643 223 272 102 5 47 2,112
50 238 688 1,158 462 338 170 9 59 3,172
122 565 1,510 1,707 1,175 867 604 229 571 7,350
147 699 1,828 3,414 2,746 1,082 1,185 414 803 12,318
3.0% 3.7 3.3 12.3 15.1 3.8 11.9 10.4 5.9 9.0
Primary plant nutrients Thousar ids of tons
Area New England Middle Atlantic South Atlantic East North Central West North Central East South Central West South Central Mountain Pacific Total
Nitrogen 1960^ 1966
32 135 463 423 495 315 315 127 382 2,686
45 205 629 1,175 1,345 417 668 241 549 5,273
1960
47 227 473 641 457 280 187 97 142 2,552
K20
P2O5
Total
a All years end June 30. Source: U.S. Department of Agriculture, Statistical Reporting Service SEPT. 4, 1967 C&EN
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plant nutrient consumption over 1965 compares very favorably with an average 8% annual gain from 1960 through 1965. And for fertilizer producers, fiscal 1967 started even better than 1966 with higher-than-usual amounts of nutrient being applied in the fall. Also, a 10% boost in crop acreages was expected to bring the 1967 total to a 10-year high of about 330 million acres. Other factors brightening the outlook for 1967 were high farm prices late last year and growing talk of increasing U.S. efforts to help feed the hungry of the world. Earlier in 1966, President Johnson had called for an all-out war on hunger, regarding it as the greatest challenge to the human family next to the pursuit of peace. In 1965 and 1966, massive shipments of surplus U.S. grain to India had helped relieve an acute food shortage there. These shipments had also almost exhausted the once burdensome U.S. food reserves. Good year All of this optimism for the 1967 farm year was generally justified. It was a good year. Soybean, corn, and wheat crops may set all-time records. Total crop volume may also turn out to have been at an all-time high. But 1967, although so good on the farm and to the fertilizer manufacturer, never quite panned out exactly as expected. First, farm prices dropped some 10% between thenpeaks of August 1966 and their lows during the spring of 1967. Then the weather was even less cooperative with the farmer than usual. During the critical spring planting weeks, when about 70% of fertilizer is applied, it was mostly too dry in the wheat areas and too wet in the corn belt for the optimum amount of fertilizer to be used. It was so bad in the cotton belt that acreage for this crop fell 37% below the 1960-65 average. This, plus other reductions, cut the planted acreage from the expected 330 million acres to about 318 million—still a seven-year high. Another factor taking a little off the edge of the 1967 year for fertilizer makers was the slower-than-expected pickup in exports of U.S. fertilizer to developing nations under an expanded Aid for International Development program. About $100 million worth was exported in fiscal 1966. AID plans called for shipment of $300 million worth in fiscal 1967. But it never happened. Protracted negotiations with recipient governments and other delays kept shipments down to about $150 million. However, the program will continue to expand. By this December, contracts for about 88A C&EN SEPT. 4, 1967
another $120 million worth will have been awarded, according to AID. By fiseal 1969, the program should be running at a rate of $450 million per year. This reduction in AID fertilizer shipments was not the only evidence to become apparent as the 1967 agricultural year wore on that some of the steam was running out of the drive to feed the hungry of the world. Better harvests in recently droughtstricken Australia and Argentina and in some of the developing nations took some of the pressure off U.S. agriculture. In fact, the pressure became so great that Agriculture Secretary Freeman in June announced a 13% cutback in the wheat allotment for 1968, compared with the 1967 allotment. That same month, the President's Science Advisory Committee issued a three-volume report on world food problems. It calls for the U.S. to take the lead in mobilizing the total resources of the developed nations in an immediate broad-scale attack on the problem. This sort of inconsistency, or irony, on matters concerning world food is not restricted to seemingly conflicting policies within the U.S. Government. The entire world fertilizer situation has an aura of tragic irony about it. World
fertilizer
In many areas of the world, alreadylow per capita food output is either static or declining. Hundreds of millions suffer malnutrition. Fertilizer is recognized as the quickest and cheapest way to relieve this problem and meet food needs that will double in some areas within the next 15 to 20 years. Yet in spite of this fundamental demand, fertilizer producers may well be plagued by quite serious overcapacity within the next five years. The trouble is that agriculture in most developing areas is just not equipped to handle the fertilizer theoretically available to it. The most serious overcapacity may be in ammonia. An IMC study, for instance, puts world fertilizer supply of nitrogen at 29 million metric tons in 1970, compared with a demand for 25 million metric tons. This agrees well with the 4.5 to 5.0 million metric-ton overcapacity estimate given by Jan M. Boudewijn, a Dutch fertilizer expert, at last June's White Sulphur Springs (W.Va.) meeting of the National Plant Food Institute. A month earlier, George C. Sweeney, Jr., of Arthur D. Little, Inc., told a New York City meeting of the Chemical Market Research Association that he expected a 20 to 2 5 % overcapacity in world nitrogen in 1968 and 1969.
To overcome this capacity problem Mr. Boudewijn favors a World Fertilizer Institute that would promote worldwide plant food use through research, educational programs, cash grants to governments, and other means. At the same White Sulphur Springs meeting, Herbert J. Waters, assistant administrator for the War on Hunger for AID, also had a couple of proposals for increasing fertilizer use. One is for a much-expanded field demonstration program. The other is for long-term programing of fertilizer needs on a detailed country-by-country basis. As for fiscal 1966, world plant nutrient use advanced 11.3% from 1965 to reach a new high of 48.1 million metric tons, according to the Food and Agriculture Organization of the United Nations. Nitrogen output was up 13.4%, to 19.5 million metric tons; phosphate, up 9%, to 15.1 million metric tons; and potash, up 12%, to 13.5 million metric tons. US. in 1966 In the U.S., production of primary plant nutrients advanced 12.9% during fiscal 1966, to reach 13.2 million tons. This compares with a 5.6% increase in 1965 from 1964. For the first time, the U.S. became a substantial net importer of fertilizer. Imports spurted 37% over fiscal 1965, to almost 2 million tons—mostly potash. Exports were 1.65 million tons, a 14% increase from 1965. The biggest growth in consumption of primary plant nutrients in this country last year came in the north central region of the country—reflecting the large soybean, corn, and wheat crops. Consisting of 12 states and stretching from Ohio to the Dakotas, this area accounts for three quarters of the soybean, two thirds of the corn, and more than half of the wheat grown in this country. In fiscal 1966, these states used some 22% more plant nutrient than they did in 1965. This compares with the 13.5% nationwide increase. The mountain states, much smaller users, boasted a 12% gain. The three Pacific Coast states managed only a 2% increase. On a state basis, the big users of primary plant nutrients in fiscal 1966 were Illinois with 1.3 million tons, up 3 3 % from 1965; Indiana with 906,000 tons, up 22%; Iowa with 856,000 tons, up 26%; and Texas with 634,000 tons, up 5 % . Rhode Island was the most modest user with less than 5000 tons, a drop of 7% from 1965. Of the contiguous states, 42 used more nutrients in 1966 than they did in 1965, while the remaining six, including California, used less. Total use of fertilizer products—as
opposed to primary plant nutrients— in this country in fiscal 1966 was 34.5 million tons. This is 8% more than a year earlier. Two trends established in recent years were continued during the year. One is toward higher analysis fertilizers. The other is toward relatively less use of fertilizer mixtures. Last year, the average analysis of
all primary nutrient fertilizers was 16.11% N, 11.78% P 2 0 5 , and 9.74% K 2 0. This compares with the 1965 average analysis of 15.30% N, 11.59% P 2 0 5 , and 9.35% K 2 0 . In 1966, 57.7% of all nutrients were applied as mixtures, 42.3% by direct application. A year earlier, mixtures had accounted for 59.8%. Much of this trend is due
to the 2 5 % increase in the direct application of anhydrous ammonia—up to 1.96 million tons in 1966 from 1.56 million tons a year earlier. Direct sales It is not only the way that farmers are using fertilizer that is changing.
Herbicides continue to make biggest gains among organic pesticides
Source: U.S. Tariff Commission SEPT. 4, 1967 C&EN
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Nitrogen is fastest growing primary plant nutrient used in U.S. Primary plant nutrients Millions of tons
Source: U.S. Department of Agriculture, Statistical Reporting Service
The way they buy it is also in for some changes. Traditionally, fertilizers have been sold either through farm cooperatives or by independent dealers. However, the basic nutrient makers are continuing to seek more direct sales to the farmer. Most of the basic producers are at least looking at this route. In the past three or four years several have built chains of their own outlets to sell their own products under their own name. The final outcome of this trend is not yet clear. All of these centers have not been successful. But Monsanto, for one, is deeply involved in this merchandising method. The St. Louis-based company, which is basic in both nitrogen and phosphate, completed another 31 of these centers during fiscal 1967, to bring its total to 150. The company plans to have 250 of them by 1970. Typically consisting of a dry fertilizer blending plant, anhydrous ammonia facilities, bagging equipment, and fertilizer solution storage, each center represents an investment of about $125,000. They are owned directly by Monsanto and staffed by company personnel. Sales through these Monsanto agri90A C&EN SEPT. 4, 1967
cultural centers increased 30% in fiscal 1967 from the previous year. Originally thought of as each handling 1000 tons of fertilizer per year, they are now averaging 2500 tons annually. The company hopes to boost them to 5000 tons per year. Today, such centers, owned by the basic fertilizer companies, account for less than 10% of all fertilizer sold in the U.S. How much more can they grow? Expert opinions differ. But Monsanto, for example, is sure the centers will continue to capture a bigger piece of the market. One reason is that with their "big company" backing they can offer the increasingly sophisticated U.S. farmer more and better agronomic and scientific services than the smaller independent fertilizer outlet can offer. Plant nutrients Meanwhile, the cooperatives are boosting their share in the retail market. In 1966, they accounted for about one third of all fertilizer purchased by farmers. But from whomever the U.S. farmer buys his fertilizer, he will always be looking for a solid, reliable source of
the three basic nutrients—nitrogen, phosphate, and potash. And in spite of the alarms about overcapacity sounded during recent months, U.S. producers have spent much of their energy in the past 12 months in boosting production, capacity, and reserves of these nutrients. Of these three nutrients, ammonia continues to be the most heavily used and the fastest growing. In fiscal 1966, U.S. farmers consumed almost 5.3 million tons of it—up almost 16% from the 4.6 million tons they used the year earlier. From 1960 through 1965, average growth in consumption was 1 1 % . Figures for fiscal 1967 are not yet complete. But best industry guesses call for another 15% boost for the year. U.S. nitrogen capacity has continued to rush ahead during the past 12 months. During the second quarter of 1967 alone, domestic anhydrous ammonia capacity increased some 2.24 million tons per year, according to Arthur D. Little's Mr. Sweeney. This was a 16% increase and put total capacity at something more than 16 million tons per year. According to USDA, this capacity should reach 17 million tons annually by the start of
1968 and 18.9 million tons per year a year later. But even this estimate is probably low. At least two more 1000 ton-per-day units have been planned— by Central Farmers Fertilizer and Hill Chemicals—since it was made. A survey by the Agricultural Nitrogen Institute puts 1969 annual capacity at 19.8 million tons. Domestic nitrogen output is obviously moving up in line with all this new capacity. In fiscal 1966, 5.6 million tons of nitrogen were produced in this country for agricultural use. This is 15% more than the 4.87 million tons produced the year earlier. December 1966 was the first month in which U.S. anhydrous ammonia producers turned out more than a million tons. Just two years earlier, in December 1964, they produced 700,000 tons. For the first 10 months of fiscal 1967, anhydrous ammonia production totaled some 9.3 million tons. This is some 18% ahead of production in the same period a year earlier. Phosphate consumption on U.S. farms was also up sharply in fiscal 1966. It reached almost 3.9 million tons (of P2O5). This is some 1 1 % more than the 3.5 million tons consumed in 1965. Domestic production in fiscal 1966 for agricultural use was 4.7 million tons. This is some 17% more than the 4 million tons produced a year earlier. For the first 10 months of fiscal 1967, phosphate production was running some 9% ahead of last year. Shipments were running 8% ahead. This year, several companies have moved to improve their phosphate ore reserve positions. In July, Stauffer increased its phosphate reserves by acquiring full ownership of a deposit near Salt Lake City, Utah. Earlier in the summer, IMC started talks with the Spanish government over development of a deposit, believed to be the world's largest, in Spanish Sahara. In yet another move, Monsanto bought some substantial reserves in northern Florida in April. Consumption of the third nutrient, potash, on U.S. farms grew almost 14% during fiscal 1966 to reach 3.17 million tons (of K 2 0 ) . Domestic production was up 3%, to 2.86 million tons. According to the American Potash Institute, deliveries of K 2 0 for agricultural purposes in the U.S. during calendar 1966 were 3.77 million tons, 2 1 % more than the 3.11 million tons delivered in 1965. During the first quarter of 1967, deliveries were running a more modest 8% ahead of the first three months of 1966. Saskatchewan, Canada, has been the scene of the real action in potash in the past year. IMC completed its second mine in the province. Known as K-2, it cost $60 million and has
a capacity of 1.5 million tons of potash per year. It brings the total capacity of the three potash producers— IMC, Potash Co. of America, and Kalium Chemicals—in the area to some 4.9 million tons annually. By 1970, when five more mines now being built should all be completed, Saskatchewan's annual potash capacity will be about 11 million tons. Pesticides In keeping with the good year on the farm, U.S. pesticide sales again moved forward sharply during calendar 1966. Again, herbicides were the prime movers as their sales surged 22%, compared with the 16% sales gain shown by insecticides and an 1 1 % increase in fungicides. This year, for the first time, herbicide sales will likely exceed pesticide sales. One reason behind this greater growth for herbicides is that the insecticide market is nearer saturation. As one pesticide expert told C&EN, "It has been possible to grow crops with weeds in them. But for many crops you just have to get rid of the
insects. For instance, you just can't sell a housewife an apple with a worm in i t Another factor behind the rapid growth of herbicides is farm labor costs, which have risen 20%, and more in many areas, in the past five years. The use of more herbicide means less tillage. This, in turn, means less farm labor. Yet another factor boosting herbicide output is the Vietnam war. Defoliant chemical purchases by the Department of Defense were $12.5 million in fiscal 1966. In fiscal 1967, they rose to $45.2 million. In fiscal 1968, they will be $43.4 million. These purchases will take all the 2,4,5-trichlorophenoxyacetic acid and its derivatives produced in this country for the next year. In calendar 1966, sales of these herbicides amounted to more than $20 million. The D O D purchases will also include major quantities of 2,4-dichlorophenoxyacetic acid, the major organic herbicide. All of the Tordon, a relatively new defoliant introduced by Dow Chemical, will also be taken up by these military purchases during fiscal 1968.
Increasing ammonia and phosphate production and bigger potash imports keep domestic supply of plant nutrients in line with growing U.S. demands Estimated supply of nitrogen for fertilizer usesa 1964 b
Thousar ids of tons 1965 1966
1967c
4418
4870
5597
6537
Imports
453
470
529
616
Exports
264
392
546
747
4607
4948
5580
6406
1964b
Thousairids of tons 1965 1966
1967c
3846
4002
4696
5503
100
98
125
131
Domestic production
Net domestic supply
Estimated supply of P205 for fertilizer usesa
Domestic production Imports Exports Net domestic supply
400
432
441
643
3546
3668
4380
4991
Estimated supply of K20 for fertilizer usesa Thousands of tons 1964b
1965
1966
1967°
2764
2774
2858
3111
Imports
691
884
1332
1590
Exports
526
625
664
544
2929
3033
3526
4147
Domestic production
Net domestic supply a
U.S. and possessions. All years end June 30. C USDA estimates. Source: U.S. Department of Agriculture, Agricultural Stabilization and Conservation Service b
SEPT. 4, 1967 C&EN
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