Peak Phosphate? No. Distribution Issues? Yes!

Recently there have been some media articles related to availability of phosphate. While the concensus is that we are not going to be running out of phosphate globally any time soon, there is a growing concern of where phosphate is produced relative to where it is used.

In a recent article from The Western Producer, where it was confirmed that there was a widespread lack of availability at crucial seeding time, and that there wouldn't be any phosphate available until June, a little late to be of use for Canadian farmers.

So what is the problem? Potentially the same problem that Western grain farmers have been facing - rail issues leading to distribution issues. Currently all commercial phosphate fertilizer in Canada is being produced from imported phosphate - and until Mine Arnaud or Lac a Paul come on stream, both of which have not confirmed a start date Canada will be dependent on foreign phosphate.

This is also growing in the US, who for many decades was a net exporter of phosphate. In 2012 there were only 11 mines in 4 states in the US. About 10% of the US requirements are coming from imports, primarily from Morocco and Peru. Canada is now 100% dependent on imports. Additional handling. Additional transportation. Looks like its becoming an issue of additional waiting time for farmers.

But is this just an issue in North America? Apparently not. In Sri Lanka manufacturing issues and raw material supply shortages are hitting farmers the same as in Canada. It appears that in Sri Lanka the phosphate availability is about 50% of the norm as discussed in the Daily Mirror article "Low phosphate output likely to trigger fertilizer shortage".

With the year being nearly half over, what comes next? Well.......Livestock!?!

Commodities sectors have posted negative returns except for Livestock. And what does that mean for phosphate. Lots! And we can thank the Chinese. An increasing appetite for pork (and beef) which require more feed. And the feeds for livestock are made from grasses and grains. And grasses and grains require fertilizer. And phosphate is a key ingredient in fertilizer. China is already by far the largest producer of phosphates on the planet. And traditionally China has been static - not really importing or exporting phosphate fertilizer. But with the changing diet of the Chinese comes a changing demand on fertilizer. And will their domestic supply keep up with demand - or will they become a dominant importer phosphate. Could this lead to additional distribution concerns? Potentially, especially for emerging markets dependent on phosphate imports who don't have deep wallets to cover increases in fertilizer costs.

I'd like to continue some of these ideas in the future and consider what the implications of global population growth, where that growth is dominated, and what the infrastructure in those regions are like, as well as the how the global demand on phosphate might drive up pricing and hit the food prices in the emerging markets where in many cases making sure there is food on the table is the priority, and not video games, mp3 players, cell phones, and new golf clubs....

Below are some sources that I used to put this piece together - have a look to get a better feel on what I have summarized above.

https://www.producer.com/2014/05/phosphate-goes-short-on-prairies/

https://www.dailymirror.lk/business/features/48030-low-phosphate-output-likely-to-trigger-fertilizer-shortage.html

https://www.ft.com/intl/cms/s/5eb1a1c6-ed87-11e3-8a1e-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F3%2F5eb1a1c6-ed87-11e3-8a1e-00144feabdc0.html%3Fsiteedition%3Dintl&siteedition=intl&_i_referer=http%3A%2F%2Fsearch.ft.com%2Fsearch%3FqueryText%3Dmeat%2Bis%2Bthe%2Bnew%2Bcoal#axzz34QopQ5xu

https://minerals.usgs.gov/minerals/pubs/commodity/phosphate_rock/mcs-2013-phosp.pdf

https://investorintel.com/potash-phosphate-intel/meat-new-coal-means-potash-phosphate/