Competing in World Phosphate Fertilizer Markets: An Operator's Perspective

Since the 1981 record of 54 mm tons of US fertilizer consumption, grain surpluses in the US have brought about massive acreage reduction programs, decreased fertilizer consumption, and resulting price pressures caused by excess capacity. The strong US dollar that reduced export sales of both grain and fertilizer, and new offshore manufacturing capacity using US engineering/contracting know-how have combined to put US producers of phosphate fertilizers in uncompetitive postures. While recent events suggest the industry may be growing out of this capacity problem, the cost of US phosphates will continue to be disadvantaged by such external factors as taxes, environ- mental regulations, and high power costs. There is no reason to expect help from the government in the form of reduced environmental regulation and taxation. In order to survive, phosphate fertilizer producers will have to develop technologies and adopt strategies that result in world competitive production costs. Current responses to the need to reduce costs include reduced energy costs through cogeneration, innovative reclamation techniques that create valuable land, and in- creased raw material recovery achieved by operator proficiency. While new technology offers long-term benefits for the producer, present efforts are concentrated on more mundane management efforts to reduce costs. Major attention is being given to the problems of labor utilization and productivity. Raw materials suppliers are being asked to renegotiate contracts which more appropriately reflect conditions in an industry operating at about 50% of capacity. Achievements in these and other areas will allow the producers to continue operating until longer term benefits materialize. `