Demand for renewable fuel sources is generating a need for increased crop production – and more potash.
For vehicle owners around the world, the simple act of refuelling the family car is something that can no longer be taken for granted. Rising political tensions, a tight supply/demand balance for oil and high energy prices have consumers in many countries asking questions about their fuel supply. Increasingly, they are discovering that the seeds of a solution are being planted in farm fields around the world.
Crops like corn, sugar cane and oil palm are being viewed as viable alternatives in the energy debate as they provide a renewable source for the production of ethanol and other biofuels. To grow more of these crops, more fertilizer – especially potash – will be needed.
Over the past four years, world production of ethanol doubled to more than 12 billion gallons per year. Approximately 1 billion gallons of biodiesel, the second most popular alternative fuel. This growth is expected to continue as many countries work to secure their energy supply and biofuels become more economically attractive. According to the Food and Agricultural Organization (FAO) of the United Nations, biofuels could fill 25 percent of the world’s energy needs within 20 years. This, however, is creating a competition between food and fuel for many crops.
The world’s growing population, much of which has benefited from higher incomes in recent years, is demanding more high-quality food as well. That is placing new demands on the world’s agricultural land – demands that make it even more important to replenish the soil’s nutrients to allow for sustainable production. Many of the crops used for both food and biofuel require significant potash applications to protect yield and quality. That is fuel for growth – for biofuels and the potash industry.
GRAIN DRAIN
As the production of renewable fuel sources helps resolve one challenge, it is also adding to the increasing production pressures on the world’s farmers and agricultural land.
The combination of a growing population and higher incomes has already pushed global grain production to its limits. With the exception of the 2004/05 crop season, when almost every region of the world enjoyed near-perfect growing conditions, grain consumption has outstripped production every year since the turn of the century. The gap is expected to be even larger this year.
That has driven the world’s grain stocks-to-use ratio alarmingly low. It is now forecast that the 2006/07 ending ratio will fall to 15.5 percent – the lowest level in recorded history.
With the new expectation of crops like corn, oil palm and sugar cane being directed to biofuel production, it will be even more important for farmers to maximize the yields that can be achieved on existing agricultural land.
Fertilizers will be an integral part of that story. Many of these crops are significant potash consumers, which will mean farmers must increase application rates to keep their land fertile and yields high.
