Unfortunately, we are not living in a world where food is sufficient for every single person, and how to feed ever growing global population has always been an important issue in many countries to different extent. In 1950, the number of people living in the planet was around 2.5 billion, but it has jumped rapidly and now the number reaches over 7.1 billion. This seriously questions the availability and stability of food resources for all. Cultivating more land may be pursued, but the earth has limited space for agriculture, and most of arable land is already being used. As such, the world will gradually demand more fertilizers to produce more food in a limited space.
Phosphorus is one of the most important elements of fertilizers, and thus global demand for phosphate rock, the base material for phosphorus, will most probably increase in the future. Not just population growth, but also changing diet for more meat and increasing use of biofuels will demand more use of phosphorus based fertilizers. Phosphate, however, is a finite and non-renewable resource like oil, yet there is no alternative. Moreover, the global distribution of this important resource is heavily skewed to several countries, and thus it has a tremendous strategic importance although this has been rather neglected. Luckily, the Arab region is blessed with this resource, and the region is known to hold more than four fifths of the global phosphate reserves. Huge amount of phosphate reserves are reported particularly in North African Arab countries including Morocco, but several countries in West Asia also play important roles in the global phosphate market. China and the United States, followed by Morocco, are the largest producers of phosphate, but their domestic demand is large enough to limit their roles in global phosphate market. This makes the Arab region as the largest exporter of the resource including Morocco and Jordan, the largest and the second largest exporter respectively. Thus, the sector has the potential to greatly contribute to the regional economy.
There are, however, important challenges to count. In the long-run, global demand for phosphate will increase, but it can vary in the short and medium term due to changes in global crop prices, changes in policies for fertilizer subsidies, changes in taxation policies, and etc. Yet, the supply of phosphate rock is not very responsive to these changes as it normally takes quite a few years to increase supply capacity. As a result, global phosphate rock prices have fluctuated between below 50 US$ and over 400 US$ per ton in the last decade. Nevertheless, major producers and exporters of phosphate rock have not well coordinated their production, and there is no international organization like OPEC that decides production quotas for its members, even between Arab phosphate exporters. Furthermore, the dominance of India in phosphate import market threatens the ability of Arab phosphate exporters to maintain reasonably high phosphate rock prices. India alone imports over one third of the global phosphate trade, and India’s policy for fertilizer subsidies greatly influence the demand for phosphate. The export tax policy of China, the largest producer of phosphate rock, also makes the Arab exporters difficult to set plans and make decisions.
Thus, careful monitoring of market developments and coordination among countries are needed for the phosphate sector to give the real benefit to the regional economy. For this reason,
ESCWA is considering to further study how the region can benefit and what should be done in developing and managing the phosphate sector. What do you think?
