The Thailand fertilizer market is projected to witness a CAGR of 8.8% during the forecast period (2021-2026). COVID-19 has a direct and negative impact on the value chain of the fertilizer market. The lockdown in Thailand has affected the transportation systems adversely. The primary raw materials used in the production of chemical fertilizers include ammonium, sulfuric acid, phosphorous, and potassium. The logistics restraints limited the supply of the raw material, and also, the prices of the fertilizers impacted the domestic fertilizer industry during the pandemic. Spike in fertilizer prices was also observed in 2020, owing to the logistics ban and increased international prices of phosphates and urea.
The increasing adoption rate of new technologies by farmers, increasing agricultural productivity, and growing country population are some of the major factors driving the Thailand fertilizer market. According to the FAOSTAT, the arable land in the country has remained constant at 16,810 thousand hectares during 2016-2019. The use of fertilizers helps in increasing the crop production per unit of land. Hence, in order to increase the agricultural productivity,
Nitrogenous fertilizer dominates the market as the demand for notrogenous fertilizer is high owing to soil nitrogen deficient, due to the dominance of rice crops. Thus, nitrogenous fertilizers are the most frequently used, especially urea. For instance, according to IFASTAT, the nitrogenous fertilizer consumption in the form of Urea was 705.2 thousand metric ton in 2017. Despite the increasing area under organic cultivation in the country, the challenges in the usage of biofertilizers and organic fertilizers resulted in farmers to prefer synthetic or chemical fertilizers.
Key Market Trends
Need for Increasing Agricultural Productivity
Despite the unchanged agricultural land in the country, agricultural productivity in Thailand is showing positive increment over the year. According to FAOSTAT, the cereal production in the country was 36,695.1 thousand metric ton in 2016, which has reached 38,196.2 thousand metric ton in 2017. This increase in agricultural production in the country is majorly due to the increased adoption of various agricultural products and technologies, including fertilizers.
The arable land in Thailand holds nearly 32.9% of the total land area in 2018, according to the world bank data. The largest number of farm holdings are located in the Northeastern region. In the region, along with the insufficient supply of land, some other factors, such as poor-quality soil, seasonality and variability of rainfall, scarcity of surface water etc. Therefore, fertilizer application has become crucial to acheive higher productivity gains.
In order to boost the agriculture production in the country, the Thailand Government has supported the farmers by providing subsides on farm inputs. For instance, in 2019, the government announced to launch new stimulus measures for the Thai farmers in the form of cheap fertilizers. This measure will be included on the state welfare smartcard, to provide the subsidy directly to the holders. With the increasing agriculture production coupled with various government schemes, the demand for fertilizers in the country is expected to grow during the study period.
Nitrogenous Fertilizer Dominates the Market
Fertilizer use in Thailand is an integral part of agriculture, due to the declining availability of arable land and the increasing role of agricultural commodity exports in the economy. However, Thailand has a limited supply of raw materials for fertilizer, and therefore, the imports both raw materials and pre-compounded grades for domestic production and distribution are high.
Most of the soil in Thailand is nitrogen deficient, due to the dominance of rice crops. Thus, nitrogenous fertilizers are the most frequently used, especially urea. Ammonium sulfate (AS) provides critical plant nitrogen (N) and sulfur (S) nutrients, compared to other N fertilizers, as ammonium sulfate has agronomic and environmental benefits against toxicity (aqueous NH3), N loss via NH3 volatilization, etc. Ammonium sulfate is another widely used nitrogenous fertilizer, only after urea, in Thailand.
Some of the major crops for which nitrogen is used include corn, cassava and sugarcane which are all the key crops grown in the country. Urea is among the most imported fertilizers in Thailand, as it is the most widely used fertilizer. Chia Tai has greater presence in the single-nutrient fertilizer urea market, because it has access to high quality urea from Russia. According to the Food and Agriculture Organization (FAO), value of urea imported in Thailand, in 2016, stood at USD 501,349.88 thousand, which has consistently increased to reach USD 704,575.18 thousand by 2018. Thus, the demand for nitrogen fertilizers in the country is anticipated to grow over the forecast period.
Thailand Fertilizer market is moderately consolidated, with players such as Yara (Thailand) Company Limited, NFC Public Company Limited., Chai Thai Co. Ltd, Thai Central Chemical Public Company Limited, and Terragro Fertilizer Co. Ltd. being some of the active players in the market. Mergers and acquisitions, partnerships, expansion, and product launches are some of the most adopted business strategies by these active players.
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