DH Fertilizers Ltd

Prediction models for site specific fertilizer recommendations

View point of fertilizer industry

Nadeem TariqSr GM Agri Biz

Stake holders conference

Aug 25, 2012

DH Fertilizers Ltd

Stake holders conferenceSituation analysis

• Fertilizer price increase is higher than commodities in 2011

• Farmers ability to buy fertilizers decreased, lead to:• Reduction in N and P use• Widening N:P ratio

• Higher land use efficiency to meet increasing population needs

• Financial impact on national exchequer from wheat alone• 1 maund / acre wheat yield contributes 24 B Rs• Lower fertilizer use may reduce yield by 10 – 15%• Potential loss to GDP can be 72 – 96 B Rs• Food security may be compromised leading to higher crime

rate and serious law & order situation

Catastrophic situation, calls for serious focus to enhance fertilizer use efficiency

DH Fertilizers Ltd

Stake holders conference

-

200

400

600

800

1,000

1,200

-

1,000

2,000

Off Take Price

• Consumption was growing with stable price till 2009• Bumpy ride started from 2010

– Installed production capacity reached 6.9 million tons– Gas supply curtailed by GOP from 2010 and almost stopped in 2012– Production losses lead shortage and market price increase– Imports not aligned with consumption, maximum product arrived after peak– Higher price affected farmers’ buy-ability leading to lower consumptions

Pric

e (R

s/ba

g)

kt C

onsu

mpti

on

4.9 5.5 6.5 6.1 (-6%) 5.9 (-3%)

Urea Price impact

3.1 (-1%)

DH Fertilizers Ltd

Stake holders conference

M M J S N M M J S N M M J S N M M J S N M M J S N M M J -

100

200

300

400

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000 Off Take Dom Price

• DAP off take has strong correlation with price and acceptance by farmers– 2007 Oct – Nov : price was 1.4 k Rs/bag and off takes were 202 and 335 kt– 2008 : Nominal sales between Mar – Sep at 2.7 – 3.0 k Rs/bag. Situation changed with

wheat price to 950 Rs/40 kg and DAP off take were 484 kt in 4Q even at 3.1 k Rs/ bag– 2010 : Farmers resisted to 2,000 + price level in 3Qs. Factors for higher sales in 4Q

• Impact of increasing international price put fear of even higher price• Higher Cotton price improved farmers ability to invest in wheat

– 2011 and 12 : Farmer response to 3.7 - 3.9 k Rs/bag has been very poor

Rs/b

ag

kt C

onsu

mpti

on

1.4 0.8 1.8 1.3 1.1 0.3

DAP Price impact

DH Fertilizers Ltd

Stake holders conferenceLand use efficiency

90%

100%

110%

120%

130%

140%

Pakistan

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Punjab

• Increasing LUE and yields, Lower fertilizer use : more mining of nutrients

• Depleted soils require higher fertilizer to even maintain yield levels• Higher fertilizer price forced famers to further reduce dose

• Improving fertilizer efficiency and balance application seems better option

DH Fertilizers Ltd

Stake holders conferenceN:P Ratio analysis

• Recommended NP ratio 1:0.50• Urea and DAP taken, being highest volume products in N & P

OfftakeRatio

Urea DAP2007 4,917 1,397 0.282008 5,473 774 0.142009 6,493 1,800 0.282010 6,111 1,285 0.212011 5,918 1,110 0.19

Jan - Jul 12 3,140 341 0.11

RemedyBalance use and higher use efficiency, quick & economical

DH Fertilizers Ltd

Stake holders conferenceNitrogen use efficiency

• Research by International Fertilizer Association• Indicator : kg grains produced with each kg of N used

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

15

25

35

45

55

65

ChinaIndiaPakistan

Kg

DH Fertilizers Ltd

Stake holders conferenceCorrelation

• Wheat production is directly affect by P fertilizers sales• P sales declined in 07-08 resulted in lower wheat production despite

18% higher N fertilizers sales

00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-1015

17

19

21

23

25

27

29

0.4

0.9

1.4

1.9

2.4

2.9

3.4

3.9

19.018.2

19.2 19.5

21.6 21.3

23.3

21.0

24.0 23.9

0.90.8

1.0 1.0 1.01.0

1.6

1.00.9

1.1

2.6 2.72.8

3.1

4.1

3.0

3.3

3.9

3.0

3.3

Wheat Production

Sales (P Fertilizers)

Sales (Urea)

Whe

at P

rodu

ctio

n (m

illio

n to

ns)

Ferti

lizer

Off

Take

(mill

ion

ton)

DH Fertilizers Ltd

Stake holders conferenceConclusion

• Countries are generously investing to enhance use efficiency• E-Chopal is one such example• Invested over 1 B IRs to develop GPS base soil fertility map• Now facility available to famers at their farms spontaneously

• Excellent step forward by Dr A Rashid and his team• Best use of in-house resources• Humble start with negligible investment• Potential to become knowledge hub for farmers and change

fertilizer use habits leading to higher productivity

• Request authorities to provide maximum support to meet current challenges of Food Security

• Funds to expand crop and geographical base• Cordial information sharing by all departments