Global and Regional Phosphate Fertilizer Production, Trade, and Policy Scenarios Eihab Fathelrahman, Stephen Davies, Raeda Osman, and Tamrat Challa ARIFSID, United Arab Emirates University IFPRI Non-Resident Fellow Phosphate Fertilizers- Production, Use, and Trade • Explore phosphate fertilizers’ patterns of use globally and regionally • Suggest a broader perspective on food security—prioritizing national soil productivity over merely boosting food availability in the global market when shaping global trade policies. • Niu, Kunyu (2024) indicated that phosphorus deficits are primarily concentrated in regions with low soil-P reserves, such as sub-Saharan Africa, Latin America, and Southeast Asia. • Or, heightening risks of soil-P depletion may come from insufficient use, amplifying long-term concerns about food security. • Overuse in some selected areas. Niu, K., Li, M., Lenzen, M., Wiedmann, T., Han, X., Jin, S., ... & Gu, B. (2024). Impacts of global trade on cropland soil-phosphorus depletion and food security. Nature Sustainability, 7(9), 1128-1140. Phosphorous Concentration and Misallocation? Phosphate Fertilizer - World Production is 45 Million Tons in 2022 China, 13, 29% Morocco, 5, 12% U.S. , 5, 11%India, 5, 11% Russian Federation, 4, 10% Brazil, 2, 5% Saudi Arabia, 2, 4% Australia, 1, 1% Pakistan, 1, 1% Türkiye, 1, 1% Rest of the World, 7, 15% Source: Food and Agriculture Organization (FAO-Stat) https://www.fao.org/faostat/en/#home Total Prod. by top 5 is 32 Million Tons (73%) World Phosphate Fertilizer Ag. Demand is 42 Million Tons in 2022 China, 10, 23% India, 8, 19% Brazil, 6, 13%U.S., 4, 9% Australia, 1, 3% Rest of the World, 14, 33% Total Consumption by the top 5 is 38 Million Tons (67%) Source: Food and Agriculture Organization (FAO-Stat) https://www.fao.org/faostat/en/#home Phosphate Fertilizer Quantity Exports & Imports in 2022 Morocco, 4, 20% Russian Federation, 4, 19% China, 3, 18% Saudi Arabia, 2, 11% U.S., 2, 10% Rest of the Wrold, 4, 22% World Phosphate Fertilizer Exports is 19 Million Tons in 2022 Brazil, 3.9, 20% India, 3.7, 19% Bangladesh, 1.1, 6% Canada, 0.9, 5%U.S, 0.9, 5% Australia, 0.8, 4% Indonesia, 0.6, 3% Argentina, 0.5, 3% Pakistan, 0.3, 1% Rest of the World, 6.7, 34% World Phosphate Fertilizer Imports is 19.5 Million Tons in 2022 Source: Food and Agriculture Organization (FAO-Stat) https://www.fao.org/faostat/en/#home Top 10 Countries in Phosphorus Fertilizer Use Kg/Hectare in 2022 120 106 90 75 63 59 56 55 52 47 0 20 40 60 80 100 120 140 k g /h a Source: Food and Agriculture Organization (FAO-Stat) https://www.fao.org/faostat/en/#home Phosphorus Fertilizer Use Per Value of Agricultural Production Source: Food and Agriculture Organization (FAO-Stat) https://www.fao.org/faostat/en/#home 25 23 22 22 20 20 10.0 10.0 9.9 9.8 9.7 9.4 9.1 0 5 10 15 20 25 30 G /I n t $ Global Simulation Model (GSIM) Global Simulation Model (GSIM) Adopted by Francois and Hall ( 2003) ▪ An analytical tool for global simulations ▪ Estimating the changes in trade value and welfare flows as a result of trade policy ▪ In order to simulate the changes, the GSIM model requires data on bilateral trade of studied countries, information on elasticities, initial bilateral tariffs, and scenarios of tariff changes. ▪ The simulation results consist of different trade values and trade welfares, including producer surplus, consumer surplus, and tariff revenue. Global Simulation Model (GSIM) – Key Characteristics (Thanks to ChatGPT) • Partial-equilibrium, product-level model in WITS to simulate tariff changes. • Global market-clearing: solves for world (exporter) prices, then derives country-level impacts. • Armington differentiation across sources (imperfect substitutes). • Needs three key elasticities: σ (substitution), ε (import demand), e (export supply). • Inputs: baseline bilateral trade & tariffs (often HS-6) + elasticities. • Outputs: changes in trade, world prices, tariff revenue, consumer & producer surplus, welfare. Bilateral trade flow- Phosphorus Fertilisers (DAP, MAP, SSP, &TSP) import value between the selected partners in 2022 Import tariff in 2022 between selected partners- Effectively Applied Tariff rates obtained using the AVE estimation UNCTAD method Import-demand (Em) and export-supply (Ex) come from the ESCAP (2020) global HS6 dataset estimated with Soderbery-LIML; the Armington substitution elasticity (Es) is set to 5 following the GSIM (Francois & Hall, 2003) All data were obtained by accessing the World Integrated Trade Solution (WITS) D A T A Trade data Tariffs Elasticities Data source The Theoretical Framework of GSIM model Scenario Policy Shock Policy Detail Affected Economies Baseline (2022) None (benchmark ) Baseline is a Benchmark flow, shift from none to current trade policies Global Scenario 1 (Exporter Cartel) Export tax 50% export tax on top phosphorus exporters. China, Morocco, Russia, Saudi Arabia, United States Scenario 2 (Importer Subsidy for Food Security) Production subsidy Introduce a 25% production subsidy for key importers. Bangladesh, Brazil, EU, India, United States Scenario 3 (1&2 Combined) Export tax + Production subsidy Maintain the 50% export tax (as in Scenario 1) and add a 25% production subsidy for key importers. Exporters: China, Morocco, Russia, Saudi Arabia, United States; Importers: Bangladesh, Brazil, EU, India, United States Scenario 4 (Export Tax Eliminated ) Selected export tax elimination Eliminate import tariffs for key importers.Bangladesh, India Phosphate Fertilizers Policy Scenarios Simulation Results Welfare Effects (Million $) Output and Price Changes Producer surplus Consumer surplus Tariff revenue Change in subsidy payments Net welfare effect Change in Overall Consumer Prices Change in Output Producer Price for Home Good A B C D E= A+B+C+D % % % Bangladesh 0 31 0 0 31 -2% -1% -3% Brazil 0 236 -3 0 233 -4% -1% -2% EU 9 59 12 0 79 -4% 1% 2% India 0 144 0 0 144 -2% 0% 0% China -95 0 0 0 -95 -5% -1% -2% Morocco -149 0 0 0 -149 0% -1% -2% Russia -286 0 0 0 -286 0% -2% -7% Suadi Arabia 14 0 0 0 14 -2% 0% 0% United states -41 25 0 0 -15 -2% 0% -2% RoW -112 262 65 0 215 -32% -12% -38% Total -661 759 74 0 172 Baseline (2022) Scenario 1- Export Tax (Exporter Cartel) Welfare Effects (Million $) Output and Price Changes Producer surplus Consumer surplus Tariff revenue Change in subsidy payments Net welfare effect Change in Overall Consumer Prices Change in Output Producer Price for Home Good A B C D E= A+B+C+D % % % Bangladesh 0 -25 0 0 -26 1% 0% 0% Brazil 0 -97 -91 0 -187 2% 0% 0% EU 3 -19 -12 0 -28 1% 0% 1% India 0 -105 -101 0 -206 2% 0% 1% China -436 0 0 0 -436 2% -10% -32% Morocco -1986 0 0 0 -1,986 0% -10% -32% Russia -1215 0 0 0 -1,215 0% -10% -31% Saudi Arabia -362 0 0 0 -362 1% -10% -32% United states -831 -18 0 0 -849 1% -10% -33% RoW 5 -103 -78 0 -176 14% 1% 2% Total -4822 -367 -282 0 -5,471 Scenario 2- Production Subsidy (Importer Subsidy for Food Security) Welfare Effects Output and Price Changes Producer surplus Consumer surplus Tariff revenue Change in subsidy payments Net welfare effect Change in Overall Consumer Prices Change in Output Producer Price for Home Good A B C D E= A+B+C+D % % % Bangladesh 0 -2 0 0 -2 0% 0% 0% Brazil 1 5 0 -1 5 0% 7% 23% EU 98 -1 0 -87 10 0% 7% 23% India 6 -4 0 -6 -3 0% 7% 23% China 9 0 0 0 9 0% 0% 0% Morocco 11 0 0 0 11 0% 0% 0% Russia -1 0 0 0 -1 0% 0% 0% Suadi Arabia 3 0 0 0 3 0% 0% 0% United states 592 0 0 -537 54 0% 7% 23% RoW 1 21 6 0 28 -1% 0% 0% Total 721 19 6 -630 114 Scenario 3- Export tax + Production subsidy (Combined Effects) Welfare Effects (Million $) Output and Price Changes Producer surplus Consumer surplus Tariff revenue Change in subsidy payments Net welfare effect Change in Overall Consumer Prices Change in Output Producer Price for Home Good A B C D E= A+B+C+D % % % Bangladesh 0 -26 0 0 -26 1% 0% 0% Brazil 1 -92 -91 -1 -183 2% 7% 24% EU 102 -19 -12 -88 -17 1% 7% 24% India 7 -108 -101 -6 -208 2% 7% 24% China -438 0 0 0 -438 2% -10% -32% Morocco -1982 0 0 0 -1,982 0% -10% -32% Russia -1215 0 0 0 -1,215 0% -10% -31% Suadi Arabia -362 0 0 0 -363 1% -10% -32% United states -423 -17 0 0 -978 1% -5% -17% RoW 6 -87 -75 0 -157 13% 0% 2% Total -4306 -351 -279 -94 -5,567 Scenario 4- Scenario 4 (Export Tax Eliminated ) Welfare Effects Output and Price Changes Producer surplus Consumer surplus Tariff revenue Change in subsidy payments Net welfare effect Change in Overall Consumer Prices Change in Output Producer Price for Home Good A B C D E= A+B+C+D % % % Bangladesh 0 71 0 0 72 -3% 0% 0% Brazil 0 -206 -95 0 -301 3% 0% 1% EU 8 -9 -10 0 -11 1% 1% 2% India 1 376 -74 0 302 -5% 1% 2% China -398 0 0 0 -398 1% -10% -34% Morocco -2,026 0 0 0 -2,026 0% -10% -33% Russia -1,236 0 0 0 -1,236 0% -10% -32% Suadi Arabia -441 0 0 0 -441 -1% -6% -20% United states -848 -105 0 0 -952 7% -10% -33% RoW 13 -149 -67 0 -202 11% 1% 5% Total -4,927 -22 -246 0 -5,195 Welfare Effects (Million $) Welfare Effects- Producer Surplus Consumer Surplus Net welfare effect Baseline Sc. 1 Sc. 2 Sc. 3 Sc. 4 Baseline Sc. 1 Sc. 2 Sc. 3 Sc. 4 Baseline Sc. 1 Sc. 2 Sc. 3 Sc. 4 Bangladesh 0 0 0 0 0 31 -25 -2 -26 71 31 -26 -2 -26 72 Brazil 0 0 1 1 0 236 -97 5 -92 -206 233 -187 5 -183 -301 EU 9 3 98 102 8 59 -19 -1 -19 -9 79 -28 10 -17 -11 India 0 0 6 7 1 144 -105 -4 -108 376 144 -206 -3 -208 302 China -95 -436 9 -438 -398 0 0 0 0 0 -95 -436 9 -438 -398 Morocco -149 -1,986 11 -1,982 -2,026 0 0 0 0 0 -149 -1,986 11 -1,982 -2,026 Russia -286 -1,215 -1 -1,215 -1,236 0 0 0 0 0 -286 -1,215 -1 -1,215 -1,236 Suadi Arabia 14 -362 3 -362 -441 0 0 0 0 0 14 -362 3 -363 -441 United states -41 -831 592 -423 -848 25 -18 0 -17 -105 -15 -849 54 -978 -952 RoW -112 5 1 6 13 262 -103 21 -87 -149 215 -176 28 -157 -202 Total -661 -4,822 721 -4,306 -4,927 759 -367 19 -351 -22 172 -5,471 114 -5,567 -5,195 Conclusions Trade and Policy Interactions Matter • Global phosphate trade patterns reflect both resource endowments and policy choices. • Export taxes can restructure trade flows—benefiting large exporters but straining import-dependent nations. • Production Subsidy: improves food security but may distort trade. • Combined Policies: reveal trade-offs between national gains and global equity. The Way Forward • Understand dimensions of misallocation and the role trade can play, including promotion of phosphorus efficiency or circular nutrient use (e.g., recovery from waste streams). • Review the potentials issues with the WTO and Most favored Nation status and, where appropriate, foster cooperative trade frameworks to stabilize supply and ensure equitable access. -5% 0% -2% -2% 2% 1% 1% 2% 0% 1% 1% 1% 0% 1% -6% -5% -4% -3% -2% -1% 0% 1% 2% 3% China Morocco Russia Suadi Arabia United states Change in Consumer Prices for major Exporters Baseline Scenario 1 Scenario 2 Scenario 3 Scenario 4 -2% -4% -4% -2% 1% 2% 1% 2% 0% 0% 0% 1% 2% 1% 2% 0% -5% -1% -4% -5% -4% -3% -2% -1% 0% 1% 2% Bangladesh Brazil EU India Change of Consumer Pricess for Major Importers Baseline Scenario 1 Scenario 2 Scenario 3 Scenario 4 -3% -2% 2% 0% 0% 0% 1% 1% 0% 23% 23% 23% 0% 24% 24% 24% 0% 0% 1% 1% -5% 0% 5% 10% 15% 20% 25% 30% Bangladesh Brazil EU India Change in Producer Price for Major Importers Baseline Scenario 1 Scenario 2 Scenario 3 Scenario 4 -40% -30% -20% -10% 0% 10% 20% 30% China Morocco Russia Suadi Arabia United states -2% -2% -7% 0% -2% -32% -32% -31% -32% -33% 0% 0% 0% 0% 23% -32% -32% -31% -32% -17% 0% 1% 2% 1% 0% Change in Producer Price for Major Exporters Baseline Scenario 1 Scenario 2 Scenario 3 Scenario 4 -1% -1% -2% -10% -10% -10% -10% -10%-10% -10% -10% -10% -5% -12% -10% -8% -6% -4% -2% 0% 2% 4% 6% 8% China Morocco Russia Suadi Arabia United states Change in Output for Major Exporters Baseline Scenario 1 Scenario 2 Scenario 3 Scenario 4 -2% -1% 0% 1% 2% 3% 4% 5% 6% 7% 8% Bangladesh Brazil EU India -1% -1% 1% 0% 0% 0% 0% 0% 0% 7% 7% 7% 0% 7% 7% 7% 0% 0% 0% 0% Change in Output for Major Importers Baseline Scenario 1 Scenario 2 Scenario 3 Scenario 4 Slide 1: Global and Regional Phosphate Fertilizer Production, Trade, and Policy Scenarios Slide 2: Phosphate Fertilizers- Production, Use, and Trade Slide 3: Phosphorous Concentration and Misallocation? Slide 4: Phosphate Fertilizer - World Production is 45 Million Tons in 2022 Slide 5: World Phosphate Fertilizer Ag. Demand is 42 Million Tons in 2022 Slide 6: Phosphate Fertilizer Quantity Exports & Imports in 2022 Slide 7: Top 10 Countries in Phosphorus Fertilizer Use Kg/Hectare in 2022 Slide 8: Phosphorus Fertilizer Use Per Value of Agricultural Production Slide 9 Slide 10 Slide 11: Global Simulation Model (GSIM) – Key Characteristics (Thanks to ChatGPT) Slide 12 Slide 13 Slide 14 Slide 15 Slide 16 Slide 17 Slide 18: Scenario 2- Production Subsidy (Importer Subsidy for Food Security) Slide 19: Scenario 3- Export tax + Production subsidy (Combined Effects) Slide 20: Scenario 4- Scenario 4 (Export Tax Eliminated ) Slide 21: Welfare Effects (Million $) Slide 22: Conclusions Slide 23 Slide 24 Slide 25