Cebu City – Confident that the ₱30 billion industry will continue to expand, the country’s largest fertilizer company, the Atlas Fertilizer Corporation (AFC) is investing ₱1 billion over three years on its 17-hectare fertilizer plant in Toledo City.
By P. J. Restituto
AFC, which began operations in 1957, is the country’s oldest fertilizer manufacturer. Now a Japanese company, AFC marked its 60th anniversary this year and has a new admin building for 300 employees. “Agriculture is not growing as fast as the gross domestic product (GDP); the country’s farmland area is decreasing; and we need to increase yields by using hybrid seeds and fertilizer,” says Takashi Sumi, AFC president and chief executive officer.
If the forecast growth of the industry continues over the next 10 years, “…we [will] have to cope with market needs,” he says, pointing out the country’s fertilizer industry is growing at 1-1.5 percent each year. AFC is so upbeat that it is expanding operations in its 60-year-old plant in Toledo, about three hours’ drive south of Cebu City. Sumi expects the expanded facility will increase production output by at least 25 percent, up to a high of 40 percent.
The production target this year is 300,000 metric tons, Sumi says, adding that AFC accounts for nearly half or 43 percent of the local nitrogen (N), phosphorus (P), and potassium (K) or NPK fertilizer market. About a fourth or 23.7 percent of the country’s total fertilizer business is commanded by AFC. He estimates that volume-wise, the country’s fertilizer market is about 1.9 million metric tons annually, with about 650,000 metric tons of that NPK fertilizer.
“For the past five years, the industry, the economy, and the company have been getting better,” Sumi says. “It’s been stable for us, [operationswise], and we’re riding on the good economy.”
He says AFC needs to increase its capacity, so “…we need to rehabilitate the 60-year old Toledo plant.” The company’s move to expand and rehabilitate its plant is welcome as domestic production, which used to account for over 70 percent of net supply, is now down. Imports are mostly sourced from Southeast Asian countries and other free trade partners such as China, Japan, South Korea, and Australia, for which the import duty is zero, according to the Philippine Institute for Development Studies (PIDS). AFC, which imports urea, gets 90 percent of its raw material from abroad.
For local distributors, China is the largest source of imported fertilizer. Free trade partners account for 89 percent of fertilizer imports by value, according to the PIDS. Together with the tariff exemption of agricultural enterprises, imports of fertilizers into the Philippines are effectively dutyfree. About 60 percent of local fertilizer consumption goes to food crops, mainly rice and corn. According to the PIDS, rice accounts for nearly 40 percent of fertilizer use, followed by corn, fruits and vegetables, then sugar.
The PIDS, citing a 2009 study, says that farmers apply sub-optimal amounts of fertilizer, whether for the main nutrients (nitrogen, phosphorus, and potassium) or for micronutrients.
This story appeared in Agriculture Monthly’s December 2017 issue.