Fertilizer Market in Japan: Key Research Findings 2020
Yano Research Institute (the President, Takashi Mizukoshi) has conducted the domestic fertilizer market and has found out the market size, trends of market players, and future outlook.
As the “Agriculture, Forestry and Fisheries and Regions Vitalization Creation Plan” (hereinafter referred to as the “Vitalization Plan”) was established in 2016, National Federation of Agricultural Cooperative Associations (JA Zennoh) has performed a reform operation to support producers and review producer goods including fertilizers since FY2017, which discouraged production of small volume each of a wide variety of fertilizers by consolidating the brands of high analysis compound fertilizers, NK compound fertilizers, and NPK compound fertilizers. The Vitalization Plan also encouraged introducing a bidding system for fertilizers where lowest prices were set by each of competitive bids, which reduced the prices of fertilizers, especially compound fertilizers, by 10 to 30%. These factors brought about the domestic fertilizer market to diminish, with FY2018 market size (based on the shipment value at makers) attaining 9,461,320 million yen, 94.5% of the preceding year.
Consolidation of Fertilizer Brands and Introduction of Bidding System Projected to Continue Reducing Fertilizer Prices from Mid-to-Long Term View
Since FY2015, as a part of the attempts mainly by JA Zennoh to increase the income of producers (farmers), producer goods prices have been reviewed, which reduced the prices of fertilizers, primarily high analysis compound fertilizers, by 10 to 30%.
To help reducing production cost at farmers, fertilizer makers and JA Zennoh have pressed ahead with supplying fertilizers with low-ratio nutrients and those with low price. In addition, employing controlled-release fertilizers for non-tillage nurturing boxes and introduction of side-banding fertilization have been attempted to reduce labor hours as well as the application volume. Furthermore, farmyard manures have been applied for the past several years as a partial replacement of chemical fertilizers, because of lower prices.
As a result of the revision of Fertilizers Regulation Act, broadcast application of mix of farmyard manures and compound fertilizers has become available, which is considered to benefit producers by saving fertilization labor with the application method being “broadcast” and also by saving the cost by 10 to 30% due to a part of compound fertilizer being replace by low-cost farmyard manures.
JA Zennoh hereafter plans to address and expand solutions of the similar issue of reducing the retail price of high analysis compound fertilizers toward the spring of 2018 to other fertilizers as well, which is likely for the mid-to-long term fertilizer prices to keep decreasing.
Fertilizer makers, therefore, are further obliged to streamline their business or to shift their products to high value-added ones, aiming to maintain profits. The fertilizer market size based on the shipment at the makers for FY2019 is projected to be 33,640 million yen, 97.2% of that of the previous fiscal year.
As the price of fertilizer materials hardly decreased, and as transportation cost rising every year, fertilizer makers seem to have no choice but to complement the decreased sales by streamlining the business through economies of scale that takes advantage of brand consolidation, or by building the optimal logistics network connected with JA Zennoh, Keidanren (Federation of Economic Organizations), and other makers, and by expanding the sales of high value-added products.
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