The Future of the Fertilizers Industry 2020

At the Rotterdam School of Management MBA students Umit Cakici, Ilse van der Jagt, Juan Martinez Pelayo, Morgane Rollando and Emilio Scatalani have as part of their assignment for the course New Global Business Environment looked at the future of the Heavy Fertilizer Industry in 2020. To download their full report in PDF please click here.

Introduction

As far as strategic decision making is concerned, the fertilizer industry can be considered a very traditional industry. Fertilizer manufacturers do not seem to worry about what the uncertain aspects of their futures might bring. However, to position themselves better for unexpected opportunities that come along, they should expand their imaginations to see a wider range of possible futures.

Scenarios

Heading South

In the year 2018, Maroc, Libia, Tunisia, Egypt and Algeria attracted by the unsatisfied demand for biological food in Europe, formed the OBFEC (Organisation of Biological Food Exporting Countries). They created a cartel to produce and distribute fresh healthy food in Europe without hammering the price level.
This caused a severe reduction in the use of non biological fertilizers, warning fertilizers’ producers about the irreversibility of this process. In order to counteract the disappearing of the market, fertilizers’ producers looked at the new developing markets which at been growing at unbelievable pace.

Environmental mania

The environmental situation as well as the international instability led to urgent summits among the most important leaders of the world in order to make decisions that could solve the problems. As usual, those leaders could not get agreement on a global decision. Protests of NGO’s, and an increasing alarm of the European population made EU act more energetically. Hence, the EU decided to meet its crisis cabinet. By 2016, the EU passed one of the most severe and strict laws never remembered until that moment.

A new Dell

Recalling how he ordered his Dell laptop over the Internet, he started to think about adapting the “tailored to order” Dell model to the fertilizer industry. In 2014, his dream became reality and 90% of his sales were fertilizer mixes ordered through the internet. In 2015 LUHONG Fertilizer went public on the booming Shanghai stock-market. Based on this new success LU HONG looked for the next opportunity for developing the offer of fertilizers. With the new funds collected on the stock-market LU HONG set up a joint venture with HAIER electronics. The goal was to research the possibilities of automatic ordering systems for fertilizers. In 2017 the joint venture devised a soil analysis system linked to the farmers mobile network. This system made it possible to use the analysis data based on the soil analysis, crop planted and the local weather expectation for ordering the next batch of tailored fertilizer automatically through the Internet.

To download the full report in PDF please click here.