The global fertilizer market, valued at $145 billion in 2023, is on the verge of profound transformations. Between technological adoption, regulatory developments and fluctuations in supply and demand, the industry will have to adapt to disruptive trends that could reshape its fundamentals by 2040.
Over the past decade, the fertilizer industry has grown at a moderate rate of about 1% per year, supported by stable global population growth and increased demand for food. However, this status quo is now being challenged by major structural factors. According to an analysis by the consulting firm McKinsey, elements such as precision agriculture, land degradation and regulatory pressures could influence the trajectory of this market. What challenges and opportunities await players in this strategic industry?
Technological trends that are transforming demand
Technological innovations in agriculture are transforming farmers’ practices. With the rise of precision agriculture that optimizes fertilizer application using sensors, AI and geospatial data, overall fertilizer volumes could decline by 5% by 2040. These technologies enable Apply nutrients in a more targeted way, thereby reducing costs for farmers while preserving yields.
At the same time, biostimulants, a biological alternative, are gaining ground. Nitrogen fixers, algae extracts or even organic acids, these new generation inputs offer the potential to reduce emissions and improve yields. Their growing adoption, particularly in the United States, could cause traditional commodity fertilizer volumes to decline by 5-10% by 2040.
Environmental pressures and their impacts on the industry
Nitrogen fertilizers, responsible for around 3% of global emissions, face increasing regulation. Initiatives such as the European Green Deal or the commitments of agri-food companies on their emissions aim to reduce their use. These efforts could result in volumes decreasing by 5% by 2040, as regenerative agricultural practices and more sustainable supply chains become priorities for the entire sector.
Soil degradation: a double-edged sword
Soil degradation, caused by erosion, salinization and climate change, could also disrupt fertilizer demand. If some farmers increase fertilizer doses to compensate for this degradation, others could reduce their applications in the face of a drop in yields, making these contributions unprofitable. These dynamics could cause usage volumes to vary from –10% to +10% depending on the regions and practices adopted.
Regional developments and adjustments to application rates
In Africa, improving access to fertilizer could boost application rates and bring the region in line with global averages, increasing overall volumes by around 5% by 2040. Conversely, China and India, where enforcement rates exceed global averages, are pursuing policies aimed at limiting excesses. If these efforts continue, a drop of 5 to 10% in volumes could be observed in these two countries, the largest consumers of fertilizers in the world.
Land use change
Changing diets (reduction of animal proteins) and the transition to crops grown for biofuels could also impact fertilizer demand, with volumes potentially falling by 5% in the long term.
Factors relating to supply and strategic considerations
Alongside demand disruptions, supply-side factors are emerging. Raw material volatility, efforts to adopt more sustainable inputs (like blue and green ammonia), and evolving global supply chains are complicating the competitive landscape. These pressures are forcing players to rethink their strategies, notably through:
-strengthening competitiveness: how to maintain margins in a competitive environment marked by cost constraints and increased regulation?
-portfolio diversification: Innovation in specialized fertilizers or the integration of precision technologies could offer growth opportunities.
-a geographic focus: Regions like Africa, where growth is expected, require targeted and adapted strategies.
