In Saudi Arabia, the modernization of agriculture and food security has been a major initiative in Vision 2030. The Kingdom has limited arable land and water, but has great resources in the Industrial sector that can sustain the needs of Agriculture. The other one is the Saudi Basic Industries Corporation's nutritional arm, which consists of SABIC Agri-Nutrients Company. Its business reinvention, production and investment in innovation is transforming SABIC into one of the leaders in the sphere of fertilizers in the country as well as in the international context.
Top countries exported urea and DAP fertilizer (00 tonnes) in 2020
Fertilizer and Vision 2030
Vision 2030 has ventured into a technologically sound farming industry that can integrate with industries. This means that the soil needs some fertilizer because it enables crops to grow better where the soil is not fertile and the water resources are scarce. It has many manufacturers of its fertilizer within Saudi Arabia including fertilizer which is utilized to guarantee the adequate supply and demand in the domestic market as well as exporting it to the overseas market.
The fertilizer market is massive and growing. It is decreed by Mordor intelligence that the Saudi fertilizer market stands at USD 0.82 billion and is estimated to grow to USD 1.05 billion by 2025 and 2030 respectively, that is the annual average growth rate of about 5.1%. Another study estimated by Verified Market Research (2016) places the market at USD 4.00 billion and USD 7.50 billion in 2024 and 2032, respectively, equivalent to an estimated annual growth rate of 8%. In the deficiencies of the various reports, you simply find different definitions and classifications but all of them seem to point to the apparent growth in demand. It is through this growth that SABIC is giving more fertilisers.
Rebranding SAFCO
The largest transfer was done on the conversion of SAFCO which belonged to Saudi Arabia into the SABIC Agri-Nutrients Company which is the oldest producer of fertilizers. It was the move that made SABIC stronger, as the firm got closer to the industry. Concentrating its owned stock in the fertilizer sector to place it under one roof has enabled SABIC to own a bigger stake in its key joint ventures such as Ibn Al-Baitar, Al-Bayroni and GPIC in Bahrain.
The restructuring resulted in SABIC holding a majority of 50 percent of companies, some of which were majority owned by SABIC as announced by SABIC. It will also provide the company with the opportunity to make decisions more quickly today, invest with ease and produce more to offer the market. It will also help SABIC to assist the farmers with more diverse products such as urea and ammonium, and complex and phosphate fertilizers.
The move to displace SAFCO with SABIC Agri-Nutrients also demonstrates the tendency of the company to abandon Saudi Arabia and work throughout the world. An export of fertilizers is an activity that already has an impact on the global markets in Saudi Arabia. Recent journal publications in Sustainability reported Saudi urea and diammonium phosphate (DAP) exports are used to stabilize the yearly global prices of fertilizers and have a direct effect on food crop production in the countries where it is destined, e.g. wheat, maize and rice.
Enhancing Production Capacity
The SABIC has revealed that it has ambitious expansion strategies as far as production of fertilizer is concerned. In 2022, the company recorded sales of 190 000 metric tons of phosphate fertilizers twenty five percent higher than it sold in 2021. The growth in this increase follows the expansion of capacity and desirable demand within the market. Since then, SABIC has proceeded further to bolster operations by enabling arrangement of higher amounts of feedstock such as natural gas and ammonia that are needed to produce fertilizers.
The company has as well emphasised that the production capacity has been increased in the manufacture of traditional fertilizers such as urea, MAP (monoammonium phosphate), and DAP. These are also essential to the growing crops and the international markets. SABIC continues to invest in NPK mixtures (mixtures of nitrogen, phosphate and potassium) based on crops. In one example, the company is distributing sulfur-containing NPK 10-26-26, sulfur-containing NPK 11- 29-19 and NPK 12-32-6 that farmers utilized in planting potatoes, onions and melons.
The Saudi Arabia Ministry of Energy has officially authorized the quantity of feedstock that would support the expansion programs of SABIC. This will be the assistance of a government which will go to give the company an assurance that it will be in a position to run the operations with greater output within the newer rates and be in a position to meet the demands of the local and be in a position to meet the demands of the international by the need of the internationals.
Development in Fertilizer Solutions
It is a retaliatory industry over manufacturing of similar products by its competitors who are progressing in production of similar products. This amount of growth is not an end in itself. SABIC also invests in some new forms of more efficient, and environmentally-friendly forms of fertilizers. In 2024, SABIC Agri-Nutrients will exhibit different types of fertilizers as bio-enhanced at international fairs. The wishes are with hopes of improved crop production by means of diminished soil erosion, leakage of greenhouse gases into water bodies and nutrient leakage into water bodies.
The company has also been working with other businesses worldwide in the making of coated fertilizers and an enhanced formula that dispenses nutrients at a reduced speed. Using this technology causes crops to absorb nutrients more effectively and reduce wastage. It is the manner the global bowl of fertilizers is moving and SABIC is planning to be a leader in the area of approach to solving a problem in a green light.
In its sustainability report, SABIC stated that the world was witnessing high demand for low-emission fertilisers. As agriculture is one of the key contributors to GHGs in the world, and since one of the easiest things any individual could do to eliminate emissions is perform scientific farm husbandry by enhancing the performance of fertilisers.
The Role of Exports
Saudi Arabia is not only self-producing fertilizer but also exporting vast quantities of the same. With millions of tons of urea and phosphate fertilizers annually shipped to various countries across the globe, SABIC and Ma'aden together comprise most of the Saudi fertilizer exports.
The exports earn foreign currency, and they also give Saudi Arabia a good reputation as a reliable supplier of agricultural inputs. It is shown that, based on Mordor Intelligence, the Saudi fertilizer market will consist of a small number of key companies occupying the largest part of the market in 2024, such as SABIC Agri-Nutrients. This level of concentration provides Saudi companies with a large sway of influence on the cost and supply, both at local and international markets.
The Saudi fertilizer exports will also increase as the world needs more food, especially in Africa and Asia. This is linked to the mission of the Vision 2030 of diversifying the economy and increasing non-oil exports.
Impact on Saudi Agriculture
More supply of the fertilizer will give better access to lower prices to the local farmers. The crops cultivated in Saudi Arabia include wheat, barley, tomatoes, cucumbers, potatoes, onions and dates. On sandy soils that do not contain natural nutrients, fertilizer contributes immensely to high yields.
The government schemes also compel farmers to apply sophisticated fertilizers and irrigation methods in a bid to safeguard water. According to the Ministry of the Environment, Water and Agriculture, almost 70 percent of all water used by Saudi Arabia goes into agriculture and thus, it needs to increase the efficiency of its fertilizers. Water stress can be mitigated through the use of better fertilizers since the more effective the nutrient absorption is, the more farmers can grow with less.
Challenges to Address
Amid this good news, there is more in store. The production of fertilizers requires natural gas and other crude materials such as sulfur and phosphates. Production costs can be influenced by any changes in prices occurring in the world regarding these feedstocks. There is also the question of logistics: to deliver fertilizers in the vast areas of Saudi Arabia covered by deserts, a well-developed infrastructure and a cold store are needed to preserve the quality of goods.
There is also increased environmental pressure. The use of fertilizers will result in degradation and water pollution of the soil. Saudi Arabia has been balancing push-based and long-term sustainability objectives. One solution is to invest in innovative fertilizers by SABIC, yet every farmer will be slow to implement the technology and require training.
Looking Ahead
This means that the future of Saudi agriculture is bright as SABIC expands on the production of fertilizer and the introduction of new ones. The fertilizer market will remain on an upward trajectory due to the reforms of Vision 2030 and exports. The company can now compete on a global scale through consolidation of assets under SABIC Agri-Nutrients. Should the firm proceed to increase production, launch green products and consolidate its exportation routes, Saudi Arabia can become among the leading fertilizer centers in the world. This would not only help in assuring local food security, but it would also be beneficial in terms of Saudi influence at global agricultural markets.
Conclusion
SABIC Agri-Nutrients is increasing production of its own fertilizers and shifting towards new advanced development to embrace Vision 2030 in Saudi Arabia. Redesigning SAFCO, entering into new technologies, and each side of the government supporting the entry into new feedstock all have a clear direction to grow. The figures validate the increasing demand both within Saudi Arabia and globally.
This growth will not be merely the sale of additional fertilizer. It has to do with foreign policies to fortify food security, assist farmers, and enable Saudi Arabia to contribute more to the world agricultural system. As imports already affect the world markets and domestic reforms are driving sustainability, the fertilizer development of SABIC may be among the most significant industrial narratives in the Saudi Arabian Vision 2030 process.
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