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BUSINESS OPPORTUNITES FOR INTERNATIONAL FOREST PRODUCTS
Business Opportunities for International Forest Products
within the Agricultural Chemicals and Fertilizers Industry
Suffolk University
Written for International Forest Products
BUSINESS OPPORTUNITES FOR INTERNATIONAL FOREST PRODUCTS
Table of Contents
Executive Summary………………………………………………………………………………………………………………………………………………….. 1
Project Focus ……………………………………………………………………………………………………………………………………………………………. 1
Research Findings………………………………………………………………………………………………………………………………………………. 1
Recommendations………………………………………………………………………………………………………………………………………… 2
Introduction ………………………………………………………………………………………………………………………………………………………………… 2
Project Overview …………………………………………………………………………………………………………………………………………………….. 2
Research Overview ……………………………………………………………………………………………………………………………………………. 3
Company Overview………………………………………………………………………………………………………………………………………. 3
Industry Analysis………………………………………………………………………………………………………………………………………………………. 4
Chemicals Industry …………………………………………………………………………………………………………………………………………………. 4
Tariffs …………………………………………………………………………………………………………………………………………………………………….. 5
Industry Drivers ……………………………………………………………………………………………………………………………………………. 6
Industry Challenges ………………………………………………………………………………………………………………………. 7
Major Players……………………………………………………………………………………………………………………. 8
Value Chain ……………………………………………………………………………………………………… 10
Opportunities …………………………………………………………………………………………………………………………………………………………… 12
Research ………………………………………………………………………………………………………………………………………………………………….. 12
Latin America ……………………………………………………………………………………………………………………………………………………. 14
Africa ……………………………………………………………………………………………………………………………………………………………… 16
Conclusion …………………………………………………………………………………………………………………………………………………………………. 17
Recommendations …………………………………………………………………………………………………………………………………………………. 19
Bibliography …………………………………………………………………………………………………………………………………………………………….. 20
Appendix A ………………………………………………………………………………………………………………………………………………………………… 23
Appendix B ………………………………………………………………………………………………………………………………………………………………… 25
List of Tables and Figures …………………………………………………………………………………………………………………………………… 37
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BUSINESS OPPORTUNITES FOR INTERNATIONAL FOREST PRODUCTS
Executive Summary
Project Focus
The focus of this report was to address whether is there an opportunity in the agricultural
chemicals industry for International Forest Products. By conducting primary and secondary
research, we were able to understand agricultural chemicals industry through exploration of the
tariffs, industry drivers, industry challenges, major players, and the value chain. Our research of
these key parts of the agricultural chemicals industry allowed us to identify potential business
opportunities and offer recommendations for IFP.
Research Findings
Our research found that chemical industry is 69 percent of the larger sector of the
materials industry, and is broken down in five sectors — specialty; diversify; fertilizers and
agricultural; industrial gas; and commodity1. We focused our research on the agricultural
chemicals and fertilizers sector of the chemicals industry which makes up 15 percent of the total
industry1. Through our research into Chapter 31 of the Harmonized System (HS) codes, we
found that the major raw components of fertilizer are 3102 Nitrogen, 3103 Phosphate, and 3104
Potash, and that all fertilizers imported into the United States are duty free2 3. Our research also
revealed three key industry drivers: energy prices, government regulations, and commodity
pricing4. We also found that there are four industry challenges: Genetically Modified Organisms
(GMOs); organic foods; safety; and the short product life cycle of fertilizers5. Through our
research into the production of Potash, Nitrogen and Phosphate, we identified five major players
in the agricultural chemicals industry. These include ICL, Mosaic, CF, Potash, and Agrium6 7 8 9
10
. Potash and Agrium merged into Nutrien in January 20186 8. We also found that companies
1
Chemicals Industry Surveys (2017, November). Retrieved from
https://www.capitaliq.com/CIQDotNet/Research/DocumentViewer.aspx?documentViewerDocumentId=37881073#
2
Harmonized Tariff Schedule. (2018, March 29). Retrieved from hts.usitc.gov: https://hts.usitc.gov/current
3
U.S. International Trade Commission. (n.d.). Harmonized Tariff Schedule Search. Retrieved April 11, 2018, from
https://hts.usitc.gov/
4
Dun and Bradstreet. (2018, February 19). Agricultural Chemical Manufacturing. Retrieved from
http://www.mergentintellect.com/index.php/search/firstResearchReport/CHMA/Agriculturalchemical20180219.pdf
5
Loria, K. (2017, February 23). GMO market growing at 3.2% CAGR. Retrieved from https://www.fooddive.com/news/gmomarket-growing-at-32-cagr/436711/
6
Agrium. (2018, February). Annual Report. Retrieved April 11, 2018, from
https://www.nutrien.com/sites/default/files/uploads/2018-02/2017 AGRIUM Annual Report FINAL.pdf
7
The Mosaic Company. (2017, February 3). ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934. Retrieved April 5, 2018, from http://investors.mosaicco.com/Cache/c38082405.html
8
Potash Corp. (2018, February). Annual Report. Retrieved April 11, 2018, from
https://www.nutrien.com/sites/default/files/uploads/2018-02/2017 PotashCorp Annual Report.pdf
9
Israel Chemicals. (2018, February). Annual Report. Retrieved April 11, 2018, from
http://iclgroupv2.s3.amazonaws.com/corporate/wp-content/uploads/sites/1004/2018/03/ICL-2017-Annual-Report-20-F.pdf
10
CF Industries. (2018, February). Annual Report. Retrieved April 11, 2018, from
https://www.snl.com/Cache/1001234503.PDF?O=PDF&T=&Y=&D=&FID=1001234503&iid=4533245
2
BUSINESS OPPORTUNITES FOR INTERNATIONAL FOREST PRODUCTS
that produce agricultural chemicals and fertilizers are typically involved in every part of the
value chain from extraction to retail.
When researching opportunities for International Forest Products, our team found that
there are three major factors that increase the need for fertilizer and they are high population, the
production of corn, and the production of cotton11 12 13. In addition to these three factors, we also
researched the countries that produce the most bananas (as it was noted that International Forest
Products maintains relationships with Dole and Chiquita). We concluded that the places with the
biggest business opportunities for International Forest Products are Latin America and West
Africa. In Latin America, the country of Brazil is dependent upon imported fertilizer to make up
the gap between domestic production and consumption14. This gap could provide an opportunity
for International Forest Products to enter the Brazilian market West Africa also is dependent on
imported fertilizer and has been expanding its harvesting land area to increase its crop
production15.
Recommendations
Our three recommendations to International Forest Products are as follows: Match buyers
to suppliers in West Africa and Brazil; finance smaller players in the market; or, conversely, not
enter the agricultural chemicals industry.
Introduction
Project Overview
Our project explored the business opportunities for International Forest Products within
the agricultural chemicals and fertilizers industry. Our goal was to determine if there was an
opportunity for International Forest Products to enter the agricultural chemicals industry through
financing. By conducting primary and secondary research, we were able to understand the
current climate of the agricultural chemicals industry, such as what the major ingredients are in
agricultural chemicals and what countries need these chemicals the most. This understanding
allowed us to identify potential business opportunities in these areas. In addition,, we could
determine the major manufacturers and distributors of key chemicals and fertilizers, which
allowed us to examine which companies need logistics and financing services, thus providing an
opportunity for IFP to enter the market through those portals. . This report provides an in-depth
11
Keshrinandan Enterprise. (2016). World Corn Production 2015/2016. Retrieved from

World Corn Production 2015/2016

12
USDA. (2018). Retrieved from https://ipad.fas.usda.gov/ogamaps/map.aspx?cmdty=Cotton&attribute=Production
13
World Atlas (2017). Top Banana Producing Countries In The World. Retrieved from https://www.worldatlas.com/articles/topbanana-producing-countries-in-the-world.html
14
Simões, D. C., Caixeta-Filho, J. V., & Palekar, U. S. (2018). Fertilizer distribution flows and logistic costs in Brazil: changes
and benefits arising from investments in port terminals. International Food & Agribusiness Management Review, 21(3), 407-422.
doi:10.22434/IFAMR2017.0037
http://ezproxysuf.flo.org/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=128757921&site=ehostlive
15
Mulholland, S. (2017, JULY 07). CRU. Retrieved from CRU INTERNATIONAL LTD:
https://www.crugroup.com/knowledge-and-insights/spotlights/is-2017-a-turning-point-for-west-african-fertilizer-demand/
3
BUSINESS OPPORTUNITES FOR INTERNATIONAL FOREST PRODUCTS
examination of the international agricultural chemicals industry, the current climate within the
industry, business opportunities, and several recommendations on how to enter the agricultural
chemicals industry through logistics and financing.
Research Overview
To gain a better understanding of the agricultural chemicals industry, we started our
research focusing broadly on the chemicals and fertilizer industry. First we defined the chemical
industry as being an umbrella term used for various sub industries, including the fertilizer
industry. We then defined the agricultural chemical industry as being a subset of the chemical
industry and as being an umbrella term for the fertilizer industry. We wanted to understand how
this industry looked internationally, what were the major drivers of the market, who were the
major players, and what countries used agricultural chemicals the most and for what purpose.
Company Overview
International Forest Products is a privately-owned subsidiary of the Kraft Group that
handles the international logistics and transportation of paper products, including paper, pulp and
wood, for other companies. International Forest Products currently is ranked the sixth largest
exporter in the U.S.1. For research purposes, we defined International Forest Products industry as
“paper and pulp manufacturing”. Figure 1, from Mergent First Research database, shows the
growth rate of the paper and pulp manufacturing industry from 2017 to a projected 2022.
Figure 1:
1
Paper and Pulp Manufacturing Industry Annual Growth Rate
International Forest Products. (2016). International Forest Products General Business Overview. Retrieved from
file:///C:/Users/Mia/Downloads/IFP General Presentation (2).pdf
4
BUSINESS OPPORTUNITES FOR INTERNATIONAL FOREST PRODUCTS
Retrieved From: Mergent. (2018, March 12). Paper & Paper Products Manufacturing.
The paper and pulp manufacturing industry revenue is expected to grow at an annual
compounding rate of 2 percent between the years 2018 to 20222.
Since International Forest Products is a privately held company, certain types of financial
information is not available. However, based on what we were told in the client’s initial
presentation to us, we can assume that International Forest Products has strong financial backing
from the Kraft Group. Other assumptions that were made include the idea that the company
provides a high level of customer service to its clients and that it can expand its business with its
current clients. These assumptions were all based on extensive meetings with the clients over the
course of several months.
Industry Analysis
Chemicals Industry
According to an industry survey conducted by Standard and Poor’s NetAdvantage, the
chemical industry is 69 percent of the larger sector of the materials industry3. The chemicals
industry is broken down in five sectors — specialty, diversify, fertilizers and agricultural,
industrial gas and commodity3. Figure 2 shows the five sectors by percentage of the industry.
Figure 2: Chemical
Industry Sectors
Retrieved From: Chemicals Industry Surveys (2017, November).
2
Mergent. (2018, March 12). Paper & Paper Products Manufacturing. Retrieved from http://mergent.firstresearchlearn.com/industry.aspx?chapter=0&pid=145
3
Chemicals Industry Surveys (2017, November). Retrieved from
https://www.capitaliq.com/CIQDotNet/Research/DocumentViewer.aspx?documentViewerDocumentId=37881073#
5
BUSINESS OPPORTUNITES FOR INTERNATIONAL FOREST PRODUCTS
The fertilizers and agricultural chemicals sector makes up 15 percent of the industry3. This
sizable percentage was a factor that helped us to decide to focus our research on the fertilizers
and agricultural chemicals sector.
The outlook for the agricultural chemical manufacturing industry is predicted to grow at a
higher rate than the paper and pulp manufacturing industry. Figure 3 visualizes the annual
revenue rate of the agricultural chemicals manufacturing industry.
Figure 3: Agricultural Chemicals
November 13). First Research.
Manufacturing Industry Growth Rate Retrieved From: Mergent (2017,
According to Mergent First Research database, this sector is projected to grow at an annual
compounding rate of 5 percent between the years 2018 to 20224. Compared to the 2 percent
predicted growth rate of International Forest Products current industry, the agricultural chemicals
industry presents an attractive opportunity for International Forest Products.
Tariffs
To understand the tariffs on agricultural chemicals and fertilizers, we looked at the
Harmonized System codes, or HS codes, on fertilizers. Appendix A is a table that deals with
Chapter 31, which contains all the HS codes dealing with fertilizer and agricultural chemicals5 6.
The relevant HS codes for the agricultural chemical industry were 3102 Nitrogen, 3103
4
Mergent (2017, November 13). First Research.
http://mergent.firstresearch-learn.com/industry.aspx?chapter=0&pid=161
5
6
Harmonized Tariff Schedule. (2018, March 29). Retrieved from hts.usitc.gov: https://hts.usitc.gov/current
U.S. International Trade Commission. (n.d.). Harmonized Tariff Schedule Search. Retrieved April 11, 2018, from
https://hts.usitc.gov/
6
BUSINESS OPPORTUNITES FOR INTERNATIONAL FOREST PRODUCTS
Phosphate, and 3104 Potash5 6. According to the Chapter 31, as of 2018, all fertilizers imported
into the United States are duty free5 6. Database restrictions did not allow us to find the tariffs for
fertilizers in other countries.
Industry Drivers
In an industry report by Mergent First Research on the agricultural chemicals industry,
we located three key industry drivers. The first industry driver is energy prices. The cost of
chemicals is directly related to cost of natural gas7. Natural gas is used in the production of
nitrogen, a key chemical ingredient in most fertilizers. Natural gas is used as a source of
hydrogen and heat in the production of Nitrogen7. The second driver is government regulations.
Regulations for fertilizer in the United States come from both the state level, as individual states
have their own regulations, and the federal level from the Department of Agriculture. The
Environmental Protection Agency also sets regulations and standards for fertilizers. The third
driver is commodity prices such as the price of crops, metal and other raw materials. Crops and
fertilizer have a direct relationship with one another as fertilizer is used to grow crops and
fertilizer is dependent on the production of crops. Metals and fertilizer have a direct relationship
with one another as the containers that are used to transport, and store fertilizers are made from
various metals.
This chart, retrieved from the United States Department of Agriculture’s website, depicts
the historical price of fertilizer and the raw ingredients of fertilizer over the course of 16 years
beginning in 20008.
7
Dun and Bradstreet. (2018, February 19). Agricultural Chemical Manufacturing. Retrieved from
http://www.mergentintellect.com/index.php/search/firstResearchReport/CHMA/Agriculturalchemical20180219.pdf
8
Mosheim, R. (2018, February 21). United States Department of Agriculture. Retrieved from usds.gov:
https://www.ers.usda.gov/data-products/fertilizer-use-and-price.aspx
7
BUSINESS OPPORTUNITES FOR INTERNATIONAL FOREST PRODUCTS
Figure 4:
Fertilizer Price Index
Retrieved From: Mosheim, R. (2018, February 21). United States Department of Agriculture.
The graph shows the historic prices of nitrogen and phosphate but excludes potash8. The
Department of Agriculture, for reasons unknown, ceased collection potash data in 1983. The
price that farmers paid for fertilizer is significantly lower than the price of the individual
fertilizer components, most likely since most farmers purchase fertilizer in bulk and therefore
can pay significantly less than retailers would pay for fertilizer.
Industry Challenges
The agricultural chemicals industry also faces many challenges. One of the primary
challenges is GMOs, or Genetically Modified Organisms. GMOs are bei …
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