Almost every decision a manager takes needs a forecast. If he has an idea of what will happen in the future, he can make appropriate management decisions. He also needs to assess the effect of his present decisions on the future so that the right decisions are made today to create a desired condition tomorrow. Fertilizer is capital intensive and, therefore, cost sensitive. If we know what fertilizer types are likely to be demanded, where and when, we can improve the quality of decisions concerning production, procurement, placement and promotion. Consequently, we can minimise funds tied up in inventories, save interest costs, conserve foreign exchange, avoid running out of stock and, generally, increase sales and improve profits.
To a fertilizer marketing or producing organisation, estimates of demand and likely market share are indispensable for strategic decisions and those concerning resource allocation. Developing countries, facing problems of low agricultural productivity, growing populations and food needs, recognize the crucial role of fertilizer in promoting food security. Forecasts of fertilizer demand in the short term and potential consumption in the long run are essential for the determination of appropriate policies regarding food production and fertilizer use. Similarly, the global movement of fertilizers, their price trends and investment in new production facilities are influenced by demand expectations.
This manual looks at major concepts in demand measurement and describe different methodologies. The significance of forecasts both where there is market competition and where there is a parastatal monopoly and the relative advantages of different techniques will be presented. Even though some of the forecasting models are too complex to be relevant to all countries, brief outlines have been provided to facilitate further study by those who wish to try applying them to their specific situations. The purpose is to provide practical advice on fertilizer forecasting methods to improve marketing efficiency at the company level and strengthen the supply management system at national level.
