AN OPTIMAL FERTILIZER DISTRIBUTION MODEL FOR IRAN, 1980- 88

Chemical fertilizers are important but highly seasonal inputs in the production of wheat, barley, rice, cotton and sugar beets in Iran. However, geographic location, topography, other industries and national security interests present special problems in transportation of fertilizer from the coast to inland farms. Most chemical fertilizers must be transported from major ports on the Persian Gulf, the Oman Sea and the Caspian Sea, across one or more of three major mountain rifts to widely dispersed distribution centers. Because fertilizer is a relatively low valued input, the cost of domestic transportation is an important component in its total farmgate cost. This study uses a capacitated transshipment model to minimize the sum of customs, loading, unloading, transportation and warehousing fertilizer costs subject to a series of seasonal volume constraints. The transshipment model incorporates two types of fertilizer arriving through eight main entry ports, production from two domestic plants, and transport through three alternative networks to 182 final consumption sites. This study also assesses the impact of a new rail line on total fertilizer handling and transportation costs. The base optimal transportation system relies heavily on truck transportation; approximately 77.3% of the fertilizer move directly by truck to final desfitiations, about 16.8% moves by truck to storage and the remainder is transported by rail (4.5%) or truck-rail (1.4%). The optimal plan results in a total cost of 9.8 billion Rials, a cost saving of 1.53 billion Rials or 13.4 percent over the current system cost of approximately 11.4 billion Rials. Nevertheless, the optimal base system suffers a number of bottlenecks. The ports of Ghah Bahar (spring and fall) and Bandar Abbas (spring and fall) and Anzali-Noshahr (fall only) are three major bottlenecks to phosphate transportation and distribution in the base plan. The base optimal cost could be further reduced by 16.1 percent if up to 50% of fall fertilizer demands could be stored at these points during the spring season. This would require spring port capacity to be increased by 30%. A second alternative is the combination of the Bandar Abbas railway expansion and the Bandar Emam plant which could further reduce total costs by an additional 8.9% or a 23.5% reduction over the base optimal system.