FORECAST OF FOOD, FARMING AND FERTILIZER USE IN THE EUROPEAN UNION 2008-2018

The mission of the European fertilizer industry is to respond to the needs of agriculture and society by providing, in accordance with the principles of Responsible Care, a reliable and competitive supply of high-quality mineral fertilizers.

The industry encourages, moreover, the adoption of Good Agricultural Practices in the use of plant nutrients, thus stimulating farmers and growers to produce high-quality crops in an economically and environmentally sound manner.

The mission of EFMA is to identify, promote and manage the common interests of its members by:

• promoting the role of mineral fertilizers in European agriculture and horticulture; • anticipating and preparing for upcoming issues that may affect the industry; • being the industry’s spokesperson and sounding board; • providing its members with a wide range of statistical information and studies.

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ANNUAL FORECAST 2008

Contents

HOW THE FORECAST IS MADE 5

OVERVIEW FOR 2018 7

THE CROPPING PATTERN 9

THE FUTURE 11

MORE UNCERTAINTIES 13

MODERN AGRICULTURE FEEDS THE WORLD AND HELPS PROTECT THE ENVIRONMENT AND THE CLIMATE 15

“In the next ten years, use of nitrogen in the EU 27 is expected to increase by 3.8%.”

5

ANNUAL FORECAST 2008

FORECAST OF FERTILIZER USE IN EU27

how the foreCast is made

The EFMA Forecast is an annual exercise that respects the following procedure:

- In spring, a European scenario is estab-lished, based on quantitative information from (USDA, FAPRI, European Commission) and qualitative analyses made by the fore-casters, EFMA experts. - Between May and July the general scenario is adapted to the specificities of each country. National forecasts are then made by forecast-ers.

- National forecasts are then analyzed and discussed by all experts in July, before inte-gration and publication.

In all EU27 countries, the EFMA Forecast is an upward crop-based procedure, where ferti-lizer consumption is evaluated by assessing area and nutrient application rates for each crop. However, two different methodologies are used to achieve this crop-based proce-dure:

- In 20 countries (EU15, Estonia, Hungary, Latvia, Lithuania and Poland), representing 87% of the EU27 Agricultural area and 94% of the EU27 fertilizer consumption, the Forecast is an expert-based approach constructed from the national forecast generated by our members.

- In the other 7 countries, the evaluation of the production and crop area is based on the economic model used by the European Commission. Application rates used for N, P and K nutrients on each crop are based on an agronomic model developed by a small group of forecasters.

In this report, fertilizer nutrients are expressed as follows: nitrogen (N) as pure element, phosphorus (P) as phosphate equivalent(P O , or phosphorus pent-oxide), and potas-sium (K) as potash equivalent (K O, or potas-sium oxide).

2 5

2

+ 3.8%

- 0.2%- 4.3%

NP OK O

0.000

2.000

4.000

6.000

8.000

10.000

12.000

14.000

16.000

1927

1932

1937

1942

1947

1952

1957

1962

1967

1972

1977

1982

1987

1992

1997

2002

2007

2012

2017

Fertilizer nutrient consumption in the European Union 27

Nutrient (million tonnes)2 5

2

7

ANNUAL FORECAST 2008

FORECAST OF FERTILIZER USE IN EU27overview for 2018

On average, between 2005 and 2008, mineral ferti-lizers carrying 10.7 million tons (Mt) nitrogen, 3.1 Mt phosphorus and 3.5 Mt potassium are applied each year by European farmers.

In the next ten years, use of nitrogen in the EU27 is expected to increase by 3.8%, a confirmation of the positive trend seen last year. Phosphorus is expected to present more moderate decline (-4.3%) than fore-seen last year, with potassium having relative stability (-0.2%). By 2018, forecasters expect fertilizers to supply European farmers with 11.1 Mt nitrogen, 2.9 Mt phosphorus and 3.5 Mt potassium.

This is still a substantial downward trend from the consumption peak of the seventies and the eighties. By 2018 there will be a reduction of 27% nitrogen in the EU compared to 1986, when nitrogen consump-tion peaked. There will also be a reduction of 68%

phosphorus and 60% potassium, compared to 1979, when phosphorus and potassium consumption peaked.

When comparing the long-term forecast (2017/18) to the last three seasons, we still foresee a rather general reduction for all nutrients in the EU15 countries, but more moderate than in the forecast of previous years. The only exceptions are the increases in N consumption in Austria, Denmark and Sweden due to area increase (development of energy crops drawing profit of the development of rapeseed), and a slight increase of all nutrients in Spain and Portugal due to the development of irrigation.

In the EU 12 on the other hand, with the exception of Slovenia which is comparable to EU 15 countries, all nutrient consumption will increase.

Due to the current low P&K application rates in the majority of the EU12, strong increases in these elements are forecast in all countries but important variations among countries can appear: in the two new EU countries for instance, Bulgaria foresees a 38% increase for P, whereas estimates show only 25% in Romania.

The significant development of nitrogen consumption in the EU12, not offset by a too important decrease of the EU15 consumption, will induce in the whole EU 27 an increase of this nutrient more significant than foreseen in the past.

Thus, the development of grain sector (food-crops and bio-fuels crops) throughout the EU27 will continue to partially compensate the negative impact of the CAP reform on P and K consumption, and contribute to the 3.8% final increase in N consumption.

Bulgaria

EU 12

EU 27EU 15

Slovakia

Poland

Estonia

Slovenia

RomaniaLatvia

Lithuania

Hungary

CzechRepublic

-15

-5

5

15

25

35

45

55 Nitrogen Phosphorus Potassium

Forecast changes % in regional fertilizer use

Austria

Germany

Finland

U K

Greece

Ireland

Italy

Netherlands

EU 15

EU 12

EU 27

Denmark

France

Spain

PortugalSweden

Belgium+ Lux

-35

-25

-15

-5

5

15

25

35

Nitrogen Phosphorus Potassium

Forecast changes % in regional fertilizer useForecast changes % in regional fertilizer use Forecast changes % in regional fertilizer use

In the EU 27 the fertilized area equals 136 Mio ha, of which arable crops account for 68%, (cereals 44%, oilseeds 7%, fodders 9%, other crops 8%), permanent crops 9% and grassland 23%.

ANNUAL FORECAST 2008

FARMING AND FERTILIZING OUTLOOK IN EU-27

Agricultural area throughout EU27 is marked by a large diversity. The current situation is illustrated in the facing pie charts.

In the EU15, fertilized area accounts for 70% of the total agricultural area. The non-fertilized area consists of idle-land, compulsory set-aside (still valid) and non-fertilized grassland.

The fertilized area encompasses 61% arable crops (of which 37% cereals, 6% oilseeds, 10% fodders, other crops 8%), 11% permanent crops (vineyard, orchards, forest) and 28% grassland.

In the EU12, fertilized area accounts for 76% of the total agricultural area. The non-fertilized area consists of idle-land, and non-fertilized grassland (some non-fertilized grassland is not taken into account in the statistics). The fertilized area encom-passes 87% arable crops (of which 61% cereals, 11% oilseeds, 8% fodders), 3% permanent crops (vineyard, orchards, forest) and 10% grassland.

The aggregated figures for the EU 27 are:

The fertilized area equals 136 Mio ha, of which arable crops account for 68%, (cereals 44%, oilseeds 7%, fodders 9%, other crops 8%), perma-nent crops 9% and grassland 23%.

Crop-area combined with the application rates provide the following results: grain sector accounts for 57% of total nutrient consumption, of which 23% is wheat. Grasslands and fodders account for 24%.

Wheat

Coarse grains

Other cropsFodder crops

Grassland fertilized

Perm. Crops(fruit, vineyard,

forest)

PotatoSugar beet

Grassland non-fertilized

Idled land*

Oilseeds

Agricultural area in the European Union 27 (current situation)the Cropping pattern

Agricultural area in the European Union 15 Agricultural area in the European Union 12

Agricultural area in the European Union 27 (current situation)

9

Wheat

Coarse grains

Grassland fertilized

Grassland non-fertilized

Idled land*

Potato

Sugar beetOilseeds

Other crops

Fodder cropsPerm. Crops

(fruit, vineyard,

forest)

Wheat

Coarse grains

Grassland non-fertilized

Idled land*

Other crops

Fodder crops Oilseeds

Potato

Sugar beet

Grassland fertilized

Perm. Crops(fruit,

vineyard, forest)

Over the next ten years, we foresee that nutrient consumption (N+P+K) will increase by 6% for cereals and 26% for oilseeds.

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ANNUAL FORECAST 2008

Over the next ten years, the probable new Common Agricultural Policy (CAP) associated with a rather favourable global context for agricultural productions will bring significant changes to the acreage of arable crops in the EU27.

Within the EU27, the acreage of wheat, maize and barley are foreseen to increase again, which, together with a sustained increase in yield, will significantly increase the total EU production of cereals. Other coarse grains, even with a signifi-cant drop in the cultivated area, will also present a slight increase in production.

The increase of the oil seed rape production (29%) comes both from the increase in area (20%), and from a sustained increase in yield (7%).

This development in grain production will lead to higher nutrient consumption. Over the next ten years, we foresee that nutrient consumption (N+P+K) will increase by 6% for cereals and 26% for oilseeds.

With regard to sugar beet, the yield increase would all but compensate for the area decrease. Fertilizer use, however, will drop by 13% due to

the increased productivity, with the less produc-tive areas being discarded.

Nutrient consumption will decrease by 7% for fodder crops and by 9% for grassland due to the trend toward extensification in the meat sector induced by the new orientation of the CAP. Even if this is a less negative trend than in the past, this does not yet include the future likely abolition of milk quotas. A reason for this limited decrease is of course the still increasing use of organic fertiliz-ers and manure as nutrient sources.

FARMING AND FERTILIZING OUTLOOK IN EU-27the future

Forecast changes in farming food crops

oilseedrape

sugarbeet

wheat

potato

rye, oats, rice

grain maize

barley

-30% -20% -10% 0% 10% 20% 30% 40% 50% 60%

Area (ha)

Yield (q/ha)

Forecast changes : 2017/18 - Ref.

Forecast changes in fertilizer use by crop

grassland

potato

fodder crops

wheat

coarse grains

oilseeds

sugar beet

-30% -20% -10% 0% 10% 20% 30% 40% 50%

Nitrogen Phosphorus Potassium

Forecast changes : 2017/18 - Ref.

Forecast changes 2008/2018 in farming food crops Forecast changes 2008/2018 in fertilizer use by crop

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ANNUAL FORECAST 2008

For the fourth year we stress the increasing uncer-tainty around the EU policy context for agricul-ture. We have reached a new level in 2008 with a dramatic evolution of the global economy and its impact on all EU activities.

The CAP “Health check”.

The CAP is now implemented in the EU 27, with 17 Member States already applying the full scheme. The now agreed “Health Check” will result in more visbility for the CAP over the coming 4 years, and certainly prepare our mind set till after 2013.

Production of biofuels.

Last year, despite the ambitious target set in January 2007 and after an initial slow take-up in biofuel production, the question was “where will it stop?”. The demand was boosted by several factors:

• a global demand which has exploded, follow-ing the sudden development of bioethanol in the USA.

• more tensions on the energy market, which keep energy prices at a high level.

• national biomass plans beginning to be implemented in EU member states.

As a consequence, the food sector has been significantly impacted by the developments, and

this has certainly contributed to the exceptional tension experienced mid 2008 on the global agri-cultural commodities market. This tension induced strong demand for agricultural inputs especially fertilizers, which have reached record high prices.

However, the situation on biofuels has already changed completely with a general stabilization of the biofuels production: a dramatic drop in the USA and a significant slow down in the EU, due to debate on first generation biofuels.

The global economic situation.

Despite numerous attempts to reactivate the WTO negotiations, probability for a rapid global agreement continued to fade away. However, the extraordinary financial crisis which now hits the world economy may give new impetus to the procedure. The crisis is becoming the main overall threat, and consequently uncertainty, in any fore-cast exercise. Despite strong efforts and resource implemented by the EU to react, it is legitimate to consider that the EU now has less control on its economic future. If the tensions on the food supply brought positive incentive for agricultural production, and therefore fertilizer consumption, the impact of the economic crisis on global trade will definitely harm the agricultural development in many parts of the world, especially in developing countries.

NITROGEN, PHOSPHORUS ANDPOTASSIUM ARE THE THREE MAIN NUTRIENTS OF PLANTS

Mineral fertilizers are made from natu-rally occurring raw materials which have been transformed into a more plant-available form by industrial processing.

- Nitrogen (N), taken from the air, is es-sential as an important component of proteins.

- Phosphorus (P), extracted from mined ores, is a component of nucleic acids and lipids, and is key to energy transfer.

- Potassium (K), extracted from mined ores, has an important role in plant me-tabolism, for photosynthesis, activation of enzymes, osmoregulation, etc.

THE COMMON AGRICULTURAL POLICY (CAP)more unCertanties

Mineral fertilizers provides 48% of the world population with its food and protein supply.

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ANNUAL FORECAST 2008

According to the FAO (Food and Agricultural Organization of the United Nations) the need for cereals, will rise globally by 50% by the year 2030. This increasing need for food can either be satis-fied:

• by increased yields from existing farmland; or

• by expanding farmland area into natural land.

But the creation of new farmland would lead to deforestation and humus depletion. This would release large quantities of carbon dioxide from the carbon which is currently firmly bound in wood and soil organic matter

The constant challenge to farmers is to increase the productivity of their existing land, thereby preserving forests and natural areas.

The use of mineral fertilizers provides 48% of the world population with its food and protein supply. Europe, despite a limited land area, has climatic conditions that will continue to make it a key contributor to global agricultural production.

Whilst highly productive, European agriculture represents 9.2% of EU green house gas emis-sions, of which N O emitted from soils represents 50%. Approximately 2.2% of all emissions are directly caused by mineral nitrogen, 1.2% coming from its use in field (Figure 1). Modern good farming practices are designed to maximize the

efficient use of inputs such as fertilizer and diesel (for tractors) so that not only are food costs kept down, but greenhouse gas emissions are also kept as low as possible.

The challenge is to manage the inevitable contri-bution better by helping farmers to reduce their emissions per unit of production and by reducing emissions from fertilizer manufacture.

Optimized fertilization according to good agri-cultural practice helps protect the climate.

Modelled calculations of wheat production show that an increased area of farmland, which would become necessary as a result of extensification and reduced fertilization, would lead to increased greenhouse gas emissions (Figure 2).

Figure 2: Half-rate fertilization gives reduced yields so additional land is required to provide food.

Conclusions

In order to provide the food needed by the grow-ing world population, yields from farmland must be increased significantly by using proven up-to-date good agricultural and fertilizing practices. By contrast, extensifying agriculture would result not only in the destruction of currently wild and natural habitats but also in higher prices and higher green-house gas emissions per unit of food produced.

modern agriCulture feeds the world and helps proteCt the environment and the Climate

AGRICULTURE, FERTILIZERS AND CLIMATE CHANGE

0% (CO )

3.9% (CH )

4.1% (N O) Other Sources

1.2% (N O) Mineral Nitrogen

2

4

2

2

Other Sectors 90.8%

Agriculture 9.2%

Other SectorsAgriculture

* (CO Carbon Dioxide) (CH Methane) (N O Nitrous Oxide) 2 42

2

Figure 2

calculation based on UNFCCC(2008), Bouwman (2002), UNECE/EMEP (2007), IPCC (2006)

Figure 1

0

50

100

150

200

250

GAP ext.

g CO

2eq/

kg w

heat

gra

in GHG emissions due to land use change and cultivation of this extra-land

Assumptions:(1) N applied as AN; AN produced with BAT (i.e. incl. N2O catalyst)(2) Yield with GAP: 9.25 t/ha; yield with ext.: 7.11 t/ha(3) Additional farmland needed to compensate for yield difference displaces forest

Good Agricultural Practice

Extensive farming

Assumptions:(1) N applied as AN; AN produced with BAT (i.e. incl. N O catalyst(2) Yield with GAP: 9.25 t/ha; yield with extensive farming: 7.11 t/ha(3) Additional farmland needed to compensate for yield difference displaces forest(4) Half rate N fertilization applied in extensive farming compared to good agricultural practice

g C

O e

q/k

g w

heat

gra

in2

GHG emissions due to land use change and cultivation of extra land.

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