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ANNUAL REPORT 2006


Without energy, there is no life. All living beings need energy in order to live and grow. Agriculture’s main purpose is to supply this energy by growing crops. The raison d’être of our industry is to make inorganic nutrients as fertilizers available to agriculture and thereby to provide the fundaments for feeding a growing world population. To fulfil this mission, we in turn need energy and feedstock in the form of natural gas. The European fertilizer industry is the biggest single user of gas in the European Union. It is obvious that access to competitively priced gas is vital to the continued prosperity of a nitrogen fertilizer industry in Europe. This report testifies to the many efforts our industry has made in addressing the challenges arising from our fundamental need for gas in order to honour our responsibility as provider of a life essential product towards all our stakeholders, customers, shareholders, employees, society at large and future generations.

ANNUAL REPORT 2006


ANNUAL REPORT 2006

2 4 8

From the President From the Director General From the Executive Board

10 14 16 22 24

Agriculture and Environment Fertilizer Consumption Forecast Technology, Environment and Safety Trade and Economic Policy From the Gas Task Force

26 28 30 32

Lobbying Branding Knowledge Facilitation

34 35 35 36

Executive Board Members Staff EFMA’s Core Values

CONTENTS


The raison d’être of our industry is to make inorganic nutrients as fertilizers available to agriculture and thereby to provide the fundaments for feeding a growing world population. To fulfil this mission, we in turn need energy and feedstock in the form of natural gas. It can be said, that once made into fertilizers, gas is ultimately one of the basic raw materials for food.

DANIEL CLAUW

FROM THE PRESIDENT 2


ANNUAL REPORT 2006

As this year’s Annual Report is about energy, let me state some fundamental truths which are evident to us but often seem to be overlooked in the general debate. There is no life without energy. All living beings – plants, animals and humans – need energy in order to live and grow. Agriculture’s primary purpose is to supply this energy by growing crops. With the help of solar energy, plants form their complex organic matter through photosynthesis, using carbon dioxide (CO2) taken from the air, inorganic nutrients from the soil, and water in the process. The raison d’être of our industry is to make inorganic nutrients as fertilizers available to agriculture and thereby to provide the fundaments for feeding a growing world population. To fulfil this mission, we in turn need energy and feedstock in the form of natural gas. It can be said, that once made into fertilizers, gas is ultimately one of the basic raw materials for food. The European fertilizer industry is the biggest single user of gas in the European Union. Natural gas represents 50 to 70% of the total costs of finished fertilizers. It is obvious that access to competitively priced gas is vital to the continued prosperity of a nitrogen fertilizer industry in Europe. Access to this gas is increasingly challenging for many industrial users as well as private consumers. It is therefore no surprise that the energy issue has seen itself ascending on the European Commission’s list of priorities, as well as in the EU Member States and on a global level. The industry’s response to this challenge is more specifically explained in the Gas Task Force chapter in this report.

There are, however, also opportunities. Worldwide agricultural production, and with it fertilizer consumption, is growing. Why should this trend be so different for Europe? In order to feed a growing population, the world not only needs high yield agriculture, but also a considerable contribution from Europe. Uniquely blessed with fertile soils and favourable climate conditions, the European agricultural sector is extremely productive. It contributes considerably to world cereal production as the second biggest wheat producer after Asia, achieving yields twice as much per hectare as North America. In addition, European agriculture is actively taking up today’s environmental challenges and contributes with sustainable solutions. In a more recent development, agriculture’s role is not only to produce food but also to help provide more sustainable forms of energy. Fertilizers greatly increase the positive energy balance of agriculture. Harvesting Energy with Fertilizers is therefore a very appropriate title for the 2002 EFMA publication which explains these fundamentals. In all these developments, the European manufacturers are fully committed to being the supplier of choice and delivering optimum value to the European farmers. Many parts of this report testify to what we uniquely have to offer to make European agriculture prosper.

2006 has been a year of transition and further development of our new working structure. The Executive Board will report in their chapter on our experiences and progress. On 15th May we welcomed Esa Härmälä as our new Director General. Previously President of The Central Union of Agricultural Producers and Forest Owners in Finland (MTK), Esa has an impressive career in Finland within government, including missions to Brussels, but also in the private sector. With his agricultural background, Esa is strongly developing the voice of EFMA as well as pursuing a close dialogue with our agricultural stakeholders. He has put his forceful mark on many activities in this report. Helmuth Aldinger leaves EFMA by the end of this year. I appreciate and thank Helmuth for what EFMA has become during the nine years of his leadership. The challenges and achievements were many during his time. The reason for ultimate success is the contribution and support from many in the EFMA community. However, to coordinate these contributions and steer our efforts in one forward direction without losing people on the way often looks like a tormenting task and I am therefore happy to see Helmuth in good spirits, looking forward to other treats life has to offer. In conclusion, I would like to thank the entire EFMA family for their hard work and positive spirit in which they have served the industry. I trust that this will continue in the face of an even more demanding future.

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As each year, this Annual Report records important developments in the fertilizer industry, on the European regulatory scene and in the public debate on issues of concern to us. We also record what the industry has done under the umbrella of EFMA when responding to these developments as well as preparing the future agenda.

ESA HÄRMÄLÄ

FROM THE DIRECTOR GENERAL 4


ANNUAL REPORT 2006

Overview of the Fertilizer Season Although the harvest of 2005 did not reach the record level of the previous year, it was good. Conditions during the autumn 2005 allowed a large planting of winter crops, especially rape seed. A mild winter with minor frost and snow damage, and with negligible local flooding, had no overall negative impact. However, in certain countries such as France, this mild winter has generated a higher level of soil mineral nitrogen than usual, and has therefore resulted in a reduction, indeed sometimes suppression, of the first nitrogen dressing in the beginning of 2006. Despite rather cold conditions during spring, crops seemed to develop well until June, when lack of rainfall and continuous high temperatures led to a severe drought in certain regions. The negative impact on the harvest was especially significant in areas with light soils. The limiting impact of the new CAP was already visible in 2005, mostly as a result of the implementation of the Single Farm Payment. In 2006, this impact increased further. The area planted with cereals, especially coarse grains such as rye, decreased. In addition, after a significant increase in 2005, the set-aside area stabilised. There was also a sharp decrease in the planting of sugar beet as a consequence of the current implementation of the reform. Measures to induce less intensive animal production led to continued decrease of the fertilized grassland area.

Energy crops are a significant positive market development this year. The oilseed area increased by 13.5% in one year. This new pace is mostly due to the implementation of the ambitious national Action Plans.

Major increases are still observed in South Asia (+8.9%) and East Asia (+3.2%), which already have had the biggest increases in 2005. More moderate increases are seen in Central Asia (+1.7%) and Central Europe (+1.6%).

Difficult market conditions as well as high energy costs, which consequently also led to higher fertilizer costs, put severe pressure on farmers and led to a significant drop in fertilizer consumption. In the EU-15, fertilizer consumption has dropped dramatically (-7.2% on average). In the new Member States, consumption is stable, but does not compensate the decrease in the EU-15. In sum, in the EU-25 during the 2005-2006 season, nitrogen consumption decreased by -3.3% (to 10.11 million tonnes N). Phosphate decreased by -8.3% (to 3.01 million tonnes P2O5). Finally, potash decreased by -9.9% (to 3.39 million tonnes K2O), all compared to 2004/2005.

World trends for fertilizer consumption are rather positive. For the first time in a decade, the EFMA Forecast of Food, Farming and Fertilizer Use in the European Union 20062016 predicts an increase in nitrogen consumption. Although this is only a modest increase, I hope that it signals a reverse of the trend. The growing world population needs an even more substantial contribution from European farming.

In contrast, the global fertilizer consumption suffered only a slight decrease of -0.4% (154.1 million tonnes) over the same period. Nitrogen increased moderately by +0.7% (to 90.9 million tonnes N), while the consumption of phosphate decreased by -1.8% (to 36.8 million tonnes P2O5). This decrease in P consumption is a halt from the increases of previous years. The decrease of potash consumption was even stronger with -2.4% (to 26.4 million tonnes K2O). Region-wise, the variations are very important with significant decreases in South America (-12%) and Africa (-10%), as well as large falls in North America and of course West Europe (-5.7% and -4.6% respectively).

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Industry Developments Fertilizer price levels were good at the beginning of this season. However, rapidly climbing energy costs soon started to suppress profitability. High energy costs even induced some plant closures, albeit temporarily. Our industry is not alone in being severely affected by this development. Other energy-intensive industries, as well as private consumers, are suffering. Equally our customers, the farmers, are facing runaway operating costs, which in some cases squeeze their margins critically. Yet the fertilizer industry’s dependency on natural gas is unique since gas typically represents between 50 to 70% of finished nitrogen fertilizer products. We do therefore certainly appreciate the Commission’s effort to address this situation. As EFMA wrote in a letter to Energy Commissioner Piebalgs earlier this year, the industry fully appreciates and supports the Commission’s efforts towards achieving market-based and competitively priced supply of gas for the European private and industrial consumers. Likewise, we fully share the Commission’s analysis in its Gas Sector Inquiry and very much welcome the proposed measures and tools to liberalise energy markets in the European Union as listed in the Commission’s Green Paper on a European Strategy for Sustainable, Competitive and Secure Energy.

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However, we need access to competitively priced gas now. The issue is therefore urgent. We also need to look beyond the borders of the EU. Market measures in the EU alone are not sufficient as long as Europe predominantly relies on gas from Gazprom, a state monopoly which does not have to abide by liberalised market economy rules. Indeed we find ourselves blocked in two ways: we do not have access to competitively priced gas and we are being exposed to unfair trade practices based on non-market-priced gas. The spiralling energy prices force us to confront this problem head on, and the chapter from the Gas Task Force later in this report will explain the strategy and work which has been undertaken by EFMA. Applying European trade defence instruments seem to be the only relief available today. There are many active fertilizer cases where the common denominator is structural dumping, i.e. based on non-market supply structures for gas. If these structures cannot be changed, should not the arsenal of the EU trade defence instruments respond with a structural solution? Do we indeed have to suffer substantially and respond to each incident of fertilizer dumping before there is relief? Is there not some preventive medicine that can help? To identify such a novel approach and make it work is the most daunting task on the Trade and Economic Policy Committee 2007 agenda.


ANNUAL REPORT 2006

Developments within EFMA The EFMA Secretariat has been busier than ever during 2006. Not only did we give support to the Functions, but the flood of work in each portfolio seems to have reached unprecedented high water marks: for example, the Agriculture and Environment Committee with the Integrated Farm Management conference, the Trade and Economic Policy Committee with the gas issue, and the Technology, Environment and Safety Committee with the Product Stewardship Program. In addition, integration of the members in all our activities has continued. A recent quote from a President of a big new member company shows that our mutual integration efforts have come a long way: “As a fertilizer manufacturer, we promise to help EFMA. We do not want a free ride. We feel responsible for the industry and we do not want to shirk this responsibility. We are part of the European industry and we are ready to accept our duties in EFMA”. Last but not least, helping the new Director General settle in was an additional challenge for all at EFMA. I would therefore like to express special thanks to my entire staff for their hard work and strong support. Working with such a group of committed and dedicated people makes me confident that together we will take EFMA’s potential even further. In these thanks, I expressly include Helmuth Aldinger. I am very grateful for the many hours of trustful dialogue, his sharing of EFMA’s past, his views and advice, but also for our joint pondering on a prosperous future for the industry. As in last year’s Annual Report, the reporting in the Committee chapters is structured around the four Functions whenever practical. With “Energy” as this year’s theme, reporting about our energy issues has had a priority.

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It is now one year that we have been working under our new structure. The major changes have been in the establishment of the four Functions: Lobbying, Branding, Knowledge and Facilitation, and in creating a smaller, more executive Board. The focus is on leadership, expertise and ability to deliver, but also on empowerment of the Vice Presidents and the Committees.

FROM THE EXECUTIVE BOARD 8


ANNUAL REPORT 2006

What is the status of implementation of EFMA 2007? What is our experience with this structure, and in particular, does it deliver on the promises made? As for the implementation, the reports of the Heads of Functions will explain this in greater detail. The general consensus is that the Functions have helped us focus on what our true priorities must be and that they are strongly backed by the power and the authority of the Executive Board. In this way, the Executive Board has played a crucial, integrative roll in the work of the different Committees. Being smaller, the Executive Board also enabled a more focused discussion on strategic priorities while allowing the empowered Vice Presidents and Committees to have genuine ownership and authority when executing the substantive Committee agenda. However, the transition period has shown that the new structure might not be inclusive enough. Therefore, a new balance has had to be found between leadership and broad participation. Participation in an organisation like EFMA is not only needed to build the necessary broad consensus, but also to have the full benefit of different input, expertise and ideas.

The EFMA Board itself will meet twice a year to receive a progress report and endorse the work of the Executive Committee, decide on more fundamental issues, and prepare decisions to be taken by the General Assembly. We hope that with this organisational adjustment and the support of the General Assembly, the benefits of both a strong, dynamic, expert Executive Committee and a Board with a broad representation will win the widest support from the membership. We have appointed Tore Jenssen as Supporting Vice President to the Technology, Environment and Safety Committee. With this appointment, we wanted to demonstrate our seriousness in honouring our pledge of drawing upon the best available expertise. We welcome Tore to our group. We would also like to give special thanks to all at the EFMA Secretariat. They have had to shoulder most of the burden in making EFMA 2007 happen and without this support we would not be where we are today.

Since we have always said that our new organisation is not cast in stone but rather breathing, we have adapted and optimised by deciding to establish an EFMA Board consisting of all the CEOs of EFMA member companies. The Executive Board will be renamed the Executive Committee of the Board, or for short, the Executive Committee.

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Increasing public pressures, both economic and environmental, have resulted in substantial constraints which might even put the viability of certain European agricultural sectors into question. Of course, this translates into comparable pressures and threats for agricultural input sectors such as the fertilizer industry. It has therefore become essential to address these developments and make them more visible in Brussels. We did this in our conference Integrated Farm Management: Sustaining Fertile Soils and Productive Agriculture.

DANIEL GRASSET & HEIKKI SIRVIĂ–

AGRICULTURE AND ENVIRONMENT 10

New ways of advertising: Posters for the EFMA Integrated Farm Management conference in Schuman metro station in Brussels


ANNUAL REPORT 2006

Bioenergy and Sustainability

Facilitation

Knowledge

Sustainable energy resources are an ever increasing concern. As a result, biomass as a renewable source of energy is increasing in importance. Already in 2002, EFMA communicated the benefits of fertilizer use on energy crops with its publication Harvesting Energy with Fertilizers, demonstrating the highly positive energy balance of such a production.

Integration of the new EFMA members is progressing well. Their participation in the main projects of the Agriculture and Environment Committee has been concrete and significant, especially in the work of our Forecast and the new EFMA publication Sustaining Fertile Soils and Productive Agriculture.

One of the Agriculture and Environment Committee’s principle annual products is the EFMA Forecast. It is a publication based on the long-standing and highly sophisticated expertise from within the EFMA member companies. The results are presented in a separate chapter.

The implementation by the Member States of the two EU Directives on biofuels, and of the corresponding national Action Plans, has given new momentum to the development of energy crops. This is already reflected in the current evolution of the areas which are planted with energy crops, but more significantly in the areas which we foresee in the coming ten years as published in the EFMA Forecast of Food, Farming and Fertilizer Use 2006-2016. Although we still anticipate an overall decrease in fertilizer consumption during this period (with the exception of nitrogen), for the first time in a decade the downward trend seems to be losing pace because of energy crops, and especially rape seed for the production of biodiesel. Since this development will be a major new opportunity for European farming, we are supportive on many different levels. We have for example provided basic information to our partners, especially about the positive role of fertilizers in the production of bioenergy. The new EFMA publication Producing Bioenergy and Making the Best of European Land aims to respond to most of the questions and concerns in this context, including the challenges and constraints that all actors of EU agriculture will have to face in the coming years.

Likewise, in 2006, important progress has been made to further improve the collaboration between EFMA and the National Associations. A good example has been the joint actions which were successfully launched in 2005 in the boron case. The debate about the revision of the Ground Water Directive has been another issue where the National Associations have coordinated efficient actions. Regarding our cooperation with the International Fertilizer Industry Association (IFA), the Agriculture and Environment Committee is now providing substantial and regular support concerning their long-term forecast: we helped set up their new Forecast methodology and we participated in the first training session organised in Kunming (China) for the main South-East countries. An important role of EFMA is to provide a platform where various stakeholders can meet. In our constructive dialogue with our key stakeholder, namely the farmers, important current issues were added in 2006. In many discussions, we both reconfirmed that our future is intrinsically linked and that we both benefit from working together where the challenges are mutual.

With the ambition of constantly improving the Forecast, a specific smaller Working Group has been set up. This group deals with issues such as the increasing uncertainties of the EU agricultural markets, as well as bioenergy, recycling of organic materials, and how to correctly reflect the developments in the new Member States. Knowledge also needs to be shared with others. Our main tools in doing this are our publications. Sustaining Fertile Soils and Productive Agriculture presents the main scientific principles, particularly of soil fertility and crop nutrition, which are the basis of good soil management. It also explains how the fertilizer industry contributes to the best implementation of these principles through advice and practical tools for the farmer. Likewise, our publication Producing Bioenergy and Making the Best of European Land gives a better understanding and identifies opportunities and limitations for energy crops.

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Branding

Lobbying

Increasing public pressures, both economic and environmental, have resulted in substantial constraints which might even put the viability of certain European agricultural sectors into question. Of course, this translates into comparable pressures and threats for agricultural input sectors such as the fertilizer industry. It has therefore become essential to address these developments and make them more visible in Brussels. We did this in our conference Integrated Farm Management: Sustaining Fertile Soils and Productive Agriculture in November. Our publication bearing the same title was an important step in preparing this conference. Key actors from the European Parliament, the European Commission and from the main farmer associations, as well as our own industry representatives actively participated in this event. In this forum, a broad range of views were presented.

Boron has been an important issue during 2005. This case is still pending after two years of discussion, but we are confident that a reasonable solution will soon be found. 2006 has been a very active year with regards to water protection. After rejecting the Commission’s proposal for a revised Ground Water Directive in its first reading in 2005, the European Parliament has maintained most of its amendments to the common position tabled by the Council at the beginning of 2006. EFMA, which welcomed the common position, opposed two of Parliament’s amendments as they were not compatible with the Water Framework Directive and the Nitrate Directive. This position, which was in line with that of certain farmers’ associations and more importantly, with the Council itself, led to a new rejection by Parliament in its second reading. The resulting conciliation procedure has finally succeeded and has found a solution fully compatible with the Nitrate Directive. Also regarding water protection, the inclusion of measures addressing phosphates in Member States’ Action Plans under the Nitrate Directive is becoming a concern in a number of countries where soil fertility could be endangered in certain situations. We are coordinating industry responses in Member States where such situations occur.

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ANNUAL REPORT 2006

Another important issue is regulation on air protection. In May 2005, the United Nations Gothenburg Protocol on Long-range Transboundary Air Pollution (LRTAP) was enforced. EFMA, as observer to the Ammonia Expert Group within the United Nations Economic Commission for Europe (UNECE) since 1999, made a number of proposals already in 2002, to amend the Guidance Document to Abate Ammonia Emissions. This year, these amendments have finally been accepted in the published document. In May 2006, as a consequence of the enforcement of the aforementioned Gothenburg Protocol, compliance with the UNECE Code for Good Agricultural Practice for Reducing Ammonia (established in 2002) became mandatory within the countries which have signed the LRTAP Protocol. Our EFMA publication Urea, Code of Best Agricultural Practice published in 2001, has been and still is a strong industry tool in the promotion of Good Fertilization Practices to avoid ammonia emissions, and will in certain cases facilitate the implementation of the UNECE Code in the Member States.

The Commission has also finally published a Framework Directive for soil protection in September 2006, following the publication in 2002 of the Thematic Strategy on soil protection, and several years of development. Since the protection of soil as mankind’s most precious resource has always been at the top of the Agriculture and Environment Committee’s agenda, we were actively engaged in this project. With the enforcement of the Kyoto Protocol in February 2005, among other obligations, the EU has undertaken to monitor Greenhouse Gas Emissions from all EU soils. As a consequence, EFMA is bringing its expertise on present and future developments on European farming to the review process which eventually will lead to a second European Climate Change Program.

The Agriculture and Environment Committee also contributed to the EU Clean Air For Europe (CAFE) project, both with forecasting and technical inputs. This project has prepared the ground for the EU Thematic strategy on air pollution, as well as the proposal for a Directive, which was published at the end of 2005.

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EFMA experts have carried out a thorough analysis of data in order to provide a well-based outlook regarding the evolution of farming and fertilizer use over the coming ten years in the enlarged EU. While the main findings are set out in this chapter, EFMA also issues a yearly publication, Forecast of Food, Farming and Fertilizer Use in the European Union, which provides further detail and highlights some major issues and figures. As a starting point, the Forecasting group carefully considers the agricultural trends identified by international organisations, such as the OECD agricultural department, the US Department of Agriculture (USDA), the Food and Agricultural Policy Research Institute from Iowa State University (FAPRI), and the European Commission.

PHILIPPE DUGAST

FERTILIZER CONSUMPTION FORECAST 14


ANNUAL REPORT 2006

After the signing of the Luxembourg Agreement in June 2003, most countries decided to apply the central feature of the reform, namely the Single Farm Payment (SFP), as soon as possible in 2005. Other Member States (among them, France and Spain) decided to start with the implementation of the SFP only in 2006. However, at the mid-term period of the Forecast exercise (2010-2011), the CAP reform will be fully implemented in all Member States of the European Union.

decrease otherwise attributed to the Single Farm Payment and cross-compliance measures.

N+P+K), is still slightly smaller than the decrease in the EU15 countries (0.96 million tonnes for N+P+K).

In sum, our Forecast predicts a continuation of the general downward trend in fertilizer use in the EU-15. More specifically, consumption of the three major nutrients, nitrogen, phosphorus and potassium, will decline by -3.5%, -12.1% and -10.7% respectively over the next ten years.

In another important development, the Commission has decided to support energy crops to help meet the EU target of 5.75% biofuels in 2010. This decision favours the cropping of cereals and oilseeds for that purpose, and part of set-aside land can be devoted to it. For the EU-15, the combination of these two factors will lead to a -4.5% decrease of cereal area (only -2.9% for wheat) and a +55% increase of the oilseed rape area. Non-cropped set-aside should decrease by -1.7 million hectares, whereas set-aside used for energy and industrial crops should increase by +1.8 million hectares, resulting in a total set-aside rate of some 11.4% of the base area.

For the new Member States, a significant increase in consumption is foreseen: +32% for nitrogen, +17% for phosphorus and +18% for potassium, and is linked to an expected +19% increase in cereal production. These results appear more optimistic than those obtained through the 2005 Forecast. Poland is the main reason for this new trend, since this country accounts for 55% the total nutrients consumption of the EU-10. The overall increase in the EU-10 countries, in absolute figures (0.80 million tonnes for

However, at EU-25 level and for the first time in a decade for the EU in general, the consumption of nitrogen will increase moderately by 0.28 million tonnes (+2.5%), while the next ten years will see phosphorus and potassium both continuing to decline by -0.23 and -0.22 million tonnes respectively. This gives the following absolute tonnages for the EU-25: on average over the last three seasons, fertilizers carrying 10.49 million tonnes of nitrogen, 3.24 million tonnes of phosphorus, and 3.68 million tonnes of potassium, have been applied to 133.26 million hectares of farmland each season (51.8 million hectares are not fertilized). By 2016, the forecasters expect these figures to have increased for nitrogen to 10.75 million tonnes, and to have dropped to 3.00 and 3.46 million tonnes for phosphorus and potassium respectively.

Fertilizer Nutrient Consumption in the EU-25 As for other cropping patterns, wheat areas will decrease slightly while sugar beet acreage will continue to decrease more drastically (-20% foreseen for the planted area, when production will decline by only -5%) as a consequence of the new sugar regime after 2009. However, these figures are already taking into account the development of bioethanol. The decrease in fertilizer use is predicted in almost all EU15 Member States. The only slight increase of nitrogen in Denmark, Sweden and Austria is due to a particularly bad current base situation. In France, the stable forecast is due to the development of energy crops compensating the

Nutrient (million tonnes) 15

N P205

12

K20

9

6

3

0 1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2006

2010

2016

15


Fertilizer production consumes energy. Especially in the production of ammonia, which is the raw material for nitrogen-containing fertilizers, substantial amounts of energy (mostly in the form of natural gas) are consumed as feedstock and fuel. At the same time, carbon dioxide from the flue gas (fuel-generated CO2) and, after absorption from the process gas (process-generated CO2), is released into the atmosphere. For both economic as well as environmental reasons, it is therefore of utmost importance to be as energy-efficient as possible. To achieve this, ammonia plants in Europe have been continuously revamped and belong to the world’s most energy-efficient plants.

AREND WERNER & TORE JENSSEN

TECHNOLOGY, ENVIRONMENT AND SAFETY 16


ANNUAL REPORT 2006

To get a good understanding of where they stand in terms of energy efficiency, EFMA members benchmark their plants at regular intervals. In 2005, after two earlier benchmarks in 1998 and 2000, EFMA outsourced this energy benchmark to Plant Surveys International (PSI). The survey results for all participating plants show a further improvement in the average net energy efficiency during the operating year 2004 compared to 2000.

Lobbying During this reporting year, our lobbying dialogue with stakeholders in the regulatory process covered the following issues: Cadmium The decision on how to regulate cadmium in phosphate fertilizer has been postponed by the European Commission while awaiting the outcome of a full risk assessment on cadmium by Belgium. After the risk assessment became available this summer, EFMA’s evaluation, namely that there are no grounds for further regulation, has been shared with the Commission. N2O Following a formal EFMA position on emission trading and the agreement on a standardised method of analysis of N2O, a fair amount of time has been spent convincing the Commission and Member States that N2O should be part of the Emission Trading Scheme in 2008.

Some Member States feel positive about this EFMA initiative but the discussions on the appropriate base level for trading are continuing. These discussions turned out to also be relevant to the BATREF issue. BATREF Ammonia, Acids and Fertilizers Experts from EFMA member companies have prepared comprehensive industry comments on the Best Available Technique Reference (BATREF) Document Ammonia, Acids and Fertilizers drafted by the European IPPC Bureau (EIPPCB) in Seville. These comments were defended in several meetings with the EIPPCB and the Member States. Agreement could be reached on most points except for the definition of Best Available Techniques (BAT) and BAT levels for N2O for existing plants where there is a “split view”. It is expected that the BATREF document will be finalised in the Information Exchange Forum Meeting organised by DG Environment in December this year. The BATREF document must be taken into account by regulations as of 10/2007. Security Issues Against the background of terrorists potentially manufacturing fertilizers into explosives, the Commission (DG Enterprise and DG Justice) are considering a modification of the fertilizer regulation in order to introduce requirements to sell ammonium nitrate (AN) fertilizers only to authorised persons and upon proof of use for solely agricultural purposes. A Commission discussion paper containing possible measures which was published in December 2005 was discussed in the Fertilizer Working Group (DG Enterprise and Member States) in March 2006, but no consensus was reached.

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As part of our own Product Stewardship Program, EFMA is promoting a voluntary industry approach similar to the Fertilizer Industry Assurance Scheme (FIAS) in the UK. Global Harmonized System (GHS) A German proposal to the Sub-Committee of Experts on the Transport of Dangerous Goods (SCETDG) to form a subgroup for ammonium nitrate products in the Global Harmonized System (GHS) was not supported by EFMA. Rather, EFMA shared the view of the Explosives Working Group (EWG) that the issue of informing about the potential hazards can be resolved more effectively by inserting an appropriate note in the GHS “Blue Book�. A suitable note was drafted and formally accepted by the SCETDG. Revision of the IMO Bulk Cargo Code of Practice In the Bulk Cargo Code of Practice, the International Maritime Organisation (IMO) sets rules for transporting bulk cargo, which also covers certain fertilizers, by sea. A recent revision of this code proposed mandatory and far-reaching measures, even for non-hazardous fertilizers. In the September meeting of IMO, EFMA took the position that voluntary measures, such as information given in the Material Safety Data Sheets, would suffice.

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EFMA Proposal for Amendments to UN Transport Regulations There is a growing market for formulations of ammonium nitrate fertilizers containing calcium sulphate. In the existing transport regulations they are unfavourably classified against products based on AN, containing e.g. dolomite, whilst potential safety hazards of both formulations are comparable. EFMA therefore proposes a revision of the Model Regulation in order to exclude ammonium nitrate-based fertilizers with less than 80% (formerly 70%) ammonium nitrate mixed with calcium sulphate from classification. A Position Paper has been forwarded to the Committee of Experts on the Transport of Dangerous Goods (SCETDG) for further discussion at their December meeting.


ANNUAL REPORT 2006

Branding EFMA’s Product Stewardship Program The EFMA Product Stewardship Program is an essential element of the EFMA brand. This program, initiated in September 2003, has become a synonym for the industry’s reputation. Covering our commitment during the whole life cycle of our products, the program is now well-established and well-anchored in our member companies. The results of a first audit of all EFMA members by an independent auditor (SGS) in 2004/beginning of 2005, regarding the status of implementation of the program, were reviewed by the EFMA Executive Board. All companies have had to draw up an improvement plan. The results will be audited again at the beginning of 2008. In addition, a number of companies which scored below a defined level in one of the ten elements of the program in the 2004/2005 audit, were audited by SGS in May 2006. SGS confirm that improvements have been made.

The full content of EFMA’s Product Stewardship Program can be found on EFMA’s website. A new updated version (version 1.3) containing the latest information such as new EU regulations and EFMA’s Guidance Documents will be available in January 2007. We believe that this product stewardship initiative should be followed by other National Fertilizer Associations, and on a global scale by the International Fertilizer Industry Association (IFA). This message was given by Arend Werner, chairman of the TESC, in his presentation EFMA‘s Product Stewardship Program at the IFA Technical Symposium in Vilnius (Lithuania) in April 2006. Likewise, important product stewardship knowledge was shared with the wider industry in presentations made in EFMA companies and on behalf of EFMA at various external events. The subjects were for example: Hot AN Solutions: Controlling Hazardous Behaviour; Safety in Production, Storage and Movement of Ammonium Nitrate Fertilizers; Ammonium Nitrate Handling Operations: Guidance for Safe Practices; Transport Accidents & Tests Involving Ammonium Nitrate; Ammonia Rail Transport. In addition, several new Guidance Documents have been developed. We see these publications as an important part of product stewardship and they are presented in greater detail in the Knowledge section of this chapter.

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Knowledge EFMA’s Benchmark Studies Safety Statistic Survey Since 1996, EFMA members benchmark the safety performance of their employees and contractors in a yearly safety statistic survey. The improvements shown over the past years continued also in 2005. Furthermore, EFMA members have this year for the first time agreed on target values for both their own employees as well as their contractors. These target values are to be achieved in 2006. EFMA also participates in the IFA global safety survey. Environmental Benchmark Since 1996, EFMA members benchmark their emission performances of a large number of substances into air and water. Analyses show that emissions are decreasing over the years. EFMA members use the data to see where they stand compared to other producers. EFMA uses the data to see how our overall performance as an industry develops. The data is also important in establishing the BATREF Document Ammonia, Acids and Fertilizers as mentioned earlier. EFMA also participates in the bi-annual global environmental survey of IFA.

20

EFMA’s Guidance Documents Guidance for the Compatibility of Fertilizer Blending Materials A large number of blended fertilizers are produced from basic primary fertilizer products (e.g. ammonium nitrate or urea) and natural materials (e.g. rock phosphate or potassium chloride). All such materials are not necessarily compatible with each other and some may produce undesirable effects when mixed. Chemical reactions or physical effects may negatively impact use or effectiveness. The European Fertiliser Blenders Association’s Handbook of Solid Fertiliser Blending: Code of Good Practice for Quality gives some information about these potential compatibility problems. EFMA has reviewed this information and has produced an EFMA Guidance which has a wider scope and includes the most commonly used blending materials. Guidance for UN Classification of Ammonium Nitrate-based Substances In order to provide a common understanding and a practical approach to the classification relating to ammonium nitrate fertilizers in the Recommendations on the Transport of Dangerous Goods (“Orange Book”), EFMA has prepared a Guidance for UN Classification of Ammonium Nitratebased Substances. This Guidance is based on the industry’s established practices over many years, its interpretation of the intention of the controls and of the UN recommendations, its understanding of the potential hazards and knowledge of the wide range of products produced.


ANNUAL REPORT 2006

EFMA’s Safety Seminar This year’s EFMA Safety Seminar was hosted by CUFAdubos de Portugal in Lisbon in May 2006. The central theme was Learning from Accidents. Participants also visited the CUF-Adubos de Portugal facility plant in Lavradio. The set of safety seminar proceedings covering ten years (1996-2006) will be put on the EFMA extranet once it is operational (scheduled for beginning of 2007).

In order to advance the Technology, Environment and Safety Committee agenda, presence at meetings with allies outside of EFMA is essential. We participate for example in CEFIC Working Groups on Occupational Exposure Levels, the Seveso Directive, Product Stewardship, Best Available Technique Documents, Transport and HPV. EFMA also participates in the IFA Technical Working Committee and in a number of IFA Working Groups on Environment, Safety and Energy Benchmarking.

Facilitation The Technology, Environment and Safety Committee and its Working Groups provide first-rate facilitation platforms to come together, share ideas and expertise and jointly improve performances. A key Working Group, covering product safety and transport issues, is the Permanent Working Group (PWG). Another central Working Group is the Task Force REACH/HPV established in 2006 to assist the industry in preparing for REACH. In addition, the Task Force has started a survey to support compliance with the requirements of REACH and to investigate what can be done under the umbrella of EFMA. A foundation was laid by participating in the voluntary ICCA/HPV program. All test data of 25 fertilizers and intermediates have now been reviewed by NOTOX and have been submitted to the EPA (sponsor country USA). The products will be submitted for approval in the OECD meeting in April 2007.

Participants at the EFMA Safety Seminar in Portugal

21


This year, the work of the Trade and Economic Policy Committee was characterised by two major themes. Firstly, the commercial problem of ever increasing energy prices in Europe put the issue of a secure and sustainable supply of competitively priced energy for consumers and industry straight on the top of the political agenda in Brussels and in the Member States. We responded by establishing a new comprehensive gas program. Secondly, the widening gap between the market-priced gas that European industry has to pay and the government mandated low gas prices for some of our competition, forced us to continue our focus on EU trade defence instruments.

RENSO ZWIERS & ARUNAS LAURINAITIS

TRADE AND ECONOMIC POLICY 22


ANNUAL REPORT 2006

Promoting Free and Fair Trade Under the WTO Anti-dumping Agreement, all measures must be reviewed every 5 years as to whether or not the removal of the measure is likely to lead to a recurrence of dumping and injury. The following three major sunset review applications, which are still in the investigation stage, were presented from September 2005 to February 2006: UAN solutions from Algeria, Belarus, Russia and Ukraine; AN from Ukraine; urea from Russia. In November 2005, a Russian company, JSC Eurochem, opened an exporter review requesting a repeal of the existing specific anti-dumping duty applied by the EU on imports of ammonium nitrate from Russia. Eurochem argued that Russia now were a market economy and that this changed circumstance needed to be accounted for. Eurochem also argued it was no longer dumping and that this fact represented another changed circumstance. There are however several strong arguments against a review or change of the measure. In terms of gas supply, Russia does not have a market economy at all, as Gazprom is forced by government statute to sell gas at artificially below cost levels to the entire Russian manufacturing industry. These local gas prices grossly distort the production cost base of Russian nitrogen fertilizer manufacturers. Applying European anti-dumping laws, which are very clear on this issue, Russian export prices for gas to Europe (true market prices) must be used to calculate a fair local production cost for AN in Russia.

With a number of additional sunset reviews scheduled for 2006/2007 and with new exporters to the EU already demonstrating dumping tendencies, the importance of trade defence instruments does not seem to decrease in the future. We very much regret this development since defence instruments are only correcting a past wrong, whereas in a level playing field, such a wrong would never occur to begin with. In December 2005, the EU recognised Ukraine as a market economy. EFMA continues to express reservations over this status especially when rail logistics tariffs are execeptionally low in Ukraine and when the gas price to industrial users is determined by an inter-governmental agreement between Ukraine and Russia. However, in recognition of the EU’s new position toward a westward-looking Ukraine, EFMA accepted an invitation to meet with the Ukrainian Government and industry in July 2006. A frank and useful exchange of views included issues such as anti-dumping, energy efficiencies, new challenges arising from double-pricing of gas and the revival of agricultural demand for fertilizers in Ukraine.

With the EU’s introduction of a new scheme of Generalised System of Preferences (GSP) there was a prospect that the 6.5% rate might be significantly reduced. However, in view of the gas problems and the history of dumping campaigns the EU agreed to treat nitrogen fertilizers as a special, sensitive case. The 6.5% conventional EU tariff is therefore being maintained.

Facilitation The EFMA National Associations meeting in Madrid was an important event to coordinate the industry’s response in the Member States on the central issue of gas. Realising that there is no difference in how EFMA members in the EU-15 and in the EU-10 are affected by existing trade and gas distortions, integration in the TEPC is well achieved. Indeed, EFMA’s efforts to level the playing field now rely in a substantial way on the expertise, input and hard work of delegates from new member companies.

Russia’s accession to the WTO is still not formalised. The necessary bi-lateral agreement between Russia and USA was only concluded in November. Only when this is done can the final international WTO package be agreed. EFMA continues to push for a commitment from Russia to price its gas to local industry on market price-based principles. EFMA’s allies in the USA, Canada, Norway and Australia are also supportive of this position.

23


With the growing gap between gas prices in Europe’s oligopolistic environment and the artificially low, state-fixed prices in the former Soviet Union and North Africa, EFMA’s Gas Task Force was once more obliged to address the external supply dimensions of gas as well as the serious dysfunctionality of the internal market.

FROM THE GAS TASK FORCE 24


ANNUAL REPORT 2006

EFMA’s message which combines the external supply and internal market problem factors can be readily summed up: there has to be a level playing field for gas supply across the pan-European economic zone. This theme was fully promoted by a special EFMA publication entitled The European Fertilizer Industry’s Vision of a World Competitive European Gas Market.

The publication’s strategic messages are the following: As the largest single sectoral user of natural gas in the EU’s manufacturing sector, the European fertilizer industry applauds the EU institutions’ top priority commitment to establish truly competitive EU energy and gas markets. To achieve this, the vision and practice required must be aimed at a fully integrated pan-European, and even intercontinental, transparent, free and fair marketplace. The full weight of the EU’s legal trade and competition powers as well as the EU’s considerable economic consumer leverage must be fully engaged against unfair and illegal pricing practices. Energy-intensive industries in Europe – especially those such as the nitrogen fertilizer industry which use hydrocarbons such as gas as a raw material – must have fair and free market economy conditions prevailing in the EU internal market and the world market.

These strategic messages also formed the basis for EFMA’s formal positions vis-à-vis the Commission’s Green Paper on a European Strategy for Sustainable, Competitive and Secure Energy (September 2006) and DG Competition’s Gas Sector Inquiry (May 2006). Furthermore, against a background of regular dialogue with the EU institutions, EFMA’s President and other senior executives from the industry met with Energy Commissioner Piebalgs to put the EFMA position firmly on the Commission’s agenda. In the discussions there was mutual understanding on key reforming requirements, i.e. more pipeline, LNG and storage infrastructure to the EU; better inter-connectivity; more transparency on the markets; and a correction of dual-pricing. Dual-pricing, arguably, remains the most difficult issue to resolve. The EU is still relying on anti-dumping measures to correct the unfair effects of dual-pricing on the EU market. However, not only the unfair effects should be corrected – a more global and fairer solution must be found by comprehensive market economy practices and pricing in the producer/supplier countries, preferably confirmed in the WTO.

With energy and gas still very much a Member State competence, and for some even still an issue of “national sovereignty”, EFMA’s National Associations were briefed on this issue at the National Associations meeting in Madrid in June 2006. Indeed while the Commission is expected to present legislative proposals over the forthcoming year, decisions taken in the Member States regarding infrastructure, interconnectivity, and coordination amongst bordering national regulators that could bring the fastest results in terms of lower gas prices. By the same token, although it is the Council of Ministers that must ultimately approve any Commission proposal such as a third Gas Directive, such a Directive must be applied by each Member State and must take the national situation into account. Thus the Member State factor is supremely important.

An international level playing field – not only an EU level playing field – for gas and energy must be an imperative. If the international competition field cannot be levelled then EU trade policy must accordingly take strong and steadfast corrective actions at its borders. No solution at the source of the problems must mean solutions at the EU borders.

25


It has been agreed that the core of the Function is to assure lobbying performance through best practices but also to attain full commitment and direct personal involvement from the highest representatives of the industry. This involvement should provide leadership to our efforts and optimise the outcomes.

DANIEL CLAUW & HEIKKI SIRVIĂ–

LOBBYING 26


ANNUAL REPORT 2006

Although we now have a new separate Lobbying Function in our new organisation, lobbying is certainly not new to EFMA. This has been one of our core activities: being in close dialogue with regulators and addressing the industry’s concerns in a proper way in order to achieve well balanced outcomes. What then has changed with the establishment of this separate Function? From the outset, it has been agreed that the core of the Function is to assure lobbying performance through best practices, but also to attain full commitment and direct personal involvement from the highest representatives of the industry. This involvement should provide leadership to our efforts and optimise the outcomes.

Did the new EFMA organisation make a difference? We believe that the new organisation did indeed help us focus and that it therefore contributed substantially to EFMA’s achievements during the past year. At the same time, CEOs of EFMA member companies made personal participation and involvement in the process a top priority, setting also a model of contribution for others within their organisations to follow. This involvement deepened the consensus and made it visible that it is not only in the marketplace where the industry must play and win. In order to succeed in the world of today we must also be fully present and play to win in the public and political arena.

With the establishment of the new Function, issues have been divided into those of a more technical nature, and those which address long-term fundamental questions. Technical issues, such as product or safety regulations, are of course equally important to the durable success of the industry. But here we trust that the experts will prevail on the strength of their technical arguments in the dialogue with the regulators. In this context, the Lobbying Function will therefore generally restrict itself to the role of giving overall guidance. By contrast, concerning long-term issues such as securing access to competitively priced gas, or in sustainability issues like industry stewardship or the dialogue with farmers, the Lobbying Function is much more involved. Readers can learn from the other chapters in this report about the interventions, high-level contacts, meetings and events where the Lobbying Function delivered on its commitment.

27


The term “brand” has been defined as a collection of perceptions in the mind of a consumer or, in a broader sense, in the mind of a stakeholder. Others have put it more simply: a brand is a promise. Thus, there are two elements in a brand: firstly, the perception of what we as an industry stand for, i.e. what is our promise? And secondly, how do we communicate this promise and firmly establish it in the minds of our stakeholders?

FRANCISCO J. DE LA RIVA GARRIGA & JAVIER GOÑI DEL CACHO

BRANDING 28

EFMA publications produced during this year


ANNUAL REPORT 2006

This year, the challenge has been to transform what was Communications under the old structure into the new Branding Function. The EFMA Core Values give us a solid foundation to build our brand. In addition, other past efforts such as the Product Stewardship Program, our contribution to sustainable farming practices and our persistent strive for free and fair trade are important elements of our brand. However, in a changing world, a brand needs to develop, adapt and renew itself. In this ongoing process, we analyse, evaluate, prioritise and fill possible gaps. The results are constantly incorporated into our brand. On the definition side of the brand, we are in the midst of this described process and re-evaluating key questions: What are the basic attributes of the EFMA brand and what are the key messages? Who are the target audiences? How is the EFMA brand perceived and how should it be positioned? First answers are being formulated and the members’ consensus is being obtained. During this re-examination process, the tasks and services to the members, Committees, and Secretariat, which formerly came under the responsibility of Communications, have been maintained. In the various chapters in this report, readers can see the contribution made by this Function to the different areas of activity. The Function has worked for example on several publications, such as the publication about gas: The European Fertilizer Industry’s Vision of a World Competitive European Gas Market, as well as the Agriculture and Environment publications: Producing Bioenergy and Making the Best of European Land, and Sustaining Fertile Soils and Productive Agriculture.

The Branding Function has also been closely involved with the EFMA conference Integrated Farm Management: Sustaining Fertile Soils and Productive Agriculture held in November. This event was an important forum to communicate key promises of what we stand for. Work has continued with the bi-weekly publication of the EFMA Newsletter which gathers relevant press articles about European developments, the legislative agenda and activities in Brussels. The Branding Function also contributed to presentations given by members of the EFMA Secretariat in various open forums such as the Arab Fertilizer Association (AFA) Annual Conference, the Canadian Fertilizer Institute (CFI) Annual Conference and the International Fertilizer Industry Association (IFA) Enlarged Council meeting. These presentations are available on the EFMA website. In addition, the Branding Function has supported presentations given in more restrictive, smaller expert forums when there was a special opportunity to promote the EFMA brand. Efforts need to continue, both to perfect a focused definition of our brand and to firmly anchor it in the minds of key stakeholders, but we are on the right track.

Reaching out to target groups: EFMA web banner advertising the EFMA Integrated Farm Management conference

29


Knowledge has been identified as a core asset of EFMA. Under the new structure, the Knowledge Function’s mandate and objective is to provide, manage and continuously improve the quality, scope, depth, coordination and efficiency of information, statistics and databases within EFMA.

RICHARD BRABEC & WILLEM VAN DER WEIDEN

KNOWLEDGE 30


ANNUAL REPORT 2006

The Knowledge Function is broad in coverage and is not restricted to statistics and databases but may also include intelligence, expertise, research and studies residing in EFMA Committees, amongst members or provided by third parties. It is a priority for this new Function to broaden EFMA’s information base to fully cover the EU-25. Within the Knowledge Function, the Information Services Committee (ISC) continues to be the body responsible for EFMA’s systematic statistics, and most importantly the EFMA database. The Committee’s mandate is to supply our Association with correct and verifiable data in a transparent manner, using consistent and clear definitions. Providing our industry with a reliable picture of current situations and expected developments, the yearly activities of the ISC cover the collection, customisation and interpretation of statistical data, as well as special ad hoc projects. We are now producing statistics at the EU-25 level in the same way as we did for the EU-15 and West Europe (which included Norway and Switzerland) before the EU enlargement. During the year 2005/2006, statistics were distributed to EFMA members to support their forecasting and benchmarking exercises. Regular publications included among others: the statistical handbook, figures relating to production, exports and imports, production costs and product deliveries. The reference book Standard Statistics Issued By and For EFMA, containing the full inventory and examples of EFMA statistics, was delivered to all members. EFMA’s statistical database is now available for members online.

The Information Services Committee worked closely with the Agriculture and Environment Committee to produce EFMA’s Forecast of Food, Farming and Fertilizer Use in the European Union. The ISC also provided regular support for the activities of the Trade and Economic Policy Committee, especially with statistics for our trade cases. Furthermore, the ISC supported the work of the TESC by providing benchmarking exercises. As for deliveries of N-containing fertilizers (in Kt N), members report the following:

To EU-25 To Rest of World Total World

2005/2006 7,455 1,028 8,483

2004/2005 7,488 1,037 8,525

Change % - 0.4 - 0.8 - 0.5

Provisional import figures for all nitrogen-containing fertilizers from non-EU-25 countries into EU-25 show that imports totalled 2,327 million tonnes N in 2005/2006 compared to 2,464 million tonnes in 2004/2005, i.e. 137 thousand tonnes less than the previous year. They accounted for 19% of consumption (including products used for technical purposes) compared to 18% in 2004/2005. The Knowledge Function acts in its own right but also as a support to various Committee activities. The reader can therefore find more specific reports of the Function’s contribution in the individual Committee chapters.

31


In the reorganisation, the Facilitation Function was given an important mandate, namely to continue to improve and optimise how our members work together in the various EFMA Committees, as well as to further enhance the corporation between our members and the Secretariat. The ultimate purpose of these efforts is to obtain active participation, total commitment and full integration of all members.

HELMUTH ALDINGER

FACILITATION 32


ANNUAL REPORT 2006

With the implementation of EFMA 2007, further progress was made in reaching these objectives at all levels of the Association. Many parts of this report will testify to this, as without broad participation and active commitment many projects and achievements simply could not have been realised. We are also making good progress with the integration of our members who joined EFMA as the EU was enlarged in 2004. These members are now well represented within our Committees, including the Executive Board. We are increasingly seeing that their contribution, expertise and clout can indeed make a difference. From the Secretariat’s side, we continued our efforts to be more present amongst these members on their home turf. This for two reasons, firstly to share knowledge accumulated in EFMA over the years, but secondly also to better understand their specific situation and experiences. This will enable us to better respond to their needs, to help them find their proper place in the various bodies of the Association and to represent them effectively in Brussels. Our extranet will be operational in the beginning of 2007. We hope that this will be an important step towards bringing the organisation and the members even closer together and that this tool will make a profound change in timely information exchange, transparency, efficient communication and handson corporation.

We also delivered on another important mandate of the Facilitation Function, namely to maximise impact through close cooperation with National Associations, the International Fertilizer Industry Association (IFA) and other relevant stakeholders. In June, we held a National Associations meeting in Madrid which was hosted by Fertiberia and ANFFE. The importance of this meeting was underlined by the full participation of the Executive Board. The different reports on national and EFMA developments were complemented by high-level external presentations on European integrated farming, as well as on EU trade instruments and energy issues and their potential strategic impact on the industry. It soon became clear that this meeting was not only important for the EFMA Secretariat to understand the situation in each Member State, but even more so for the National Associations as they were eager to learn from each others’ experiences and situations. It was therefore good to see the simple exchange of information developing into a constructive dialogue, which in turn led to agreement to substantially increase corporation under the new EFMA structure. The challenge in the future will be to keep the strong momentum and translate the tremendous goodwill into more formalised, concrete working procedures.

Integrating new member companies: EFMA visiting Zaklady Azotowe Pulawy S.A. in Poland

33


Daniel Clauw President and Chairman of the Lobbying Function Yara International ASA

Arunas Laurinaitis Supporting Vice President to the Trade and Economic Policy Committee AB “Achema”

Heikki Sirviö Deputy President; supporting the Lobbying Function and the Agriculture and Environment Committee Kemira GrowHow Oyj

Arend Werner Chairman of the Technology, Environment and Safety Committee, Vice President BASF AG

Daniel Grasset Chairman of the Agriculture and Environment Committee, Vice President Grande Paroisse S.A.

Tore Jenssen Supporting Vice President to the Technology, Environment and Safety Committee Yara International ASA

Francisco J. de la Riva Garriga Chairman of the Branding Function, Vice President Fertiberia S.A.

Esa Härmälä Director General and Chairman of the Facilitation Function EFMA

Javier Goñi del Cacho Supporting Vice President to the Branding Function Fertiberia S.A.

Richard Brabec Chairman of the Knowledge Function, Vice President Lovochemie A.S.

Willem van der Weiden Supporting Vice President to the Knowledge Function Yara International ASA

Renso Zwiers Chairman of the Trade and Economic Policy Committee, Vice President DSM Agro BV

EXECUTIVE BOARD 34


ANNUAL REPORT 2006

CORPORATE MEMBERS AB “Achema” AMI Agrolinz Melamine International GmbH ANWIL S.A. BASF AG CUF - Adubos de Portugal DSM Agro BV Fertiberia S.A. Grande Paroisse S.A. K+S Aktiengesellschaft Kemira GrowHow Oyj Lovochemie, a.s. Nitrogénmüvek Zrt. SKW Stickstoffwerke Piesteritz GmbH Terra Nitrogen (UK) Ltd. Yara International ASA Zaklady Azotowe Pulawy S.A. Zaklady Chemiczne POLICE S.A.

NATIONAL ASSOCIATION MEMBERS Belgium Association Belge de l'Industrie des Produits Azotés (ABIPA) France Union des Industries de la Fertilisation (UNIFA)

Esa Härmälä

Felipe Lemus

Helmuth Aldinger

Sean Mackle

Hans van Balken

Christian Pallière

Catherine Dielens

Samina Shamsie

Patricia Everaert

Katarzyna Tyszko

Germany Industrieverband Agrar (IVA) Italy Associazione Nazionale Fertilizzanti (ASSOFERTILIZZANTI) The Netherlands Vereniging van Kunstmest Producenten (VKP) Poland Polska Izba Przemyslu Chemicznego (PIPC) Spain Asociación Nacional de Fabricantes de Fertilizantes (ANFFE) United Kingdom Agricultural Industries Confederation (AIC)

Marjolaine Jaquet

MEMBERS

STAFF 35


Responsibility as provider of a life essential product As provider of a life essential product we recognise our responsibility towards all our stakeholders, customers, shareholders, employees, society at large and future generations. We are committed and act accordingly.

Sustainable delivery of value We deliver optimum value to our customers, suppliers, shareholders and employees in a sustainable manner.

Sustainable performance in matters of health, safety and environment We strive for the highest safety, health and environmental standards. Subscribing to the principles of Responsible Care, we conduct all our activities in a manner which contributes to the goal of sustainable development.

Science and innovation We base our activities on sound science. We strive for innovation and continuous improvement.

Free and fair trade We believe in, adhere to, protect and promote the concept of free and fair trade.

Ethical conduct Our conduct is ethical and honest, open and transparent

28 May 2003

EFMA’S CORE VALUES 36


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