AGRICULTURE AND FERTILIZERS ANALYSIS, LESSONS, SOLUTIONS Seite 1
1. GLOBAL TRENDS Seite 2
FERTILIZERS DEMAND DRIVERS Global population increase >1-2% p.a. Bio-fuel production in USA, Latin Americas and Europe Steep income growth in some developing countries Change of diet in Asian countries High energy prices Natural resources constraints (water, land) Tight food supply High prices for agricultural commodities Seite 3
2. INCOME AND NUTRITION Seite 4
BETTER NUTRITION BECAUSE OF ESCAPE OF 300 M PEOPLE FROM POVERTY The amount of people who earn less than 1 $ per day, decreased from 32% to 19% between 1990 und 2004. Economic development in Asia caused this phenomenon. About 300 M people there escaped from the extreme poverty. The most immediate effect of additional income became a nutrition improvement. Due to UN forecast this trend will continue. Source: UNO Millennium Development Goals Report 2007 Seite 5
MEAT CONSUMPTION IN DEVELOPING COUNTRIES STILL WELL BEHIND Africa 15,4 kg/person/year Asia 30,1 Developing Countries 30,7 World 41,5 Latin America 63,4 Developed Countries 83,1 Northern America 123,2 0 10 20 30 40 50 60 70 80 90 100 110 120 130 Source: FAO Seite 6
MEAT CONSUMPTION GROWS MUCH FASTER THAN POPULATION 12 11 10 9 8 7 6 5 4 3 2 1 Billion People 0 0 1965 1970 1975 1980 1985 1990 1995 2000 2005 Source: FAO World Population World Meat Consumption Million Tonnes 300 275 250 225 200 175 150 125 100 75 50 25 Seite 7
GLOBAL MEAT CONSUMPTION WILL ALMOST DOUBLE BY THE YEAR 2030 Million Tonnes 400 350 300 250 200 150 100 50 Developed Developing 0 Source: FAO 1995 2015 2030 Seite 8
PROTEIN-RICH DIET NEEDS TRIPLE PRODUCTION OF CORN AND SOYA 1.800,0 1.600,0 1.400,0 kg/jahr Feldfrüchte 1.200,0 1.000,0 800,0 600,0 400,0 200,0 0,0 Source: IiASA Vegetarian Mixed Meat-based (Western type) Seite 9
3. BIO- FUELS Seite 10
DRIVERS FOR BIO-FUEL PRODUCTION The global utilization of bio-fuels is subject to the following criteria: o Ecological benefits o Reduction of CO 2 emissions o Economic benefits (without subsidizing) Ecological benefits and reduction of CO 2 emissions: Results of the Brazilian program Proalcool from 1975 to 2005: Reduction of CO 2 emissions: 644 Mill. t Saving of fossil fuels: 778 MBOE (Million Barrels Oil Equivalents) Saving of foreign currency: USD 72 billions Source: JSA Ltda, Phosphates 2008 Conference Seite 11
ENERGY & COST BALANCE FOR BIOFUELS Economic results of the production of ethanol: MJ per ton USD/Barrel Wheat (EU) 1,3 154,0 Corn (USA) 1,5 75,0 Beetroots (EU) 1,9 Sugar Cane (Brazil) 8,0 32,0 Sugar Cane (Australia) 51,0 Sugar Cane (Thailand) 46,0 Sugar Cane (Brazil 2010) 10,0? Conclusion: Production of biofuels is economically viable in many countries outside Europe, provided the crude oil price is above USD 75,-/barrel. Source: JSA Ltda, Phosphates 2008 Conference Seite 12
STRONG GLOBAL DEMAND FOR BIO-FUELS 1 US Gallon = 3,785 l Source: PIRA / Fondsfinans Fertilizer Investor Conference Dec. 2007 Seite 13
NATIONAL BIOFUEL STRATEGY IN THE US 3,4 3,0 2,6 2,2 1,8 Billion Bushels (1 bu = 0,0254 t) One barrel of bio-fuel from US corn costs in 2007 about $ 75,- and is competitive with oilbased fuels (1 Barrel = 158,957 l) % of total US corn use 18% 25-30% 1,4 1,0 0,6 6% 0,2-0,2 88/89 91/92 94/95 97/98 00/01 03/04 06/07F 11/12F Source: FAO, USDA Seite 14
4. AGRICULTURAL PRODUCTS Seite 15
CHINA BECOMES A CORN IMPORTER - PRODUCTION BELOW DEMAND Million Tonnes 140 120 100 80 Production Exports Consumption Stocks Production Gap Favorable Production Years 60 40 Stocks Continue to Fall 20 0-20 86/87 88/89 90/91 92/93 94/95 96/97 98/99 00/01 02/03 04/05 06/07 Exports Declining Source: FAO Seite 16
EVEN GOOD HARVESTS IN 2006/2007 DID NOT COVER GLOBAL DEMAND 1,7 1,6 1,5 1,4 Billion tons Production Consumption US, China and India produce over 40% of the world s wheat and coarse grains. Near Perfect Weather Year Production Gap 1,3 1,2 1,1 1,0 1982/83 1985/86 1988/89 1991/92 1994/95 1997/98 2000/01 2003/04 2006/07 Sources: FAO, USDA Seite 17
2006/2007 GRAIN STOCKS AT THE LOWEST LEVEL IN 30 YEARS Wheat & Coarse Grains 600 500 Million Tonnes Year-End Grain Stocks Stocks-to-Use Ratio Grain ending stocks-to-use ratio of 14,7% for 2006/07 are the lowest in over 30 years. Percent 40 35 400 30 300 25 200 20 100 15 0 10 1974/75 1978/79 1982/83 1986/87 1990/91 1994/95 1998/99 2002/03 2006/07 Source: FAO Seite 18
IN THE FUTURE GRAIN CONSUMPTION WILL CONTINUE TO GROW 1,5 Billion Tonnes 1965 1996 2030F 1,2 45% 60% 0,9 0,6 0,3 0,0 Food Animal Feed & Other Uses Source: FAO Seite 19
INCREASING CAPITAL FLOWS TO AGRICULTURAL COMMODITIES A study, conducted by Barclays Capital among 240 institutional investors, has revealed that 100 billion Dollars may be currently invested in agricultural commodities. Until the end of 2008, this investment could increase to 140-175 billion Dollars. Darin Newsom, a Senior Analyst of DTM means that the market of agricultural commodities has become a market for acknowledged investment strategies. The influx of investments has lead to price increases, increased volatility and eroded the cyclical nature of markets for agricultural commodities, says Newsom. Source: U.S. News & World Report, 24. February 2008. Seite 20
HIGH GRAIN PRICES Source: USDA, CBOT / Fondsfinans Fertilizer Investor Conference Dec. 2007 Seite 21
5. FERTILIZERS Seite 22
URBANIZATION AND INDUSTRIAL DEVELOPMENT REDUCE ARABLE LANDS SMALLER ARABLE AREAS REQUIRE INTENSIVE AGRICULTURE WITH HIGHER SOIL FERTILIZATION Seite 23
HIGH YIELD GROWTH POTENTIAL IN DEVELOPING COUNTRIES Source: FAO Seite 24
FERTILIZER BY CROP USE Source: IFA Seite 25
STRONG GROWTH OF FERTILIZER SALES Seite 26
CONSUMPTION OF FERTILIZERS IN 2006-2007 Global Fertilizer Consumption 2006 Change 2007 Change Million tons Nutrients N 96,9 +4,7% 100,0 +3,2% P2O5 38,6 +4,5% 40,0 +3,8% K2O 26,5 +2,1% 28,7 +8,1% Total 162,0 +4,2% 168,7 +4,1% Source: IFA Seite 27
STEEP ROCK PHOSPHATE PRICE INCREASE Rock phosphate prices, Morocco 450 400 350 300 USD / t 250 200 150 100 50 0 2001 2002 2003 2004 2005 2006 2007 2008 Source: Phosphates 2008 Conference, Paris, Feb. 19-20/2008 Seite 28
ROCK PHOSPHATE EXPORTS CONTROLLED BY FEW COMPANIES Source: Phosphates 2008 Conference, Paris, Feb. 19-20/2008 Seite 29
6. URBAN P-RESOURCES Seite 30
EUROPEAN PHOSPHATE CONSUMPTION EXCEEDS PRODUCTION With exception of ICL and YARA, all European P-fertilizer producers have to import phosphate products. Seite 31
t / Jahr 3.000.000 2.500.000 2.000.000 1.500.000 1.000.000 2.530.000 EU ANNUAL P 2 O 5 MINING & CONSUMPTION EU mining capacity EU annual phosphate consumption EU P-recycling potential from existing sludge ash EU total P- recycling potential 632.000 500.000 0 313.000 180.000 YEAR 2006: EU P 2 O 5 CONSUMPTION= 2.530 Mio. t EU P 2 O 5 MINING = 313.000 t Seite 32
POTENTIAL PHOSPHATE MINING FROM URBAN RESOURCES IN THE EU 10 M t SLUDGE 3 M t MBM SNB SLUDGE INCINERATOR Moerdijk/NL > 989.000 t P 2 O 5 can be recycled from sludge and MBM > 632.000 t P 2 O 5 are lost in landfills and other forms of disposal Seite 33
NEW SLUDGE INCINERATORS IN EUROPE OPERATOR LOCATION to DM p.a. Status ARA Tobl St. Lorenzen (IT) 4.000 Operation EEF ENSA Posieux (CH) 10.000 Operation Stuttgart Mühlhausen Stuttgart (DE) 30.000 Operation GUP Vodokanal Süd St. Petersburg (RU) 50.000 Operation GUP Vodokanal Nord St. Petersburg (RU) 60.000 Operation Thames Water Belfast (UK) 35.000 Construction United Utilities Shell Green (UK) 25.000 Construction Emter Altenstadt (DE) 25.000 Operation Biomasseverwertung Großwilfersdorf (AT) 5.000 Commissioning Bazenheid Bazenheid (CH) 12.000 Construction ERZ Zürich Zürich (CH) 33.000 Project Infraserv Gendorf Gendorf (DE) 4.000 Operation AWV Pinneberg Pinneberg (DE) 4.000 Project Stadtwerke Crailsheim Crailsheim (DE) 4.000 Construction Mosvodokanal Moskau (RU) 500.000 Project Kievvodokanal Kiev (UA) 80.000 Project Istanbul WWTP Istanbul (TR) 120.000 Project Seite 34
Thank You for Your Attention! L. Hermann,, tel.: +43 1 734 46 40, l.hermann@ashdec.com Seite 35