European Commissioner for Agriculture and Rural Development in the eye of the storm

With grain prices in Europe at record levels, Dacian Ciolos, the Romanian-born European Commission-er for Agriculture and Rural Development, finds himself at the eye of a storm. He faces the enormous task of reforming Europe's Common Agricultural Policy at a time when budget constraints will be fight- markets will be volatile and wider society will be making more demands than ever, especially on environment and sustainability. Grain producers in Europe are doing well from high pric-es, but livestock producers are facing a cost squeeze which threatens to put many of them out of business. The governments of the European Union's member states are faced with an ex-tremely pressing need to save money and populations winch may not understand any use in farm budget when they face austerity. "However, the picture for the sector is not actually as bad as you might think," he said. "Prices are still well below the levels they reached in 2008, even if they do remain highly volatile. The euro is relatively strong against the U.S. dollar, which has lim-ited price rises on the European Union market. Despite that volatility, we are in no way in any sort of crisis with cereals. The world had a normal harvest, despite the problems in Russia and Ukraine, and stocks have been rebuilt after two good harvests." Europe is actually fairly well supplied with grains, which helps. "Production this year is estimated at 276 million tonnes, which is an average level for the E.U." he said. "If you add back in the opening stocks, we've sot availability of 60 mil-lion tonnes more than we need." "But there is absolutely no need to take any emergency measures in the E.U. internal market, because there isn't an emergency. Supplies are sufficient, and there is no sign of any shortage of grain."

Continued on page 4

This issue

Grain and rapes market Milk economy market

Fertilizers market Agricultural land market

Dioxon closes 4.700 farms The company at the centre of Ger-many's dioxin food contamination crisis could face criminal charges according to the country's agricul-ture ministry. Harles und Jentsch supplied oils to animal feed pro-ducers that should have been used only for the industrial production of bio-fuel. Some 3,000tof dioxin-contaminated feed was last week identified on German dairy, pig and poultry farms. Some4,700 farm have been shut as a precaution, with no products allowed into the food chain. One sample was found to contain 77 times the permitted level of the toxin. The farmers' as-sociation said the problem was costing the industry about €50m a week.

2011 February Nr. 2 (9)

AGROMEDIA

MONTHLY I SSUE ABOUT AGRO MARKET

GRAIN AND RAPES MARKET

Official statistical publication states that grain and rape procurement prices are still growing in Lithuania. Wheat was bought at 787.7 LTL/t on average in 3rd week (01 17-23) of 2011 in Lithua-nian grain procurement companies. Compared with the price one month ago (51st week of 2010 (12 20-26)), their price increased by 7.4%. Average rye procurement price during the men-tioned period has grown by 6.6% (to 684.8 LTL/t), feeding barley (II class) – 14.4% (to 628.0 LTL/t), triticale – 16.2% (to 684.4 LTL/t). Average rape procure-ment price in the 3rd week of this year increased by 8.5% (to 1,562.1 LTL/t), compared with 51st week of 2010. Grain procurement prices are also growing in the neighbouring countries. For example, the price of nutritional wheat, compared with 51st week of 2010, has increased by 0.7% (to 740.8 LTL/t), feeding barley – 4.2% (to 620.7 LTL/t) in the second week (01 10-16) of 2011 in Latvia. Wheat price in Poland during the men-tioned period has increased by 12% (to 824.8 LTL/t), feeding wheat – 11% (to 757.7 LTL/t), feeding barley – 8.8% (to 677.9 LTL/t), and nutritional rye – 11.9% (to 663.1 LTL/t). In Lithuania, grain import was 24% higher in December, 2010, and export – 35% smaller than during the same pe-riod in 2009. Lithuanian grain procure-ment companies have imported the total of 22.421 thousand tons of grain in December, 2010. Wheat made al-most 71% (15,873 thousand tons) of all

imported grain to Lithuania. Wheat was imported from Latvia, Denmark and Germany (average price – 741.8 LTL/t). 8861 thousand tons of rye was im-ported in December, 2010. They were imported from Latvia, Poland and Bela-rus (average price – 566.8 LTL/t). Rape import has grown by 82% in De-cember, 2010, comparing with the same period in 2009, and made 9.802 thousand tons. Rape was imported from Latvia, the Netherlands and Ukraine (average price – 1.520.8 LTL/t). Lithuanian grain procurement compa-nies exported 135.161 thousand tons of grain in December, 2010. Wheat made 89% of them. They were ex-ported to Latvia, Germany, Belgium, Denmark, Spain, France, Finland, Swe-den, Switzerland, Norway, and Turkey. Average price of exported wheat made 737.8 LTL/t. Rye (1.292 thousand tons) was exported to Latvia, Finland, and Turkey (average price – 613.5 LTL/t). Wheat (7.729 thousand tons) was trans-ported to Latvia, Estonia, Finland, Ger-many, Sweden, and Denmark (average price – 509.1 LTL/t). Triticale (4.916 thousand tons) was exported to Finland, Sweden, Denmark, Germany, and Turkey (average price – 555.7 LTL/t). Rape export was 74% higher in Decem-ber, 2010, than in December, 2009, and made 35.955 thousand tons. Rape was exported to Latvia, Finland, Germany, Belgium, Sweden, and Denmark (average price – 1.386.0 LTL/t).

Smaller wheat harvest and ex-port are foreseen in EU in 2011 According to French market analysts’ agency “Strategie Grains”, danger to winter crop and its harvest of 2011 is growing because of thin snow cover in Middle and Southeast Europe and de-creasing temperature. Experts from “Strategie Grains” have decreased the prognosis of the EU soft wheat harvest for 2011 to 0.9 million tons (to 135.6 million tons) in this Janu-ary, compared with December, 2010, but that would be 6% more than in 2010. The main reason of decreasing the prognosis of January is unfavour-able meteorology in Greece and some Central European countries. When the weather became hotter in Germany and Hungary in January, snow cover has melted in many re-gions and the fields were overflowed. It is feared that winter crop can be dam-aged after cold. According to January data by “Strategie Grains”, EU maize harvest of 2011, expecting the increase of their areas, may become bigger by 6.3% (to 58.6 million tons), and barley – 4.9% (to 55.8 million tons). It is predicted that EU wheat export may decrease by 3% (to 19.1 million tons) in 2011/12 trade years. Experts speculate that the main reason of de-creasing export is the decrease of EU grain competitive ability. Transitional resources of soft wheat may increase by 1.2 million tons (to 9.4 million tons) at the end of 2011/12, comparing with the last season.

2

Grain and rape procurement prices are still growing in Lithuania

Grain harvest in the major CIS countries

In Russia, grain harvest decreased by 37.9% (to 60.9 million tons) because of drought in 2010, compared with 2009. In 2011, state government is planning to get 80-85 million tons of grain har-vest. It is planned to increase the areas

of summer corny crops for the harvest of 2011 by 25-30%, because the pre-dicted amount of winter crop wasn’t sown in the autumn of 2010 due to un-favourable meteorology. According to Ukrainian analysts’ cen-tre “UkrAgroConsult”, Ukraine had 39,242 million tons of grain harvest in 2010 – 14.8% smaller than in 2009. Wheat harvest decreased by 19.4% (to 17.2 million tons) in 2010, compared with 2009, barley – 28.3% (to 8.8 mil-lion tons), rye - 51.3% (to 464.5 million tons), corn – 37.3% (to 458.3 thousand tons) and buckwheat – 29.1% (to 133.7 thousand tons). Maize harvest was 13.7% bigger in 2010, because the area of maize crop in 2010 was 26.7% big-ger, though productivity decreased from 5.02 t/ha (2009) to 4.5 t/ha (2010). Rape harvest was 21.5% smaller in 2010 than in 2009 and made 1,470 million tons. It is planned to get 17.8% higher grain harvest in Ukraine in 2011. In Belarus, grain harvest was 7 million tons in 2010. That is 17.8% less com-pared with 2009. Productivity of corny crop made 2.77 t/ha in 2010 (3.33 t/ha – in 2009).

World combined feeds production has increased by 1.4% in 2010 Decreased demand of animal pro-teins during economical crisis slowed down the increase of feeds produc-tion, however, according to tentative data, world combined feeds produc-tion was 1.4% higher in 2010, com-pared with the last year (2009) and made 718 million tons. Combined feeds production of 2010 of the big-gest producers in the world, USA (155.28 million tons), China (108.94 million tons), Brasilia (60.4 million tons) and Mexico (24.3 million tons) increased by 1%, compared to 2009 According to FEFAC data, combined feeds production of EU-27 made 146.1 million tons in 2010 and was 1% smaller than in 2009. Industrial feed producers admit that currently farms, which produce feeds for themselves, became the biggest competitors for feeds production companies in Europe. Also it has been noticed that the amounts of produced feeds may strongly depend on animals’ welfare rules, valid in European Union. For example, sales of bird feed in the Netherlands have decreased by 14% in 2009. That was influenced by changed requirements of aviculture – the required area for keeping one bird has increased.

3

Worldwide grain export prices Lt/t

HRW – Hard Red Winter, SRW – Soft Red Winter, FCW – French Channel Wheat, CWRS – Canada Western Red Spring, YC – Yellow Corn * prices (Lt) provided based on the currency exchange of the Bank of Lithuania on the respective date ** comparing December with November, 2010 *** comparing December, 2010 with December, 2009

Šaltinis: Agro Rinkos , Nr. 1 (151)

Grain State

2010 Price change %

December October November December mounth ** year ***

Wheat JAV HRW 2 kat. 527,5 738,1 729,2 878,9 20,5 66,6

JAV SRW 2 kat. 510,7 710,6 721,5 850,1 17,8 66,4

Argentina 587,5 725,6 778,2 790,0 1,5 34,5

ES, France, FCW 1 442,0 740,6 756,2 868,4 14,8 96,5

ES, Germany, B class 460,4 753,1 767,9 892,0 16,2 93,8

ES, United Kingdom, forage

417,2 660,5 700,9 803,1 14,6 92,5

Canada, CWRS 13,5% 705,0 930,8 950,8 1122,2 18,0 59,2

Corn JAV 3 YC 446,0 635,5 603,0 695,8 15,4 56,0

Argentina 443,6 635,5 618,4 706,3 14,0 59,2

Barley ES, France, forage 364,5 648,0 657,1 722,0 9,9 98,1

Australia, forage 359,7 635,5 569,5 617,3 8,4 71,6

Australia, malting 481,9 743,1 762,7 852,7 11,8 76,9

European Commissioner for Agriculture and Rural Development in the eye of the storm

Making sure that agriculture policy is equal throughout the E.U. nion is close to the heart of Dacian Ciolos. Until now, the latest member states — the former eastern block countries which joined in 2004 and 2007 — have not had exactly the same rules as the ”old” member stales. For example, they have only been allowed to allocate direct payments on a hectarage basis, whereas most of the old member states still allocate their Single Pay-ment Scheme based on a historical ref-erence period, or a hybrid, combining historic elements with regional hec-trage amounts. As well as enlargement, the other big

change Ciolos identifies since the last time the E.U. took a close look at the CAP has been the increasing impor-tance in the minds of policy makers and the public of climate change and the environment. He wants a com-petitive agriculture. '"Let's be clear, the meaning of the word competitivity has changed" he said. :"But you can have a competitive agriculture without the sustainable use of natural resources. In the long term, Europe will demonstrate its leadership in the world through its ability to create economic growth without wasting natural resources." It means changing the whole empha-

sis of policy. "The CAP has to be all about sending

the right signals to famers in all of Eu-rope." he said. "That means integrating the environmental demands of policy completely into our new policy." It also means integrating the CAP into wider European policy strategy, including the Europe 2020 strategy, designed to revive the E.U.'s economy, adopted by the Commission in March 2010. Ciolos believes that direct payments

to farmers will remain an indispensa-ble part of the CAP, but also that the reform must make the system a lot fairer. Ciolos is also raising questions about

who receives funds — indicating that he will once again raise the concept of a cap on the amount of CAP funding a single holding can receive. It was an idea tried by his predecessors, Mac-

Sharry, Fischler and Fischler Boel, with-out any notable success. However, within the context of budgetary aus-terity, there may be stronger argu-ments this time — especially if there's an alternative option of green pay-ments coming parallel with the “basic payment” per hectare, which would not be capped. He's also troubled that the CAP has come to a point at which a lot of support goes to people who aren't actually fanning.

Ciolos is also taking a particular in-terest in small farmers. "They have a huge role to play in the environment and in the wider economy," he said. "They need and deserve our attention and help. They are also tremendously important from a cultural point of view. They are the backbone of a great many rural communities across Europe. In a lot of places, protecting small farmers is vital to preventing the slow death of a culture. Finally, Ciolos came back to the subject of managing the market. "Since the economic crisis, there's been a lot of talk about making sure we have the right tools in place to manage financial markets. We have to make sure we're doing the same with the agricultural markets." Last year's dairy crisis showed the

importance of maintaining some Form of public intervention as a genuine safety net, and there seems little inter-est in making major changes to that particular tool following the 200S Health Check changes which removed automatic intervention buying for bar-ley. European agricultural policy will

come under enormous budgetary pressure during the course of the com-ing negotiations. Clearly one of Ciolos’ aims is to make the current system more understandable to the non-agri-cultural population — in terms of the provision of greener, public goods — in order to justify such a large share of the E.U. budget. Ciolos believes that it's vital to provide a supportive frame-work, and he also believes that he can persuade Europe's politicians to accept that.

Borought to You by “World grain”, January 2011

Russia is planning to increase com-bined feeds production. On 22 De-cember last year, the Ministry of Agri-culture of Russia approved the com-bined feeds production programme for 2010-2012. The aim of the pro-gramme is to provide conditions for the development of complex com-bined feeds production. For the im-plementation of the plan, it is planned to allocate 25 billion RUB (3 billion LTL), from which own finances will make 21.6% (637 million LTL), and credit investments – 69% (2.4 billion LTL).. 16.28 million tons of feeds are planned to be produced in 2011, and 17.1 million tons – in 2012. According to tentative data, 15.5 million tons of combined feeds were produced in Russia in 2010, out of them – 135 thousand tons were protein-vitamin-mineral concentrates and 80 thou-sand tons – premixes. Prices of soy and its products are increasing. According to data by the Department of Agriculture of USA (USDA), world soy production should decrease by 1.8% (4.6 million tons) in 2010/2011, compared with 2009/2010, and make 255.5 million tons, while export should increase by 5.6% (5.2 million tons) to 98.0 million tons. Rape and sunflower harvest, decreased because of droughts, should prompt the import of soy and soy products (especially from EU and China). 9.8% (8.6 million tons) increase of soy products import is predicted for 2010/11 (96.0 million tons). According to USDA data, farmers from Brazil have sold 44% of 2010/11 soy harvest in the beginning of January (25% in the same period in 2009). More and more countries of South America are interested in biodiesel production, and despite the fact that this increases the volumes of processing, it also re-duces soy export. In Rotterdam stock market, price of soy in December, 2010, compared with the same period last year, increased by 21.5% to 547 USD/t (1,383.9 LTL/t), soy meal - 2.5% to 436 USD/t (1,103.1 LTL/t), oil – 41% to 1322 USD/t (3,344.7 LTL/t).

4

MILK ECONOMY MARKET

Average procurement price of natural fatness milk, bought from Lithuanian milk producers, has increased by 39.91% in Lithuania in 2010. Lithuanian milk buyers bought 1,278.26 thousand tons of natural fatness milk from Lithuanian milk producers – 0.3% more than in 2009. Average procurement price of the milk, bought from Lithuanian milk producers, made 863.66 LTL/t last year and was 39.91% higher than in 2009. Natural fatness milk, bought from Lithuanian farmers and family farms, made 79.42% of all the natural fatness milk, bought from Lithuanian milk producers in 2010, and average procurement price made 815.52 LTL/t and was 22.35% smaller than the average milk pro-curement price paid to agricultural partnerships and companies. Average procurement price of natu-ral fatness milk, bought from Lithua-nian milk producers, was growing from the beginning of last year, compared with 2009, and the in-crease in September made 54.81%; however, compared to October data, the increase was lower by 44.16%, and in December, it was only 17.75%. Amounts of raw milk, bought from Lithuanian milk pro-ducers, have also increased in 2010. For example, 9.39% less natural fat-ness milk was bought in January, 2010, compared with January, 2009, so in December the procurement increased by 4.57%. 206.05 thou-sand tons of natural fatness milk were bought from other EU states to Lithuania in 2010 – 22.85% more than in 2009, and average procure-ment price made 968.27 LTL/t – 39.25% more than in 2009. 24.59 thousand tons of natural fatness milk were sold to other EU states from Lithuania in 2010 – 74.02% more than in 2009. During the ana-lysed period, average price of selling natural fatness milk to other EU states made 1,144.82 LTL/t and was 18.64% higher than in 2009.

Ecological farms: is it allowed to tether livestock in cowsheds?

5

Stock-raising is one of ecological farming spheres. EU legal acts establish the require-ments that must be followed in order to certify ecological livestock. One of such requirements is the ban to tether livestock. However, lately, more and more farmers from ecological farms address the Ministry of Agriculture asking to allow tethering livestock in cowsheds. They argue that freely kept livestock hurts themselves, some of them endanger safety of people with their aggression etc. As N. Jakubauskiene, a senior specialist at the Agro-environmental Protection and Ecological Farming Department of the Min-

istry of Agriculture has informed, it is al-lowed to tether livestock in cowsheds with-out any advance permission in small farms, i.e. farms keeping up to 100 concerned ani-mals, which means that such farmers do not need to apply to certifying institutions or the Ministry of Agriculture. Livestock, raised in small farms, may be tethered in cowsheds independent of the beginning of cowshed exploitation period, if the subject of ecological production farm proves to certifying institution that it is im-possible to keep animals in groups that meet their behavioural requirements.

Name of a company

Average natural milk procurement price,

LTL/t

Milk, for which

deductions due

to quality were

not applied

when paying

Milk, for which

any deduction

due to quality

was applied

when paying

Average

milk pro-

curement

price

AB "Pieno zvaigzdes" companies group 1062,6 785,4 1055,1

UAB "Marijampoles pieno konservai" 984,7 734,9 981,4 AB "Rokiskio suris" companies group 1000,8 786,8 995,6

AB "Zemaitijos pienas" 1036,6 890,8 1031,2

UAB "Vilkyskiu pienine" 986,5 711,9 970,9 AS (Agricultural society) "Salteksnis" 954,3 1167,8 1011,3

UAB „Vikeda“, Kedainiai 1280,2 1280,2 Bariunai AS (Agricultural society), Jo-

niskis district 750,0 709,1 748,8 Dairying cooperative "Zalmarge" 855,4 586,8 847,2

Average milk procurement price, Lt/t 1029,5 823,9 1023,1

Average natural milk procurement price LTL/t of Lithuanian biggest

milk shoppers

Production of raw milk is decreasing in Oceania region due to very unfavourable weather conditions

In New Zealand, droughts overlap-ping with big showers, and in Austra-lia, big floods prevail. That particularly harms production of raw milk from Oceania region. It is not possible to restore the planned production vol-umes, and quality indexes of raw milk (proteins and fatness) are untypically low for this season. Australia is racked with unceasing floods. The biggest concern is inunda-tion of livestock paddocks and trans-fer of production to safer regions. Some milk processing companies have stopped their activity, until the end of floods. Besides, flood water has polluted the equipment, so produc-tion cannot be renewed until it the equipment is sterilized. Nevertheless, prices on butter, pro-duced in Oceania states, have re-mained stable in world market. Be-cause of very bad climatic conditions, milk quality indexes became worse, so and produced milk fat was not suffi-cient to satisfy the demand. Butter producers predict that production volumes will continue decreasing. Some butter resources are stored in the region; however, traders are not making new agreements, because they are afraid that in the future, it may be not enough butter to meet the demand, defined by advance agreements. According to the newest data by the European Commission

(EC), butter export of New Zealand has decreased by 13.5%, and Australia – even 30.5% during January-November, 2010, compared with the same period in 2009. Milk powder price in Oceania region remains stable. Powder producers inform that milk powder production does not satisfy the predicted vol-umes because of decrease in raw milk production. Traders are not making new agreements in order to keep bal-ance between supply and demand. According to EC data, export of skim milk powder in New Zealand de-creased by 16% and Australia – by 24% during January-February, 2010, compared with the same period in 2009. Despite unfavourable condi-tions, export of whole milk powder of New Zealand increased by 15% dur-ing January-February, 2010, com-pared with the same period in 2009, while Australia exported 15% less of the mentioned products. Cheese market in Oceania region also remains stable, even if the production is decreasing not only because of showers or droughts in that region, but also because of seasonality. Ac-cording to EC data, cheese export of New Zealand decreased by 8.5% dur-ing January-February, 2010, com-pared with the same period in 2009, while Australian cheese export re-mained at the same level.

World prices to go even higher in early 2011

Sky-high prices for dairy commodities on international markets may rise even further in the first quarter of 2011, according to Rabobank's latest Quarterly Dairy Report. The drought in NZ will restrict the country's ability to respond to strong global demand for dairy products over the coming 3mths, more than offsetting expected strong production growth from the Northern Hemisphere. "With genera! demand conditions set to improve and import buying likely to remain strong, emerging supply constraints are likely to exert significant upward pressure on international prices in the first quarter of 2011," Rabobank warn. Exportable supply will start to track

below previous-year levels for the first time in 2yrs, while recovery in the world economy will coincide with continuing strong purchases from the world market, especially China and Russia. Rabobank say the surge in out-put in the EU in autumn 2010 will ease in early 2011, as rising feed costs start to impact. Australia and Argentina are stepping up output but the La Nina phenomenon is affecting both coun-tries in different ways, with excessive rain in Australia's dairying regions and an early summer drought in Argen-tina. Import buying wilt stabilize in early 2011 "though at extremely high levels".

6

Economic groth driving Sky-high dairy prices

China to drive firmer world mar-kets China's imports of WMP are tipped to reach 400,000t in 2011 according to the latest USDA report, easily eclipsing all other major importers: "This growth is being fuelled by sev-eral factors: an expanding popula-tion experiencing a steady rise in disposable income, tight domestic supplies and food safety concerns overiocal production. China's need for imported WMP is expected to continue for the foreseeable future." The USDA predict that China's SMP imports will reach 100,000t in 2011, with "significant implications for global dairy markets." Exports of WMP from NZ and Argentina are expected to rise in 2011, but not enough to offset EU declines and rising Chinese imports. "WMP prices will remain relatively buoyant and high WMP prices may also provide support for prices of cheese and butter," say the USDA. "Whether SMP prices will benefit remains to be seen, however import demand from some key Asian markets is ex-pected to grow". Despite the prospect of higher milk supplies, the outlook for 2011 re-mains bright Income per capita growth rates in key market areas such as Asia are forecast to increase by 3.9%, implying that import de-mand will remain strong. And there are limited available stocks with EU SMP stocks committed or metered out at high prices, and historically low butter stocks. The supply lines for some dairy products "looks pre-cariously tenuous", according to the USDA.

2010 ended with world dairy com-modity prices, particularly for powder, rising again after a period of compara-tive stability. Prices for SMP were be-tween $2,700/t and $3,200/t and be-tween $3,000/t and $4,000/t for WMP since November 2009, while butter ranged from $3,600 to $4,200—the highest ever, and cheese from $3,700/t to $4,000/t. Between 2006 and 2009, prices were exceptionally volatile, but the 2010 price range was similar to pre-2006—but at around $l,500/t higher for SMP and $2,500/t higher for butter. Supply and demand was roughly in balance despite the histori-cally high prices, with supplies cut by drought in NZ in early 2010, and more

WMP imports into China adding a fur-ther 2.5m tonnes to the 50m tonnes of world trade in milk equivalent. At the end of 2010, the prospect of an-other NZ drought helped the world market look increasingly positive de-spite higher milk supplies in the EU, the US and South America. World eco-nomic growth is tipped to be a little below 2010 levels, with demand for commodities, including oil, rising—which should mean more demand for dairy, and supplies look limited. The latest USDA report predicts a slowing of the US milk supply growth to 1.4% but higher demand for butterfat and skim solids, thereby limiting exports.

7

World dairy prices up $300+ in a month

Weather is now seriously affecting milk supplies, with Fonterra strug-gling to meet contracts and nothing available or spot sale—and this could continue until the autumn, US sup-plies of butter and SMP are low, with rising SMP/ NDM prices, so buyers are turning to the EU's limited supplies. All world market prices have risen $300/t-$400/t in a month, with butter hitting record levels, and SMP the highest for 3yrs. Reports suggest that drought reduced NZ milk supplies by 6.5% in December, but recent rain has helped, and Fonterra now expect 2010-11 season milk supplies to be close to last year. The Australian floods have disrupted production

and hit wheat supplies, but only 6% of Australia's milk is produced in Queensland. After rising 7% on Janu-ary 4, the Fonterra auction average increased a tiny 1% last week. How-ever, the auction covers supplies from March to September during peak Northern Hemisphere produc-tion. AMF auction prices are at a re-cord at nearly $6,000/t, up by 11% in a month, while SMP prices were up 14% and WMP4%. Fonterra expect to auction 600,000t of product dur-ing the next 12rnths, including 470,000t of WMP. The auction results imply that world market prices could re-main high until at least Q4 of 2011.

FERTILIZER MARKET

Strike in Tunisia hits phosphate/

nitrogen sectors

Strike action by workers at the GCT rock mine in Tunisia and disruption

to rail transportation has halted pro-duction at all of GCT’s phosphate

and ammonium nitrate plants. Rock inventories at the TSP plants at Sfax and M’dilla as well as the DAP plant

at Gabes and the phosphoric acid plants at Skhira have been ex-hausted and there is no DAP and

TSP inventory in the warehouses. The last full cargoes of DAP to load

were the Ameropa ship for the US Gulf / Mexico and the Multi-Commerce vessel for Engro, Paki-

stan. Raw material suppliers – sulphur, ammonia and sulphuric acid – have

been requested to halt new deliver-ies. The ammonia and sulphuric acid

tanks are more or less full. The date for a re-start of production is uncertain and dependent on the

result of strike negotiations as well as the rail disruption. In any case, the sulphuric acid unit would take

around two weeks to bring back up from start up and rock supplies

would have to be built back up at the producing units. On 3 February, the company stated:

“GCT and CPG continue to execute

their existing commitments towards

their customers. Besides CPG and GCT

are presently not taking new commit-

ments as their plants suffered irregular

rock supplies during the last few days

and are facing [production disrup-

tions”.

8

K+S production back to normal at Sigmundshall

After completing work on repairs, the K+S Group reports that production returned to normal at the start of February at the Sigmundshall potash plant in Wunstorf, Lower Saxony, Germany. During assembly work in the extraction shaft by an outside contractor, parts of the shaft conveyor equipment were damaged during the Christmas and New Year break. Due to the plant interruption of about four

weeks, there was a decline in the level of production of about 70,000 tonnes of potash and magnesium products, equivalent to about 1% of the annual sales volumes of the Potash and Magnesium Products business segment anticipated for 2011. The resulting damage to property and financial losses were claimed from the assembly company.

Acron seeking to block merger of Russian potash producers

On 31 January 2011, one of the Russian buyers of MOP, Acron, which has an 8% shareholding in Russian potash producer Silvinit, and Licona (International) Limited filed a petition in the Perm Territory Abritrazh (Commercial) Court seeking to invalidate the 20 December 2010 decision of the Board of Directors of Silvinit to approve the merger between Russian potash giants Uralkali and Silvinit. Subsequently (on 3 February) it was announced that the court had rejected the preliminary measures sought by the claimants and had scheduled a hearing to consider the merits of the claim on 11 March 2011. Meanwhile, at press time, news was awaited of the 4 February vote by shareholders in the companies on whether to approve the merger between Uralkali and Silvinit. No decision about the roles of Belarusian Potash Company (BPC) and International Potash Company (IPC)

will take place at these meetings; the two marketing companies will co-exist for some time. If the merger decision is approved, it is hoped that the merger will be finalized in May of this year.

European fertilizer prices

9

Belgium - €/t bulk 4 Fabruary 21 January CAN 27% del retail 270-275 252-275 KCI (G) fot ex-store 317-335 317-335 DAP fob/fot bulk $ $620-625 $615-625 France- €/t bulk AN 33,5% gran del 355-355 315-355

AN 33,5% prill fot bgd 314-325 314-325 Urea prill fot 325-330 325-330

Urea gran fot 340-358 348-355 DAP fot 464-468 464-468 Germany - €/t bulk CAN cfr imp inland 270-275 252-275 Urea prill cfr 310-330 320-350 15-15-15 cif inland 350-370 350-370 DAP fot seaport 450-457 465-470 Ireland - €/t bagged Urea gran del 390-405 380-400 CAN 27,5% del 305-310 300-307 27-6-6 del 400-405 390-395 Italy - €/t bagged Urea gran fot 370-380 370-380 CAN (27%) fot 415-425 415-425 DAP fot 495-505 495-505 Netherlands - €/t bulk

Can cif del inland 270-275 252-275

KCI (G) fot ex-store 317-335 317-335 Ispanija - €/t nefasuota CAN 27% fot 288 258 Urea prill fot 340-345 340-345 DAP fot 455-470 460-470 15-15-15 fot 355 355 United Kingdom - £/t bagged AN 34,5% del farm 342-372 342-372 AN cif import 319-330 319-330 Urea prill cif bulk 307-319 307-319 Urea gran cif bulk 354-366 354-366 20-10-10 bgd 372-378 372-378

World market prices

Baltijos šalys - US $/t 4 Fabruary 21 January Urea prilled bulk 359-363 362-378 MAP12-52% 858-590 570-575

Preparation of land consolidation projects is launched in areas, when at least 5 applications, where the indicated total area of land plots makes at least 100 hectares, of at least 5 land plots, which are at the same or several cadastral places, having common border, are sub-mitted. State Land Fund: Konstitucijos ave. 23, telephone: (+370) 25 18 856, Information about land consolida-tion, telephone (+370) 2391 320, E-mail: giedre.leimontaite@nzt.lt The Government has approved the offer by the Chamber of Agri-culture and decided to ask for extension of the transitional pe-riod Transitional period, which prohib-its foreign subjects to buy lands of agricultural or forest economy pur-pose, as indicated in the agree-ment of Lithuanian entering to EU, will end on the 1st May, 2011. How-ever, there is an exception in this agreement that Lithuania may ask the European Commission to ex-tend the transitional period, “if there is a presumption to think that after the end of transitional period there would be big distur-bances or a danger of big distur-bances will appear for Lithuanian land of agricultural purpose mar-ket”. The Government made the deci-sion to ask the European Commis-sion to extend the ban to buy lands of agricultural or forest economy purpose for foreign legal bodies only after long discussions and one vote odds. Currently, land of agricultural pur-pose by proprietary can be man-aged by Lithuanian citizens (up to 300 hectares) and companies (up to 500 hectares).

Editorial: AB “Agrowill Group”, Smolensko g. 10, Vilnius Tel./fax +370 5 2335340; +370 5 2335345; e-mail: info@agrowill.lt Subscribe to free updates in the website www.agrowill.lt

Ministry of Agriculture and National Land Service under the Ministry of Agriculture encourages Lithuanian farmers and other land owners and procurators of state land to partici-pate in land consolidation projects, the preparation of which has already started. Admission of applications to participate in the projects has opened. Since 2011, preparation and imple-mentation of land consolidation pro-jects is initiated in Lithuania once again. Under the Lithuanian rural de-velopment programme 2007-2013, 56 million LTL of EU support have been allocated for these projects. It is planned to prepare and implement 40 land consolidation projects up to the end of 2015. 14 similar projects have been already implemented in Lithua-nia during 2005-2008. What does land consolidation mean? During land consolidation, borders of land plots are rearranged in a particu-lar rural territory in a complex way, joining by forming agricultural do-mains, managed rationally, and proper rural infrastructure is created. Land consolidation helps improve farming conditions, forming less land plots and more land plots of better form by joining them. Owners of private land, municipality boards and procurators of state land can participate in land consolidation

projects. Participants of land consolidation pro-jects do not need to invest their money, because implementation of the projects is financed by EU under the Lithuanian rural development programme 2007-2013 and Lithua-nian national budget. Everyone, willing to participate in land consolidation projects, have to submit applications state institution “State Land Fund” or territorial agri-cultural departments of National Land Service around Lithuania. Everyone willing to participate in land consolidation projects must present: cadastral number (-s) of land plot (-s), which he/she would like to include into land consolidation project, to-gether with application, as well as de-scription of need to implement land consolidation – motives and descrip-tion of planned land domain rear-rangement; land plot (-s) plan (-s). The deadline of applications to par-ticipate in land consolidation projects is 13th May, 2011. Land owners and procurators, who are not on time to enter the first stage of projects prepa-ration in time, can participate in the next stages, but only with the condi-tion that all the finances will not be used in the first stage – 56 million LTL.

MARKET OF AGRICULTURAL LAND

Data sourses: Fertilizer Europe, 4 February, 2011,

Dairy Industry Newsletter , January 11, 2011, Vol 22, No. 18 January 25, 2011, Vol 22, No. 19 Agro rinka, Nr. 1 (151)/2011 m.,

World grain, January 2011 vz.lt , manoukis.lt, .valstietis.lt; ukiozi-

nios.lt; zum.lt, savasukis.lt, Web sites of other companies and other public sources

of information

10

Call for applications for land consolidation projects started