Flashbacks

The seminar 2011 in retrospect

HORSCH has always considered itself not only as the supplier of machines, but also as a competent partner for farmers for all agricultural questions. So the motto of the HORSCH seminar 2011 was „Take a closer look“. Due to the large number of visitors – more than 500 people had registered – the seminar did not take place on Gut Sitzenhof, the headquarters of HORSCH Maschinen, but in the festival hall Rieden/Kreuth, only a few kilometres away from Schwandorf.

The following points were the main topics of the event:
- Agricultural policy after 2013
- Agricultural commodity markets
- buy specifically
- use specifically
- sell specifically

After all participants had a hearty snack, Michael Braun who is responsible for the HORSCH seminars started with an introduction of the extensive topic. Michael Horsch was the first speaker and his topic was „What agricultural
developments will influence us most in the future?“. Michael Horsch was available for an interview to talk in detail about this topic.

The next speech with the topic „Agricultural policy after 2013 and political events on the European agricultural market“ was held by Hans-Michael Goldmann. Goldmann is the chairman of the food, agriculture and consumer protection committee of the Bundestag. The FDP (Free Democratic Party) politician first clarified that the committee’s main occupation no longer is agriculture but primarily consumer protection with a special emphasis on food. The second key topic is rural development. Politics in general has to learn which preceding and subsequent sectors are part of agriculture. Among others, he mentioned the examples of agricultural engineering and food production. „If you take all that into consideration“, Goldmann said „agriculture is the sector with the second largest number of jobs in Germany.“

The committee chairman regretted that in politics the main focus often is on party politics rather than on the matter itself. In case of a scandal, the opposition generally demands the resignation of the minister in charge, even if he had been previously working in the other direction.

With regard to the opinion that people often consider agriculture as a mere recipient of subsidy payments, Hans-Michael Goldmann countered: „67 per cent of the agricultural budget is used for agricultural hedging.“ The financial means of the EU for road building are considerably higher than those for agriculture. His estimation of the general perception: „Some people have the dream that agriculture still looks like the farm that they once got for Christmas.“ However, he warned people not to equate the terms „organic farming“ and „sustainability“. „Sustainability also means to create jobs and food.“

According to his estimation, farmers will loose money after 2013. As an example he particularly mentioned the dairy farmers. In return he demanded a reasonable handling of genetic engineering. The EEG amendment in 2011 is necessary. Even if the two column model will endure, he demanded that the coupling of large animal units and fields has to be reconsidered. Eventually those farmers should get the premium who farm their fields according to good agricultural practice. The commodity futures markets should be organised in such a way that they are favourable for the farmer.

The next speaker after lunch was Dr. Gudwin Rühlicke from K+S Kali GmbH. He spoke about the topic „Fertiliser availability, market survey and price development“. Right at the beginning he made it very clear: „The producers cannot drive up the price for nitrogen“. There are far too many suppliers. Germany with a global market share of only 1.6 per cent is of comparably low importance. Production is carried out continuously, price formation worldwide depends on supply and demand and is made in US Dollars. „Prices are heavily influenced by China and India“, the expert said. „Here the government is responsible for purchasing and the import of fertiliser is cheaper than the import of food.“ The nitrogen consumption worldwide amounts to about 100 million tons and is highest in Asia.

Although it is not very popular in Europe, urea is the kind of nitrogen fertiliser that can be produced most easily. According to Rühlicke China is the largest exporter of urea. The government there, however, has a very strong influence due to export duties – a fact that explains the extreme price fluctuations worldwide.

„In total, fertiliser prices lag behind demand”, Dr. Gudwin Rühlicke said. „They increase with the commodity and crude oil prices.“

In his opinion the main factors for the costs are:
- the supply situation
- energy prices
- commodity prices
- freight charges
- the costs for plant construction
- the exchange rate for the US Dollar

The agricultural nitrogen consumption increases by an average of 1.8 per cent per year, in the form of urea the growth of the total production amounted to 3.5 per cent during the last ten years.

„Statistically, the phosphate supplies are still enough for 115 years. But without recovery“, Rühlicke said. „It partly is extremely persistant. The largest ressources are in Morocco – here alone almost half of the global trade
is mined – and in China. There are no ressources in Europe. As phosphate is solubilised with acid sulphur, the sulphur price has a direct influence. But due to the creation of new production capacities for phosphate I do not expect any price increases in the medium term.“

Owing to sufficient potassic reserves Rühlicke did not predict a scarcity of the raw material potash. Here, too, the highest consumption is in Asia – that is where the prices are made. Despite a global market share of ten per
cent Rühlicke said: „We cannot control prices.“ The quantity of potash imported into the EU is high, the worldwide consumption amounts to about 55 million tons per year.

His general interpretation of the market: „The demand for fertiliser will continue to increase worldwide, price increases, however, cannot continue for ever. Orienting N fertilisation towards yield and quality will always pay off.“

Martin Schraa from the Agrarmarkt Informations-Gesellschaft (Agricultural market information society) was the last speaker. His topic: „New developments on the grain market, assessment of the stocks and consequences
of worldwide fluctuations of harvest quantities“.

He observed that wheat stocks have decreased by 13 to 20 million tons and that there is a quality problem. The commodity flows have changed, prices have risen to a record high. There will be enough wheat stocks for 98 days
and maize stocks for 53 days!

„The futures markets clearly develop towards price hedging, but also towards speculations“, Schraa said. The fivefold world production is traded in Chicago. The volatility has considerably increased – this, too, is an indication for speculations. In the future, this will even get more frequently according to the estimation of the market observer.

Schraa put the increased grain consumption of the last 20 years to 30 per cent, for soya even to 145 per cent. Import dependency has risen. The demand decreases while prices are increasing – with at the same time increased production. Political decisions, e.g the promotion of bio energy, have an influence on production. In addition, the population growth (56 per cent since 1980) and the increased incomes are reasons for the higher consumption.

Schraa described the German grain market as follows:
- from March till August mills are worried about supplies
- grain stocks are significantly lower than the previous year’s level
- fast export, thus decreased stocks
- price curve flattens
- farmers’ stocks are marketed to a large extent

Concerning the topic biogas Martin Schraa added: “In 2010 there were 6,000 plants, in 2011 there will be 6,800. The land required for this is about 650,000 hectares which corresponds to approx. five per cent of the total arable land. In addition, there will be about 240,000 hectares for bioethanol, so another two per cent.

For 2011, Schraa predicts that the cultivation of wheat and maize will increase worldwide and in the EU, whereas the production in Germany will remain the same. The harvest quantity – as far as it is possible to predict – will rise by just under 25 per cent to 672 million tons compared to 2010. As the demand worldwide already amounts to 670 million tons, it will hardly be possible to develop stocks.

Afterwards the speakers were available for discussions. There was also a machinery presentation at the end of the event.

The comments of the seminar participants were very positive. “Current topics, interesting speakers and quite controversial discussions – that is what is so special about the HORSCH seminars“, the visitors complimented.

Conclusion: to attend a HORSCH seminar always pays off!