Investor Relations

Global development 2008

Yara is affected by global as well as local economic developments, particularly within the markets it operates. Yara contributes greatly to economic as well as social development: Application of crop nutrients enhances yields and raises the potential income from farming, contributing to sustainable agriculture, rural development and economic growth.

Global megatrends constitute an important part of the global business environment in which Yara operates. Globalization has a major impact on a global company such as Yara, which trades extensively across the world, as well as on Yara’s customer base the world’s farming community. Growth is a major driver in two ways; economic growth increases purchasing power, and population growth increases the demand for food – and for mineral fertilizer. Also, urbanization affects human settlement and human health, with pollution of air and contamination of water, offering considerable opportunities for environmental products and services

Economic development

2008 saw exceptional turmoil in international economy, with a lengthy period of sustained economic growth coming to an end. At the turn of 2008, the World Bank and the International Monetary Fund projected a sharp fall in world economic growth. 2008 started with a global food crisis, and ended with a global financial crisis. Uncertainties in global commodity markets in 2007/08 contributed to a sharp rise in the price of basic food crops, while turmoil in the financial markets in 2008/2009 reduced demand for fertilizers, raising questions of future agricultural productivity.

Political development

2008 saw a considerably stronger political attention to the agricultural sector and food production than in several years, with high-level conferences calling for increased investments in agriculture and agribusiness. The focus on environmental issues, in particular global warming and climate change – partly combined with renewed considerations on bioenergy – remained high on the agenda. 2008 also saw attention raised on emissions, with new measures setting stricter caps on harmful emissions.

Social development

2008 saw an increase in the number of food insecure and poor people, most likely reaching one billion. Record-high food prices are cited as one major cause, partly reversing some of the recent gains in hunger reduction. The financial crisis aggravated the situation, and in February 2009, the World Bank said that “the financial crisis is fast becoming a human crisis”. The Food and Agriculture Organization of the UN (FAO) noted that high food prices also constitute an opportunity, calling for concerted help for producers to boost food production, “mainly by facilitating access to seeds, fertilizers, animal feed and other inputs”.

Another issue of rising concern in 2008 was the impeding water scarcity. Already, there is critical water scarcity in large areas of the world, including major food producing regions. Agriculture being the main consumer of water, improved water management and farming methods to make use of less water were some key topics on the agenda. Drip irrigation and precision fertilization, including the use of fertigation solutions, can contribute to save precious water; solutions that Yara has pioneered.

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