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Document 52016SC0064

COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a Regulation of the European Parliament and of the Council laying down rules on the making available on the market of CE marked fertilising products and amending Regulations (EC) No 1069/2009 and (EC) No 1107/2009

SWD/2016/064 final - 2016/084 (COD)

Brussels, 17.3.2016

SWD(2016) 64 final

Circular Economy Package

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the document

Proposal for a Regulation of the European Parliament and of the Council

laying down rules on the making available on the market of CE marked fertilising products and amending Regulations (EC) No 1069/2009 and (EC) No 1107/2009

{COM(2016) 157 final}
{SWD(2016) 65 final}


COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the document

Proposal for a Regulation of the European Parliament and of the Council

laying down rules on the making available on the market of CE marked fertilising products and amending Regulations (EC) No 1069/2009 and (EC) No 1107/2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

Introduction

1.Procedural issues and consultation of interested parties

1.1.Identification

1.2.Organisation and timing

1.3.Consultation and expertise

1.4.Scrutiny by the Commission Impact Assessment Board

2.Regulatory context

3.Problem definition

3.1.Lack of awareness about nutrient recycling

3.2.Lack of internal market

3.3.The impacts of mutual recognition of fertilisers covered by national laws

3.4.Weaknesses of the current EU Fertilisers Regulation

3.5.Drivers of the problem

3.6.Who is affected, in what ways and to what extent?

3.7.Expected evolution of the problem

3.8.EU right to act

4.Objectives

4.1.General policy objective

4.2.Specific policy objectives

4.3.Operational objectives

4.4.Consistency with other policies and objectives

5.Policy options

5.1.Possible options which have been discarded at an early stage

5.2.Description of the examined options

6.Analysis of impacts

6.1.Descriptions of impacts and their corresponding assessment criteria

6.2.Option 1: no action

6.3.Option 2: creation of an internal market for fertilising products by listing individual product types

6.4.Option 3: creation of an internal market for fertilising products by listing authorised ingredients

6.5.Option 4: creation of an internal market for fertilising products by using the New Legislative Framework

6.6.Option 5: creation of an internal market for fertilising products by adopting different variants of options 4

7.Comparing the options

8.Monitoring and evaluation

8.1.Supporting the implementation of the new legislative proposal

8.2.Measuring the fulfilment of the objectives

9.References

10.Glossary of technical terms and abbreviations

ANNEX I The global and EU supply and demand of fertilising products and additives

ANNEX II Additional evidence illustrating the problems with the current regulatory framework

ANNEX III Evaluation of administrative burden costs

ANNEX IV SMEs Test and competitiveness proofing

ANNEX V List of relevant EU legislation in relation with fertilising products

ANNEX VI Background information concerning the proposed list of contaminants levels for the different categories of products

ANNEX VII Description of each possible options envisaged in this impact assessment

ANNEX VIII Assessment criteria

ANNEX IX Characteristics of plant biostimulants and agronomic fertiliser additives

ANNEX X Regulation (EC) No 2003/2003 relating to fertilisers

ANNEX XI Overview of some national fertiliser laws and their discrepancies (Source: the Fertilisers Study)

ANNEX XII Summary of various stakeholder consultations carried from 2010 to 2015.



Introduction

The market of fertilising products covers different categories namely fertilisers, soil improvers, liming materials, growing media, plant biostimulants, fertiliser additives and mixtures thereof. For an explanation see also glossary of technical terms in Section 10. Each product category has different characteristics and safety profiles depending on the nature of the feedstock used in manufacturing them (mined feedstock, domestic organic and secondary raw materials from waste streams or industrial by-products) as well as different market dynamics.

Fertilisers provide 'food for plants'. They replenish soils with nutrients and help professionals and private consumers to maintain or increase crop yields to produce food and non-food products (e.g. energy commodity crops) for the world's growing population. They accounted for approximately 60% of the registered yield increase in the last 50 years. Consequently, the access to efficient fertilisers to feed an additional 2 billion people by 2050 is a relevant issue.

Fertilisers can be divided into three sub-categories:

1.inorganic fertilisers composed of synthetic chemicals and/or minerals such as various nitrogen, phosphate, and potassium substances;

2.organic fertilisers mainly made of organic matter from various sources such as processed manure and compost;

3.organo-mineral fertilisers which result from the chemical reaction between organic and inorganic fertilisers with the objective to delay the release of nutrients.

Alongside fertilisers, other product categories such as soil improvers, liming materials and growing media are also used in agriculture to improve crop yield.

Soil improvers include products added to soil in situ to maintain or improve its physical, chemical or biological properties (e.g. increasing organic matter/carbon content through adding compost, limiting soil dewatering and erosion…).

Liming materials are inorganic products whose main function is to correct soil acidity.

Growing media are products used in horticulture to offer a growing substrate for root development, e.g. off-soil greenhouse production systems, potted plants in nurseries.

Plant biostimulants are products that, when applied to a crop or to its rhizosphere (on the soil close to the roots), will influence its nutrition pathways and hence will either enhance its nutrition efficiency or its resistance to abiotic stress, or modify the quality traits of the plant, mainly by improving the crop’s capacity for nutrient uptake or by improving its nutrient use efficiency.

Agronomic fertiliser additives are products which influence the release patterns of nutrients present in fertilising products to modify their availability for feeding crops more efficiently.

As illustrated in Figure 1 below, the inorganic fertiliser business represents 80% of the estimated total value of the EU fertilising product market. Not all inorganic fertilisers are marketed as EC fertilisers (See Section 2). The organic fertiliser market represents around 4.5% of the market. This figure however excludes raw manure which is an important source of nutrients for crops but is mainly used by farmers directly on their own or neighbouring fields generally without commercial transactions. Commercial transaction of raw manure between Member States is subject to mutual agreement under Regulation (EC) No 1069/2009 1 laying down health rules as regards animal by-products and derived products not intended for human consumption (hereinafter the Animal By-Products Regulation - ABPR). By convention raw manure is therefore not considered as a fertilising product in the sense of the future regulation on fertilising products and should not be included in its scope.

Organo-mineral fertilisers, soil improvers, liming materials and growing media represent about 12.5 % of the current value of the EU fertiliser market. Plant biostimulants represent only 2.25% but with a strong market development potential. Lastly agronomic fertiliser additives represent less than 1% of the current market value but again with a strong market development potential. See Annex I for more details on the current size and future market trends for each sub-category.

Figure 1: Market value distribution per category of fertilising products.
(Source: the Fertilisers Study)

Note: ’Other products’ can be defined as products the primary objective is not to bring nutrients to the plants.

According to Eurostat and the Fertilisers Study 2 , the EU fertilising product market as presented above, is an economic sector that has between EUR 20 billion and EUR 25 billion in annual turnover. Around 95 000 to 100 000 jobs (expressed as Full Time Equivalent) are involved: i.e. approximately 1% of European Gross Value Added for the whole manufacturing sector and 0.2-0.3% of the workforce in manufacturing.

Due to the lack of available statistics in Eurostat (except for inorganic fertilisers), the number of SMEs active in the sector was estimated on the basis of information collected from various industry federations. In the inorganic fertilisers (which are international trade commodities), large companies represent 75% of the total market value whereas for the other groups of products, SMEs represent approximately 98%. In total, 90% of the number of enterprises active in the production, sales and imports of fertilising products are estimated to be SMEs.

As fertilising products are key ingredients for crop production, a competitive European fertilising product industry is essential to ensure a reliable access of European agriculture to fertilising products at competitive prices.

1.Procedural issues and consultation of interested parties

1.1.Identification

Lead Directorate General: Internal Market, Industry, Entrepreneurship and SMEs (DG GROW).

Other Directorates-General involved in the ISSG: Environment, Health, Agriculture, Trade, Secretariat General and Legal Service.

Agenda Planning/WP Reference: 2012/ENTR/001.

1.2.Organisation and timing

DG Growth set up an Inter-service Steering Group (ISSG) on the revision of Regulation (EC) No 2003/2003 (hereinafter the ‘Fertilisers Regulation’) to which the above-mentioned Services were invited. The ISSG met in July 2012, February 2013, May 2013, September 2013, March 2014, May, July and October 2015 in order to discuss the preparation of the impact assessment and the legal proposal. The members of the ISSG were also invited to participate in meetings with industry and Member States representatives held during the preparation of this report.

1.3.Consultation and expertise

In September 2009, the French Ministry for Food, Agriculture, Fisheries and Rural Affairs and the French Ministry for Economy, Financial Affairs and Industry organised a workshop 3 to identify the main regulatory failures that hamper the functioning of the EU fertilising product market. It concluded that the intra-EU trade of fertilising products not covered by the Fertilisers Regulation is hindered by diverging national requirements. The entry into force of Regulation (EC) No 764/2008 4 of the European Parliament and of the Council of 9 July 2008 (hereafter the ‘Mutual Recognition Regulation’) that applies to non-harmonised products has not entirely met the expectations of the economic operators in terms of reducing the administrative burden. Many Member States hold negative opinions towards applying mutual recognition to fertilising products covered by national rules as described in Section 3.2.

In December 2010, the Commission published the results of an ex-post evaluation 5 of the Fertilisers Regulation and the implications of the entry into force of the Mutual Recognition Regulation for the fertilising products sector (hereinafter 'the ex-post evaluation'). The evaluation covered 10 Member States representing around 75% of the total EU fertilising products consumption in 2008, 28 companies and 4 European Trade associations. The evaluation concluded that the Fertilisers Regulation had been effective in simplifying and harmonising the regulatory framework for the inorganic fertiliser market. However, the limited scope of the current Fertilisers Regulation was seen as the most important deficiency to be addressed in order to ensure a functioning internal market. The findings of the ex-post evaluation are further detailed in the problem definition and are all addressed by this impact assessment.

In January 2011, the Commission mandated an external study for the collection of data on the EU fertilising product market and the assessment of different policy options in view of the potential extension of the scope of the Fertilisers Regulation. During the preparation of this study (hereinafter the ‘Fertiliser Study’ 6 ), a broad range of businesses and competent authorities 7 were invited to share their expertise on the current legal framework for the placing on the market of fertilising products through several questionnaires and interviews.

The consultation confirmed that the intra-EU trade of fertilising products other than those covered by the Fertilisers Regulation is hindered by major differences between national legislation covering the placing on the market of national fertilising products (i.e. fertilising products not covered by the Fertilisers Regulation). More details are available in Section 3 and Annex II.

These differences lead to considerable additional costs of product registration for producers (according to the analysis described in Table 23 of Annex III this could amount up to EUR 25.2 million annually for the whole industry).

In December 2011, the results of the study and a set of policy options for the revision of the Fertilisers Regulation were presented to the Working Group of the Competent Authorities responsible for the implementation of the Fertilisers Regulation (hereinafter referred to as the ‘Fertilisers WG’), which is composed of representatives of the Member States and open to observers from EU fertilising products manufacturers, non-EU producing countries, environmental NGOs, Trade Unions, Farmers and Consumer associations 8 . The options examined in this impact assessment were presented in detail and stakeholders were requested to provide their initial views on the options either orally in the meeting or by sending written comments to the Commission in the subsequent weeks. Since 2011, the members of the Fertilisers WG were regularly consulted on the developments of a future proposal for a revised Regulation and at the beginning of 2014 bilateral meetings took place in several European capitals to discuss the possible consequences of the revision of the Fertilisers Regulation for the competent authorities and local stakeholders. The outcomes of the Member States consultation are detailed in Section 6 for each examined option.

In the framework of the implementation of the Small Business Act, requests for inputs on the various options examined in this impact assessment report were submitted to Small and Medium Size Enterprises (SMEs) during the last quarter of 2012 via the Enterprise Europe Network 9 . The aim of this consultation was to ensure that the specific concerns of SMEs involved in the production and/or marketing of fertilising products could be considered. 61 companies in 10 Member States participated in the consultation. In summary, the replies show that SMEs are in favour of a flexible regulatory approach to allow an easy access to the market of safe products.

In line with the Commission Communication on Industrial Policy 10 "to ensure that all policy proposals with a significant effect on industry undergo a thorough analysis for their impacts on competitiveness", a consultant team was mandated to further deepen the economic analysis of the effects of the various options on business competitiveness – hereinafter referred to as ‘the Competitiveness Proofing’ 11 – in several key sectors. Annex IV (SME test and competitiveness proofing) summarises the results of the SMEs survey as well as the analysis of impacts on competitiveness.

In the course of 2012, the Commission organised 13 meetings of four ad-hoc technical working groups composed of representatives of competent authorities, the fertilising products industry and NGOs to discuss a broad range of technical issues related to the implementation of the different options identified in the Fertiliser Study. The overall structure of a possible proposal, definitions of the various categories of products, agronomic and safety criteria as well as labelling and enforcement issues were addressed. A summary of the main outcomes of the stakeholders consultations carried out since 2012 is available in Annex XII.

In 2013, the Commission mandated an external consultant to carry out an analysis of existing regulatory approaches in the Member States and third countries for plant biostimulants and agronomic fertiliser additives. Although there are grounds and support from the technical working groups to cover these product categories in a future proposal, some details about information on safety and quality requirements needed to be further worked out 12 in cooperation with representatives of the industry and Member States.

The various consultations conducted as part of the preparation of this impact assessment report have been carried out in compliance with the Commission's minimum standards on consultation 13 . Since mid-2010, all the relevant target groups have been consulted. In each consultation, the Commission has allowed sufficient time for participation. All the opinions expressed in writing and/or orally during the consultation procedure have been considered by the Commission. During the consultation period, DG GROW made an extensive use of the Fertilisers Working Group as an open platform for Member States, industry and NGOs to collect feedback on various issues relating to the revision and in particular on the content of the various options (see Annex XII). An open public consultation to help the Commission to better identify and define the main barriers to the development of a more circular economy was organised mid 2015. The outcomes of that consultation regarding the market of secondary raw materials for fertiliser use are reported in Annex XII.

1.4.Scrutiny by the Commission Impact Assessment Board

The Impact Assessment Board of the European Commission assessed a draft version of the present impact assessment and issued its first opinion on 22 January 2014. The Impact Assessment Board made several recommendations to improve the quality of the report Therefore a revised draft impact assessment report:

Better showed the magnitude of the problems related to the fragmentation of the internal market, mutual recognition of fertilisers and weaknesses of the Fertilisers Regulation (amendments to section 3, Annex II, Annex XI);

Better demonstrated that diverging national rules create adverse consequences in terms of trade within the EU and competition distortions in different segments of fertilisers' market (amendments to sections 2, 3.1, Annex II);

Better presented the operational set-up of the various options and clarified the content of their safety and quality requirements (amendments to section 5 and Annex VII);

Clarified how the proposed maximum limit values for contaminants were selected and how they relate to the current values in commercialised products and limit values in national legislation (amendments to section 3.3, Annexes VI and XI;

Improved the assessment of the economic, environmental and social impacts of the proposed limit values for contaminants and clarified any significant international impacts ( amendments to sections 3.5, 3.6 and 5, Annexes VI);

Explained how stakeholders' concerns as regards the preferred option have been addressed and described the results of the consultations carried out in view of the preparation of the revision.

The Impact Assesment Board issued its second opinion on the revised report on 16th July 2014.

In light of the recommendations in the second opinion, this final report:

Provides more evidence regarding the extent of the market fragmentation, the role of the diverging national rules as a driver and the size of environmental and public health concerns (amendments to Sections 3.1, 3.2.1, 3.3.1, 6.3.3);

Better defines the content of each option, the need for harmonised standards, transitional provisions and the intervention logic (amendments to Section 5 and Annex VII);

Explains the reasons for setting the proposed limit values for contaminants, how a consensus was achieved and under which conditions Member States can deviate from them under Article 114 TFEU (Amendments to Sections 3.3.1, 6.3.3 and 3.7.2);

Explains in deeper details the order of magnitude of key impacts (Amendments to Section 6 and Annex XIII);

Better justifies the assumptions underpinning the calculations of the development costs of harmonised standards (Annex III);

Better presents stakeholders views throughout the report

2.Regulatory context

Regulation (EC) No 2003/2003 14 of the European Parliament and of the Council of 13 October 2003 relating to fertilisers only covers inorganic fertilisers listed in its Annex I. Other fertilising products are – if at all – currently governed by national legislation in the Member States.

The Fertilisers Regulation replaced Council Directive 76/116/EEC which covered inorganic fertilisers and had been amended several times. The Fertilisers Regulation intended to harmonise the inorganic fertiliser market and to reduce the complexity of the regulatory environment in the pre-2003 period in line with the SLIM initiative (‘Simpler Legislation for the Internal Market’). According to the ex-post evaluation, the Fertilisers Regulation has effectively contributed to this objective by removing the various procedures required by national legislation, thus eliminating the former trade barriers for 60 to 70% of inorganic fertilisers although the marketing of national inorganic fertilisers is still permitted 15 . It has also facilitated the import of inorganic fertilisers from third countries as reported by the European Fertilisers Importers Association (EFIA).

Still, such a benefit from the Regulation is not able to counterbalance the generally negative trend in the EU exports of fertilisers (See Annex I, Section 2) during the last decade that reflects, primarily, the lower production costs in certain non-EU countries (e.g. Russia, North African countries) due to the availability of cheaper raw materials (gas, phosphate rocks) in those regions.

The Fertilisers Regulation (See Annex X) lays down rules for ‘EC Fertilisers’ with regard to their agronomic efficacy and information about their nutrient content to farmers. However the result of the consultations described under section 1.3 indicates that there is a need to strengthen the environmental and human health protection aspects in the Fertilisers Regulation, in particular through setting limit values for potential contaminants in inorganic fertilisers (for more details see section 3.3 below).

The Fertilisers Regulation does not affect fertilising products placed on the market in Member States in accordance with national rules which consist of a basic law supplemented by technical annexes that are subject to regular updates as confirmed by notifications under Directive 98/34. Around 50% of the fertilising product market value is out of the scope of the Fertilisers Regulation.

In general, Member States' fertilising product laws are not limited to inorganic fertilisers but cover a broader range of fertilising products. As confirmed in the ex-post evaluation, national rules diverge with regard to; inter alia, definitions and scope, forms of national registration and authorisation procedures, environmental or safety requirements, labelling, national standards for control and market surveillance. National regulatory approaches for domestic organic and secondary raw materials differ also as regards the origin of the authorised waste materials used for their production as well as regards the limit values for contaminants and product standards applying to them. Lastly, some rules can be contained not only in fertilising product law but also in legislation pertaining to waste, water protection or chemical legislation. (See Annex XI for more details on the scope of national laws and evidence showing their divergences and Annex II for examples of additional compliance costs due to the current regulatory framework).

Fertilising products legally placed on the market according to national rules should circulate freely within the internal market according to the mutual recognition principle. This concept is based on the assumption that Member States are applying equivalent criteria for the protection of the environment and human health so that a product lawfully produced and marketed in one Member State enjoys a basic right to free movement in another Member State. However, as described in Section 3.2 and in Annex II, there are indications that mutual recognition is not functioning well for fertilising products covered by national rules.

Several Member States are already engaged in the development of a local market for fertilising products in line with the objectives of the circular economy action plan on the use of recycled nutrients. However, the current regulatory context, i.e. the non-functioning mutual recognition of national authorisations makes the access to the entire EU market for the producers of such products often prohibitively expensive. The resulting lack of critical mass for such fertilising products limits their visibility for end users and hampers investment in the sector. The problem is of particular importance for producers established in Member States with a small domestic market compared to the surplus of organic, secondary raw materials (typically manure) of which they dispose.

3.Problem definition

3.1.Lack of awareness about nutrient recycling

Further efforts to manage the nutrient cycle in a more resource-efficient, sustainable and cost-effective way are required under the General Union Environment Action Programme to 2020 'Living well, within the limits of our planet'.

Global competition for resources is increasing worldwide. Concentration of phosphorus mines and gas fields outside the EU makes the EU fertilising product industry and the European society dependent and vulnerable on imports, high prices of raw materials as well as the political situation in supplying countries. The transition to nutrient recycling would therefore be a key element to increase the European food security.

The production of inorganic fertiliser is high energy intensive. It has been estimated that 2% of the world's energy production is devoted to the production of inorganic nitrogen fertilisers (Source: International Fertilisers Industry Association - IFA). In 2007, the global inorganic fertiliser industry (including nitrogen and phosphorus fertilisers) generated 465 million tons of CO2 (Source: IFA). Nutrient recycling would contribute to mitigation of climate change via less energy demanding technologies which can combine sometimes the production of alternative energy sources (e.g. digestion of bio-wastes generating bio-gas and heat) thereby contributing to a transition towards a low-carbon and more sustainable economy.

Disrupted nutrient recycling is a problem for Europe and all over the world. Phosphorus and nitrogen are lost across environmental media during food production or are wasted instead of being used for plant nutrition. The leaks of nitrogen and phosphorus from human activities have led to ecological deterioration of surface water via eutrophication and "dead-sea" bottoms in coastal oceans along the EU coastlines close to mined phosphorus factories. The total losses to water and landfill are substantial and would account for 30% to 35% of the annual usage of phosphorus fertilisers (Source: The European Sustainable Phosphorus Platform).

By maintaining the value of the raw materials and energy used in products from extraction to recycling, the transition towards a more circular economy 16 can promote innovation, increased competitiveness in the sector and lead to job creation (See also annex VIII Section 3.1.1 for more details).

Possibilities to stimulate further substitution of inorganic phosphate fertilisers by alternatives have been examined in the Commission Communication on future steps in bio-waste management in the EU 17 as well as in the Consultative Communication on sustainable use of phosphorus 18 . Priority actions include rigorous enforcement of the targets on diverting bio-waste away from landfills 19 as well as proper application of the waste hierarchy and other provisions of the Waste Framework Directive to introduce separate collection systems as a matter of priority. Progress in this regards can be accelerated with initiatives such as the technical report supporting the End of Waste criteria for biodegradable waste (e.g. compost and digestate) finalised by the Joint Research Centre in January 2014 20 (hereinafter 'the JRC EoW report').

Several other EU legislations are also regulating the safe use of fertilising products to ensure the protection of water resources and air quality. Annex V contains a list of relevant existing EU legislations with information on their relation to fertilising products.

3.2.Lack of internal market

The internal market only exists for a majority of inorganic fertilisers and several types of liming materials. Fertilising products derived from the recycling of bio-wastes and biomass do not have access to the internal market due to the existence of diverging national rules and standards.

Inclusion in the current Fertiliser Regulation of such products is challenging. This Regulation as it stands is clearly tailored for well characterised, inorganic fertilisers from primary raw materials. The current Regulation lacks robust control mechanisms and safeguards necessary for creating trust in products from inherently variable composition.

As illustrated in Annex II and in Table 22 of Annex III, the multiplicity of diverging national rules leads to additional compliance costs for non-harmonised products 21 which discourage economic operators to find new markets. For example, a company active in the production of organic fertilisers mentioned that total compliance costs to five national legislation can amount up to EUR 90 000. Given the low profit margin of the sector (around 10%), the investment would be only paid off after 10 years.

The lack of an internal market can also be illustrated by the costs of marketing fertilising products in various Member States. According to an EU fertiliser association, prices of similar organic fertilisers can vary by a factor of two between Member States. A maximum price difference of 60% for organo-mineral fertilisers between Member States was also reported.

Table 52 of Annex IV shows that the costs of registration, compliance check and labelling are the top three identified costs for SMEs. A range of estimated compliance costs per type of requirements is also described in table 52.

This situation hampers intra–EU trade of organic fertilisers although there is a growing interest from industry to find new markets as mentioned in Section 3.2 and Figure 16 of Annex IV which shows that around 80% of SMEs supports the harmonisation process. It is however difficult to assess the impacts of the lack of harmonisation as there is no information about the number of companies that were discouraged to trade because of the complex legal environment.

The lack of an internal market concerns products derived from various types of organic materials such as some organic fertilisers or organic soil improvers for which, according to some national legislation, users need an environmental permit from waste management authorities to dispatch the material 22 . However, compost or digestate for example that do not require a permit or an exemption under waste law but are recognised as organic fertiliser or organic soil improver can be used at lower costs. The UK's Quality Protocol for compost, for example, allows the use of compliant compost in England and Wales without having to pay an exemption fee related to waste status. The avoided costs were estimated at more than GBP 2/tonne of compost (The Composting Association, 2006).

It has also been reported that farmers are hesitant to use materials classified as waste as it may be perceived as causing adverse impacts to the environment and agricultural produce. In that case, compost price for example is often very low compared to its actual agricultural benefits. In fact, it is likely that the agronomic value of compost is higher than the price paid for it when it is considered as a waste 23 .

The recycling of organic materials (organic waste, animal by-products, sewage sludge, by-products from the agro-food industry…) generates market development opportunities for European manufacturers by using domestic feedstock to produce either organic or inorganic fertilisers 24 . Such products could make the EU less dependent on inorganic fertilisers produced in non-EU countries with finite resources (e.g. phosphorus) or intensive energy consumption (e.g. nitrogen fertilisers).

For example, some initiatives to recover nutrients from animal manure have emerged in Member States where the high amount of animal manure produced each year becomes an environmental problem. As animal manure has a low market value, it should be processed into a tradable good before being exported to other Member States. However, the complex regulatory framework (multiplicity of national rules regarding the treatment of animal by-products, difficulty to apply for mutual recognition of fertiliser, varying implementation of the Waste Framework Directive) prevents economic operators to develop further the market of secondary raw materials and the trade of fertilisers stemming from them across the EU.

National authorities still use national or even regional analytical test methods. The diversity of such national testing standards hampers the recognition of fertilising products sourced from domestic resources or lead to additional compliance costs notably as regards labelling 25 . The issue of the existence of diverging national standards could be addressed by developing harmonised EN standards.

Moreover, as reported in the ex-post evaluation, national producers often lack knowledge on the legal situation in other Member States and are unsure whether they should adapt their products to the requirements of the Member State of destination by modifying the product (which means additional costs) or if they can rely on Mutual Recognition procedures (which may cause delay for access to the market and costs of prior authorisation procedure in some Member States).

According to the ex-post evaluation, although trade barriers have been removed for about 60 to 70% of the inorganic fertiliser sector, economic operators still have to comply with diverging national rules for the remaining part of the inorganic fertilisers sector in particular with respect to limit values for contaminants.

3.3.The impacts of mutual recognition of fertilisers covered by national laws

The free movement of goods is one of the fundamental pillars of the EU, and is being upheld by the principle of mutual recognition deriving from the case law of the Court of Justice of the EU. According to that principle, Member States may not prohibit the making available on their market of any product (including fertilisers) that is lawfully placed on the market of another Member State, unless they can demonstrate that there are specific legitimate reasons (i.e., in the case of fertilisers, mainly protection of the environment and of human health) against accepting the product. Regulation (EC) No 764/2008 on Mutual Recognition (hereinafter 'MRR') regulates the application of that principle. According to the MRR, a Member State intending to impose such a prohibition on a product based on a technical rule shall notify the economic operator wishing to market the product. After the expiry of the time limit for the receipt of comments from the economic operator, the Member State shall take a decision and notify the economic operator thereof. The MRR also obliges Member States to designate Product Contact Points ('PCPs'), whose task is, i.a. to provide information to operators upon request.

The ex-post evaluation found that in 2009, the year of entry into force of MRR, an annual average of no more than 5 to 10 fertilising products had been placed on the market under the application of the procedures for mutual recognition in most Member States. Since then, the yearly reports of the Member States on the implementation of the MRR show that 20 Member States out of 27 specifically mentioned issues relating to fertilising products. They are reported as one of the product categories for which economic operators submit many information requests to PCPs, which means that there is a significant interest in intra-EU trade, but that economic operators are uncertain about the requirements applicable in different Member States (See Annex II for more details).

In February 2010, DG ENTR published a guidance document on the application of the MRR to prior authorisation procedures 26 . The yearly reports on the implementation of MRR do not show that this guidance document has eased the difficulties of economic operators in this regard. Some Member States have continuously indicated encountering particular difficulties with the implementation of the MRR for products subject to prior authorisation procedure in general, and fertilising products in particular.

The ex-post evaluation has identified three main areas of concern for Member States and industry:

3.3.1.Lack of trust in MRR by economic operators

For a few operators, the use of the Mutual Recognition Regulation provides a suitable alternative as a way to overcome the lengthy registration procedures of the Fertilisers Regulation or the various registration procedures and tests required in the different Member States. However, the ex-post evaluation (See a summary of the report in annex XII) shows that a large majority of operators doubt the effectiveness of the MRR in the area of fertilising products. During the survey organised for the ex-post evaluation industry complained about the lack of clarity of the European legislation on mutual recognition, and argued that this tool is not suitable for creating uniform market conditions for fertilising products in the EU.

The high technical complexity and diversity of national rules applying to a large range of products/ingredients (sometimes captured in positive lists) and the uncertain outcome of procedures invoked by Member States on the grounds of human health or environment protection deter economic operators from applying for mutual recognition.

In addition, several Member States apply prior authorisation procedures 27 which the MRR has explicitly left out of its scope. Such procedures discourage economic operators from marketing their products in Member States where the procedures are in place. This conclusion is not altered by the fact that the Court of Justice of the European Union has defined certain conditions to be fulfilled for such procedures to be justified with regard to the free movement of goods. 

3.3.2.Divergences in environmental and human health safety standards

Member States are concerned that the MRR may jeopardise their national requirements to protect the environment (in particular their national soil and water standards) and/or human health. For example, one Member State reported 4 cases of requests for mutual recognition in 2010, where all four products exceeded the limit on heavy metals that it had imposed nationally.

There are also concerns that inappropriate or low quality products will enter the market. For example, one Member State stated that some recycling companies, which are not fertilising products producers, may try to put low quality products (in terms of agronomic efficacy and contaminants levels) on the market to get rid of potentially dangerous waste or ineffective by-products as fertilising products. This would be achieved by lawfully placing them on the market in a Member State where no environmental or quality criteria for such products apply, and benefit from the mutual recognition procedure to make them available in other, more stringent, Member States.

3.3.3.Additional costs for Member States

The view that the MRR does not have the potential to create a functioning internal market for fertilising products was repeatedly expressed by almost all Member States during the various consultations 28 .

The burden of proof in justifying the measures adopted according to the MRR lies entirely with the Member States, and not with the economic operators. Member States need to comply with strict rules regarding the production of evidence that national technical rules are required to ensure that overriding public interest for health and environment are respected. The application of the MRR therefore imposes administrative costs on Member States. 

In particular, Member States mentioned that many enquiries for mutual recognition were outside the scope of the MRR 29 (sometimes more than 50% of questions) which in their view creates useless administrative costs on national competent authorities. This is seen as resulting mainly from the complexity of the legislations in place and the confusion of economic operators with regard to the concept of 'legally placed on the market in another Member States. According to the Fertilisers Study, the annual costs for competent authorities to analyse requests for mutual recognition is around EUR 420.000 (See Annex III p 46).

Member States' authorities have also expressed strong concerns to the Commission that their administrations might be overwhelmed if many fertilising products lawfully placed on the market in other Member States with different technical requirements were to be placed on their markets over a short period of time. National authorities would not be able to react within the short period of time provided for by the MRR (maximum 40 calendar days). This could lead to a situation where products lawfully marketed in another Member State would be marketed in their territories as well, without giving the receiving Member State any possibility to challenge the assessment of their potential risks for health and the environment.

In addition, Member States do not necessarily use the same analytical methods for control purposes. This can lead to administrative costs for authorities who verify with their own methods that the fertilising product complies with the requirements for human health and the environment applicable in another Member State.

In addition to the direct costs, reliance on mutual recognition is likely to have significant opportunity costs. The large number of information requests to PCPs indicates that there is willingness to trade within the EU across national borders. Regulatory uncertainty and hurdles, in particular in the form of national pre-marketing authorisation schemes, have been reported in the ex-post evaluation. The current regulatory framework discourages fertiliser producers using domestic resources from expanding their markets beyond national borders. This limits competition, which in turn implies that farmers may be paying higher prices for fertilising products. The potential costs hereof have not been included in the quantitative impact assessment, due to the difficulty to estimate its magnitude, but must not be disregarded.

3.4.Weaknesses of the current EU Fertilisers Regulation

3.4.1.Lack of consideration for environmental and public health concerns

In recent decades, interests have moved from solely providing extensive information about the nutrient content of fertilisers to also addressing environmental concerns. The current provisions are however lagging behind in this respect as no limits for contaminants are specified. The Fertilisers Regulation is therefore perceived as providing a lower level of protection of the environment and public safety than national legislation and, from the information collected from Member States, can even be used as a means to circumvent some national safety provisions by selling inorganic fertilisers containing harmful substances as EC Fertilisers 30 .

In fact, Article 14 (c) of the Fertilisers Regulation requires that “a fertiliser type may only be included in Annex I if under normal conditions of use it does not adversely affect human, animal or plant health or the environment”. It is therefore the responsibility of the Commission and the Fertilisers Committee to check that a fertiliser type is not harmful before it is included in Annex I of the Fertilisers Regulation. However, several Member State authorities argued that the information required in the technical files for the registration of new fertilisers as EC Fertilisers is not clearly stipulated 31 . According to these Member States, the nature of the information to be provided and how this information should be presented should be specified more precisely. Moreover, the evaluation of these technical files should be given to a scientific committee of technical experts covering the whole range of relevant disciplines, which are not necessarily represented in the Fertilisers Working Group/Fertilisers Committee.

In addition, the Inter Service Steering Group has highlighted that the absence of contaminants limits for EC fertilisers is an issue for other pieces of EU legislation and policy:

As regards the protection of surface water, EU Environmental Quality Standards (EQS) for several contaminants 32 in rivers, lakes and other surface waters have been adopted under the Water Framework Directive 2000/60/EC and there is an obligation for Member States to progressively reduce and in some cases completely phase out emissions, discharges and losses of those substances to the aquatic environment. Recent research suggests that the EQS for cadmium may not be sufficiently strict to properly protect the aquatic ecosystem 33 . Mined inorganic phosphate fertilisers are identified as the main contributor to soil cadmium inputs and surface water inputs through runoffs.

As regards groundwater, specific measures also have to be taken under the Water Framework Directive to prevent and control groundwater pollution and achieve good groundwater chemical status. Directive 2006/118/EC on the protection of groundwater against pollution and deterioration includes criteria for assessing the chemical status of groundwater and for identifying trends in pollution of groundwater bodies. Under this Directive the Member States are required to establish threshold values for a so-called minimum list of pollutants in case they identify risks of pollution. This list includes arsenic, cadmium, lead, and mercury which are found in mined phosphate fertilisers. The Groundwater Directive also includes a European quality standard for nitrates based on the Nitrate Directive. The presence of nitrates in groundwater is mainly due to an excessive use of inorganic nitrogen fertiliser and manure.

Contaminants in food are regulated by Regulation (EC) No 1881/2006 setting maximum levels for certain contaminants in foodstuffs. The Regulation provides an increased level of protection of consumers from listed pollutants (nitrate, lead, cadmium, mercury, PCBs and PAHs 34 ). Several recent scientific opinions 35 and exposure reports 36 demonstrated the need to further reduce dietary exposure to heavy metals such as cadmium and lead. Food is the major source of human exposure to lead and it accumulates in the body and most seriously affects the developing central nervous system in young children. EFSA has recommended reducing the dietary exposure to lead in food by lowering existing maximum levels and setting additional maximum levels for lead in relevant commodities. On cadmium, EFSA concluded that the current exposure to Cd at the population level should be reduced as well. (See Section 6.3.3 and Annex VI for more details).

Except for the use of sewage sludge in agriculture, which is regulated by Directive 86/278/EEC, there are no standards for soil contaminants at EU level. Nevertheless, the Soil Thematic Strategy 37 advocates for action at source to prevent diffuse soil contamination. There is evidence that contaminants inputs from anthropogenic sources (including fertilising products) affect the natural background concentration of such contaminants in arable soils. For example, the French Environment and Energy Management Agency (ADEME 2007) estimated that approximately 4,500 tons/year of copper and zinc are added to agricultural soils in France mainly due to animal manure spreading on farm fields. Chromium, nickel and lead have inputs ranking between 500 to 1,000 tons/year and approximately 150 tons of arsenic, 50 tons of cadmium and 12 tons of mercury are added each year to French soils from 7 different sources 38 . Fertilising products (inorganic fertilisers, soil improvers, liming materials, animal manure) contribute to more than 50% of the inputs mentioned above and their intensive use leads to difficulties for Member States to correctly enforce the Directives on water protection and the Regulation on the maximum values for contaminants in foodstuffs.

Plastic mulch films offer a wide range of advantages for farmers. For example, it reduces the amount of water, energy and chemicals used for crop production 39 . However, 68% of the plastic mulch films used in EU agriculture (Annex I contains some information on the size of this market) are not recycled and end up in landfills, incinerators or are left on soils which lead to reduced crop yields 40 .

Finally, urea-based fertilisers are an important source of ammonia emissions, an important air pollutant, and the review of the Fertilisers Regulation should also include appropriate solutions to minimise such emissions. Urea-based fertilisers represent about 20% of total inorganic fertiliser use in the EU but due to higher volatility compared to other sources of nitrogen, they are responsible for about 50% of the ammonia emissions deriving from fertiliser use. Compared to the total ammonia emissions from agriculture overall, urea-based fertilisers represent approximately 10% of these emissions 41 .

In conclusion, the compliance with the very stringent limits for contaminants in water and food becomes more and more difficult because of the presence of contaminants in the environment brought by anthropogenic interventions such as farming activities. This confirms the need for an overall action to limit further contaminants inputs to arable soils through the use of fertilising products which remain important contributors to soil contamination.

3.4.2.Market access problems for new products

The inorganic fertiliser industry is a mature industry. Novelty is limited compared to the chemicals industry, and even more so compared to the plant protection product industry. It is mainly concentrated on the development of agronomic fertiliser additives that modify the nutrient release pattern.

The impact of the Fertilisers Regulation on innovation in inorganic fertiliser is nevertheless an important source of concern for industry 42 .The key problem is the lengthy procedure for the listing of a new product type in Annex I to the Fertilisers Regulation. It takes on average 4-5 years to get a new type included in Annex I during which time the related products cannot be marketed as an EC Fertiliser. Most companies believe that this duration is not in pace with the innovation cycle in the inorganic fertiliser industry 43 , which is of the order of 1-2 years.

The main reasons for this unduly long approval period are the time required for the development of European Standards 44 for test methods to ensure market surveillance for the new EC Fertiliser type and the lengthy discussion in the Fertilisers Working Group/Fertilisers Committee where decisions on the relevant technical files are taken.

The provisions of the current Fertilisers Regulation are tailored for conventional fertilisers, typically inorganic or chemically produced, from well characterised primary raw materials. These provisions are not adapted to new fertilising products produced from organic or otherwise unknown materials, such as animal by-products or recycled waste. In particular the robust control mechanisms and safeguards necessary for creating trust in such products are missing, and the links with existing legislation on animal by-products and waste are not clear. This distortion of competition turns in favour of conventional inorganic fertilisers and hampers the investment in new fertilising products from domestic organic or secondary raw material, in particular in Member States with a small domestic fertiliser market compared to their organic matter surplus.

Moreover market dynamics have evolved since the entry into force of the Fertilisers Regulation which covered only inorganic fertilisers. EU farmers are increasingly demanding more products allowing for new combinations of fertilising products not in the scope of the current Fertilisers Regulation and tailored to the needs of their crops.

3.5.Drivers of the problem

The market for fertilising products is evolving. More focus on the recovery of nutrients is already well recognised in some Member States but not yet at EU level.

The regulatory framework for the EU fertilising product market becomes increasingly complex. Member States have adopted national measures with different scopes, authorisation procedures, limits for contaminants, labelling requirements, and control measures that entail extra compliance costs for industry and for authorities themselves. Moreover, there is a general lack of confidence among the Member States in the mutual recognition of fertilising products because of diverging levels of stringency in national legislation. This complex regulatory framework is not conducive to innovation in the whole sector and emerging products are thus not available throughout the Union market (See Annex XI) in particular for domestic organic and secondary raw materials.

Member States and industry suffer from that complexity. There are growing expectations and demands from various industry segments for a better integrated EU regulatory framework with faster procedures to favour the emergence of more fertilising products sourced from domestic resources (See the summary of the SMEs consultation in Annex IV).

Member States do not have the necessary human resources to ensure sufficient market surveillance activities for products placed on their market in accordance with the MRR. For example, the Italian authorities reported during the ex-post evaluation that Mutual Recognition of national fertilisers harms the process of market surveillance as the Italian system is based on a system of registration of companies.

Expectations from farmers and society in general in terms of protection of the environment, human health and better use of natural resources (including lands) are also expanding. The absence of maximum limits for contaminants at EU level is perceived to be a clear limitation of the Fertilisers Regulation and an area where Member States would like to see specific harmonised provisions put in place. Limited awareness among farmers and a general lack of information about the potential release of ammonia from urea-based fertilisers contributes to negative health impacts through increased concentrations of secondary particulate matter and increased nitrogen deposition and acidification (See Annex VI and Annex VIII Section 3.3 for more details).

3.6.Who is affected, in what ways and to what extent?

In the current situation, the stakeholders listed below are affected by the identified weaknesses of the Fertilisers Regulation, the shortcomings of the application of the Mutual Recognition Regulation, and trade barriers caused by the diverging requirements of the Member States' national laws:

European fertilising products manufacturers (in particular SMEs), importers, distributors, traders and retailers who, without a harmonised market for new products sourced from local raw materials have to comply with different rules throughout the Union and thereby continue to face extra compliance costs. This hampers the recycling of nutrients from bio-wastes, hence the development of the circular economy and makes the EU more vulnerable to imports from non-EU countries. Inorganic fertiliser producers have difficulties to market new products due to the lengthy procedures for inclusion of new fertiliser types in Annex I to the Fertilisers Regulation.

Private and public recovery operators (such as operators of waste water treatment plants or of waste management plants producing compost or digestates) want to valorise their outputs and at the same time will face, due to the revised waste legislation under preparation in the framework of the Circular Economy Package, increasingly difficult disposal regulations and recycling targets (landfill ban of organic wastes by 2025 and 70% recycling of municipal solid waste by 2030).

National competent authorities have difficulties enforcing their national limit values for contaminants due to their obligations to accept the free circulation of EC Fertilisers which do not specify any limit value for contaminants and the mutual recognition of fertilising products. This situation undermines the efforts made by some Member States to impose stringent rules to protect their environment and/or human health.

Food safety authorities face difficulties in the implementation of safe maximum levels of contaminants in foodstuffs without unduly restricting the supply of food commodities that are beneficial and essential to human health (fruits, vegetables, cereal…). These limits are set taking into account the recommended daily intake but also considering the current load of contaminants in the environment.

The general population has no access to a wide variety of new fertilising products sourced from domestic resources. Some parts of the population are affected by the presence of contaminants in fertilising products. According to EFSA, exposure of the general population to cadmium and lead needs to be reduced (See Section 3.3.1 and Annex VI Section 5 for more details). Such safety concerns are not equally addressed by the Member States.

EU farmers, professional gardeners and the general public currently do not benefit from an internal market for fertilising products because of existing trade barriers between Member States, which limits competition. Access to a broad range of valuable domestic raw materials (e.g. compost) is currently hampered by their classification as waste or variations in the implementation of waste legislation in Member States. New agri-environmental climate measures are in place under the Rural Development Programs to promote the use of organic fertilisers with the aim to increase the organic matter content of arable soils.

Phosphate producing companies in non-EU countries and the European inorganic fertiliser industry currently have no incentives to develop and implement technologies that are able to remove cadmium during the production of inorganic phosphate fertilisers.

The underlying drivers of the problem and the direct and indirect consequences are summarised in Figure 2.

Figure 2: Drivers, problems and consequence of the lack of internal market for fertilising products

Fragmentation of the internal market and related administrative costs for industry and Member States

Lack of trust in new products, in particular those deriving from waste

DRIVERS

Barriers to trade for fertilising products

Potential danger for human health and the environment over the longer term

Barriers to new and more sustainable products in line with the Circular Economy

No limit for contaminants in the EC Fertilisers Regulation

Diverging labelling and control requirements for national products hampering comparison of products

Mutual recognition of new types of fertilising products does not work well

PROBLEMS

Difficult to enforce safety maximum levels for contaminants in food, water, air and soil

Lack of market dynamism and European scale production for new types of fertilising products

CONSEQUENCES

More sensitivity of farmers and general public towards better environmental, sustainability and health protection

Member States have difficulties to cope with the market dynamics of fertilising products

Regulatory challenges for fertilising products become increasingly complex

3.7.Expected evolution of the problem

If no action is taken, legal and administrative divergences between Member States will increase leading to a more fragmented internal market for fertilising products. Consequently, operators proposing alternatives to conventional inorganic fertilisers to support the circular economy would remain confined to their national markets which will not help to reduce the dependance of the Union on critical raw material such as phosphorus or on imports of important volumes of natural gas for the production of inorganic nitrogen fertilisers. The Bio Based Industries Joint Undertaking 45 has identified phosphorus recycling for fertiliser production as an emerging and economically promising new value chain from organic waste. Easy access to the internal marketfor such fertiliser would be a pre-conditon for achieveing this goal and bringing results from research to the market.

Member States will continue to take national legislative action to reduce the potential negative impacts of the presence of contaminants in fertilising products which will further increase the fragmentation of the market. As there would be less market opportunities to export organic fertilisers made of processed animal manure, Member States would continue to request derogations under the EU Nitrate Directive to allow farmers to apply raw manure in vulnerable zones leading to increase risk of eutrophication of water bodies. Municipalities would have increasing difficulties to valorize the outputs of waste treatment plants as market opportunities would remain limited in particular in densely populated areas.

If the number of requests for mutual recognition increases with the increasing fragmentation of the market, national competent authorities wishing to enforce stringent limit values to avoid soil contamination, and thereby food and water contamination, will have increasing difficulties to review such requests in accordance with the requirements of the MRR.

In the absence of limits for contaminants in EC Fertilisers, accumulation of contaminants (particularly heavy metals) in the soil will continue, contrary to the objectives of the Soil Thematic Strategy, and Member States wishing to enforce national limit values for EC Fertilisers would have to request derogations based on Article 114(5) TFEU. This would create administrative burdens for Member States – examples from the past have shown that gathering the necessary data requires significant resources for the requesting Members States as well as for the Commission in order to evaluate and decide on the requests.

The objectives of a Commission communication on a new Clean Air Programme for Europe 46  will be more difficult to achieve unless ammonia emission from urea-based fertilisers is specifically addressed in EU legislation. EU consumers would not be equally protected against exposure to heavy metals such as cadmium and lead through the food chain as some Member States may not wish to enforce limit values for contaminants in fertilising products.

EU farmers, professionals and citizens would have limited access to efficient and innovative products at competitive prices because of extra compliance costs that fertilising products producers currently face due to the complex regulatory framework.

3.8.EU right to act

3.8.1.Legal basis

The legal basis for action is Article 114 of the Treaty on the Functioning of the European Union (TFEU), which is also the legal basis of the current regulation. The objective of Article 114 is to establish an internal market while ensuring a high level of protection of human health and the environment.

3.8.2.Subsidiarity and Proportionality

From the point of view of the operators diverging national measures have led to an incoherent regulatory framework that does not provide a level playing field for all manufacturers and leads to increased compliance costs. These existing market barriers in the form of diverging national regulatory frameworks can only be removed though EU action. 

Pursuant to Article 31(2) of the Fertilisers Regulation, requests have been submitted to include fertilising products made of secondary raw materials in its Annex I. Such requests have been so far rejected on the grounds that the current Fertilisers Regulation does not provide the necessary regulatory procedures to ensure the safety of such products. Consequently, the competition between more sustainable fertilising products in line with the circular economy and inorganic fertiliser produced in line with a linear economy model is currently tilted in favour of the latter.

The weaknesses of the current Fertilisers Regulation and the problems that they cause cannot be resolved by Member States alone, as a revision of the regulation requires EU action.

As the amount of fertilising products applied on arable soils depends on the crop grown and soil and climatic conditions in each Member State, this impact assessment report will only concern the placing on the market of fertilising products, while it will continue to be left to Member States to regulate the use of such products (e.g. amounts that can be applied per hectare). In addition, a future framework would have to provide flexible tools to address emerging concerns from Member States relating to safety by providing an appropriate procedure for managing fertilising products presenting a risk.

According to Article 114 (4) and (5) TFEU, Member States may maintain or introduce national limits for contaminants based on the evaluation of risks for the environment and human health under certain strict conditions and after authorisation by the Commission.

As one of the general policy objective of the initiative aims at reaching a critical mass for fertilising products made of domestic secondary raw materials through the development of an internal market for such products, product harmonisation should not go beyond what is necessary for providing the regulatory certainty required to incentivise large scale investment in the circular economy while imposing a high level of protection of health and the environment.

The proportionality of possible options will be discussed in more details in later sections of this report. 

4.Objectives

4.1.General policy objective

The general objective is to incentivise large scale fertilising products production in the EU from domestic organic or secondary raw materials by creating a regulatory framework granting such fertilisers access to the internal market and to address the well-recognised issue of soil contamination by contaminants present in fertilisers.

4.2.Specific policy objectives

In order to achieve the general objectives and address the identified problems, the following specific objectives have been identified:

To ensure an improved functioning internal market and a level playing field for manufacturers and importers of fertilising products in particular for those made of domestic and secondary raw materials in line with the Circular Economy model;

To reduce the administrative burden resulting from diverging national rules and incomplete application of the mutual recognition of fertilising products;

To improve the safety of fertilising products as regards the protection of the environment and human health (in particular soil, water, air and food quality);

To ensure coherence with other existing EU legislation to support investments into new economic opportunities for public and private operators.

4.3.Operational objectives

To remove trade barriers for the intra-EU trade of fertilising products;

To limit pollutants levels in fertilising products;

To reduce administrative burdens for economic operators, Member States authorities and the Commission, improve the overall cost efficiency and simplify the regulatory framework;

To facilitate innovation and allow a quicker access to the market for more sustainable products, in particular for organic products issued from the recycling of nutrients from biomass, in accordance with the objectives of a European Circular economy.

To streamline the information obligations requirements as regards quality parameters for all product categories in order to allow farmers and consumers to easily compare products and address the information gaps for users concerning urea-based fertilisers as regards their impact on the environment.

4.4.Consistency with other policies and objectives

Consistency with other EU policies and stated priorities has been sought in the development of the policy options. Policies particularly considered include:

'Europe 2020' 47 , notably in relation to its smart, sustainable and inclusive growth priorities and associated flagship initiative on 'Resource Efficient Europe'. An internal market for organic fertilising products would help to support a partial substitution of inorganic fertilisers for which the EU is highly dependent on imports thereby contributing to the circular economy. The main ideas on how to do more with less are being taken further in the EU's Environment Action Programme to 2020 48 .

"Closing the loop – An EU action plan for the circular economy" recently adopted by the Commission 49 has identified the Fertilisers Regulation revision as a key legislative proposal to boost the market for secondary raw materials. The Commission Communication calls for new measures to facilitate the EU wide recognition of organic and waste-based fertilisers, thus stimulating the development of an EU-wide market. 

The EU raw material strategy 50 includes phosphorus in the critical raw materials list. Since its publication in 2010 the list of critical raw materials has proven to be an important tool for the Commission to raise awareness, determine priority actions and open up funding opportunities under the Horizon 2020 51 (e.g. the research activities launched under the Societal challenges 2 - "food security, sustainable agriculture and forestry, marine and maritime and inland water research and the bio-economy" and 5 – "climate action, environment, resource efficiency and raw materials) which aim at providing technological solutions for recycling more efficiently and safely bio-wastes and encouraging researchers to deliver innovative products in compliance with the market and societal needs.

The Small Business Act 52 as the proposal accompanied by the impact assessment report addresses issues (e.g. barriers to trade, compliance costs and innovation) faced by numerous SMEs that are involved in the manufacture of fertilising products.

EU policies related to the protection of the environment, in particular soil (as defined in the Soil Thematic Strategy), water (as set out in the Water Framework Directive and in particular the Nitrate Directive), air (the new Clean Air Policy Package tabled in December 2013 53 ) and to the protection of human health, in particular with regard to contaminants in foodstuff.

This initiative is undertaken with the objectives of the Commission's Communication on Smart Regulation in the European Union 54 in mind. The problems to be addressed by the initiative are based on the ex-post evaluation of the existing legislative framework for fertilisers.

5.Policy options

Based on the weaknesses identified during the evaluation of the current Fertilisers Regulation, the Commission developed eight possible policy options which could address the identified problems.

5.1.Possible options which have been discarded at an early stage

5.1.1.Improvement of the Mutual Recognition without harmonisation

The Commission concludes from the explanation given in Section 3.2 and further detailed in Section 2 of Annex II that the internal market for non-EC Fertilisers has not substantially progressed since the existence of the MRR despite a comprehensive body of case law and guidance and that further progress cannot be expected. Increased enforcement activities of the MRR by Member States are also not a promising alternative in view of the distrust of most EU companies for the mutual recognition of fertilisers.

The ex-post evaluation showed that neither economic operators nor national authorities were of the opinion that mutual recognition could be an effective tool for ensuring free movement of fertilisers, a product category for which legitimate product quality, environmental, and public safety concerns warrant stringent rules.

Moreover, the problems stemming from the Fertilisers Regulation itself would not be addressed by this option. This option has therefore been discarded.

5.1.2.Voluntary agreement by industry

On top of the existing Fertilisers Regulation and other applicable EU legislation, fertilising products manufacturers and importers would need to agree to voluntarily establish quality procedures and standards for all the categories of fertilising products to ensure a certain level of harmonisation of the market. This would include safety and quality elements (limits on contaminants and agronomic efficacy criteria), good manufacturing practices based on best available techniques, self-control activities, and certification schemes.

Although self-regulation by industry to improve the quality and safety standards of its products generally leads to a market with fewer barriers to trade, it is unlikely that the Member States would repeal their existing national legislation. Also, while such voluntary commitments have already been adopted in some Member States and for specific product types (for instance, the “Quality Assurance Scheme for Compost” adopted by the members of the European Compost Network – ECN), a meaningful EU-wide commitment would be difficult to achieve as partners would not necessarily have the same economic interests. As a result, several private commitments could be generated and create a multitude of monitoring systems and enforcement problems. Representation of SMEs in the preparation of such voluntary scheme could also be an issue. Finally, this option is clearly rejected by all stakeholders as this would not bring the same level of legal certainty compared to regulatory harmonisation, especially in the long run.

5.1.3.Withdrawal of the EU legislation on fertilisers and reliance on other relevant existing EU legislations to ensure the safety of fertilising products

The Fertilisers Regulation would be repealed and only the requirements of other existing EU legislation (i.e. REACH, CLP 55 , Animal By-Products Regulation…) would apply to ensure the safety of the products placed on the market 56 . There would be no harmonised limit values for heavy metals or organic pollutants at EU level.

Member States would, in line with the provisions of the Treaty, be free to maintain or introduce national legislation. Manufacturers would have to comply with national provisions or apply the provisions of the Mutual Recognition Regulation to market their products. This would increase the fragmentation of the internal market for fertilising products and uncertainty for producers and market surveillance authorities.

The costs of managing national legislation would increase as Member States would have to convert existing EC Fertilisers into ‘national’ fertilisers which would further increase the compliance costs for operators. REACH and CLP do not properly cover the issues at stake concerning the presence of contaminants in fertilising products and their scope is currently not adapted for the categories of fertilising products outside inorganic fertilisers and liming materials deriving from industrial by-products. The Animal By-Products Regulation is addressing hygienic safety issues relating to the use of such materials in the composition of organic fertilisers or soil improvers but not environmental issues such as the presence of heavy metals except for each consignment of raw manure which is subject to prior acceptance by the Member State of destination.

This option is not considered as a viable option by Member States and industry as they favour a dedicated instrument to ensure a level playing field for economic operators and the safety of fertilising products placed on the market.

5.2.Description of the examined options

For each option (except option 1), two possible variants would be examined for implementation:

1)Full harmonisation: if this variant were to be applied to the options 2 to 5 described below, the scope of harmonisation would be extended to all fertilising products (including the EC fertilisers) placed on the market in the EU. All existing national legislation would have to be repealed.

2)Optional harmonisation: under that variant, which could be applied to either of the options 2 to 5, the scope of harmonisation would be extended to all fertilising products (including EC fertilisers) on an optional basis. Operators interested to get products CE-marked for easy access to the EU-wide internal market would have the option of ensuring that their products comply with the harmonised requirements. However, non-harmonised products could still remain on the national markets, subject to any applicable national requirements and mutual recognition. This variant would also be more flexible in defining the scope and the level of the legal requirements of a future regulation depending on the level of political ambition of the circular economy.

5.2.1.Option 1: the current EU legislation governing the placing on the market of fertilisers remains unchanged (baseline scenario)

In this baseline option, the existing EU legislation framework would be maintained. The Fertilisers Regulation would continue to apply to inorganic fertilisers. There would be no specific EU legislation for other fertilising products – instead national fertiliser laws and mutual recognition would continue to apply albeit with a number of problems as identified above.

As regards safety, no maximum limits for heavy metals in inorganic fertilisers would be adopted at EU level. Member States having established limit values for heavy metals for national or EC Fertilisers (where authorised – see 3.7.2) will maintain them, whilst others might introduce them in the future.

5.2.2.Option 2: creation of an internal market for fertilising products in the format of the current Regulation, i.e. listing individual product types 

The option (as the options 3 to 5) would imply the extension of the current scope to organic fertilisers, organo-mineral fertilisers, soil improvers, growing media and plant biostimulants as defined in the introduction. All technical details such as minimum nutrient content and quality criteria, description of manufacturing procedures, specific labelling obligations would be fully described in fertilising product types.

Maximum limit values for contaminants for each product category would be defined. Specific quality criteria would apply to each product category. Labelling requirements would apply to each product category in accordance with its specific characteristics.

In order to list a new fertilising product type, producer would have to follow a procedure including the submission of an application dossier containing safety and agronomic data and an evaluation of such data involving all Member States (Variant 2A) or an EU Agency 57 i.e. ECHA –Variant 2B or EFSA – Variant 2C before a decision for inclusion by the Member States and the Commission would be taken (See Annex III for details).

As regards the safety criteria limit values for contaminants will be proposed. The values are selected on the basis of an extensive stakeholder consultation after peer-review of available studies (soil contamination and human health studies) with the aim to limit as far as possible further accumulation of contaminants in EU soils from the use of fertilising products. More detailed justification for the proposed limit values can be found in Annex VI. Information on how these limits relates to the current values in national legislation can be found in Annex XI.

European standards relating to test methods (nutrient content, organic matter content, quantity, density…) would be developed and referenced in an annex to the legislation to facilitate the control of all products. The verification of the compliance of the products to the requirements of a future regulation would continue to be carried out by manufacturers during production and by market surveillance authorities during controls.

Apart from informing users about the characteristics of the product, labelling provisions will also have the objective of increasing awareness about environmental aspects, such as cadmium levels (particularly relevant for phosphate fertilisers – See IAR on cadmium for further details).

In case of full harmonisation, sufficiently long transitional provisions (e.g. 10 - 15 years – See examples from the Biocidal product regulation) would be required to allow fertiliser producers and importers to register their established products in the EU authorised list of fertilising product types.

5.2.3.Option 3: creation of an internal market for fertilising products by listing authorised ingredients 

Permitted ingredients allowed in the manufacture of fertilising products would be listed in the annexes of a new regulation repealing the current Fertilisers Regulation. A detailed description of fertilising product types would no longer be needed and the central rule to place a product on the market would be that it results from combination of authorised ingredients only.

Maximum limit values for contaminants (the same as under option 2) for each product category would be defined in a future proposal. Minimum quality criteria would apply to each product category. Labelling requirements would apply to each product category in accordance with its specific characteristics.

To be listed in an annex, new ingredients would have to follow the same procedure as described under option 2 i.e. submission by the producer of the ingredient of an application dossier containing safety and agronomic data and evaluation of such data involving all Member States (Variant 3A) or an EU Agency i.e. ECHA – Varian 3B or EFSA – Variant 3C. European Standards relating to test methods and labelling requirements would apply to final products.

A shorter transitional period could be envisaged as the number of ingredients for fertilising product production would be less than the number of product types.

5.2.4.Option 4: creation of an internal market for fertilising products using the ‘New Legislative Framework 58 - NLF 

This framework aimed to be less prescriptive and restrict the content of legislation to ‘essential requirements’ leaving technical details to European Harmonised Standards. The objective of the NLF is to facilitate the functioning of the internal market for goods and to strengthen and modernise the conditions for placing a wide range of products on the EU market. It builds upon existing systems to introduce clear EU policies which will strengthen the application, monitoring and enforcement of single market legislation. The NLF objectives are to ensure that products available in Europe meet a high level of protection to public interests like health and safety, consumer protection or environmental protection and to ensure the free movement of products.

Legal requirements with regard to safety (including the same limit values for contaminants that would be proposed under options 2 and 3), product quality and other specific rules appropriate for the placing on the market of safe and efficient fertilising products would be specified for each product category. There would be no listing of ingredients or types and hence no need for frequent adaptations to technical progress.

Maximum limit values for contaminants (the same as under option 2) for each product category would be defined in a future proposal. Minimum quality criteria would apply to each product category. Labelling requirements would apply to each product category in accordance with its specific characteristics. 

Harmonised EN Standards would be developed and published in the Official Journal to allow demonstrating conformity of the products to the legal requirements of the legislation.

Producers would have to declare conformity with the legal requirements, or, alternatively, notified bodies designated by Member States would have to confirm compliance with the legal requirements. This would range from self-certification (Variant 4A) to various levels of third party certification (Variant 4B: verification of the compliance of products to the legal requirements by notified bodies - Variant 4C: verification of the compliance of products to the legal requirements by notified bodies plus regular tests on specific aspects –Variant 4D: verification of the compliance of products to the legal requirements by notified bodies plus random testing on specific aspects). More detail on the content of the various variants of option 4 is available in section 3.4 of Annex III.

Shorter transitional provisions (e.g. 3 years) could be envisaged provided that the necessary harmonised standards are available in particular under variant 4A. Under the other variants of option 4, a reasonable delay (e.g. 3+1 years) could be foreseen to allow Member States to notify the bodies that will be tasked to certify the compliance of products.  

5.2.5.Option 5: creation of an internal market for fertilising products and additives by adopting different variants of option 4 for different types of fertilising products

As under option 4, harmonisation of the EU market for fertilising products is achieved through the 'New Legislative Framework'. However, third party involvement in the assessment of conformity with the legal requirements varies between product categories, and is highest for fertilising products sourced from waste and other secondary materials with potentially variable composition. 

The regulatory regime for the different categories of fertilising products would look as follows:

Inorganic fertilisers as well as liming materials would be mostly regulated by variant 4A (self-certification) as these products have constant composition and are deriving from well-known chemical processes 59 . A limited number of inorganic fertilisers and liming materials (those derived from industrial by-products) would be regulated under Variant 4B (third party certification regarding the composition of the final product and its fulfilment of legal requirements) as they could contain some contaminants such as heavy metals. Ammonium nitrate fertilisers would need to be more strictly regulated under Variant 4C (third party certification regarding the composition of the final product and its fulfilment of legal requirements plus detonation tests) for security reasons 60 . However it has to be noted that these stringent requirements for ammonium nitrate are already described in the current Fertilisers Regulation and would be also covered by the other options envisaged in this impact assessment. A future regulation would ensure that such products are periodically and evenly controlled by authorised laboratories across Europe.

The coexistence of three different certification procedures for inorganic fertiliser is feasible as the different product types are easily identifiable by market surveillance authorities.

Growing media would also be regulated under variant 4A (self-certification) as the stakeholders consulted in 2012 agreed that most of the ingredients used in growing media present limited risks to the environment or human health that could be easily addressed with generic safety criteria.

The organic matter used in the production of organo-mineral fertilisers will have to be of high quality 61 to ensure the effectiveness of the end-product. As only source segregated materials could be used to achieve this high quality target, it is proposed to regulate those products under variant 4B.

Many organic fertilisers and organic soil improvers derive from bio-wastes. As opposed to mined fertilisers, the nature of potential contaminants in fertilisers from waste cannot be easily predicted, which creates problems of market acceptance. For fertilising products sourced from waste, it is therefore necessary to lay down essential legal requirements not only for the composition (including contaminants) of the end-product, but also – as a means of excluding potential contaminants – for the origin and treatment of the input-materials. For the purpose of establishing the necessary trust and confidence in waste-based fertilising products, it is therefore also necessary to establish harmonised rules for processing and traceability, and to include third-party-certification in the conformity assessment procedure. Although the Commission can take inspiration of the JRC report on biodegradable waste subject to biodegradation of January 2014 to establish such criteria for compost and digestate, similar EU criteria should be developed in the future for other fertilising products deriving from waste.

In order to address their wide variety in composition and use patterns, plant biostimulants – unless they are currently exempted - such as microorganisms and certain plant extracts – and agronomic fertiliser additives would be subject to REACH registration. Microbial plant biostimulant will have to be recognised as safe and be listed in a table annexed to the proposal to be modified by a Commission delegated acts taking into account available scientific assessment such as the Qualified Presumption of Safety developed for clearing the safety of biological agents which are intentionally added at different stages into the food or the feed chain. No functionality or biostimulant effect may be claimed on the label without having been proven by the producers. Application of a plant biostimulant on a crop may not lead to residue exceeding the limit of quantification, in order to limit the risk of contamination of the food chain. If the actual level found on a given crop would be higher than this limit of quantification, maximum residue level shall be set at a level ensuring the appropriate protection of human health resulting from the consumption of the treated crops.

Table 47 in Annex III summarizes the type of regulatory option that is proposed for each category of products.

Maximum limit values for contaminants (the same as under option 2) for each product category would be defined in a future proposal. Minimum quality criteria would apply to each product category. Labelling requirements would apply to each product category in accordance with their specific characteristics.

Under a full harmonisation scenario, all national rules on fertilisers would need to be repealed and there would be no more need for recourse to mutual recognition as the new Regulation would apply to all kinds of fertilising products currently governed by national rules.

The safety criteria relating to fertilising products would be more easily adaptable to new scientific evidence or any modification to the list of priority substances in relevant environmental legislation.

A transitional period of maximum 3 years is envisaged. Products considered as safe will get a quick access to the market as they will follow the self-certification procedure. More risky products (i.e. products deriving from animal by-products or waste) will have to wait the designation of notified bodies by the competent authority.

More information on the content of the options is available in Annex VII.

6.Analysis of impacts

6.1.Descriptions of impacts and their corresponding assessment criteria

Based on the main drivers and causal links identified in Section 3.4 and the EU over-arching policies on promoting the safety of products and the sustainable development of SMEs, the impacts of the possible options have been analysed. The merits of each option have been assessed with the help of assessment criteria. Annex VIII explains the methodology to set up these criteria and where relevant how they are linked to the policy objectives of this initiative.

Economic impacts

Criterion 1: do the policy options achieve a better level playing field for products? (Qualitative)

Criterion 2: do the policy options lead to administrative simplification? (Qualitative)

Criterion 3: do the policy options minimise administrative and compliance costs? (Quantitative)

Criterion 4: do the policy options support innovation by facilitating access to the market and by minimising the time to market new products? Could the option lead to significant trade impacts? Is the option compatible with WTO obligations? (Qualitative)

Social impacts

Criterion 5: can the options effectively contribute to the reduction of contaminant inputs to agricultural soil at EU level and hence decrease contaminant exposure of human beings via the food chain and drinking water? (Qualitative)

Criterion 6: can the options lead to the creation of jobs and economic growth? (Qualitative)

Environmental impacts

Criterion 7: can the various options foster significantly the recycling of nutrients and contribute to the circular economy? (Qualitative)

Criterion 8: can the options effectively contribute to the reduction of contaminant inputs to agricultural soil at EU level and hence improve soil function? (Qualitative)

Criterion 9: will the options ensure that farmers are correctly informed about the potential release of ammonia from different inorganic fertilisers in order to choose the optimal type of fertiliser and/or implement remediation measures? (Qualitative)

6.2.Option 1: no action

For the baseline scenario, the problems identified in Section 3 would persist and the objectives of this initiative would not be achieved. An internal market would only exist for part of the inorganic fertiliser market, which would not favour the emergence of alternatives to inorganic fertilisers deriving from waste. There would be no improvement in the safety of EC Fertilisers, and therefore no expected benefits for the environment and human health. Farmers would not be informed about the possible release of ammonia from urea-based fertilisers.

Producers of non-harmonised products would continue to suffer from the absence of a level playing field with the related compliance costs. Total annual costs for all stakeholders together are estimated at EUR 43-44 million. Of this amount, EUR 26 million are representing annual compliance costs for businesses (mainly stemming from the inclusion of new products in Member States positive lists) and more than EUR 17 million are linked to annual costs for EU and national authorities (mainly for managing the current regulatory system) (see comparison table in chapter 7 for an overview and explanations in Annex III for more details). The problems linked to the mutual recognition would continue, and increase over time as new types of products enter national markets. The fragmentation of the internal market, and the complexity of the regulatory environment, would not be conducive to innovation.

Stakeholders’ opinion

The current situation is clearly no longer supported by Member States and industry except for two national inorganic fertiliser associations which fear a loss in market share if more domestic secondary raw materials are allowed in the production of CE-marked fertilising products. Producers of soil improvers, plant biostimulants, organic and organo-mineral fertilisers are requesting urgent harmonisation of the rules at EU level (see also results of SME test in Annex IV).

6.3.Option 2: creation of an internal market for fertilising products by listing individual product types

6.3.1.Economic impacts

6.3.1.1.Impact on the functioning of the EU fertiliser market and simplification potential

Criterion 1: contribution to the creation of a level playing field for products.

In case of full harmonisation, Option 2 would clearly improve the functioning of the internal market for all fertilising products not yet harmonised but only after a long transitional period due to the huge number of product types that would need to be listed in the Annex(es) of a future Regulation. There would be a transition cost for the products currently put on the market as national fertiliser that would need to be registered at EU level.

In the longer term, there would be no national rules on fertilisers anymore and the uncertainty concerning the procedures of mutual recognition would disappear. This would significantly reduce compliance costs for companies (See criterion 3 (e)).

If optional harmonisation is envisaged, option 2 would improve the functioning of the internal market for a broad range of fertilising products while allowing other products to remain on national markets. The uncertainty concerning the procedures of mutual recognition would not disappear as national rules would remain. However, compared to the current situation, the number of requests for mutual recognition would be expected to seriously decrease as harmonised legislation would be available to market products across the EU.

Criterion 2: does the policy option lead to administrative simplification?

The full harmonisation under Option 2 for a wide range of product categories would require constant efforts to adapt the annexes of a regulation to technical progress, which would put significant demand on resources in the Member States, the Commission (possibly also ECHA or EFSA) and industry itself. The current regulation contains around 100 product types. This could be easily tripled if the new regulation is extended to organic based fertilising products.

The lengthy adoption process of a new product type is due to the detailed nature of technical dossier required to demonstrate that the product type is safe and effective. This, combined with the decision making process including a qualified majority voting in the Regulatory Committee on fertilisers, rendered in many cases the current Annexes of the EU legislation difficult to implement. Option 2 would generalise those difficulties to all fertilising products including those which are currently present on national markets. This will create severe market disruption for these national fertilisers if no sufficiently long transition period is foreseen. This would also lead to administrative complication with regard to the mutual recognition of products in particular during this necessary long transition period where a co-existence of a European list of types with national products is unavoidable.

Optional harmonisation would reduce the number of requests to include new fertiliser types in the Annex(es) of a future Regulation. Small companies would still be allowed to market products for local needs without trade disruption. Optional harmonisation could therefore be considered as better achieving the objective of administrative simplification for industry in the short term. However, it would fail to achieve this objective for national public administration which will have to maintain national provisions in place.

6.3.1.2.Administrative costs

Compared to the baseline, many more type designations for fertilising products (see Annex III) would have to be listed in several annexes to a regulation, in particular for the categories of products falling outside the scope of the current Fertilisers Regulation. Several variants of this option have been analysed with different roles allocated to the public ‘bodies’ (e.g. public administration and EU agencies – ECHA or EFSA) involved in the risk assessment of newly harmonised fertilising products.

Variant 2A: only Member States and the Commission would review applications for listing types in the Annexes of a new regulation.

Variant 2B: the peer-review process for applications would be managed by the European Chemicals Agency (ECHA). An opinion would have to be delivered for each entry proposed.

Variant 2C: the peer-review process for applications would be managed by the European Food Safety Agency (EFSA). As for variant 2B, an opinion for each entry proposed would be required.

Criterion 3: contribution to the minimisation of administrative and compliance costs.

The list below shows the impacts on different types of costs:

(a)Costs related to the governance of EU and national legislations

In case of full harmonisation, the costs for the management of the Fertilisers Regulation would increase compared to Option 1. The members of the Fertilisers Committee would have to meet more frequently to adopt opinions based on the assessment of ECHA or EFSA. The selected agency would have to hire new staff to assess the requests for inclusion of types not yet covered by the Fertilisers Regulation. Under variant 2B, companies would be required to pay fees for the services delivered by ECHA (see Annex III for more information). Under variant 2C, EFSA would receive a payment from the Commission through an EU budget contribution.

The SMEs consultation reported that more than 80% of the responding SMEs are in favour of harmonisation. Although it is not possible to establish with any accuracy the precise part of the market for which producers would opt for EU rules and the part that would stay under national rules under optional harmonisation, it is assumed, for the purpose of this IAR, that the respondents are broadly representative and that they would use the same strategy for their entire range of products. With this in mind, it is assumed that 20% of the products would remain under national rules and that 80% would fall under EU rules.

If 20% of the current products remain on national markets under the optional harmonisation option, the costs of governance of national legislation would have to be increased accordingly whereas the costs of EU governance would have to be reduced proportionally compared to the full harmonisation scenario (See Annex III Section 3.6 for more details)

(b)Costs related to the placing on the market of new products and mutual recognition

Under the full harmonisation option, industry would have to resubmit applications for the registration of products that have been authorised for years under national laws. The costs for industry to prepare application dossier for types would be higher than the average today, as data requirements would result from the addition of national requirements in order to satisfy expectations of all Member States. More types to assess would also mean increased workload for Member States to conduct a first evaluation of dossiers submitted and then participate in the peer-review process organised by ECHA or EFSA. More explanations and assessment of the possible costs are available under Section 3 of Annex III.

As regards the costs of standardisation, the compliance of most existing products with regard to the safety and agronomic parameters of the future legislation could be controlled by means of existing EN Standards (conclusions of the stakeholders working groups established in 2012). For organic fertilisers, plant biostimulants and agronomic fertiliser additives, additional standardisation work is expected either to check the reliability of some existing test methods (in the case of organic fertilisers) or to develop new methods for the detection of active substances in plant biostimulants or agronomic fertiliser additives (see details in Annex III). The costs of mutual recognition would disappear.

Under optional harmonisation, products that have been registered under national laws would remain on the market without being obliged to comply with EU requirements. Less product types to assess at EU level would mean fewer registrations and standardisation costs for industry and Member States compared for full harmonisation (See Annex III Section 3.6). National fertilisers would be still subject to mutual recognition. However, it is assumed that, in the presence of harmonised legislation, the costs of mutual recognition would go down as producers interested in marketing their products across several Member States would more likely opt for getting EU approval.

(c)Market surveillance costs

Member States do not differentiate between EC and ‘national’ fertilisers during their market surveillance activities. Consequently, compared to option 1, the costs of market surveillance would not change under all variants of Option 2 (including the variants on full or optional harmonisation) as it is unlikely that activities of the Member State authorities would vary.

(d)Compliance costs

Compared to Option 1, full harmonisation of the safety, quality and labelling requirements would overall lead to a considerable reduction of the current compliance costs borne by industry 62 . Harmonisation would lead to a level playing field for all producers as they would no longer have to fulfil diverging legal requirements and criteria in different Member States. In 2012, Member State experts and industry representatives, as well as one NGO, agreed in the context of an expert group that limits on contaminants in fertilising products should be set for a range of contaminants already addressed by national fertiliser legislation. The contaminant contents should be set at a level that would both help Member States to meet their environmental targets and reduce as much as possible the risks of non compliance for existing products. The limits proposed in Annex VI meet these conditions.

Each variant of options 2 to 5 would, however, introduce mechanisms for the reduction of compliance cost over time. For example, the costs reduction potential for monitoring the content of contaminants in compost compared to the first reference year could be estimated at up to EUR 1 650 per company and per year. The conditions that would justify a reduction of the frequency of controls have been described in the JRC EoW report and would consider:

1.The nature of the input materials preventing the presence of contaminants (or at least at a low acceptable level): A priori excluding sewage sludge and municipal waste from the input materials might reduce the likelihood of high levels of contaminants;

2.The volume of production: smaller capacity installations shall not be submitted to the same frequency of analytical testing compared to larger installations;

3.The fact that the producer can prove that during the recognition year the level of contaminants in the end-products was well below the regulatory limits (at 95% confidence level).

See Annex IV, Section 4 for information about other mitigation measures.

As regards urea based nitrogen fertilisers, producers would be required to inform farmers about the potential release of ammonia via labelling information. It is not expected that this information would lead to important additional compliance costs for producers.

Uniform labelling requirements for quality parameters under options 2 to 5 would help farmers and other users to choose the most effective and cost-efficient fertilising product for their crops. However it has not been possible to estimate what would be the costs savings for farmers of the improved transparency of the market.

Under optional harmonisation, companies wishing to access the entire EU market would benefit from the harmonisation while others would be able to continue to market products that could satisfy local demand. Optional harmonisation would have less disruptive effects on trade of existing products and therefore less compliance costs would be expected overall.

(e)Summary of costs assessment under criterion 3

For the full harmonisation, the total costs for authorities would be approximately EUR 21.5 million per year, i.e. which represents an increase by EUR 4.5 million per year compared to the baseline. See Table 1in Section 7.

The significant costs for managing national legislation and requests for mutual recognition of products would disappear. This would mean overall a considerable reduction in annual total compliance costs for businesses which would be reduced to approximately EUR 3-6 million, compared to EUR 26 million under the baseline, i.e. saving of about 75-90% of current costs.

Option 2 would lead to total costs for businesses and administration of EUR 25-28 million per year compared to approximately EUR 43 million under the baseline, i.e. a saving of roughly one third of current costs. More details are available under Section 3 of Annex III.

Option 2 would positively contribute to the reduction of administrative costs resulting from the diverging regulatory framework among the Member States. However the burden of listing all available fertilising product types in an annex would be considerable in particular for SMEs as explained below and would lead to an overly long transitional period.

In case of optional harmonisation, it was assumed that approximately 20% of the current fertilising products would remain on national markets (result of the SMEs consultation in Annex IV).

The total costs for authorities would be approximately EUR 20 million per year, i.e. which represents a cost reduction of about 1.5 million per year compared to the full harmonisation option (See Table 1). The costs associated with keeping national rules would be compensated by the reduction of costs related to the assessment of applications for the registration of all existing fertilising products in the Annex(es) of a future EU regulation and the costs related to the involvement of Member States in the CEN standardisation activities.

Optional harmonisation would also mean a reduction in annual total compliance costs for businesses which would be reduced to approximately EUR 0.5-1 million, compared to the full harmonisation option. This cost reduction accounts for the possibility to keep 20% of the existing products on national markets but does not address future requests for registration of products under national rules.

Option 2 would lead to total costs for businesses and administration of EUR 23-25 million per year compared to approximately EUR 25-28 million under the full harmonisation, i.e. a saving of roughly 10%. More details are available under Section 3 of Annex III.

6.3.1.3.Impact on competitiveness, innovation and international trade

All options in this IA would apply to products being put on the EU market, regardless whether they were manufactured in the EU or abroad.

Criterion 4: does the policy option support innovation by facilitating the access to the market and by minimising the time to market new products? Could the option lead to significant trade impact? Is the option compatible with WTO obligations? (Qualitative)

Under Option 2 and full harmonisation, producers and importers would face significant delays to get all types that they want to keep on the market included in the annex(es) to a new regulation. This would lead to market disruption for several products currently present on national markets as producers would have to get their products listed in the annex(es) to the Regulation in order to stay on the market. These efforts could also reduce their capacity to innovate at least in the short-term, as their efforts would concentrate on the authorisation of products already on the market. A similar reaction from industry has been observed under the Plant Protection Products 63 and Biocidal Products 64 Regulation where the resources needed to keep existing substances on the market via the respective review programmes took up resources which could otherwise have been spent on the development of more sustainable substances.

The lengthy procedure for the inclusion of fertiliser types in the Annex(es) of a future regulation could negatively discriminate against small inorganic fertiliser producers operating on the local market, but also against the organic fertilisers and soil improver producers. In particular the costs of registration of types for compost and digestate as organic or soil improvers could be considerable, as the nutrient composition of such products is quite variable compared to inorganic fertiliser and depends on many parameters (such as the animal species, feed…). A change in the composition of a fertilising product type would trigger the need to revise the wording of the current type if the new product can no longer satisfy the existing requirements. Consequently, for certain products currently marketed under national legislation, companies would not be willing to apply for type listing in a future regulation, leading ultimately to reduced product choice for the users.

Furthermore, as the listing of types would not be linked to the specific companies having submitted an application dossier, those having borne the costs for compiling a dossier would later have to compete with other companies placing products on the market that fit within a listed type description without having themselves submitted a dossier (free riding), which could discourage innovation.

The lengthy procedure for the evaluation of applications for listing a new type could considerably slow down the innovation cycle of the industry, as noticed in recent requests introduced by companies under the current Fertilisers Regulation. Consequently, industry would be more reluctant to innovate as they would not be able to quickly obtain the required return on investment.

In addition, stringent limits on contaminants might disqualify certain raw materials that are currently used in the production of inorganic fertilisers, i.e. certain phosphate rocks or phosphate fertilisers might no longer be eligible for the EU market. A summary of the impact assessment regarding cadmium 65 in inorganic fertilisers is available in Section 5 of Annex VI. The limit values for the other contaminants are not expected to lead to any significant effect on trade as they are the results of in-depth consultations with Member States and are deemed to represent current best available practices.

Relative to the baseline, Option 2 would lead to transitional costs for manufacturers to get their products listed in the annexes of a future regulation. In particular small producers would have difficulties to prepare applications and get their product types included in an EU regulation in the short term. This would lead to a reduction of the availability of products if the transition to the new system is too short and therefore higher prices with negative consequences for the competitiveness of European farmers and less innovation in particular from small companies.

On the other hand, in the longer term harmonisation of the requirements for all products will facilitate trade (as no producer would face the uncertainties and costs related to mutual recognition and diverging national rules) and increase competition among producers in all Member States. In particular, trade in product categories that are not yet harmonised might increase considerably, e.g. compost producers exporting compost would no longer need to take part in different quality assurance schemes 66 . This would lead to increased recycling of nutrients from waste and hence lower demand for 'new nutrients' from chemical sources, thus putting downward pressure on inorganic fertiliser prices and allowing for mixing ‘new’ sources of nutrients with inorganic phosphate fertilisers, which can serve as an alternative or a complement to decadmiation technologies for the purpose of reducing the cadmium content in such products.

Additionally, depending on the Member States or regions, the use of compost is regulated either by product, soil protection or waste legislation. Setting clear product criteria at EU level, which would qualify compost as product rather than waste, may avoid uncertainty with regard to investment decisions. The suppression of compliance costs due to waste legislation (Articles 12, 13 and 35 of the Waste Framework Directive) for the use 67 of compost and digestate would also be a factor to increase the farmer’s demand for compost and digestate, leading to prices better reflecting their usefulness over the long term. In addition, small producers might be able to develop new products that fit into the type descriptions listed in annex(es) to a future Regulation, without themselves having to go through the costly listing process. The initially negative consequences for small producers described above could be further mitigated by sufficiently long transition periods, that would allow small producers to continue marketing their established products while they adapt product characteristics to new types being included in the annex(es) of a regulation.

Therefore, the initial drawbacks of Option 2 will turn into advantages in the long term, with more products of more diversified nature being traded throughout more Member States than today. This would lead to increased competition and pressure to innovate for producers, resulting in lower prices and wider choices of products which would increase competitiveness of the producers and of European farmers.

Optional harmonisation would have less negative impacts on the competitiveness and innovation of companies as less disruptive effects on trade can be expected compared to full harmonisation. National markets can also be considered by small producers as a place for testing new products before being introduced at EU level thereby allowing companies to progressively invest in more important installations.

6.3.2.Social impacts

Criterion 5: can the option effectively contribute to the reduction of contaminant inputs to agricultural soil at EU level and hence decrease contaminant exposure of human beings via the food chain and drinking water?

Full harmonisation under option 2 promotes harmonised limit values for contaminants in all fertilising products, and would thus lead to a reduction of the input of contaminants to agricultural soil, and ultimately to lower contaminant levels in food, with expected benefits for human health protection.

However, as explained in more detail in Annex VI, it is not possible with the current scientific knowledge, to derive risk-based limit values for contaminants in fertilising products that would ensure that the exposure of the general population via the food chain remains under a safe limit value.

In order to reduce dietary exposure of the population via the food chain, the largest beneficial effect is achieved by reducing the contribution of staple food (i.e. cereals, potatoes, vegetables), meaning by lowering the existing maximum levels for heavy metals in such commodities, which is directly influenced by the presence of such contaminants in agricultural inputs.

As these crops are largely consumed, a mere decrease of 10% of the tolerable limit for cadmium in staple food would help to reduce significantly the exposure of the population to cadmium. However, in 2011, a blocking minority of Member States opposed such reduction on the grounds that such a decrease would have excluded a large part of the annual production of cereals in some regions which would have led to important economic losses for farmers. Similar situations exist for lead.

In view of achieving the necessary reduction of consumer dietary exposure, legislation leading to a reduction of the heavy metals in fertilising products is therefore an effective step to achieve this goal.

In accordance with Article 114 TFEU, Member States enforcing tighter limit values than the values proposed in a future revised Fertilisers Regulation would be allowed to submit requests for maintaining them based on scientific justification. Given the potential health and environmental benefits, further harmonisation as recommended under Option 2 would promote market integration better than mutual recognition could.

Under variants 2B and 2C, ECHA or EFSA would assess the risks of new products types and the safety of products should therefore increase under these variants even though the time required to achieve these assessments for all product types would delay the expected safety improvements.

Farmers and other users would be more confident in products that are placed on the market, in particular those of waste origin, if harmonised limits for contaminants were put in place. Increased competition among a wider range of products will lead to lower prices in the long run and more possibilities to choose the most adequate product for a given user's need.

Compared to full harmonisation, optional harmonisation would not fully achieve the objective of increasing the safety of fertilising products in particular if national legislation imposes less stringent limit values for contaminants than a future revised Fertilisers Regulation (See Table 66 in Annex XI as example of divergence between the proposed EU limits and the existing national limits)

Criterion 6: can the option lead to the creation of jobs and economic growth?

Under the full harmonisation option, employment in the fertilising product sector might initially be negatively affected – in particular if small, locally operating producers do not manage to put dossiers together to list types in the annexes of a future regulation which correspond to their commercial products. However, over time they might adapt their production strategies to place on the market products that would fall under an existing type listing obtained by other (bigger) producers, which would then boost employment, as the free movement of fertilising products offers additional growth possibilities for small producers, thus boosting employment in the sector. Lastly, the need to prepare and evaluate a high number of dossiers for type listing could create some limited employment opportunities in companies applying for registration of new products as well as in the Member States authorities (for evaluating dossiers), and in the Commission or ECHA/EFSA, respectively.

If effective, optional harmonisation would allow a smoother transition to the new system than the full harmonisation option. As discussed above, compliance costs would be minimized and disruptive effects on innovation and production are less likely to occur under optional harmonisation hence leading to more opportunities for local development and job creation.

6.3.3.Environmental impacts

Criterion 7: can the option foster significantly the recycling of nutrients and contribute to the circular economy?

Option 2 would help to reach a more resource-efficient economy through the promotion of nutrient recycling from waste materials. A shift towards fertilising products production from domestic secondary raw materials would also reduce CO2 emissions, hence contributing to the objective of the low carbon economy (See Annex VIII Section 3.1). Some Member States are already actively involved in the development of this sector, but due the current diverging national rules, such products are often locked into national markets.

Improved recycling of phosphorus would also reduce the reliance on imports of inorganic phosphate fertilisers. Today 92% of the EU consumption in phosphate originates from non-EU countries (Morocco, Russia, Tunisia). Plant nutrients contained in compost and/or digestate as well as in other secondary raw materials sourced from biomass can to some extent substitute inorganic fertilisers. In Germany, the substitution potential for phosphate is estimated at 28 000 tonnes 68 which corresponds to 10% of the phosphate imported as inorganic fertilisers. Currently only 4% of the nitrogen fertiliser placed on the market is deriving from domestic secondary raw materials. This amounts up to around 10% for phosphate and potash. In the mid term, the volume of recyclable nutrients could increase up to 7% for nitrogen and to around 30% for phosphate and potash (based on current data on available biomass excluding raw manure – COM estimation 69 )

Although environment and health risks are associated with the production and use of compost and digestate 70 , overall those industrial processes have environmental advantages over landfilling or incineration. The identified risks of production and use of compost are covered by the recommendations of the EoW JRC report on biodegradable waste. If compliance with those EoW criteria were required in a revised Fertilisers Regulation, only safe fertilising products derived from waste-streams would be placed on the market, which would increase consumer confidence and support the objective of nutrient recycling.

Optional harmonisation would not affect the objective of the circular economy. On the contrary, the existence of national markets could be seen as an opportunity for newcomers in the fertilising product market to test new nutrient recovery technologies at smaller scale.

Criterion 8: can the options effectively contribute to the reduction of contaminant inputs to agricultural soil and hence improve soil function at EU level?

Full harmonisation under option 2 would bring environmental benefits through a reduction of contaminant inputs into the environment. It would contribute positively to achieving the objectives of the Water Framework Directive and the EU legislation on contaminants in food.

The need for limit values on contaminants has to be considered in a wider context. If very stringent limit values are adopted, a great deal of compost and digestate that could be applied to the soil to improve its organic matter content would not reach the product status and would have to be discarded as waste in landfills or incinerators with the related environmental consequences. Therefore a trade-off has to be sought between long term protection of soils and the limit values that can be reasonably achieved by the sector.

As mentioned in section 1.3 and 6.3.1.3, the COM services consulted a broad range of experts in order to prepare this report. A Technical Working Group was responsible for the determination of appropriate contaminant limits in fertilising products with the objectives of helping Member States to meet their environmental targets. The sustainability of the EU industry was also ensured by taking into account the availability of existing mining resources and constraints with regard to trade obligations and external relations (See the IAR on cadmium). The findings of the draft JRC technical report 71 for EU End of Waste (EU EoW) criteria on biodegradable waste subject to biological treatment were also considered in the setting of agreed limits for contaminants in organic fertilisers and soil improvers.

All stakeholders have however called on the Commission to establish a mechanism in the legislative proposal under which the list and the maximum limit values could be revisited based on new scientific evidence or modifications to the list of priority substances in relevant EU environmental legislations. All stakeholders also agreed that risk-based limits are preferable in the longer term and encouraged the Commission to support an EU research programme for that purpose.

Optional harmonisation would not fully achieve this objective in particular if Member States enforce less stringent limit values for contaminants than a future EU Regulation.

Criterion 9: will the options ensure that farmers are correctly informed about the potential release of ammonia from different inorganic fertilisers in order to choose the optimal type of fertiliser and/or implement remediation measures?

Full harmonisation under option 2 could also contribute to improved air quality by providing the necessary information to farmers about the potential release of ammonia from the fertilisers they use so that they can take appropriate remediation measures. (see Annex VI for more details).

Compared to full harmonisation, optional harmonisation would only help to inform farmers of the potential release of ammonia from urea-based CE-marked fertilisers, while it would remain up to the Member States to decide whether similar requirements are included in national legislation on fertilisers.

6.3.4.Stakeholders’ opinion

From the various consultations it emerges that some Member States could support either Options 2 or 3. They argue that listing of types or ingredients is an efficient way to ensure the safety of products, in particular for those derived from waste. All those Member States are well aware, that these options could be costly for them and would be time-consuming for reviewing and listing the product types or ingredients not yet harmonised. One Member State proposed a generic type designation similar to the registry of feed raw materials. This registry could be maintained by industry, which would allow flexibility and easy access to the market. This option was, however, not supported by other Member States supporting options 2 and 3, who want to continue to be informed about the origin of the products placed on the market via prescriptive measures.

Other Member States noticed that broad types or ingredients have no benefit in terms of market surveillance, and the level of safety would not be improved compared to essential safety requirements to be fulfilled by commercial products.

From the industry point of view, supported by the SMEs survey (see Annex IV), it appears that a majority of companies would favour a more flexible approach as regard the marketing of fertilising products. However, some national inorganic fertiliser federations expressed their interest in maintaining the lists of authorised types at least for inorganic fertilisers currently covered by the Fertilisers Regulation. However they may not have fully considered the fact that these EC types are not covering national fertilising product types which would require a specific review and adaptation before they can be maintained on the market.

Optional harmonisation would satisfy part of the SMEs active in the sector and that are concerned by the introduction of EU rules on fertilising products while they are perfectly satisfied to serve only their local market.

6.4.Option 3: creation of an internal market for fertilising products by listing authorised ingredients

6.4.1.Economic impacts

6.4.1.1.Impact on the functioning of the EU fertilising product market and potential for simplification

Criterion 1: contribution to the creation of a level playing field for products?

If full harmonisation is envisaged, option 3 would clearly improve the functioning of the internal market for all fertilising products but the significant delay to get all the existing ingredients listed in the Annexe(es) of a future Regulation would be a serious limitation. Long transitional period would be required to ensure that all existing ingredients can be listed in the Annex(es) of a future revised regulation. There would be no national rules anymore and the uncertainty concerning the procedures of mutual recognition would disappear.

In a optional harmonisation scenario, option 3 would improve the functioning of the internal market for a broad range of fertilising products. Companies interested in the internal market would have a quicker access to it. Other manufactures would be allowed to keep their product on national markets without trade disruption. The uncertainty concerning the procedures of mutual recognition would not completely disappear as some products would remain on national markets. However, compared to option 1, requests for mutual recognition would considerably decrease as producers wishing to market their product across the EU would opt for the EU Regulation.

Criterion 2: does the policy option lead to administrative simplification?

In the full harmonisation option, the listing of authorised ingredients in the annexes of a future proposal would still require constant adaptation to technical progress, albeit less frequently than the updating of product types under Option 2. Once an ingredient is included in the list, it could be used in combinations with other authorised ingredients to produce fertilising products that would meet user needs. The regulatory framework would thus be simplified compared to Option 2 and the marketing of new formulations would be facilitated but only in the longer term.

Under optional harmonisation, Member States would maintain national rules for ingredients not receiving a broad support for intra EU trade (e.g. processed manure placed on the market under national rules). Compared to the full harmonisation, the availability of national rules would avoid the risks of market disruption and would therefore lead to administrative simplification for small producers active on local markets in the short term. For public administration, optional harmonisation would be less conducive to simplification as national rules would have to be maintained.

6.4.1.2.Administrative costs

As for Option 2, several variants have been analysed to describe the roles of public administration and different EU scientific agencies in the implementation of Option 3.

Variant 3A: only Member States administrations and the Commission review applications for listing types in the annexes of the revised Fertilisers Regulation.

Variant 3B: the peer-review process for applications will be managed by the European Chemicals Agency (ECHA). An opinion will have to be delivered for each new entry proposed.

Variant 3C: the peer-review process for applications will be managed by the European Food Safety Authority (EFSA). An opinion will have to be delivered for each new entry proposed.

Criterion 3: contribution to the minimisation of administrative and compliance costs

(a)Costs related to the governance of EU and national legislation

Under full harmonisation and for all variants of option 3, a certain level of simplification would occur as the same ingredients could be mixed to produce several product types which would normally require separate listing under Option 2. This means less staff required in the Commission and its agencies and fewer meetings of the Fertilisers Committee to review the candidate ingredients for inclusion in the annex(es) of the regulation. Section 3 of Annex III explains in detail how this would work for the different variants of the option.

Under the optional harmonisation scenario and similarly to option 2, the costs of management of national legislation would be maintained at 20% of the costs described under option 1.The costs of intervention of EU agencies would decrease by 20%.

(b)Costs related to the placing on the market of new ingredients and mutual recognition

As regards the costs relating to the placing of products containing ingredients not yet harmonised on the market, the reasoning developed under Option 2 would remain valid although fewer requests for inclusion would be expected. Under Option 3 only allowed ingredients would be listed (see Section 3 of Annex III for more explanations about the calculation).

The costs of standardisation would be similar to option 2. Costs for managing national legislation and requests for mutual recognition of products and their related costs would disappear. This consequently would lead to significant cost reductions for businesses. Annual compliance costs for businesses under Option 3 are estimated at EUR 1-2 million per annum compared to EUR 26 million per annum under the baseline. This is a saving of more than 90% of current compliance costs (see Annex III for more details).

Under optional harmonisation, less product types to assess at EU level would mean fewer registrations and standardisation costs for industry and Member States in particular for the ingredients already present on local markets. Costs of mutual recognition would remain void as it was assumed that in the presence of harmonised rules, products complying with national requirements would remain on national markets.

(c)Market surveillance costs

For both the optional and full harmonisation scenarios, it is assumed that the costs of market surveillance would not change under Option 3 compared to Option 1, as most Member States explained that they would not change their level of enforcement activities.

(d)Compliance costs

For Option 3, the same considerations as described under Option 2 would apply. The mitigation measures described under Option 2 regarding information obligations would also apply.

Under optional harmonisation, only companies wishing to access the entire EU market will benefit the reduction of compliance costs from the harmonisation while others may be satisfied with national markets. Optional harmonisation would have less disruptive effects on trade of existing ingredients and therefore, compared to the full harmonisation option, less compliance costs would be expected.

(e)Summary of cost assessment under criterion 3

Under full harmonisation, the total costs for administration would be considerably reduced to approximately EUR 13 million per year (i.e. a saving of more than EUR 4 million per annum compared to the baseline).

Option 3 would lead to total costs for businesses and administrations of EUR 15-16 million per year compared to approximately EUR 43 million under the baseline, i.e. a saving of more than half of current costs (see Annex III for more details and Section 7).

If optional harmonisation applies under option 3, the total costs for administration would slightly increase (i.e. around EUR 0.5 million) compared to the full harmonisation option. This means that the costs of keeping national legislation would not be compensated by the cost reduction of less involvement of Member States in the evaluation of application for the registration of new ingredients and the development of standards at EU level.

Optional harmonisation would slightly reduce the compliance costs for businesses (i.e. around EUR 0.2 to 0.3 million) in the short term as it was assumed that 20% of the existing products already registered at national level would remain covered by national rules.

Option 3 and optional harmonisation would lead to total costs for businesses and administrations of EUR 15-15.5 million per year compared to approximately EUR 15-16 million under full harmonisation, which is considered as insignificant change (see Annex III for more details and Section 7).

6.4.1.3.Impact on competitiveness, innovation and international trade

Criterion 4: does the policy option support innovation by facilitating the access to the market and by minimising the time to market new products? Could the option lead to significant trade impact? Is the option compatible with WTO obligations? (Qualitative)

Under Option 3 and full harmonisation, producers and importers would face significant delays to get all necessary ingredients included in annex(es) to a regulation, which could initially reduce their capacity to innovate. However, compared to Option 2 these delays would overall be shorter, as fewer ingredients would have to be listed compared to types, and a list of authorised ingredients would later help companies to manufacture tailor-made products that would best suit the needs of local agricultural production, without the need to request another listing in an annex to a regulation. This acceleration of the procedure would be beneficial for profitability and innovation in the longer term.

Any delay in the listing of these ingredients will constitute a loss in profit for both the producer of the ingredient and the producer of the fertilising products using it. This profit will vary and be dependent on the potential use of this particular ingredient but would initially be more detrimental for SMEs than for big companies as it is assumed that SMEs would have less time and resources to prepare registration dossiers. However, later on, SMEs would benefit from the listing of ingredients submitted by bigger companies unless the listed ingredients are protected through patents or trade secrets 72 .

Analysis of impacts on international trade of inorganic fertilisers is similar to Option 2 as option 3 would specify the same maximum limit values for contaminants.

As less disruptive effects on trade would occur under optional harmonisation, less negative impacts on competitiveness and innovation would be expected in the short term. National market could be considered by small producers or newcomers as a place to test new ingredients before envisaging an EU-wide marketing thereby allowing companies to progressively invest in new production facilities.

6.4.2.Social impacts

Criterion 5: can the option effectively contribute to the reduction of contaminant inputs to agricultural soil at EU level and hence decrease contaminant exposure of human beings via the food chain and drinking water?

Under the full harmonisation scenario, the same positive impacts on human health could be expected as for Option 2. 

Under variants 3B and 3C, ECHA or EFSA would assess the risks of new ingredients. The safety of products should therefore increase under these variants even though the time required to achieve these assessments for all product types would delay the expected safety improvements.

Compared to full harmonisation, optional harmonisation would not fully achieve the objective of reducing the exposure of the general population to contaminants from fertilising products in particular if national legislation imposes less stringent limit values for contaminants than those at EU level.

Criterion 6: can the option lead to the creation of jobs and economic growth?

The same considerations as for Option 2 apply to expected impacts on employment. Optional harmonisation would have no disruptive effects compared to full harmonisation and therefore, no negative impacts on employment would be expected. Less demand for inclusion of ingredients in the Annex(es) a future regulation would also mean a quicker access to the EU market for producers of fertilising products sourced from domestic secondary raw materials who have genuine interest to access the entire EU market.

6.4.3.Environmental impacts

Criterion 7: can the option foster significantly the recycling of nutrients and contribute to the circular economy?

Criterion 8: can the options effectively contribute to the reduction of contaminant inputs to agricultural soil and hence improve soil function at EU level?

Criterion 9: will the options ensure that farmers are correctly informed about the potential release of ammonia from different inorganic fertilisers in order to choose the optimal type of fertiliser and/or implement remediation measures?

The environmental impacts of the harmonisation via listing of ingredients would be similar to those described under Option 2.

Stakeholders’ opinion

As under Option 2, a few Member States are supportive of this approach. They remain concerned by the fact that, without a positive list of authorised ingredients (or types under Option 2), dangerous chemical contaminants could be incorporated into fertilising products through dilution. Other Member States have however expressed concerns about the time needed to list authorised ingredients, especially if each ingredient has to be defined with a significant level of relevant details to allow its clear identification and a common Union-wide understanding.

Some parts of the industry (mainly inorganic fertiliser producers) remain attached to current national regulatory systems, which are often based on a list of ingredients or types, whereas a majority of SMEs active in the recycling of domestic sources of nutrients seek a flexible regulatory framework for the placing on the market of fertilising products, in line with the agricultural needs in various regions of Europe.

6.5.Option 4: creation of an internal market for fertilising products by using the New Legislative Framework

6.5.1.Economic impacts

6.5.1.1.Impact on the functioning of the EU market and potential for simplification

Criterion 1: contribution to the creation of a level playing field for products?

Both under the full or optional harmonisation option, option 4 would clearly improve the functioning of the internal market for all fertilising products by imposing generic legal requirements and not prescriptive information to reach the market. A shorter transitional period could be granted.

Under full harmonisation, national rules would no longer exist and the uncertainty concerning the procedures of mutual recognition would disappear.

Criterion 2: do the policy options lead to administrative simplification?

Full harmonisation under option 4 would be feasible and would constitute a significant simplification by allowing producers to demonstrate that their products comply with safety and quality criteria (e.g. the legal requirements) without being obliged to go through the process of listing new types/ingredients in annexes to a new regulation.

Under Option 4 producers would also be allowed to market a given material under different product categories without having to request the inclusion of this material into various type or ingredient lists. For example, compost could be used in the manufacture of organic fertiliser, soil improver or growing media provided that the end product fulfils the quality and safety requirements for these respective categories.

Compared to options 2 and 3, the Commission and the Member States would not need to meet frequently to discuss and adopt opinions on ECHA or EFSA assessments regarding the requests for the registration of new types or ingredients.

Under optional harmonisation, the maintenance of national rules would help small companies to continue to market products corresponding to local needs. Optional harmonisation would therefore lead to less administrative burden for industry whereas public administration would have to continue to manage both EU and national legislation.

6.5.1.2.Administrative costs

Criterion 3: contribution to the minimisation of administrative and compliance costs;

(a)Costs related to the governance of EU and national legislation

Under Option 4 and full harmonisation, there would be no more need for listing types or ingredients for fertilising products in annex(es) to a regulation, which would greatly reduce the need for meetings of competent authorities to agree on the peer-review of applications and to consider adaptations to technical progress of the annex(es) as proposed under Options 2 or 3.

As for options 2 and 3, optional harmonisation would not help to reduce the costs of management of the EU Regulation and organisation of meetings. Costs of maintaining national rules would be reintroduced at the level of 20% of the costs foreseen under option 1.

(b)Costs related to the placing on the market of new products and mutual recognition

For the full harmonisation, the costs for the preparation and assessment of new applications for listing types or ingredients in annex(es) to a future regulation would be replaced by the costs of product conformity assessment performed by companies themselves or by ‘notified bodies’ designated by Member States prior to the placing on the market 73 of products. The costs for industry to get their products certified and be allowed to affix the CE marking will strongly depend on the choice of the required conformity assessment module.

This would range from:

Self-certification – Variant 4A – to various levels of third party certification:

Verification by third party certification that the products comply with the essential safety criteria – Variant 4B;

Verification by third party certification that the products comply with the essential safety criteria plus regular tests on specific aspects (e.g. contaminant content) – Variant 4C;

Verification by third party certification that the products comply with the essential safety criteria plus product checks conducted at random intervals – Variant 4 D.

A clarification of the procedures related to each module is given in Section 3 of Annex III which contains detailed information on the approach followed to assess their respective costs.

In order to facilitate the comparison with other options, one-off costs (fees to be paid for compliance check of all products under variants 4B, 4C and 4D) and recurrent costs (costs for additional tests under variants 4C and 4D) have been distributed over the whole commercial life of products which, according to industry, has been assumed to be 20 years.

Compared to Options 2 or 3, the costs for standardisation under Option 4 would increase as new harmonised EN standards would be required to facilitate examination of commercialised products and to turn existing EN Standards into harmonised EN standards 74 . Compared to Option 2, an additional annual budget for standardisation of EUR 200 000 during 20 years was assumed to be necessary to support the development of these new standards.

Costs for managing requests for mutual recognition of products would disappear.

Under optional harmonisation, less product types to be assessed by notified bodies at EU level would mean fewer costs of product conformity assessment and standardisation for industry. The costs of mutual recognition would remain void as, in the presence of harmonised rules, this regulatory approach would not be used to market fertilising products in other Member States.

(c)Market surveillance costs

It is assumed that the costs of market surveillance would be slightly reduced 75 under variants 4B to 4D as products would have to be controlled by notified bodies before they are first placed on the market. This means that for Option 4A no change is expected, whilst for the other options, competent authorities could decide to reduce their market surveillance activities. For example, a 10% reduction is foreseen compared to Option 1 for variant 4B. For variants 4C and 4D a further decrease of 10% and 20% compared to option 1 is assumed as supervised controls would be performed by third parties at regular intervals under these options.

(d)Compliance costs

The overall cumulative impact on compliance costs for the industry is expected to be chiefly driven by the costs of quality assurance and regular testing under variant 4C or 4D. Examples of such cost are provided in Table 44 of Annex III and Table 56 of Anne IV respectively and would range between EUR 6 and 0.12/ ton of product 76 . These costs would create additional costs for SMEs. For example, annex IV Section 4.1 shows that these costs might not be very significant in relative terms for large scale compost and digestate production (lowest end of the cost range mentioned before), but may represent more than 15 % of total costs in the case of very small-scale production plants (top end of the costs range mentioned above).

These costs may be compensated, at least partly, by increased revenues through higher prices in fertilising products sourced from domestic materials if users accept that there is a sufficiently high benefit to them in terms of avoided compliance costs (which otherwise occur when for example compost is considered as waste) and better and more reliable product quality.

Optional harmonisation would have less disruptive effects on trade of existing products and therefore less compliance costs would generally be expected for the benefits of small companies mainly active on local markets. For example, under optional harmonisation, compost or digestate falling in the scope of the EU EoW criteria but not meeting all its provisions would be allowed to stay on the market under national rules.

(e)Summary of cost assessment under criterion 3

In the full harmonisation scenario, total costs for administration would be reduced to EUR 8-11 million per year, which is a cost saving of EUR 6-9 million p.a. compared to the baseline. The annual compliance costs for companies vary from EUR 0.6 million (if self-certification of all products is possible) up to EUR 54-310 million per year (if certification is required for all products placed on the market). Product certification for each fertilising product would thus lead to significantly higher compliance costs than the baseline (see Table 1 in Section 7 and Section 3 of Annex III for more details).

From the above, it can be concluded that Option 4A has the highest potential to lead to significant administrative costs reduction. Under variants 4B, 4C or 4D, certification by third parties could be very burdensome for individual companies currently benefitting from a type approval or operating in a country without any authorisation or registration scheme

Under optional harmonisation, total costs for administration would slightly increase by around EUR 0.5 million compared to full harmonisation which is insignificant. The annual compliance costs for companies would decrease by 20% compared to the full harmonisation option. Optional harmonisation would have the advantage of leaving operators a maximum of flexibility to put new products on the market.

6.5.1.3.Impacts on competitiveness, innovation and international trade

Criterion 4: do the policy options support innovation by facilitating the access to the market and by minimising the time to market new products? Could the option lead to significant trade impact? Is the option compatible with WTO obligations? (Qualitative)

Under Option 4 and full harmonisation, delays related to the listing of types or ingredients in annex(es) to the regulation would disappear, but the administrative burden would significantly increase for manufacturers if every single product were to be certified by a notified body. In comparison, variant 4A would be less burdensome for industry than variants 4B, 4C and 4D. However, the figures have to be considered with care, as they are biased by the huge number of commercial growing media present on the market, which significantly affects the costs for industry. Variants 4B, 4C or 4D could however be made mandatory for products potentially presenting increased level of risks, e.g. those derived from waste streams.

The flexibility for marketing products introduced by the NLF under variant 4A would greatly benefit industry, as the 'time to market' would be much shorter. The profitability of producers would increase, allowing more investments in innovation and an increase in competitiveness. Farmers and end-users would benefit more rapidly than under Options 2 or 3 from a larger choice of products at competitive prices.

However, self-certification is not considered sufficient to guarantee the safety of products derived from waste. As a matter of fact, compliance with the criteria suggested in the JRC EoW report would require third party certification at regular interval (equivalent to variant 4C) in order to ensure the safety of products.

The broader offer of products from the reuse of organic materials could help EU farmers to slightly decrease their reliance on inorganic fertilisers. According to Rosemarin et al. 77 , more than 35% of the phosphate fertiliser imports could theoretically be replaced by recycled phosphate from EU urban waste water treatment only. Today, this volume ends up in landfills, cement, ashes of power plants and waste incinerators.

Overall, if certification were needed at each product level, compliance costs would considerably increase compared to the baseline, harming the competitiveness of businesses and farmers.

The analysis of impacts on international trade of inorganic fertilisers is similar to Option 2, as option 4 would specify the same maximum limit values for contaminants.

Under optional harmonisation, existing fertilising products sourced from domestic raw materials would be allowed to stay on national markets. Optional harmonisation would again have less disruptive effects on trade than full harmonisation.

6.5.2.Social impacts

Criterion 5: can the options effectively contribute to the reduction of contaminant inputs to agricultural soil at EU level and hence decrease contaminant exposure of human beings via the food chain and drinking water?

As harmonised limit values for contaminants would apply for all products, variants 4A to 4C would effectively achieve this objective. Variant 4D would foresee regular controls of products and would therefore ensure an even higher degree of safety of products compared to options 4A to 4C.

Optional harmonisation would not be fully effective in reducing the exposure of the general population to contaminants in fertilising products. This could only be achieved if Member States adopt the limit values laid down in a revised Fertilisers Regulation.

Criterion 6: can the option lead to the creation of jobs and economic growth?

Under variant 4A and full harmonisation, the removal of unnecessary regulatory obstacles would benefit industry's competitiveness and innovation capacity. Companies would be able to speed up the return on their investments for new products as the time to market new products would disappear for all variants of option 4. The flexibility of the regulatory framework could also facilitate access to the market for SMEs, in particular for new products such as plant biostimulants, and hence increase growth and job creation.

The transition to the NLF could lead to some job creation in notified bodies where third party certification is required.

A optional harmonisation approach would benefit small operators who could avoid the costs of third party certification if the marketing conditions for their products are more favourable in their country.

6.5.3.Environmental impacts

Criterion 7: can the option foster significantly the recycling of nutrients and contribute to the circular economy?

Criterion 8: can the options effectively contribute to the reduction of contaminant inputs to agricultural soil and hence improve soil function at EU level?

Criterion 9: will the options ensure that farmers are correctly informed about the potential release of ammonia from different inorganic fertilisers in order to choose the optimal type of fertiliser and/or implement remediation measures?

The application of EU EoW criteria for input materials would offer some benefits in terms of inorganic fertiliser substitution (e.g. making the EU less dependent on imported resources), improved carbon balance and soil improvement. These benefits are not easily quantifiable, and only a few MSs have tried to assess them. For example in the UK it has been estimated that around EUR 10 million have been saved by adopting a quality assurance scheme similar to the JRC EoW over a period of 10 years (Source: the JRC EoW report).

Many organic fertilisers and organic soil improvers derive from bio-wastes. As opposed to mined fertilisers, the nature of potential contaminants in products sourced from waste cannot be easily predicted, which creates problems of market acceptance. It is therefore necessary to lay down essential legal requirements not only for the composition (including contaminants) of the end-product, but also – as a means of excluding potential contaminants – for the origin and treatment of the input-materials. For the purpose of establishing the necessary trust and confidence in such products, it is therefore also necessary to establish harmonised rules for processing and traceability, and to include third-party-certification in the conformity assessment procedure. Although the Commission can take inspiration of the JRC report on biodegradable waste subject to biodegradation of January 2014 to establish such criteria for compost and digestate, similar EU criteria should be developed in the future for other products deriving from waste. In the meantime national measures establishing end of waste criteria could continue to apply until similar EU conditions are defined in an annex of a future proposal.

Optional harmonisation would not fully meet the objectives of reducing soil inputs of contaminants from fertilising products and informing farmers about the potential emissions of ammonia from urea-based fertilisers if equivalent limit values or information are not included in national legislation – which is rarely the case today for contaminants limit values (See Table 67 in Annex XI).

6.5.4.Stakeholders’ opinion

Several concerns were expressed by seven Member States on the applicability of the New Approach legislative format to fertilising products. In this regard, the role of CEN in the development of standards was seen as a major issue, and a few Member States considered that CEN mainly defends the interests of industry and that the work of CEN would be biased on issues regarding the protection of human health and the environment. Furthermore, it was argued that SMEs could be disadvantaged as participation in standard development was a very time-intensive activity for small businesses.

However, it is noted that European standardisation is organised by and for the stakeholders concerned based on national representation, and is founded on the principles recognised by the World Trade Organisation (WTO) in the field of standardisation, namely coherence, transparency, openness, consensus, voluntary application, independence from special interests and efficiency. In accordance with the founding principles, it is important that all relevant interested parties, including public authorities and small and medium-sized enterprises (SMEs), are appropriately involved in the national and European standardisation process. National standardisation bodies and CEN encourage and facilitate the participation of stakeholders via the new Regulation (EC) No 1025/2012 on standardisation.

Moreover, three Member States and CEN expressed concerns about the availability of human resources for the development of harmonised standards regardless of the commitment of the Commission to support financially the development of any standardisation work necessary to verify the compliance of products. Several stakeholders also voiced concern that the development of such standards would take the same amount of time as listing ingredients or types in annex(es) to a regulation.

In response to this concern, it is noted that a lot of EN and international test methods applicable to products covered by the future legislation have already been developed on a voluntary basis by industry, but are unfortunately enforced by a few Member States only. The future standardisation work would mainly consist in transforming these available EN standards into harmonised EN standards, and in removing any conflicting national standards. Contractually CEN is required to develop harmonised standards within 36 months.

Harmonised EN standards are helpful for facilitating the process for demonstrating compliance, so the costs for developing them might be offset by faster and less costly certification procedures, such as in variant 4C. Issues regarding safety of products would be set out in essential safety requirements, and not in standards. Essential safety and quality requirements would be kept to a minimum in order to reduce as far as possible the costs for companies of purchasing new harmonised standards (around EUR 100/ standard).

6.6.Option 5: creation of an internal market for fertilising products by adopting different variants of options 4

6.6.1.Economic data

6.6.1.1.Impacts on the functioning of the EU market and potential for simplification

Criterion 1: contribution to the creation of a level playing field for products?

The conclusions under Option 4 would apply, i.e. clear improvement of the functioning of the market and simplification for the products categories following the self-certification procedure. Products subject to third party certification would be disadvantaged as compliance costs would be higher than under self-certification. Optional harmonisation would help to reduce such costs when similar but less costly procedures are already enforced at national level.

Criterion 2: do the policy options lead to administrative simplification?

The implementation of conformity assessment procedures proportionate to the safety profiles of products would simplify the regulatory framework. 

The development of legal requirements for plant biostimulants and agronomic fertiliser additives would be challenging but not impossible according to industry.

Developing harmonised standards to provide presumption of conformity with the legal requirements would take time even if most of technical methods are already available. In order to reduce as much as possible the transition to the new system, coordination groups among the Member States representatives would be mandated to issue guidance on how to interpret the legal requirements and demonstrate conformity.

6.6.1.2.Administrative costs

Criterion 3: contribution to the minimisation of administrative and compliance costs.

(a)Costs related to the governance of EU and national legislations

Under Option 5, all product categories would follow the NLF. This would mean less Commission staff time to manage the legislation, and less meetings of the Regulatory Committee. Agencies would not be consulted for peer-review.

(b)Costs related to the placing on the market of new products and mutual recognition

Different policy regimes would be combined to ensure that the products with the highest potential for adverse effects would be subject to the most stringent regulatory oversight. In the light of the assessment of the various options – and the higher number of ingredients or types of fertilising products, various variants of Option 4 would be selected. In fact, consultations with Member States have shown that systematic third party verification would be considered excessive and disproportionate and should, therefore, be limited to fertilising products with higher risk profiles, in particular materials containing ingredients deriving from waste recycling activities, which may therefore contain dangerous contaminants. 

While industry already developed voluntarily EN test methods for fertilising products, most of the Member States still use national or even regional analytical methods. Under its standardisation action grant commitment, the Commission could foresee a budget to ensure that existing validated EN test methods are turned into equivalent harmonised EN standards, which could be used to verify the compliance of products to the legal requirements of a future regulation. For plant biostimulants and agronomic additives, as no voluntarily EN test methods have been developed so far for such products, the development of harmonised standards would be required (See details in Section 3 of Annex III)

Costs for managing national legislations and requests for mutual recognition of products would disappear under the full harmonisation option.

The variant of optional harmonisation would have the advantage of affecting only economic operators with a genuine interest in getting access to the market in several Member States, in line with the principles of subsidiarity and better regulation.

(c)Costs for market surveillance

Similarly to Option 4, the costs of market surveillance would be slightly reduced by 10% compared to the baseline, as the most sensitive products in terms of variable composition would have be controlled by notified bodies before they are placed on the market.

(d)Compliance costs

Third party involvement in the assessment of conformity with the legal requirements would vary between fertilising product categories, and would be highest for waste and other secondary materials with potentially variable composition. Therefore the costs of third party certification would overall decrease compared to a full application of options 4C and 4D across the board.

According to the competitiveness proofing study, between 39% and 52% of the European compost and digestate producers already operate under an external certification scheme 78 . Nonetheless, under full harmonisation, the costs of third party certification could be significant, in particular where the existing national quality certification would have to be upgraded to comply with the new EU rules (mainly costs of complying with harmonised EN Standards).In such case, optional harmonisation would benefit economic operators who would be allowed to continue to market products responding to local market needs in accordance with national requirements.

Other compliance costs and their reduction potential would be equivalent to Options 2 to 4.

(e)Summary of costs assessment under criterion 3

This option would allow reducing costs for administrations considerably, namely to approximately EUR 10 million per year compared to EUR 17 million in the baseline, i.e. savings of more than EUR 7 million per year.

The costs for industry to place new products on the market tailored to their expected risks to the environment are estimated to be around EUR 9 million per year, which is a considerable reduction compared to the baseline (more than 65% savings) (see Section 3 of Annex III for details). 

Option 5 would improve the business environment by simplifying and harmonising the procedures for placing products on the market and reducing administrative burden and costs, while adapting the procedures and/or constraints to the level of risks or uncertainties from materials either due to potential safety concerns due their variable composition or proximity with plant protection products (e.g. plant biostimulants) or due to the origin of their components (e.g. waste-derived fertilising products).

Under optional harmonisation, total costs for administration would slightly increase by around EUR 0.5 million compared to full harmonisation which is insignificant. The annual compliance costs for companies would decrease by 20% compared to the full harmonisation option.

6.6.1.3.Impacts on competitiveness, innovation and international trade

Criterion 4: do the policy options support innovation by facilitating the access to the market and by minimising the time to market new products? Could the option lead to significant trade impact? Is the option compatible with WTO obligations? (Qualitative)

For all product categories falling under variant 4A (most of the inorganic fertilisers, liming materials and growing media), the same considerations apply as described in the analysis of Option 4A, i.e. competitiveness and innovation capacity of the producers of the materials concerned should improve in the short term, favouring the entry of new actors, wider choices and consequently lower prices, which in turn should be beneficial for the competitiveness of European farmers.

For organic fertilisers and soil improvers deriving from waste, third party certification (costs of quality assurance and regular testing) under variant 4C may create additional costs for SMEs as described in Section 7.5.1.2.d. Mitigations measures are proposed in Annex IV to reduce such compliance costs. For example the minimum frequency of controls should be 4 in the first year (one sample every season) unless the plant treats less than 3 000 tonnes of input material. In that case, one sample every 1 000 tonnes of input material rounded to the next integer would be required.

According to the JRC EoW report, where quality certified compost or digestate is used today under waste regulatory controls, future end-of-waste criteria are likely to lead to a net cost reduction. The cost reductions accrue in the use sector, and may possibly be transferred back to some extent, through the acceptance of increased compost and digestate prices, to compost and digestate producers, and through reduced gate fees to municipalities or other relevant waste generators.

Analysis of impacts on international trade of inorganic fertilisers is similar to Option 2, as option 5 will specify the same maximum limit values for contaminants.

As for options 2 to 4, optional harmonisation would have the advantage of keeping more technologically advanced products on the market in particular plant biostimulants and products deriving from waste that meet national EoW criteria.

6.6.2.Social impacts

Criterion 5: can the options effectively contribute to the reduction of contaminant inputs to agricultural soil at EU level and hence decrease contaminant exposure of human beings via the food chain and drinking water?

Criterion 6: can the option lead to the creation of jobs and economic growth?

The social impacts would be similar to those described under Option 4 for the product categories that would be regulated under the various variants of Option 4.

According to the Baltic Sea Action Group, provided that all nitrogen (N) and phosphorus (P) contained in biomass and waste streams are recycled into valuable fertilising products, the annual economic value 79 of P would be 4.2 billion EUR and that of N around 11 billion EUR. Thus, nutrient contained in domestic waste and biomass should not be considered as 'waste' but also as commercially valuable plant nutrient sources. Similarly, the European Sustainable Phosphorus Platform (ESPP) estimates that full implementation of the current technologies to recover phosphorus from biomass and improvements in the coherence and implementation of union environmental legislation could create 66 000 non de-localisable jobs.

Option 5 would support such investment by providing a flexible and coherent approach to access the market without compromising on safety of products.

Compared to full harmonisation, optional harmonisation would offer a more flexible environment for the development of emerging fertilising products sourced from domestic secondary raw materials. Producers of such products would be allowed to gradually invest in new production techniques to produce CE marked fertilisers.

6.6.3.Environmental impacts

Criterion 7: can the option foster significantly the recycling of nutrients and contribute to the circular economy?

Criterion 8: can the options effectively contribute to the reduction of contaminant inputs to agricultural soil and hence improve soil function at EU level?

Criterion 9: will the options ensure that farmers are correctly informed about the potential release of ammonia from different inorganic fertilisers in order to choose the optimal type of fertiliser and/or implement remediation measures?

The Communication “Towards the Circular Economy” and the related legislative proposal on the revision to the waste directive establish very ambitious targets for recycling 80 . This means that more domestic secondary raw materials are likely to be available in a near future which calls for the use of a flexible regulatory framework that could be operational when these targets enter into force.

As mentioned under 7.3.3, a first estimation of the replacement potential of inorganic fertiliser shows that around 30% of the mined inorganic fertiliser could be substituted by organic fertilisers deriving from domestic secondary raw materials. However a transition to a more circular economy for fertilising products would only be possible if key regulatory elements are not obstructing more sustainable solutions and market creation for nutrient recycling. Interdisciplinary cooperation and efficient communication between stakeholders (fertiliser industry, waste holders, public administration, farmers, agronomists, and economists) would also be key to get a holistic picture of the complicated area of plant nutrition. Tackling all these challenges would create new businesses opportunities for competitive clean technologies.

More fertilising products deriving from recycling of biomass would also mean less GHG emissions generated during production. According to the European Compost Network, emissions generated during composting contribute for 0.01 to 0.06% to the total national GHG inventories for the EU. The inorganic fertiliser industry counts for 0.5% of such emissions. Diverting more bio-waste from landfills would have also the advantage of reducing the amount of GHG emitted during landfilling.

The use of conventional plastic mulch films creates after 15 years of use, severe environmental and economic risks due to the release of micro plastic particles in the environment. The open burning of such films is also a source of toxic substances released in the environment. The CE mark should therefore be limited to fully biodegradable plastic mulch films.

The combination of limit values for contaminants (as for options 2 and 4) and third party certification before products are placed on the market would reinforce the safety of products in particular for those deriving from waste.

Option 5 could also contribute to improved air quality by providing the necessary information to farmers about the potential release of ammonia from the fertilisers they use.

6.6.4.Stakeholders’ opinion

The comments made under Option 4 remain valid as Option 5 would follow this regulatory Approach in particular as regards the role of CEN and the costs of standardisation (See stakeholders’ opinion on option 4).

Some industry representatives expressed concerns that under the NLF, the information included in the authorised type of ingredients or products would be lost. The NLF defines generic criteria applying across the board whereas lists provide technical details on ingredients or products such as the method of production and specific quality criteria. The inorganic fertiliser industry is particularly interested in keeping this information available to farmers. According to the industry, this is the only way to keep efficient products on the market. This could be solved by a guidance document to be developed by industry listing ingredients or products that meet the legal requirements of a future legislation. A statement on the label could refer to this voluntary standard.

Some Member States expressed concerns about the costs of regular testing in particular for SMEs active in the production of compost and digestate. Those costs could be mitigated by the reduction of the frequency of controls according to the volume of production and the reduction of the number of external samplings after the recognition year (see Annex IV Section 4 for more details).

Some Member States also explained that the system of certification by third parties could be expensive for micro entities applying national end of waste criteria for which such requirement does not exist. A substantial transitional period could be granted to allow producers to adapt to the new rules. If optional harmonisation is effective, national End of Waste criteria would continue to apply.

Although a full harmonisation via the NLF has been found unrealistic (i.e. the costs of third party certification would be disproportionately high if applied without distinction to all fertilising products), there is much broader consensus on option 5 to address safety and quality issues without entailing disproportionate costs for industry or unduly delay the placing on the market of new products.

7.Comparing the options

The comparison of the various policy options has been conducted taking into account the criteria of:

Effectiveness:

Each option has been given a score relating to its ability to achieve the operational objectives (removal of trade barriers, improvement of safety, simplification potential, support to innovation and harmonised labelling);

Efficiency:

The costs for the implementation of the policy options have been compared with their effectiveness in reaching the policy objectives;

Coherence:

Each option has been given a score relating to its complementarity and compatibility with other EU objectives (Air policy review, Resource Efficient Europe initiative, the Nitrate Directive…).

Table 1 compiles the information for each option and variant.

Qualitative assessment

The columns on effectiveness and coherence in Table 1 provide a qualitative analysis of the arguments developed in Section 6 in order to facilitate comparison and to identify trade-offs.

The options have been assessed as being ‘strongly negative (--)’, ‘negative (-)’, ‘neutral (=), positive (+) and strongly positive (++) compared to the baseline scenario (Option 1).

Under the full harmonisation scenario, options 2 to 5 would reach the same level of effectiveness (albeit not at the same pace) in achieving the objectives of removing trade barriers and harmonised labelling as they would complete the harmonisation of the EU market for fertilising products.

The various options differ in their capacity to meet the objectives of safety improvement, simplification potential and support to innovation in the circular economy.

Under optional harmonisation, options 2 to 5 would equally fail to fully achieve the objectives of removing trade barriers and harmonised labelling. According to the outcomes of the SMEs consultation, 20% of the current market would remain national. Over the longer term, national markets would shrink if more and more products/ingredients are covered by the EU scheme.

Under full harmonisation, the different variants of Option 2 (list of authorised types) have the potential to be effective in improving the safety of products compared to the baseline. In particular variants 2B and 2C (examination by European agencies of application dossiers for the listing of new fertiliser types) would be highly effective. However, producers – other than the first applicant for the inclusion of a new fertiliser type – could self-declare that their product complies with an existing entry of the tables listing the authorised fertiliser type without having to demonstrate compliance with the data submitted to register the original product. The compliance of their product could only be checked by post-market controls after the product is already on the market.

Option 2 would not be conducive to innovation. Companies applying for the registration of a new type would face a first mover disadvantage trying to get existing product types registered as other companies would have the possibility to use these new product types afterwards to place their own products on the market without bearing the same costs. Pioneering products based on extracts or recovery of natural products are generally not eligible for product patents. Companies would be therefore reluctant to request the inclusion of such product types in an Annex of a future Regulation.

Option 2 would not lead to administrative simplification as in light of the experience with the current Regulation, it would be extremely time consuming for industry to have all existing national product types included on a case-by-case basis in the annexes of a future regulation. In addition, the burden of such type listing upon SMEs only manufacturing specialities for the local market would be disproportionate. Consequently, some existing products could be removed from the market (market disruption) due to the burden generated by the obligation for type listing. Companies would mainly spend time and money getting their products on the EU list, although these would have already been recognised at national level. Simplification effects would only be observed once all existing national types had been listed. Option 2 is therefore considered as meeting the objective of simplification in the long term only.

Optional harmonisation would be less effective in reaching the objectives of safety of products but would better support innovation and administrative simplification as the risks of market disruption would be minimised in the short term.

Under full harmonisation, the different variants of Option 3 (lists of authorised ingredients) would also improve the situation as regards the safety of products, in particular under variants 3B and 3C for which opinions of EU agencies on applications of registration of new ingredients would be required. However, as for Option 2, producers – other than the first applicant for the inclusion of a new ingredient – using approved ingredient(s) listed in the annexes of a future regulation would not be obliged to demonstrate the conformity of their own ingredients with the requirements of the registered ingredient(s). Compliance of their products could be checked by post-market controls only.

Support to innovation is stronger than under Option 2. Ingredient manufacturers would have an incentive to register at EU level to make their ingredients more widely available to manufacturers of fertilising products across the EU.

Compared to Option 2, Option 3 would be more conducive to simplification for public administration and industry, as there are obviously less ingredients than possible product types. Listing authorised ingredients compared to listing product types in the annexes of a future regulation would require less work, and as a result the time to market new commercial products would be reduced. However, listing all authorised ingredients present on the EU market would still take a considerable effort. The regulatory Committee would still have to discuss and agree on common definitions for each ingredient, which would be consuming time and resources. Therefore the variants of Option 3 would not lead to simplification at least in the mid-term and could also lead to market disruption for fertilising products present on the national markets.

Optional harmonisation would better support innovation (less investment risks at the early stage of the marketing of the fertilising ingredients) and would lead to administrative simplification at least for industry. However, optional harmonisation would not fully achieve the objectives of safety of products.

Under full harmonisation, variant 4A (New Approach – self certification) would be very effective in achieving most of the operational objectives in particular regarding simplification and innovation potential. The safety of products would be significantly improved compared to the baseline, as conformity would be required with the Regulation’s essential safety requirements, which would include limits for hazardous contaminants such as cadmium. However, there would be no pre-marketing compliance control by third parties. In particular products derived from waste streams may need to be controlled more intensively, as regards their conformity to the safety legal requirements, before they are placed on the market.

The other variants of Option 4 (different modules for third party certification for all fertilising products) would not lead to simplification, in particular if each product had to be certified individually. The associated costs would be likely to undermine innovation. This issue could be addressed through the certification of product families rather than of individual products (See point 3.4 of Annex IV).

The safety of products would increase progressively from variants 4B to 4D as products would be certified and increasingly controlled by third parties before being placed on the market.

Although option 4 would bring the most radical change to the fertiliser legislation, and hence to the existing national procedures, some of the critical statements expressed by some Member States' experts in preliminary consultations are based on misunderstandings. For example, it was not clear to all that Member States can participate directly in the development of the harmonised EN standards, and retain ultimate control with regard to the acceptability of harmonised standards drawn up by CEN: they can also reject them if they consider that the standards do not adequately ensure compliance with the legal requirements laid down in the Regulation. In addition, the New Approach legislative format has been used successfully for other very sensitive sectors such as toys, pyrotechnic articles and civil explosives, where it now ensures the safety of products placed on the EU market.

Compared to full harmonisation, optional harmonisation would be less effective in reaching a level playing field as regards limit values for contaminants in fertilising products. National limit values would have to be maintained to avoid water and food contamination from the use of national fertiliser. The objectives of administrative simplification and innovation support would be better achieved under optional harmonisation.

Option 5 (New Approach – with various levels of third party certification depending on the expected level of risks potentially caused by the fertilising products) would have the advantage of improving the current situation as regards all operational objectives in the short and/or longer term.

Option 5 would lessen the burden on products that are deemed less risky by allowing self-certification, and therefore lead to simplification compared to options 2 and 3 and variants 4B, 4C and 4D.

As regards safety, fertilising products would have to comply with generic essential safety requirements (i.e. limit values for contaminants) and agronomic requirements specific to each product category. The conformity of products with these requirements would have to be checked either by the producers themselves or by a third party, depending on the nature of the raw material used. These pre-market conformity assessments and – as the case may be – recurrent controls would reassure farmers and public authorities about the safety of products derived from waste streams.

As regards SMEs and competitiveness, limiting third party certification to some product categories which deserve more attention, such as materials deriving from waste because of their higher variability in composition, would provide greater flexibility and impose less red tape. This should create an environment of improved business opportunity and facilitate innovation and greater competition in particular for alternatives to inorganic fertilising products. The greater flexibility would be reinforced by the optional harmonisation variant.

Farmers and consumers would benefit from more choice in line with the agricultural needs 81 in various regions of Europe therefore contributing to better match supply and demand and from competitive prices, while products will satisfy adequate safety standards.  

The new instrument would be also adaptable to new scientific evidence relating to the safety of fertilising products and/or modifications to the list of contaminants in relevant environmental legislation. A safety net of prohibited ingredients will be implemented to address recurring problematic feedstock which triggers non-compliance with the essential safety requirements

Quantitative Assessment

When comparing the costs against the expected effectiveness, all variants under Options 2 and variant 4D could be discarded, as they would trigger a significant increase in costs either for authorities or industry. Variants 4B and 4C would also lead to very significant costs for producers if certification is required at product level, whereas a certification limited to certain groups of products such as those sourced from waste could significantly reduce the costs of certification. The variants under option 3 would be cost-effective both for industry and public administration.

Option 5 would be more costly than Options 2 and 3 and variant 4A for the part of industry that does not benefit from the self-certification of products (mainly products deriving from waste and animal by-products but also plant bisotimulants and agronomic fertiliser additives).

Optional harmonisation would facilitate the smooth transition to the new regulatory framework leaving producers the choice to market product either for the local or for the EU markets.

Scope of harmonisation

Effectiveness

Total annual costs for companies

(EUR)

Total annual costs for MS authorities

(EUR)

Total annual costs for the Commission

(EUR)

Total annual costs

(EUR)

Coherence

Option

Removal trade barriers

Improvement of safety of products

Simplification potential

Support innovation in the circular economy

Harmonised labelling

Short term

Long term

Short term

Long term

1

=

=

=

=

=

=

=

26 062 500

17 165 150

328 000

43 555 650

=

2A

Full

++

+

--

+

--

+

+

3 184 750

21 617 330

631 050

25 433 130

+

2A

Optional

+

=

-

+

-

+

=

2 585 260

20 060 610

611 950

23 257 820

=

2B

Full

++

+

--

+

--

+

+

6 065 015

21 617 330

406 050

28 088 395

+

2B

Optional

+

=

-

+

-

+

=

4 889 470

20 060 610

386 950

25 337 030

=

2C

Full

++

+

--

+

--

+

+

3 184 750

21 617 330

1 421 050

26 223 130

+

2C

Optional

+

=

-

+

-

+

=

2 585 260

20 060 610

1 198 950

23 844 820

=

3A

Full

++

+

-

+

-

+

+

1 278 335

13 411 995

441 080

15 131 410

+

3A

Optional

+

=

=

+

=

+

=

1 078 765

13 454 955

421 980

14 955 700

=

3B

Full

++

+

-

+

-

+

+

2 085 660

13 411 995

366 080

15 863 735

+

3B

Optional

+

=

=

+

=

+

=

1 724 625

13 454 955

346 980

15 526 560

=

3C

Full

++

+

-

+

-

+

+

1 278 335

13 411 995

650 580

15 340 910

+

3C

Optional

+

=

=

+

=

+

=

1 078 765

13 454 955

574 580

15 108 300

=

4A

Full

++

=

++

+

+

+

+

621 890

11 268 855

219 365

12 110 110

+

4A

Optional

+

=

++

+

+

+

=

502 800

11 734 335

194 665

12 431 800

=

4B

Full

++

+

=

+

-

+

+

54 256 390

10 161 245

219 365

64 637 000

+

4B

Optional

+

=

+

+

=

+

=

43 410 400

10 626 725

194 665

54 231 790

=

4C

Full

++

+

-

+

--

+

+

156 161 940

9 053 635

219 365

165 434 940

+

4C

Optional

+

=

=

+

-

+

=

124 934 840

9 519 115

194 665

134 648 620

=

4D

Full

++

+

--

+

--

+

+

309 020 265

7 946 025

219 365

317 185 655

+

4D

Optional

+

=

-

+

-

+

=

247 221 500

8 411 505

194 665

255 827 670

=

5

Full

++

+

+

+

+

+

+

8 781 180

10 161 240

219 365

19 161 785

+

5

Optional

+

=

++

+

++

+

=

7 030 235

10 626 720

194 665

17 851 620

=

Table 1: Comparison table of options

8.Monitoring and evaluation

8.1.Supporting the implementation of the new legislative proposal

The Commission will develop together with Member States' experts and interested stakeholders, a number of accompanying activities to facilitate the implementation of the measures such as an implementing act outlining data requirements on EU EoW criteria, an FAQ document, CEN standards, guidance documents for the implementation and enforcement of the selected option.

8.2.Measuring the fulfilment of the objectives

The evaluation of the effectiveness of the legislation will be based on the feedback received through various cooperation mechanisms already established under the current Fertilisers Regulation (expert groups).

8.2.1.Removal of trade barriers and simplification (operational objectives 1 and 3)

Progress in removing trade barriers will be measured by an ex-post evaluation of the future legislation and a new SME consultation 5 years after its implementation. This includes verifying to which extent national measures on fertilisers have been effectively removed. An SME survey could measure whether the expectations of the sector in terms of administrative burden reduction and simplification have been met. The evolution of municipal waste treatment technologies and in particular the emergence of a higher number of recovery installations would be an indicator of the reduction of trade barriers for organic fertilisers and soil improvers. Data are available in Eurostat (See Annex 1).

8.2.2.Better market access for more sustainable products deriving from domestic resources (operational objective 4)

Other initiative than the revision of the Fertilisers Regulation could support the development of the market of fertilising products sourced from domestic secondary raw materials. A detailed analysis of the framework conditions supporting further investments in such products could intensify the role of nutrient recovery. It would be particularly important to identify which type and which amount of biomass is available for valorisation into fertiliser production.

Progress in allowing better access to the market for more sustainable products will be measured by an ex-post evaluation. The analysis of the number of patent registrations for new products or industrial processes before and after the enforcement of the future Regulation could be used as monitoring indicator of the achievement of this objective.

8.2.3.Better safety of products (operational objective 2)

The monitoring of compliance will be possible on the basis of a number of enforcement indicators (e.g. number of products checked, number of non-compliant products among those checked, type of non-compliance found, number of non-compliant products whose manufacturer/importer was identified, number of products refused at the border). These enforcement indicators will be based on information provided via:

Use of RAPEX, the EU rapid alert system that facilitates the rapid exchange of information between Member States and the Commission on measures taken to prevent or restrict the marketing or use of products posing a serious risk to the health and safety of consumers with the exception of food, feed, pharmaceutical and medical devices, which are covered by other mechanisms. Since 1 January 2010, RAPEX also facilitates the rapid exchange of information on products posing a serious risk to the health and safety of professional users and on those posing a serious risk to other public interests protected via the relevant EU legislation (e.g. environment, workplace, energy consumption, incorrect measurement, security). Both measures ordered by national authorities and measures taken voluntarily by producers and distributors are reported in RAPEX.    

GRAS-RAPEX is the General Rapid Alert IT tool used for the RAPEX notifications. Since May 2012, Member States can notify in the GRAS-RAPEX system all products falling under the scope of the proposal;

the safeguard clause procedures established under the future proposal according to which Member States notify restrictive measures adopted against products that although complying with the provisions of the current legislation, present serious risks or shortcomings (e.g. as regards quality);

a general database established under Article 23 of Regulation (EC) No 765/2008 for the exchange of information among Member States on market surveillance activities and non-compliant products (ICSMS database). This database allows Member States to exchange information about non-compliant products found in the market (market surveillance, authorities, customs etc.);

the data provided by customs authorities. The latter have a duty to cooperate with market surveillance authorities according to the relevant provisions of Regulation (EC) No 765/2008;

the National Market Surveillance Programmes established by Member States on the basis of Regulation (EC) No 765/2008 and their report on the state of the implementation of the programmed activities.

In 2012 the Joint Research Centre in Sevilla carried out a broad survey on the content of contaminants in compost and digestate. A similar study shall be performed 5 years after the implementation of a future regulation to verify whether the setting of harmonised rules has effectively reduced the contaminants content of such products.

Over the longer term (i.e. 10 years or more as it could take more time to observe the effects of a reduction of contaminants in fertilising products on the environment and transitional periods depend on the choice of the regulatory approach), progress on the reduction of certain soil contaminant inputs via fertilising products could be gauged from monitoring and assessment carried out in accordance with Article 3(6) of Directive 2013/39/EU and with Articles 4 and 5 of Directive 2006/118/EC, which oblige Member States to determine trends in the levels of pollutants in surface and groundwater bodies. The findings have to be reported under Article 15 of Directive 2000/60/EC. Analysis of the inventories of emissions, discharges and losses of priority pollutants required from Member States under Article 5 of Directive 2013/39/EU could also provide information on progress.

Following the results of constant monitoring and market surveillance, the lists of contaminants and their corresponding limit values could be adjusted via delegated act.

The quality of services provided by notified bodies should also be verified in line with the provisions contained in Decision (EC) No 768/2008 and regular round robin testing to which all Notified Bodies will have to participate.

8.2.4.Better information of farmers and consumers (operational objective 5)

A revised Fertilisers Regulation will propose a harmonised labelling information system that will allow end-users (farmers, growers and the general public) to make conscious choices based on the intrinsic product quality declared on the labels. Where necessary, CEN will be required to develop appropriate European harmonised standards to complement the labelling requirements set out by the future legislation.

In accordance with Articles 7 and 8 of Council Directive 2001/81/EEC on national emission ceilings for certain atmospheric pollutants, Member States shall prepare and annually update and report to the European Environment Agency national emission inventories for the air pollutants covered by the Directive, including ammonia emissions. This information, as broken down by emission source category can be used to assess whether the improved information for farmers on high-emitting fertilising products and urease inhibitors will lead to lower overall emissions of ammonia. Relevant additional information, including on the sales of urea-based inorganic fertilisers vs. nitrate-based inorganic fertilisers Member State by Member State may be obtained from Eurostat.

In accordance with Article 10 of Council Directive 91/676/EEC concerning the protection of waters against pollution caused by nitrates from agricultural sources, Member States shall submit a report to the Commission containing the information outlined in Annex V of that Directive. The report should include information about the measures in place to avoid fertilisation resulting in nitrogen leaching into waters. 

9.References

ORBIT/ECN, "Compost production and its use in the EU", 2008. (http://susproc.jrc.ec.europa.eu/activities/waste/documents/080229_eow_final-report_v1.0.pdf).

International Fertiliser Industry Association. 79th IFA annual conference Montreal (Canada), 23-25 May 2011.

Food and Agriculture organisation of the United Nations Current World fertiliser trends and outlook to 2015. Rome, 2011.

Van Dijk Management Consultants, Arcadia International and BiPRO GmbH. Study on options to fully harmonise the EU legislation on fertilising products including technical feasibility, environmental, economic and social impacts. Final Report. January 2012.

GCL Développement Durable. Etat, perspectives et enjeux du marché des engrais. Janvier 2010.

Chambres d'agriculture françaises. Revue No 999. Le marché mondial des fertilisants agricoles: trois nutriments clés au centre d'enjeux stratégiques. Janvier 2011.

Legislation and permit policies regulating the use of horticultural and energy peat resources and peat-based products in the EU. EPAGMA. May 2008.

Socio-economic impacts of the peat and growing media industry on horticulture in the EU. EPAGMA. September 2008.

Bilan des flux de contaminants entrant sur les sols agricoles en France métropolitaine. Agence de l'Environnement et de la maitrise de l'Energie. May 2007.

End of waste criteria for biodegradable waste subject to biological treatment (compost and digestate): Technical proposals. JRC Scientific and policy report 2014.

Etude de l'alimentation totale française (EAT 2). Agence nationale de la sécurité sanitaire. Juin 2011.

Green Paper on the management of bio-waste in the European Union. COM (2008)811 final.

Communication from the Commission to the Council and the EU Parliament on future steps in bio-waste management in European Union. COM (2010)235 final.

Communication staff working document accompanying the Communication from the Commission on future steps in bio-waste management in the European Union. COM(2010)577 final.

NPK: will there be enough plant nutrients to fee a world of 9 billion in 2050? JRC science and policy reports. Foresight and Horizon scanning series. J-P. Malingreau, H. Eva, A. Maggio (2012).

Ex-ante evaluation of the competitiveness impacts of the EU Commission’s policy proposal on the review of Regulation (EC) No 2003/2003 relating to fertilisers. ECORYS (January 2013).

Evaluation of Regulation (EC) No 2003/2003 relating to fertilisers. Centre for Strategy and Evaluation Services (November 2010).

Anaerobic digestion in Europe. Proceedings of the 7th international ORBIT 2010 conference. L. De Baere, B. Mattheeuws (2010).

Risk and Opportunities in the Global Phosphate Rock Market. Robust Strategies in Times of Uncertainty. The Hague Centre for Strategic Studies – Report No 17/12/12. (2012).


10.Glossary of technical terms and abbreviations

Bio-waste is defined in the Waste Framework Directive as 'biodegradable garden and park waste, food and kitchen waste from households, restaurants, caterers and retails premises, and comparable waste from food processing plants'.

Biodegradable waste is a broader concept and is defined in the Landfill Directive as 'any waste that is capable of undergoing anaerobic or aerobic decomposition such as food and garden waste, paper and paperboard'.

Agronomic fertiliser additives means any substance added to a fertiliser, soil improver, liming materials or growing medium which act on the fertilising products to which it is added in order either, to modify the release of nutrient(s) in the environment, or to improve the agronomic efficacy of the final product.

Compost means solid particulate matter resulting from controlled decomposition, by thermophilic and mesophilic microorganisms under predominantly aerobic conditions, of biodegradable waste other than those classified as animal by-products Category 1 under Regulation (EC) No 1069/2009:

Green compost means compost exclusively made of untreated, source separated (or separately collected) plant material derived from solid material from the production or processing of agricultural or horticultural produce, timber and natural textiles;

Bio-waste compost means compost produced from biodegradable garden and park waste, food and kitchen waste from households, restaurants, caterers and retail premises and comparable waste from food and fodder processing;

Bark compost means a compost produced from bark; usually not mixed with other organic residues but with additives as a nitrogen source;

Sewage sludge compost means compost of precipitated semi-solid residues from the treatment of waste water;

Mixed waste compost means any of the materials listed as compost, green compost or bio-waste compost but with the inclusion of any of the following:

(a)animal-derived material which is classified as animal by-products Category 2 or 3 under Regulation (EC) No 1069/2009, which may be composted (under controlled conditions) and can include catering and food waste, some slaughterhouse waste (such as blood and feathers), manure and gut;

(b)material that has previously been anaerobically digested.

Digestate means the residual semisolid or liquid material of anaerobic digestion of biodegradable materials.

Fertilising products: any substance or mixture which delivers nutrients to crops or improve the physico-chemical properties (pH, organic matter…) of soils. In the context of this impact assessment, it means inorganic, organo-mineral and organic fertilisers, soil improvers, growing media and plant biostimulants and their combinations.

Fertiliser is a material, the main function of which is to provide nutrients for plants, of which we can identify:

Inorganic fertiliser, i.e. fertiliser in which the declared nutrients are in the form of minerals obtained by extraction (e.g. potash and phosphate rocks) or by physical and/or chemical industrial processes (e.g. urea);

Organic fertiliser means a fertiliser which consists of organic materials of plant and/or animal origin. Compost and digestate described above can be recognised as organic fertilisers or soil improvers depending on their nutrient content;

Organo-mineral fertiliser means a fertiliser obtained by chemical reaction of inorganic and organic fertilisers in order to delay the nutrient release to the plants.

Growing media are materials, other than soils in situ, in which plants are grown and which is used independently from soil in situ.

Heavy metal means any compound of arsenic, cadmium, chromium (VI) and chromium total, copper, lead, mercury, nickel and zinc as well as these materials in metallic form, as far as these are classified as hazardous substances. Copper and zinc are also valuable nutrients for plants.

Ingredient means a substance that forms part of a mixture.

Liming materials are inorganic substances and mixtures whose main function is to correct soil acidity containing either calcium and/or magnesium under the forms of oxides, hydroxides, carbonates or silicates.

Nutrients are the elements that are essential for plant growth and ensure a good yield of harvested crops. They are often classified as macronutrients (nitrogen, phosphorous and potassium, calcium, magnesium, sodium and sulphur) and micronutrient fertilisers (boron, cobalt, copper, iron, manganese, molybdenum and zinc) in accordance with their application patterns and concentration in plan tissues. Other elements such as oxygen, carbon dioxide and water are also crucial for plants but are however not considered as nutrients as they are found in abundance in the environment or are not considered to pose any environmental problems.

Organic pollutants (OPs) are organic substances that are resistant to environmental degradation through chemical, biological and photolytic processes.

Plant biostimulant means a material which contains substance(s) and/or micro-organisms aimed at stimulating plant nutrition processes independently of the product's nutrient content, with the exclusive aim of improving one or more of the following characteristics of the plant: 

The plant's nutrient use efficiency,

The plant's tolerance to abiotic stress, or

The plant's crop quality traits.

Soil improvers are any material which improves the physical, chemical and/or biological properties of soil. However, the more usual interpretation relates to materials which are added to soils to enhance their physical properties. Such materials include manure, and various types of composted materials which may or may not also provide some useful quantities of plant nutrients, planting materials or mulches, acidifying products, perlite, clay, stone meal, biochar…

Type of fertiliser means fertilisers with common characteristics as indicated in Annex I to Regulation (EC) No 2003/2003.

Urea-based fertiliser is an inexpensive form of nitrogen fertiliser. Although urea is naturally produced in humans and animals, synthetic urea is manufactured with anhydrous ammonia. Special steps must be taken when applying urea to the soil to prevent the volatilisation of ammonia.

 

ANNEX I

The global and EU supply and demand of fertilising products and additives

A fertiliser is any material, inorganic or organic, natural or synthetic, that supplies plants with the nutrients necessary for plant growth and acts to increase yield in optimum conditions. Plants live, grow and reproduce by taking up water and mineral substances from the soil, absorbing carbon dioxide from the air and energy from the sun. Plants contain practically all (92) natural chemical elements but need about 14 of them for their optimal growth. Nitrogen and phosphorus for example are essential to build plant proteins. Every plant nutrient whether required in large or small amounts has a specific role in plant nutrition and growth. One nutrient cannot be substituted for another.

1.Global inorganic fertiliser supply

The majority of the world's intensive agricultural systems depend on synthetic fertilisers to provide three key nutrients: nitrogen (N), phosphate (P2O5) and potash (K2O) to crops. The commodities market at the origin of these inputs has experienced substantial changes in recent years. Since 2005, emerging economies (China, India) have massively invested in the production of fertilisers mainly to ensure that the food needs of their growing populations are met. In 2008, prices of agricultural products (including fertilisers) soared as shown in figure 5. This episode highlighted the increasing importance of accessibility to these essential resources, especially considering that mines and production capacities are situated in third countries.

After a 7.6% contraction in 2009, 2010 marked a strong rebound of global nutrient production due to slight recovery in traditional markets and a sustained level of consumption in emerging markets. 

Inorganic fertilisers containing nitrogen (N) represent the bulk of the global fertiliser consumption (60%) followed by phosphorus (P) (25%) and potassium (K) (15%). Figure 3 illustrates the relative importance of the various nitrogen sources in European agriculture. Figure 4 provides more information on the EU and global inorganic nitrogen fertilisers market.


Figure 3: Sources of nitrogen inputs in European agriculture. (Source: Eurostat)

Figure 4: Sources of inorganic nitrogen inputs in EU agriculture and worldwide.
(Source: Fertilisers Europe 2012)

Over the next five years, world global capacity will further increase with the realisation of about 250 new industrial projects. The International Fertilisers Association (IFA) estimates that about USD 88 billion will be invested by the fertilisers industry between 2010 and 2015.

1.1.Inorganic nitrogen fertilisers

The production of inorganic nitrogen fertilisers depends largely on the availability of gas at competitive prices 82 (see figure 5) and ammonia is the main intermediate during the production of all nitrogen fertilisers. In a volatile energy market with fluctuating natural gas availability, the industrial dimension of nitrogen production has a strategic element. Natural gas contributes to 70% of total production costs of inorganic nitrogen fertilisers. Europe is amongst the regions with the highest gas prices in the world with a 230% increase in the last decade. Measures to secure gas supply would therefore also stabilise the price of inorganic nitrogen fertilisers in Europe.

The world inorganic nitrogen fertiliser production is currently concentrated in Russia (20%), the United States (19%) and Canada (6%). For developing countries, the main driver for investment in nitrogen fertiliser production is the strong desire to optimise the use of local resources and to reduce their reliance on imports (mainly urea 83 ).

No increase in ammonia capacity is expected in Western Europe. Central Europe will more or less maintain its existing capacity.

Figure 5: Price of urea and natural gas in Europe (Source: Blanco, 2011 derived from World Bank database; price normalised to 2000; accessed in 2011)

The production technology for commodity inorganic nitrogen fertilisers is readily available but the production process is highly capital intensive. Member States are no longer financially supporting the production of fertilisers and consequently, industry has been more market driven than in the past. Economies of scale are important to reduce fixed costs per tonne and achieve good competitiveness.

1.2.Inorganic phosphate fertilisers

Despite relative abundance, resources of phosphate rocks are unevenly distributed around the world. Morocco, China and the US hold two-thirds of the world phosphate rocks reserves and it might therefore be considered a strategic resource. Some national companies intend to benefit from the increase in fertiliser demand by investing in new mining projects (e.g. Ma'aden in Saudi Arabia). In 2008, prices of phosphorus rock went up by 700% in little over a year.

In Europe, some companies 84 have invested in the production of NP and NPK fertilisers via the nitrophosphate route to reduce the generation of gypsum waste produced in the conventional phosphoric acid route. The availability of phosphate rocks might be a source of concern for those companies as many producing countries strongly encourage the local production of more valuable finished products. The only source of phosphate rock in Europe is located in Finland which cannot satisfy the needs of the European fertiliser industry.

Some countries including the EU are encouraging the use of recycled phosphorus which would help diversify the supply of this fundamental raw material and strive for a more even distribution of phosphorus resource at regional and global level.

1.3.Inorganic potassium fertilisers

Canada, Russia, Belarus and Israel represent more than two-thirds of the world production, while eight companies control 80% of the production. No scarcity of potassium is foreseen over the long term in Europe but reserves are in the hands of a few countries and companies. The most important producing Member States are Germany, Spain and the UK.

It is now generally accepted that, whatever the existing proven resources, the complete dependence of the EU fertiliser market on non-renewable resources such as N and P must be addressed over the longer term by a food security strategy.

2.Development of the internal market for inorganic fertilisers since 2003

The current fragmentation of the market for inorganic fertilisers does not indicate particular problems in the overall development of the Internal Market for inorganic fertilisers. As far as the main part of the inorganic fertiliser sector is concerned, most of the multinational firms and the other smaller exporting firms have shifted their production towards EC fertilisers. For the existing categories of fertiliser covered by the Regulation, this facilitates the smooth operation of the Internal Market with limited problems reported as regards their trade. It has also facilitated the import of fertilisers from outside the EU as reported by the importers association (EFIA). In addition, according to a couple of manufacturers, it supports the export of EC-labelled inorganic fertilisers that are accepted without additional tests or documentation requirements by a number of third countries (inside and outside Europe). Still, such a benefit from the Regulation is not able to counterbalance the generally negative trend in the EU exports of fertilisers during the last decade that reflects, primarily, the lower production costs in certain non-EU countries due to cheaper access to raw materials in those regions.

The choice of the national label in some countries appears to reflect the presence of an existing market for lower nutrient content in inorganic fertilisers that the Fertilisers Regulation does not cover. It also arises because various new products with additional ingredients (additives, coating agents) are only partially or not yet covered by the Fertilisers Regulation.

Figure 6: Evolution of extra-EU trade in fertilisers (all categories) in EU27 (1999=100). Comparison with evolution of total imports and exports 85  (Source: Eurostat, External trade statistics, 2010)

Thus, from the point of view of national authorities and most parts of the industry, the problems for the development of the Internal Market stem from the fact that the Regulation does not cover all segments of the fertiliser market. It is the “non-coverage” of the remaining segments of the market and the important problems in trading them cross-border that is considered to be the main weakness of the existing regulatory framework.

The table below shows the production and trade of inorganic fertilisers in the EU. It shows that intra EU trade (the difference between trade of individual Member States and EU-27 trade) is approximately three times as high as the EU trade with third countries.

Table 2: Production and trade of inorganic fertilisers in the EU27, top-6 in (€m) producing, exporting and/or importing member states in 2011 (Source: Based on Eurostat PRODCOM ANNUAL SOLD [DS-043408])

Category

Export

Import

Production

1,000 tonnes*

€m

1,000 tonnes*

€m

1,000 tonnes*

€m

EU27

3,525

2,291

5,131

4,306

32,015

14,836

France

341

276

3,410

2,222

2,139

1,168

Poland

661

502

771

447

1,782

1,126

Germany

932

804

1,629

1,349

1,853

955

Netherlands

2,813

1,770

1,399

653

:

:

Belgium

2,591

1,388

2,335

1,625

364

84

Lithuania

1,595

925

116

153

1,649

942

Others

5,204

3,452

6,308

4,717

8,709

3,703

Total individual Member States

14,137

9,917

15,968

11,166

* Nutrient volume, n.a. = not available

3.Increasing demand for inorganic fertilisers to feed the world

The global consumption of inorganic fertilisers has increased by 40% between 1980 and 2006. Over the past decade, consumption of inorganic fertilisers has moved from industrial countries to developing countries. China and India now account for respectively 31% and 16% of the world fertiliser consumption. Inorganic fertiliser demand in Western and Central Europe has only partly recovered from its sharp contraction in 2009.


Figure 7: Evolution of the worldwide inorganic fertiliser consumption over the last 50 years
(Source: Fertilisers Europe)

Total inorganic fertiliser nutrients (N + P2O5 + K2O) consumption estimated at 168.3 million tonnes in 2010 reached 172.4 million tonnes in 2012. With an annual growth of more than 2.0%, it is expected to reach 183.4 million tonnes by the end of 2015 as indicated in the table below.

Table 3: World demand for inorganic fertiliser nutrients, 2011-2015 (million metric tonnes) 
(Source: FAO and IFA)

Year

2011

2012

2013

2014

2015

Nitrogen (N)

105.3

107.3

109.3

111.1

112.9

Phosphate (P2O5)

34.3

35.4

36.3

37.2

38.0

Potash (K2O)

28.7

29.7

30.7

31.7

32.5

Total
(N+ P
2O5+K2O)

168.3

172.4

176.3

180.0

183.4


Figure 8: Foreseen evolution of inorganic fertilisers demand for 2016/17 compared to 2007/08 (Mtonnes of nutrients) (Source: the International Fertiliser Industry Association – IFA)

The global fertiliser market value increased by 12.9% in 2010 compared to 2007 and reached a total value of EUR 91.1 billion. In 2015, the global fertiliser market is forecast to have a value of EUR 121.1 billion, an increase of 31.9% compared to 2010.

These forecasts are however subject to a number of uncertainties. Apart from weather conditions, the main issues that could influence the forecast are 1) the world economic context; 2) demography; 3) the evolution of the biofuel policy and energy policies in developed countries; 4) fertiliser prices relative to agricultural commodity prices; 5) natural gas and other energy prices; 6) policies aiming at increasing nutrient efficiency; and 7) recycling of nutrients from organic sources. The Food and Agriculture Organisation of the United Nations (FAO) has however recently predicted an increase of 69% in fertiliser demand in developing countries to meet the expected 60% increase in food production by 2050.

In Western Europe, there will be a decline in nitrogen and phosphate consumption, of respectively minus 0.2 and minus 0.7% during the 2010-2015 period and a slight increase (of 1%) for potash driven by more sustainable farming practices concerning the use of fertilisers. However an increase in fertiliser consumption is expected for all these nutrients in Central Europe (+ 2.3, + 4.5 + 3.2%, respectively) where the levels of P2O5 and K2O in soils seem to be insufficient.

4.Inorganic fertiliser prices

The global inorganic fertiliser market experienced a decline in prices until the late 90s. The beginning of the 2000s showed a moderate increase in inorganic fertiliser prices followed in 2008 by a sharp increase. After a major contraction in 2009, commodity prices for inorganic fertilisers have strongly rebounded since mid-2010.

The magnitude of these recent fluctuations is due to the convergence of several factors. From 2006, the lack of investment in the previous years and increasing inorganic fertilisers demand in Brazil, China and India contributed to soaring prices and volatility. Increase of energy prices and speculation in the raw materials market played an important role in amplifying this trend in particular for nitrogen and phosphate.

Figure 9: Evolution of inorganic nitrogen fertiliser prices over the last decade
(Source: Fertilisers Europe)

Over the period 2009-11, the prices of inorganic fertilisers went up. For instance, the index of FOB 86 price of diammonium phosphate (DAP) (reference year 2002 = USD100) increased from USD 176 in 2009 to USD 263 in 2010 and moved further up at USD 323 in the first half of 2011 as a result of the soaring of energy and food prices. The financial crisis in Europe led to a disruption of credit lines granted by banks to farmers to buy fertilisers and the postponement of a number of investment projects. Consequently, the EU fertiliser market shrunk which led to an overall decrease in consumption of inorganic fertilisers in Europe 87 .


Table 4: Prices variation of three common fertilisers: urea, diammonium phosphate and muriate of potash (Source: FAO and IFA)

Fertiliser input price index (2002 = 100) 88 - USD

2007

2008

2009

2010

2011

Urea

222

362

184

206

269

DAP

228

515

176

263

323

MOP

182

573

541

293

363

It is expected that inorganic nitrogen fertiliser prices will stay firm in the mid-term and will fluctuate with the gradual implementation of new production units. Inorganic phosphate and potash fertilisers are expected to remain firm as their supply is dominated and controlled by a limited number of existing players.

5.Impacts of inorganic fertiliser price volatility on EU farmers incomes

The Food price Index of the FAO shows that inorganic fertiliser prices have been increasing since mid-2010 in response to a tight market environment caused by factors such as bad weather conditions in major producing countries resulting in harvests smaller than expected, a low level in cereal stock worldwide and the high crude oil price which provides strong incentive for biofuel production leading to increased competition among the food, feed and fuel sectors.

According to the Organisation for Economic Co-operation and Development (OECD), FAO and Food and Agricultural Policy Research Institute, the world stock of main agricultural commodities is not predicted to evolve much over the next five years and prices of all agricultural commodities should remain firm well above pre-crisis level.

Table 5: Prices variation of some agricultural commodities (Source: FAO)

2007

2008

2009

2010

2011

Cereals

167

238

174

183

257

Dairy

212

220

142

200

230

Meat

125

153

133

152

175

Oils & Fats

169

225

150

193

265

Sugar

143

182

257

302

371

Food

159

200

157

185

233

(Source: World Food Situation: Food Prices Index 89 , FAO, Rome)

Under such a scenario, the high agricultural commodity prices provide incentives for farmers in market-oriented economies to invest in fertilisers for higher productivity. However during the episode of soaring prices of agricultural products of 2008, the prices of agricultural commodities (e.g. crops) grew much less than the price of fertiliser which reduced farmers' revenues. This illustrates the potential danger that farmers face from volatile fertiliser prices.

Depending on their activities, EU farmers are affected differently by the current volatility in inorganic fertiliser prices as illustrated in the figure below. According to COPA-COGECA, inorganic fertilisers currently represent on average 20 to 30% of the production costs of agricultural produce. Dairy farmers are the most affected as they also face difficulties to obtain credits and do not have the possibility to pass on extra costs to customers.

Table 6: Average increase of fertilisers in farmers input costs during the period 2007-2010 (Source: Finnish farmer organisation)

Cereal farmers

+ 42%

Dairy farmers

+ 20%

Beef farmers

+ 20%

6.General description of the EU inorganic fertiliser industry

The EU inorganic fertiliser market is composed of:

Fertiliser producers,

Traders,

Distributors/retailers.

Inorganic fertiliser manufacturing plants are distributed throughout the EU. Major producing Member States are France, the Netherlands, Germany, Poland and Spain. Together with energy costs, the other main factor affecting the competitive position of inorganic fertiliser manufacturers and importers is the price and the availability of the raw materials and intermediate products 90 .

Traders import inorganic fertilisers from third countries and purchase mainly urea, DAP and nitrogen fertiliser solutions for selling them to producers and distributors.

In some Member States (e.g. France), some distributors sell fertilisers directly to farmers. They are mainly agricultural cooperatives. Over the past 20 years, a large number of mergers and acquisitions have increased the degree of concentration on the agricultural distribution market.

The overall EU inorganic fertiliser market volume can be estimated at about 16 million tons of nutrients per year i.e. 45 million tonnes of products per year (around 9% of the world consumption, according to IFA).

According to Fertilisers Europe, the market size (annual average nutrients consumption from 2007 to 2010) of the European inorganic fertiliser can be estimated as follows:

Nitrogen (N) consumption/year:        10 368 000 tonnes;

Phosphorus (P2O5) consumption/year:    2 408 000 tonnes;

Potassium (K2O) consumption/year:    2 704 000 tonnes.

The EU inorganic fertiliser market at farmer retail prices represent around EUR 17 billion in 2010 with a compound annual growth rate (CAGR) 91 of 12.6% for the period 2004-2010. The performance of the market is forecast to decelerate, with an anticipated CAGR of 5.7% for the five-year period 2010-2015, which is expected to drive the market to a value of EUR 21.4 billion by the end of 2015.

The information collected during the ex-post evaluation of the current Fertilisers Regulation indicates that 5 EU companies represent more than 80% of the total production while there are still independent players in Poland, Romania and Greece. All in all, the EU inorganic fertiliser market share of large companies is estimated at about 90%. They transform basic elements (nitrogen from air, phosphorous and potassium from mines) into a small range of inorganic fertilisers that are mainly marketed for cereal production or sold to small and medium enterprises.

Between 10 and 15 medium-sized companies per Member State produce compound inorganic fertilisers or organic and organo-mineral fertilisers for specific local market needs (vineyards, fruits, vegetables…). They cover both the professional market and the hobby sector. Thirty percent of those companies exports to other European and Third countries.

Finally, a large number of small producing firms – estimated at 800 – focus exclusively on blending fertilisers bought from multinational companies to cover specific needs in the local market.

The inorganic fertiliser industry relies on a large European distribution network including two different types of structures:

Private sector (represented at EU level by COCERAL);

Agricultural cooperatives (represented at EU level by COPA-COGECA).

Spain, Italy and France have the largest number of enterprises (228, 187 and 175 respectively) most of them being SMEs. Eastern Member States (i.e. Poland, Romania, Lithuania and Romania) and Germany have the largest companies employing more than 2 000 FTEs (Full Time Equivalent) each. According to NACE data, the gross operating surplus of inorganic fertiliser producers can be estimated at 9% for the whole EU. However, the profitability of fertiliser producers varies largely between Member States despite the existing harmonisation of the inorganic fertiliser market.

Table 7: Profitability of inorganic fertiliser producers corresponding to NACE 2415 in 2007(Source: Eurostat)

Number of enterprises

Turnover = gross premiums written

Value added at factor cost

Persons employed

Persons employed per enterprise

Gross operating surplus/ turnover

Number

€m

€m

Number

Number

%

EU27

1,058

19,583

3,672

564,000

53

9.0

Belgium

33

509

87

771

23

7.1

Bulgaria

15

236

39

2,445

163

10.2

Czech Republic

:

:

:

:

:

:

Denmark

8

17

3

29

4

6.0

Germany

54

3,397

951

10,512

195

11.3

Estonia

8

:

:

:

:

:

Ireland

12

295

46

375

31

9.2

Greece

10

212

53

837

84

8.0

Spain

228

1,309

277

3,607

16

11.0

France

175

3,295

328

5,350

31

2.8

Italy

187

1,541

199

2,855

15

5.6

Cyprus

0

0

0

0

:

:

Latvia

5

:

:

75

15

:

Lithuania

7

784

180

3,067

438

16.6

Luxembourg

0

0

0

0

:

:

Hungary

12

220

50

712

59

16.4

Malta

0

0

0

0

:

:

Netherlands

30

1,947

363

1,631

54

11.9

Austria

7

403

107

941

134

11.8

Poland

83

1,406

396

9,473

114

18.8

Portugal

22

:

:

:

:

:

Romania

22

491

61

5,589

254

3.5

Slovenia

6

:

:

:

:

:

Slovakia

:

:

:

:

:

:

Finland

14

489

74

730

52

4.1

Sweden

17

:

:

:

:

:

United Kingdom

74

1,904

257

2,622

35

4.7

7.Information about other fertilising products

The consultant mandated to support the Commission in the preparation of this impact assessment (the Fertiliser Study) was not able to provide a detailed overview of the economic importance and structure of the whole EU fertiliser market as data available in Eurostat, Datamonitor or Kompass is limited to inorganic nitrogen, phosphorus and potassium fertilisers. Data on other fertilising products are scarce and not always consistent and comparable.

In order to estimate the production, trade, employment and size of companies for other fertilising products, the consultants and the Commission have collected information directly from industry associations and reviewed economic literature. The information thus collected could not be verified by comparison to official statistics.  

7.1.The organic fertiliser sector

The organic fertiliser sector has traditionally been organised at the regional level, but trends towards more sustainable farming make organic fertilisers increasingly attractive to intensive farming systems.

Organic fertilisers (mainly livestock manure) contain the necessary content and forms of nutrients (essentially nitrogen) to grow crops but they need to be applied in higher volumes compared to inorganic fertilisers. For the whole EU, livestock manure and inorganic fertilisers are the main sources of nitrogen. More than 1 500 million tonnes of pig and cattle manure are produced each year as illustrated in the following figure.


Table 8: Estimated amount of cattle and pig manure in the EU 27 Member States
(
Source: FAOSTAT 2005)

 

Volumes of nutrients based on organic industrial by-products and waste 92 (excluding nutrients from manure) are much less important compared to those brought by inorganic fertilisers and raw manure. This organic ‘resource’ can be estimated as follows 93 :

332 800 tonnes of N (2.9% of the total yearly N inputs);

540 800 tonnes of P2O5 (15.2% of the total yearly P2O5 inputs).

On this basis, the Fertilisers Study has estimated that the market value of organic fertilisers (excluding manure) represents around 6% of the total inorganic fertiliser market value but with the potential to replace partly inorganic fertilisers if all valuable waste streams are used to recycle nutrients.

Most companies involved in this business are small or medium-sized companies (about 10 000 employees in total according to the Fertilisers Study), but are generally very well organised and have very effective marketing. In some Member States they have developed private quality schemes for mixtures of inorganic and organic fertilisers. The agronomic needs and use of organic fertilisers vary significantly from North to South. Mediterranean countries generally use these products more than the Nordic countries as climate and soil conditions favour the mineralisation 94 of the organic forms of nutrients.

The following figure shows the import, exports and production of organic fertilisers of animal and plant origin in 2011.

Table 9: Organic fertilisers (Prodcom code24156000) (Source: Eurostat, PRODCOM ANNUAL SOLD [DS-043408])

Export

Import

Production

1,000 tonnes

€m

1000 tonnes

€m

1,000 tonnes

€m

EU27

518

157

46

20

4,813

678

France

28

15

613

38

525

175

Netherlands

791

80

474

25

n.a.

n.a.

Germany

117

22

76

15

n.a.

49

Italy

394

129

134

42

736

210

United Kingdom

16

6

262

38

228

31

Ireland

46

9

48

6

480

40

Denmark

19

4

3

2

19

3

Greece

0

0

4

3

19

3

Portugal

4

1

31

15

195

19

Spain

41

21

44

19

488

62

Belgium

815

52

363

16

189

38

Luxemburg

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

Sweden

6

2

18

3

n.a.

n.a.

Finland

2

0

0

0

5

3

Austria

59

15

84

17

73

10

Malta

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

Estonia

n.a.

n.a.

3

1

n.a.

n.a.

Latvia

0

0

0

0

n.a.

n.a.

Lithuania

n.a.

n.a.

12

3

n.a.

n.a.

Poland

0

0

9

3

237

5

Czech Republic

10

2

6

2

n.a.

13

Slovakia

3

0

1

1

n.a.

n.a.

Hungary

23

4

14

4

n.a.

n.a.

Romania

0

0

8

5

n.a.

n.a.

Bulgaria

1

0

10

6

n.a.

n.a.

Slovenia

3

1

8

1

n.a.

n.a.

Cyprus

n.a.

n.a.

1

0

n.a.

n.a.

7.2.The organo-mineral fertiliser sectors

Organo-mineral fertilisers consist of organic matter with mineral compounds bound to it either chemically or by adsorption. Organo-mineral fertilisers are produced by treating humic acids or materials containing them (peat, lignite, silts) with ammonia, ammoniacal solutions of phosphates or phosphoric acid, and potassium salts.

The agronomic efficacy of an organo-mineral fertiliser is based on the interaction between the organic and inorganic components of the fertiliser which results in a dual mode of action:

The gradual release of nutrients as a result of the mineralisation of the organic component;

The general increase of the efficacy of the fertilisers through the presence of humified components that prevent the release or the immobilisation of nutrients from the soil.

The Italian market is the biggest market in Europe for the production and consumption of organo-mineral fertilisers and represents more than 360 000 tonnes of products per year. An European Association estimated the annual EU market of organo-mineral fertilisers at around 1.2 Mio tonnes. Other markets can be found in Spain, France, Germany, Belgium and the Netherlands.

7.3.The liming material sector

Lime is an essential raw material used in many applications (cement production, construction…) including agriculture. For instance, lime can be used for soil remediation (i.e. treatment of soils that have been polluted with hydrocarbons and heavy metals) and to correct soil acidity. However, agriculture uses less than 20% of the lime produced in Europe; the rest being used mainly in construction.

The European lime business is composed of around 100 companies employing 11 000 FTEs in 23 Member States 95 and producing an annual volume of 28.4 million tonnes of lime and dolomite with a market value representing approximately EUR 2.5 billion 96 (i.e. 500 million for the agricultural market).

As far as the agricultural sector is concerned, 4 or 5 companies are distributing liming materials across Europe. About 30 companies are active at national or regional levels. Most of them, especially SMEs, are connected with the traditional agricultural distribution network but they are generally managing a specific distribution network to better support farmers in their choice. Logistics are a specific and important aspect of this business which concerns large volume of products to be applied per hectare, which must therefore be produced as closely as possible to where they are used in order to reduce transport costs.

Commission Regulation (EC) No 463/2013 adapting Regulation (EC) No 2003/2003 to technical progress has harmonised 90% of the liming fertiliser market.

7.4.The soil improver sector

Soil improvers will be divided into two sub-categories: the organic soil improver category and the 'others' soil improver category.

The organic soil improvers sector depends primarily on recycling activities related to biodegradable waste (to produce compost or digestate). In practice, organic soil improvers are primarily applied to improve the physical structure by adding stable organic matter to the soil. In some Member States compost and digestate can be labelled as organic fertilisers if they exceed a defined minimum nutrient content level. In this case, it is the nutrient content of the product which is valued by the company and the organic matter becomes secondary.

Eurostat data for 2011 showed that on average 15% of the municipal waste in the EU-27 was treated by composting or digestion. Belgium, Luxemburg, the Netherlands and Austria composted/digested at least 20% of their municipal waste. The Eurostat dataset also suggested that composting/digestion of municipal waste is still relatively limited in Ireland, Greece and Portugal, as well as in most of the EU-12 countries, with less than 10% of the municipal waste being composted/digested. Nonetheless, composting/digestion figures of 17% for Poland and 10% for Estonia were recorded.

However, not all Member States report similar amounts of municipal waste production per capita. Hence, the largest per capita municipal waste composting/digestion figures were encountered in Austria (179 kg/person), the Netherlands (142 kg/person), Luxemburg (135 kg/person) and Germany (103 kg/person).

The figure below shows the evolution of municipal waste treatment options in the EU-27 until 2011, indicating that composting/digestion grew steadily during the last decade, from about 50 kg/capita in 2001 to 70 kg/capita in 2011.

Figure 10: Treatment of municipal waste in EU-27 from 2001 to 2011 (in kg/capita).
(
Source Eurostat)

7.4.1.The EU compost market

According to ORBIT/ECN (2008), the main compost exporting countries in the EU are Belgium and the Netherlands. On average, they exported 4.5 % of their annual production in 2005 and 2006. The main reason for exports in these cases was a low national demand because of strong competition with other cheap organic material (mainly manure).

According to the European Compost Network (ECN), the potential collectable annual amount of compostable bio-waste and green waste in the EU 27 is estimated at 81 million tonnes (more than 150 kg/inhabitant/year) of which only 29.5% (or 23.6 million tonnes) are currently collected separately and treated biologically. It should be noted however that compost producers usually supply markets within a distance of 50 km 97 around the producing plant or less. This corresponds to the distance that a lorry of 25 tonnes capacity can make within an hour for an average cost of EUR 50 to EUR 60. The transport costs and other marketing expenses are then covered by a compost price of EUR 5/tonne. All plants close to borders (less than 50 km distance) contacted by ECN underlined the importance of this local market and expressed their appreciation of the end-of-waste provisions which could potentially help them to overcome the constraints of selling their compost over the border. Nonetheless, ECN also mentioned cases in Germany where compost is being transported over a distance of 200 km.

Green waste and bio-waste represent around 80% of the composted biodegradable waste in Europe. European Compost Network estimated the European compost market size at up to 10.5 million tonnes (based on the ORBIT report – 2008).

Compost for agricultural use;

Compost for landscaping and gardening purposes;

Compost for professional horticultural use;

Compost for hobby gardening.

Table 9: market volume for compost products in the EU (Source ORBIT 2008)

Compost product

Market share

Amount of compost in tonnes

Medium price (EUR/tonne)

Market price (EUR)

Compost for agriculture use

48%

5 016 718

4.00

20 066 872

Compost for lansdscaping and gardening use

20%

2 090 299

10.00

20 902 992

Compost for the hobby market

12%

1 254 179

12.00

15 050 154

Compost for horticulture

20%

2 090 299

12.00

25 083 590

Total

100%

10 451 496

81 103 608

Taking the potential of 40 million tons of compost products into the calculation, compost products with a market value of EUR 310 400 000 could be produced.

The main markets for EU compost are illustrated in the table below with the corresponding market price


Table 10: Main market for EU compost (Source: ECN 2012 – information from 12 Member States)

Market type

Market ranges (%)

Market value
(consumer price in EUR/ton)

Agriculture

45-78

0-28

Horticulture

3-15

1-29

Landscaping

6-20

5-30

Blends/soil mix

10-15

5-15

Land reclamation

2-10

1-2

Hobby gardening

12-20

5-320

Export

6-7

Not available

The demand for compost varies in Europe depending mostly on soil improvements needs and consumer confidence. The EU initiative on a proposal for End of Waste criteria for biodegradable waste could significantly enhance demand in particular in areas where there is a high demand such as in the Mediterranean countries. However, the use of compost and digestate from biodegradable waste has limited capacity to solve the soil quality problems and/or plant nutrition needs. With a typical application rate of 10 tonnes/hectare/year, only 3.2% of agricultural land could be covered if all bio-waste were collected in the EU 98 . Whilst the need for inorganic phosphate fertilisers is declining in Europe, the complete recycling of phosphorus from all available phosphate organic sources will not be able to replace them completely. However, the promotion of bio-waste reuse would still manage to reduce the reliance of the EU agriculture on imports of inorganic phosphate fertilisers.

Without the gate fee (a charge levied upon a given quantity of waste received at a waste processing facility) paid by waste collection companies, the price of bulk compost for use as an organic fertiliser or as an organic soil improver would not cover the production costs, i.e. the costs of treating biological wastes in a composting plant. The prices achieved for compost for agricultural use in Central Europe are rarely higher than EUR 5/tonne of compost and, in most cases, lower. Often, the compost is actually given to farmers free of charge. A typical scenario in Germany is that the compost producer offers the compost material, the transport and the spreading of the compost on the field as a service to farmers, usually through subcontractors, and charges about EUR 1-2/tonne for the whole service.

Compost sales to agriculture become very difficult when there is a fierce competition with manure. This is the case in Flanders and the Netherlands, where, on account of the huge animal husbandry, a surplus in manure arises and up to EUR 30/tonne of manure is paid to the users. This and a restrictive application regulation make it difficult to sell compost for agricultural uses in those countries (ORBIT/ECN, 2008).

An interesting approach to generate higher revenues from compost is applied in certain compost plants in Germany. An external company provides the marketing tools, such as billboards, information folders etc. The local plant operator prepares the mixtures according to prescriptions and pays the marketing company based on the amount of compost products sold in bulk or bagged. In order to encourage citizens to respect source separation guidelines for biowaste collection and to create trust in the manufactured compost products that they purchase, references are made to regional affiliations on the compost bags. In this way, the consumers understand that the compost bought is the output of their proper collection and sorting efforts.

By using this marketing approach, plants do not only guarantee good compost quality, but they are also able to combine high turnover to private customers with high revenues. In this way, they can sell around 30% of the compost production to private end-users and generate prices of up to EUR 40/ton for compost and even higher prices for compost blends. A requirement for such a strategy is that the compost plant is situated in areas with a considerable number of garden owners.

The German Quality Assurance Organisation of Compost (BGK) calculated a theoretical price for compost based on its nutrient content. The fertiliser value for compost with 8.3 kg N/tonne, 3.8 kg P2O5/tonne, 6.8 kg K2O/ tonne and 25.1 kg CaO/tonne was considered to be EUR 11.3/tonne in April 2011. When the organic matter was taken into account, the monetary value of compost was calculated at EUR 22.8/tonne fresh matter.

The JRC-IPTS 99 2008 report evaluated the theoretical recycling potential of biowaste and green waste in EU 27 at around 124 million tonnes per year. An objective of 80 million tonnes per year (150 kg/inhabitant/year) is more realistic according to ECN which means that between 30 and 40 million tonnes of bio and green compost could be produced.

Furthermore, the potential production of compost from sewage sludge was estimated between 5 and 10 Mio tonnes/year. The potential for the production of compost from other organic materials cannot reasonably be quantified, because of the very heterogeneous properties even within one sub-waste stream. The suitability of treating those materials in an aerobic composting process depends on the composition, degradability, water or nutrient content (C/N ratio). Composting is not always the first choice. Most of the food and vegetable residues, for instance, are very wet which makes them more suitable for anaerobic digestion. For bark and wood, energy generation might sometimes be the preferred option.

Composting of collected organic waste from kitchens, households, gardens, parks and industries is currently happening at about 6 000 sites in the EU of which 40% treat only green waste. The number of composting sites is increasing regularly as composting is considered as a solution for providing a renewable source of organic matter for agriculture.

According to the European Federation of Waste Management and Environmental Services (FEAD), at least 1 100 companies (public or private, national or local) are involved in the manufacturing and trading of organic soil improvers. The business model includes two different sources of revenues: the input revenue for the waste collection and disposal, and the selling of compost after composting.

7.4.2.The ‘digestate’ market

The total amount of digestate produced in Europe is estimated at 56 million tonnes fresh matter/year. However, it should be noted that not all of the digestate produced is derived from biodegradable waste only. In view of the high prices paid for electricity produced from biogas (up to EUR 0.3/kWh), digestion plants frequently rely on energy crops as input material for biogas production.

Further data on digestion facilities for biowaste (source separated organics) and municipal solid waste is provided in a study by De Baere and Mattheeuws (2010). They made an inventory of the existing plants, contracted installations and plants under construction in several EU Member States.

Table 11: Installed capacity of anaerobic digestion plants for biowaste and municipal solid waste. (Source: De Baere and Mattheeuws, 2010)

Member States

Total capacity (tonnes/year)

Average capacity (tonnes/year)

Number of plants

AT

   84 500

   12 071

   7

BE

   173 700

   34 740

   5

DE

   1 732 805

   23 104

   75

DK

   31 000

   40 500

   1

SP

   1 495 000

   59 536

   25

FI

   15 000

   15 000

   1

FR

   862 000

   66 308

   13

IT

   397 500

   36 136

   11

LU

   23 000

   11 500

   2

MT

   45 000

   45 000

   1

NL

   476 500

   59 563

   8

PL

   52 000

   13 000

   4

PT

   85 000

   21 250

   4

SE

   40 000

   10 000

   4

UK

   202 500

   40 500

   5

Total

   5 175 505

   166

According to this study, the capacity of EU anaerobic digestion plants doubles every 5 years. Additionally, around 800 small agricultural co-digestion plants are located mainly in Germany, France and Austria.

The vast majority of the digestate is recycled in agriculture (80-97%). The application of digestate requires special equipment and therefore does not really fit the hobby market. It is estimated that the overall ratio of digestate to compost use on farmland is about 1/10 in countries with a well-developed compost market.

According to the European Biogas Association, several thousand tonnes of dried digestate produced from energy crops and manure are already available in the market and sold to fertiliser factories as well as transported across borders. Prices range from EUR 5 to EUR 30 per tonne dried digestate (production costs range from EUR 10 to EUR 30 per tonne excluding investment costs whereas revenues are generated by the sale of biogas), depending on the feedstock, content of nutrients and quality. Wet digestate are sold at prices of EUR 0 to 8/tonne, whereas composted digestate generally generate prices of EUR 0 to 50 per tonne; a price that competes with inorganic fertilisers and constitutes a new source of revenues for biogas plants. The wide price span is explained by different levels of demand across the EU regions, whereby regions with a high manure supply are characterised by lower digestate prices.

Very few Member States mentioned current exports or imports of digestate. Sweden and the Czech Republic explicitly mentioned not importing or exporting digestate.

Import or export of digestate is more likely to happen in smaller countries with a large digestate production and reduced uptake possibilities in the own market. As such, digestate is exported from the Flemish Region towards France, after it is treated in permitted manure treatment plants under Regulation (EC) No 1069/2009, or sanitised in the digestion plant. This concerns mainly the solid fraction of digestate (20-25% dry matter), digestate after biothermal drying (40-45% dry matter) or thermally dried digestate (65-85% dry matter). No liquid digestate is exported, except as incubation material to set up new anaerobic digestion plants abroad.

According to the German Quality Assurance Organisation of Compost (BGK), the fertiliser value for digestate (with 5.2 kg N/m3 fresh matter, 1.6 kg P2O5/m3 fresh matter, 2.3 kg K2O/m3 fresh matter and 2.2 kg CaO/m3 fresh matter) was EUR 6.4/m3 fresh matter in April 2011. When the organic matter is taken into account, the monetary value of digestate is calculated at EUR 7.2/m3 fresh matter.

Recycling rates of bio-waste, such as food, remains low. Only 7 Member States increased by 5 percentage points or more the rate of biowaste recycled between 2001 and 2010. As biowaste is estimated to constitute up to 37% of municipal solid waste in Europe, increased focus on this type of waste would be valuable. The target set out in the Waste Framework Directive that 50% of all household waste should be prepared for reuse or recycled by 2020 should be a strong incentive to value segregated sources of municipal waste.

Some materials of organic origin that do not undergo a composting or digestion process can be considered as organic soil improver for which the primary objective is not to improve the soil organic matter content but to improve other physical soil parameters such as for examples water retention or water drainage. This category of products would cover inorganic substances such as perlite, schist, sand… but also organic materials such as mulches. A description of the EU market for such products is not possible due to the lack of data. In France, the market sales of organic soil improvers other than compost and digestate is close to EUR 58 million and represent more than 600 000 m3 of products. This category of products would cover inorganic substances such as perlite, schist, sand… but also organic materials like mulches. A description of the EU market for mulch is difficult due to the lack of data. In France, the market sale for mulches is close to EUR 58 million and represents more than 600 000 m3 of products. The general public and municipalities are the dominant markets with respectively 70% and 30% of the market shares expressed in volume.

The EU market plastic mulch film is rather specific and does not appear in national statistic on soil improvers. However, according to industry experts, this market has a size of around 100.000 tons a year. Only 32% of the plastic mulch films are currently collected after use. The rest is burnt, landfilled or left on soils. Member States such as Spain, UK or Germany have not yet standards for biodegradability of plastic much in arable soils whereas France and Italy have already national standards in place.

It is estimated that no more than 3000 tons/year of plastic mulch films currently on the EU market are biodegradable. Only 2000 tons/year of such biodegradable plastic are able to meet the highest biodegradability requirements. The price of such films is three times higher than conventional polyethylene films. However, this would be to a large extent compensated by lower operational costs as the films would not have to be collected and recycled after each growing season.

7.5.The growing media sector

According to a socio-economic study of September 2008 conducted by the relevant industry association EPAGMA 100 , the peat and growing media industry in the EU has a strong influence on three levels: 1) extraction of the raw material, 2) production of growing media, and 3) usage of growing media in the horticulture and in the hobby market.

Most of the horticultural peat producers in the EU are small- to medium-sized companies but with strong presence in rural areas where peat reserves are located. Growing media are produced also in Member States that do not dispose of peat resources. About 500 companies are involved in the production of growing media in the following countries: EE, FI, DE, IE, LV, LT, NL, PL, SE and the UK. Most of these companies are SMEs while only 14 large companies have been found 101 .

The estimated number of full-time employees involved in the production, processing, development, marketing and sales of peat and peat-based horticultural products in the eleven ‘producer countries’ and five ‘consumer countries’ surveyed by EPAGMA is around 13 000.

In another survey conducted in spring 2007, EPAGMA indicated that over 37 million m³ of growing media were produced in the EU Member States surveyed; over 22 million m³ of this was for the professional market and about 15 million m³ for the hobby sector (representing a market value of about EUR 1.3 million in 2005 102 ). Peat was by far the main growing medium constituent representing about 29 million m³ of the growing media produced in Europe in 2007.

The largest overall peat producing countries in the EU are Finland, Ireland and Germany, harvesting 74% of the total EU production. Most of the peat produced in Finland and Ireland is used for energy purposes.

71% of the total amount of growing media produced in the EU (over 37 million m³) remain in the producing Member States, 25% is traded within the EU and 4% exported. However there are some deviations to this general trend: Germany is strongly export-oriented: 47% of the growing media produced in Germany remain in the domestic market, 46% go to the EU market and 7% outside the EU.

For performance, quality and availability reasons peat is the dominant constituent in the market. R&D focuses mainly on quality improvement, including peat substitution.

7.6.The plant biostimulant sector

Collecting economic data on the biostimulant sector is more challenging than for other fertilising products. The lack of a regulatory framework makes the collection of reliable statistics difficult as definitions for plant biostimulant products vary between Member States, even if there is official recognition of the product category.

According to a limited number of industry representatives and the European Biostimulants Industry Council (EBIC) 103 , the European bio-stimulants market value can be estimated at about EUR 400 million in 2010. It is mainly a national trade business and very few products are imported. 200 EU companies (90% SMEs) working on plant biostimulants have been reported so far accounting for 3 300 FTEs. 75% of those companies are located outside of dominant economic centres, thus providing a welcome source of skilled jobs in rural areas and small cities.

The plant biostimulant market is mainly developed in Spain, Italy, France, Portugal, the Netherlands and Germany and is growing fast, driven by economic and socio-political factors. Information provided by EBIC indicates that more than 6.2 million hectares of agricultural land are treated with plant biostimulants in Europe. The market is supposed to grow steadily at 10% or more per year (market forecast EUR 800 million in 2018 for EUR 500 million in 2013) for the foreseeable future. In 2012 R&D investments represented between 3% and 10% of annual turnover. Companies also form partnerships with universities and research organisations.

Although most important EU players are already exporting to 40 third countries i.e. South America, North Africa, Middle East and Asia. A CE mark for plant biostimulants is considered by industry as a positive marketing argument that would greatly facilitate further exports.

A recent study by PiperJaffray 104 estimates the global plant biostimulants market at approximately $ 1 billion with annual growth of about 20%. The same study indicates that the largest regional market for bio-based products (including plant biostimulants and biopesticides) is North America, currently accounting for around 40% of sales. Europe, Asia and Latin America, represent 25%, 20% and 10%, respectively. PiperJaffray indicates that there are a couple of significant explanations for these trends. First, growers in North-America and Western Europe are generally about 5-10 years ahead of developing new products. Second, most biological developers and distribution networks are situated in developed countries. Finally, middle-class demand for organic foods, residue-free produce and overall wellness has been much stronger in developed countries.

Plant biostimulants are generally sold in mixture with liquid fertilisers for high value crops. Very few of them are sold as solid products as they are typically applied in foliar treatments. An exception to this is the development of plant biostimulants applied on high value seed crops (e.g. coatings of vegetables seeds).

Factors of growth can be summarised as follows:

Plant biostimulants use is spreading from some pioneer countries to a wider number, both within Europe and the rest of the world;

The plant biostimulants sector has developed new innovative products targeting specific agronomic needs, thus attracting new customers;

Biostimulant products were initially primarily used in organic production, based on organic raw materials, and on high-value fruit and vegetable crops. They are increasingly being introduced in conventional crops to respond to economic and sustainability imperatives;

Recent high and volatile prices for agricultural inputs such as fertilisers have created incentives for farmers to optimise the efficiency of input use;

In response to consumer demands for healthy food crops with minimal environmental impacts, farmers are looking for ways to use synthetic chemicals and inorganic fertilisers more efficiently and effectively. Plant biostimulants are therefore increasingly seen by farmers as a way to improve return on their investment in other inputs and as way to respond to consumer demands for a 'greener' or more sustainable agriculture.

7.7.Market overview of the agronomic fertiliser additives (fertilising additive)

According to a report discussed at an International Conference on slow and controlled release (CRFs) and stabilised fertilisers (SNFs) in 2013, the key characteristics of the market for such products 105 are:

Markets for CRFs and SRNFs are globalised for already several years:

The United States, Western Europe and Japan have historically been the 3 largest world regional markets for CRFs. The US CRFs market (700,000 tons) is almost 5 times larger than the Western European market (150,000 tons), based on product volume, and nearly 13 times larger than the Japanese market (about 50,000 tons);

In the EU, the CRFs market distribution reads as follows (2009 data):

61% of the total volumes go to professional markets;

29% to consumers; and

10% directly to agricultural crops

The projected average annual growth rate to 2015 is about 1.5%-2.5% in Western Europe, slightly lower than growth rate in the US (2.0%-3.5%) and in Japan (3.0%-4.5%);

The global market for stabilised N fertilisers (SNFs) is developing rapidly:

US and Western Europe consumptions of SNFs amounted to an estimated 3,381,000 and 129,000 metric tons of nitrogen in 2010 respectively;

Nitrification inhibitor-stabilised fertilisers are widely used in Japan; however consumption data are not available.

It can be observed that business is dominated by a small number of large chemical international companies which have developed new innovative products that are added to commodity fertiliser formulations. The exact number of such companies and the related number of employees active in the Union is unknown.

The main obstacle to the wider use of slow- and controlled-release fertilisers, particularly in agriculture, is their cost compared to conventional fertilisers. Farmers who grow high value crops can more easily afford to pay for slow- and controlled-release fertilisers.

Prices for controlled-release and stabilized fertilisers vary locally and seasonally. In general, the prices for slow- and controlled-release fertilisers are substantially greater than those for standard fertilisers but as raw material prices rise, the cost gap becomes smaller while the benefits from efficiency increase. Lammel (2005), at the IFA International Workshop on Enhanced-Efficiency Fertilisers presented the following figure on the price relationship of the different product groups.

Figure 11: Price comparison of slow and controlled-release fertilisers with standard fertilisers (Adapted from Lammel 2005).

NPK Ni inhibitor Slow release Coated

8.Summary of economic data

The following table summarises the above-mentioned data:

Table 12: Data summary per fertilising products and additives

Sub-sector

Market value (sales)

Market volume

Employment (FTE)

Companies

SME representation

R&D investment on turnover

Additional information

Inorganic fertilisers

EUR 17 billion

Mature market

-    WORLWIDE
170 Mio tonnes

(2008-2009) (of which 60% nitrogen)

-    EU MARKET 16 Mio tonnes nutrients (consumption/year)
(9% of world volumes

56 400

1 056 companies (Source: ESTAT)

-    Nitrogen production: Low

-    Potassium production: Low

-    Phosphate production: Low

-    Blends: High

0.05%

Market with different actors for each nutrient

Developed distribution networks

Low risk of substitution through organic fertilisers

Organic fertilisers (excluding manure, compost and digestate)

EUR 1 billion

Moderate market value increase potential

-    EU MARKET

-    332 800 tonnes of organic N (2.9% of total N inputs)

-    540 000 tonnes of P2O5 (15.2% of total P2O5 inputs)

-    On average this means about 6% of total inorganic fertiliser market

2 600

95 companies

Very high (98%)

3%

Some producers also active in bio-stimulant and soil improver sectors

Market developed mainly in Mediterranean countries

Organo-mineral fertilisers

EUR 475 million

High market value increase potential

Producing Member States: IT, FR, ES, DE, BE, NL

1 650

75 companies

Very high

1%

Main markets in IT, ES, FR, DE, NL, BE, HR + Serbia. High exports to non-EU MS. Market potential in other MS

Liming materials industry

EUR 500 million

Mature market

-    EU MARKET

-    5.6 million tonnes

2 200

30 companies active in the agricultural sector

Very low for producers

Very high for distributors

0.5%

Part of a larger business sector where the agriculture market represents only 20%

Soil improvers sector (mainly products from waste) recycling activities, compost and digestate)

EUR 500 million

High market value increase potential

-    EU MARKET

23.6 Mio tonnes of bio-waste collected separately out of 80 Mio tonnes collectable: 23.6 Mio tonnes

13.3 Mio tons compost produced from the 23.6 Mio tonnes collected:

Green waste compost: 5.6 Mio tonnes

Bio-waste compost: 4.8 Mio tonnes

Sewage compost: 1.5 Mio tonnes;

Mixed waste compost: 1.4 Mio tonnes

Agricultural use + growing media products = 70% of consumption.

20 000 for the whole sector including the treatment of non-sorted waste (municipal waste and sewage sludge), the production of compost and digestate from energy crops, and source segregated raw materials and the production of mixed waste

Around 8 000 companies, including very large waste processors and a majority of SMEs active in the production of compost and digestate from source segregated waste

Very high

3%

The turnover of EUR 1 045 billion results from 2 sources:

First and for the largest part, the price paid by waste producers to deliver waste to the compost producing plants

Second and for a minor part, the price paid by the users of compost

It is this second part which might be considered as being part of the fertilising products market. We estimate it at EUR 500 Mio maximum

Growing media sector (mainly peat)

EUR 1.3 billion

Mature market

-    EU MARKET

-    74% of EU production located in FI, IE and DE

-    Intense intra-EU trade (25% of global EU market) compared to other organic product markets

-    37 Mio m3 equivalent to circa 11 Mio tonnes according to EPAGMA

13 000

500 companies including 14 large companies

Very high

1%

Fertilising additives

EUR 640 million

High market value increase potential

-    EU MARKET

Markets in ES, FR, IT, DE, BE, DK, HU, PL, UK, NL,PT,CZ

3 300

200 (Source: industry)

Very high

3%

Source: The Fertilisers Study and industry communication

ANNEX II

Additional evidence illustrating the problems with the current regulatory framework

Fragmentation of the internal market

During the ex-post evaluation, the European growing media manufacturers association reported that they face diverging quality requirements. Growing media marketed in several Member States have to bear different labelling information and comply with divergent product standards in accordance with national rules. The compliance with those diverging rules entails additional costs for industry. They have also to be constantly aware of the new provisions introduced by the Member States in national legislation.

The following examples show that any change in national legislation has financial consequences on businesses. Many departments within one single company may be affected by a change in legislation (IT/Quality/production/Sales/Administration).

Example 1:

The first case study relates to the costs of introducing an existing substrate into a new EU Member State. These mainly concern labeling and packaging costs as the national labeling system on growing media shall apply.

Table 13: estimation of the costs of adapting the labeling and packaging of one GM to the national rules of one Member State

Example 2:

The second case study is linked to the diverging requirements for growing media among the Member States. For example, in one Member State, specific phytosanitary products can be mixed with growing media whereas in other Member States phytosanitary products in growing media are simply not allowed. In this latter case, an application file has to be compiled and submitted to the ministry for registration of the growing media as ‘mixed product’. The file must contain many analyses proving the efficacy of the mixed product as well as its effect potential negative effects on the environment.  Every time, the composition of the mixed product is changed, a new file has to be submitted.

Table 14: estimation of the costs of compliance to diverging requirements among two Member States

Mutual recognition applied to national fertilisers

The ex-post evaluation concluded that, despite the provision of a legal framework for the application of mutual recognition under the MRR, economic operators have made very little use of this mechanism for fertilising products and additives placed on the market according to national laws. Data collected for the evaluation indicated that in most countries no more than 5-10 products per year had been sold on that basis. Companies interviewed for the evaluation showed limited familiarity with MRR, and expressed fear that Member States may still block entry of their products into national markets.

The Commission has already taken steps to improve the practical implementation of the MRR for such products. For example, the Commission verifies the presence of an adequate mutual recognition clause in draft national technical rules communicated under Directive 98/34. In this regard, the Commission interpretative communication on the practical application of mutual recognition (2003/C 265/02) proposes four model clauses to Member States. Moreover, in 2011, in addition to other guidance documents clarifying the concept of mutual recognition, the Commission issued a specific guidance document 106 for fertilisers which unfortunately have not helped to remove the lack of confidence from stakeholders  107 .

Businesses often allege that national authorities of Member States of destination do not accept certifications already provided by the Member State of origin. Businesses are often required to pay fees, repeat tests and prepare requests for the mutual recognition 108 that are specific to each Member State. Some producers have challenged decisions of competent authorities by filing a complaint or lodging a complaint to a national Court with the related costs (between EUR 5000 and 10.000 – Source industry federations).

Companies often do not have any information on the best tool available for trading their products to another Member State. They thus cannot choose in full knowledge of the legal situation and consequences between conforming their products to the importing Member State’s rules – and possibly having to modify the product – and relying on the Mutual Recognition procedure.

This lack of knowledge on the costs and timeframe of each option is coupled with unawareness of SMEs on the applicability of the Mutual Recognition Regulation.

The views of Member States on the mutual recognition of national fertilisers are illustrated in the yearly reports on the implementation of the Mutual Recognition Regulation.

Under Article 12(1) of Regulation 7642008 (EC) laying down procedures relating to the application of certain national technical rules to products lawfully marketed in another Member State of 9 July 2008 (hereinafter, ‘the Mutual Recognition Regulation’ or ‘MRR’), “each Member State shall send the Commission on a yearly basis a report on the application of this Regulation.”

In these reports, national authorities shall state the following:

the number of decisions taken by the competent authorities in the period, negatively affecting the marketing of products imported from other Member States, the authorities involved and the legal basis on which the decisions were taken;

an analysis of types of products and/or sectors in which the Regulation was applied most often;

information on the structure and functioning of the Product Contact Points (PCPs);

an assessment of any difficulties experienced applying the Regulation and proposals for possible improvements;

an assessment of the impact of the Regulation on the practical functioning of the MRR.

The yearly reports currently available cover the period from May 2009 (since the application of Regulation 764/2008) to December 2012.

The following main conclusions can be drawn from these reports:

(1) The opinions of the Member States have been almost unanimously positive as regards the effectiveness of the Regulation in raising the awareness of the principle of mutual recognition among those businesses involved in intra-EU trade;

(2) The majority of decisions, requests for information and complaints received by the national administrations concern specific categories of goods: articles of precious metals, foodstuffs, food additives and food supplements, construction products, fertilisers, automobile spare parts, electrical products, and spring water.

(3) As regards the application of mutual recognition where prior authorisation is applied, some Member States highlighted the confusion which exists for these products. Prior authorisation procedures are, as such, excluded from the scope of MRR, as explained in its Recitals 11 and 12. However, it follows from the case law of the Court of Justice that these procedures restrict the free movement goods 109 .

Prior authorisation procedures imply that a company needs to formally apply to the competent authorities of the Member State where it wishes to benefit from mutual recognition before the product may be placed on the market. The MRR has left such requirements out of its scope, while recalling that they restrict the free movement of goods, and therefore are permitted only in so far as they are justified by a public-interest objective and comply with the principle of proportionality.

The Court of Justice has judged that prior authorisation procedures had gone beyond what was accepted under free movement rules. 110 It follows that this possibility left to Member States opens the door to some difficulty in its application.

For fertilising products, it has been seen as an obstacle by competent authorities as well as companies. For example, in its 2011 yearly report, CZ highlighted the difficulty it experiences with its own preauthorisation procedure: “since [the testing bodies carrying out the ‘authorization processes’] are not administrative bodies capable of taking administrative decisions, national authorities find it uncertain in what way these bodies should apply the mutual recognition principle. Moreover, it is unclear if the types of authorisation schemes, which they are in charge of, are obligatory and could be regarded as prior authorisation procedures within the meaning of Court of Justice case law and paragraphs (11) and (12) of the Recitals of MRR.”

Below are the main points highlighted in the yearly reports sent by the Member States to the European Commission on the specific issue of the application of the principle of mutual recognition to fertilising products.



2010

These first reports after the application of the Mutual Recognition Regulation from 13 May 2009 do not bring much information as many Member States underlined it was too early to draw effective conclusion on the implementation of the MRR.

However, these reports do show that some Member States had already identified fertilising products as a particular obstacle for the smooth implementation of mutual recognition.

For the period May 2009 to May 2010, the yearly reports show that 20 Member States mentioned fertilising products as one product for which they had the most queries: Belgium (21%); Germany (28%); Luxembourg (30%); Slovakia (13%); Spain (43% for the chemical sector); Portugal (21%); France (14%)…

Further, Austria, Hungary and Slovakia highlighted specific difficulties in dealing with requests of mutual recognition for fertilising products.

In its yearly report 2010, Austria reported fertilising products as the only goods posing particular difficulties for the implementation of the Mutual Recognition Regulation. According to Austria, fertilising products were difficult to accommodate with the Mutual Recognition Regulation in particular as regards market surveillance and controls, product checks, non-compliant products, and uncertainty for consumers because of diverging national rules.

In its yearly report 2010, Hungary indicated to have issued a written notice under Article 6 (1) of the Mutual Recognition Regulation, as well as a decision on the basis of Article 6 (2) 111 of the Regulation. Both decisions concerned “products increasing yield”.

Hungary underlined that it had put in place prior authorisation procedures for fertilising products which economic operators had difficulties understanding and implementing within the framework of mutual recognition.

In its yearly report 2010, Slovakia underlined that even though there had been no decision affecting negatively the marketing of imported products, the authorities had taken “preventive measures to reclaim the principle of mutual recognition”. According to Slovakia, “these cases were not linked with unwillingness of the competent authorities. They occurred due to complicated legislation in several product categories belonging mostly to partially harmonised area such as textiles and fertilisers”.

2011

For the period May 2010 to December 2011, the Member States' yearly reports on the implementation of mutual recognition show that 12 Member States out of 27 listed fertilising products as one of the products for which they received the most queries. Further, 7 Member States mentioned having issues with products subject to prior authorisation procedures, which is often the case of fertilising products.

Apart from general issues with the implementation of the mutual recognition principle, in particular language and access to information as well as scope issues, Member States highlighted that they face particular problems when it comes to the mutual recognition of some products.

The Belgian and Austrian yearly reports for 2011 highlight the particular obstacles faced for a smooth application of mutual recognition to fertilising products.

In 2011, Belgium reported that 9% of all enquiries made to the Belgian Product contact Point related to fertilising products. The problems related to the placing on the market of fertilising products as well as with designation and labelling of the products.

The Belgian report for 2011 highlighted that in addition to the queries directly received by the Product Contact Point, the Pesticides and Fertilisers authority regularly receives enquires about the marketing in Belgium of fertilisers and soils improvers which are already on the market in another Member States and to which the Mutual Recognition Regulation applies.

Mainly, the Belgian report highlights that differences between national rules on product designation and product categories lead to different designations being given to the same product; the differences in methods of analysis in various Member states makes it difficult for national authorities to verify the composition of products as well as to monitor them.

Finally, Belgian authorities shared their views that the application of the mutual recognition principle has lowered the safety of products, as certain products placed on the market in other Member States had to be admitted on the Belgian market even though the authorities felt there was insufficient proof that these products were safe.

The Belgian authorities concluded the 2011 report in highlighting that “in [their] experience, Regulation 764/2008 is not the best way to facilitate the trade in fertilisers, soil improvers and cultivations substrates in the EU. In Belgium, the Regulation has lowered the level of protection, made monitoring more difficult and led to less transparency for consumers.”

The 2011 Hungarian report emphasises the issues of mutual recognition of fertilising products, products for which prior authorisation procedures have been put in place in Hungary:

The Agricultural Administration Office has already pointed out the problem regarding the implementation of the Regulation where there is no prior authorisation procedure in most EU Member States for products considered as ‘yield-enhancing products’ in Hungary. Clients from these Member States do not wish to accept that Hungary has a different procedure for these products. Each year some 90 to 100 clients contact the Office (in person or by e-mail, sometimes via the contact point) in connection with the mutual recognition of products, and it is difficult to make them accept that they have to request authorisation from the competent authority before placing the product on the market. It would be much simpler if, similarly to EC fertilisers, there were EU-level harmonisation in respect of the other yield-enhancing products.

There were no cases during the implementation of mutual recognition where an authorisation for a product lawfully marketed in another Member State could be accepted without further tests being carried out. The authorisation procedure in Hungary for yieldenhancing products is stringent when it comes to the tests required to protect human, animal and plant health, consumers and the environment and in terms of the limit values applied.” (emphasis added)

In its yearly report for 2011, CZ highlights the fact the difficulty in applying mutual recognition to goods subject to prior authorisation procedures: “for the time being there is an immense legal uncertainty involved as to how to apply the mutual recognition principle in practice.”

2012

For the period January to December 2012, the Member States yearly reports on the implementation of mutual recognition show that 20 countries out of 27 listed fertilising products as one of the products for which they received queries through their PCPs. Seven Member States specifically listed fertilising products as being a difficulty for the smooth application of the MRR. Further, 10 Member States mentioned having issues with products subject to prior authorisation procedures.

These latest reports show that over the period January to December 2012, the three Member States to mention specific issues with mutual recognition of fertilising products in 2012 had already raised the subject in 2009.

A decrease in queries received by PCP on fertilising products could be noticed in the period 2009 to 2012, which could mean either that economic operators know the rules to be applied, are unaware of the rights conferred to them by the MRR or that they do not wish to place their products on other markets 112 .

Despite the general acknowledgment that the rules and principle of mutual recognition are well-known by national authorities as well as by economic operators, the issues reported in 2009 for fertilising products do not seem to have reduced in the Member States concerned.

Hungary, Austria and Slovakia raised once again the same issues they had in their previous yearly reports.

As in its 2009 yearly report, AT indicated persistent issues with the application of the Mutual Recognition Regulation to fertilising products, in particular in relation with product designation, labelling, market surveillance and the uncertainty it creates for consumers.

HU reported a total of 21 decisions taken on ‘yield-enhancing products’ in 2012, with three decisions resulting in products being withdrawn from the market and three other decisions to redress labelling issues of products placed on the market.

It justified the number of decisions taken in indicating that economic operators did not understand the regulatory framework for these products where prior authorisation applies.

HU called for harmonisation of the whole fertilising products market: “the regulatory environment would be clearer if, as with fertilisers, the on-going EU level harmonisation was achieved in respect of other yield-enhancing products”.

In its 2012 yearly report, SK indicated that “the persisting problem of application of the Regulation remains demonstrating that the product has been already lawfully marketed in another Member State. Placing on the market does not instantly mean that the product meets all the legal requirements. Verification of compliance with all requirements by the network of contact points is time, but also administratively burdensome. Problems remain also in the product groups where some prior authorization procedures exist.”(emphasis added)

2013

The yearly reports confirmed the continuous decrease in enquiries received by PCPs on fertilisers. In 2013, fertilisers represented around 5% of the requests received by the PCPs while they represented more than 20% in 2009 and 2010 in some Member States. This means either that economic operators are still unaware of the rights conferred to them by the MRR or more likely that they abandoned the idea of marketing national fertiliser in accordance with the MRR.

Around 10 Member States still reported problems with the mutual recognition of fertilisers and in particular for organic-based fertilisers.

The Belgian PCP reported that an administrative decision on the basis of a technical rule was taken against a particular fertiliser for which the competent authority had some concerns.

AT confirmed high costs of checking all products against the Austrian requirements and the national requirements of the Member State of origin. The discrepancies between national rules create uncertainty for consumers.

 

PT clarified that during the period under analysis, economic operators lodged three appeals against the confiscation of products labelled as 'fertilisers'. The Courts decided in these three cases to maintain the decision as there were indications that the products did not comply with the applicable legislation.

Hungary, Austria and Slovakia called again for a rapid harmonisation of the rules for organic based fertilisers.

Weaknesses of the current Fertilisers Regulation

On top of the most critical deficiencies described in Section 3.3, the results of the interview programme of the ex-post evaluation have identified the following issues:

Several Member States have reported cases of inorganic fertilisers being put on the market as EC Fertilisers to avoid the limit values for contaminants (e.g. heavy metals) that had been established in national legislation.

The labelling requirements for EC fertilisers are not very clear and scattered in at least 5 different Articles of the Regulation

Some safety provisions should be included for coating agents which are used in combination with fertilisers to delay the release of nutrient in the environment

Some stakeholders considered the definition of the term ’manufacturers’ in the Regulation as not appropriate and would like different definitions for importers, distributors and producers.

ANNEX III

Evaluation of administrative burden costs

1.Assumptions

The administrative costs have been estimated based on the following main assumptions:

Clustering of Member States according to blocks for extrapolation to EU level

In order to estimate the workload (and thus the cost) for the placing on the market of new fertilising products, information was collected from relevant stakeholders (the Commission, four national administrations and the European Committee for standardisation - CEN) via specific questionnaires. Direct payments (e.g. fees) incurred by industry were directly collected from four national administrations. The elements obtained were extrapolated to all Member States in order to estimate the overall costs related to the management of the current EU and national legislation and the costs of marketing either EC or national fertilisers. Information about the costs of market surveillance was also gathered.

The table below summarises the main characteristics of the Member States' national policies selected for the case studies. It is assumed that all current national legislations would be more or less covered by the representative type of legislations mentioned below. However, it has not been found possible to specify the degree by which national legislations are covered by each type as they are often composed of different requirements that could fit several different types. The analysed national regulatory approaches have been ranked from the most expensive to the least expensive.

Table 15: Characteristics of the four regulatory approaches analysed in the case studies

Member State

Main characteristics of the regulatory approach
concerning the registration of new products

(classified from the most demanding to the less demanding legislation)

France

New fertilising products not covered by existing national standards

Full authorisation procedure requiring from the applicant a technical file on the risks and effectiveness of its product. Data are evaluated by the French Agency for Food, Environmental and Occupational Health and Safety. If approved, the applicant receives an authorisation number to market the product. The authorisation is valid for 10 years.

Listing of national standards describing well-known products

An important number of standards for the well-known products have been developed. They contain lists of authorised type designations (products and ingredients), information about the methods of production and agronomic parameters (e.g. minimum nutrient content). The specific labelling information that need to be declared for each type is also described as well as the corresponding methods of analysis. These standards have reduced the costs of registration for non-innovative products which represent 95% of products placed on the market in France. A previously authorised material can be inserted in a standard only after a long period of historical use. In this case, other manufacturers can use the newly created type to market a similar product.

Frequency: 9 full registration per year on average (12 in 2012, 5 in 2011).

Czech Republic

System based on notifications (free of charge) for specific product types (i.e. inorganic fertilisers, liming materials and several organic fertilisers).

For other materials, an individual registration procedure including safety assessment and agronomic testing is requested. A broad set of technical specifications on labelling, production method, storage and usage need to be respected.

Frequency: 147 113 individual registrations and 83 114 notifications in 2012.

UK

New fertilising products

The procedure is comparable to the system as laid down in the Regulation (EC) 2003/2003 and involves the participation and consultation of a large number of actors.

Previously authorised fertilising material

A list of authorised fertiliser types exists 115 , for which a number of requirements are defined. The products conforming to these requirements can be placed on the market.

Frequency: 4 to 6 requests for registrations.

Netherlands

Authorisation procedure is based on a set of generic criteria that applies to all fertilising products (except for waste and industrial by-products for which specific criteria apply).

Each producer is responsible for compliance with these criteria and might be subject to market surveillance control. Registration of national producers and traders is mandatory.

Frequency: No registration dossiers for new products.

Labour costs

Estimates of labour costs are expressed in terms of a number of Full Time Equivalents (FTE) necessary to perform the required tasks each year. As detailed information on the salary costs of administrative staff employed in the fertiliser sector are missing in the EU Administrative Cost model, information about the category 'Professional' for the targeted Member States was collected as part of the 'Action Programme Reducing Administrative Burdens in Europe'. These costs have been further increased by 25% to take into account overhead costs. This leads to an average yearly gross salary cost per FTE of kEUR 75 for industry. For the tasks performed by the European Commission, a yearly gross salary of kEUR 60 has been assumed, to which also 25% of overhead was added. Member States specific salary costs have been assessed for the 4 case studies mentioned above and are further detailed in Table 14. Finally, it was assumed that one FTE corresponds to approximately 220 effective working days.

Number of enterprises

The number and size of enterprises affected varies largely under the different categories of products. Although good statistical data are available for the inorganic fertiliser market, there is less information about the numbers and sizes of companies producing other fertilising products. Therefore it has not been found possible to differentiate the costs for the different types of companies. Some measures to reduce administrative burden for SMEs are discussed under Section 4 of the present annex.

Calculated costs are maximum costs

Member States have adopted different regulatory procedures for fertilising products. It is thus very difficult to give a detailed estimation of the costs of each approach. Therefore the costs calculated are expected to be maximum costs. In those Member States where one of the proposed options is already (partly) applied, the costs for both operators and Member States for enacting the option in question would be lower than calculated here.

Calculated costs are recurring and one-off costs

The costs presented for the different options are both recurring costs (e.g. costs of Fertilisers Working Group meeting, costs of labelling obligations…) that would occur once the respective options would be fully operational and one-off costs (e.g. costs of registration of new products) as they are likely to be significant costs.

Costs related to information obligations

As one important objective of the future proposal is to correctly inform professionals and consumers about the composition of the final products, the report has tried to evaluate the costs for industry to analyse and label their products in accordance with the criteria set out for the different categories.

2.Limitations

On the basis of interviews with industry representatives, it appears that the costs related to respecting the imposed obligations can vary greatly within the same fertilising material category depending for example on the complexity of data requirements for registration dossiers. Therefore, it has not been found necessary to try to differentiate costs between subsectors (except for the one-off costs under Options 4) since variability of costs within the same subsector can already be very high.

3.Detailed assessment of the administrative costs

This paragraph clarifies the method followed to estimate the administrative costs of each option. Sections 3.1 to 3.5 contain information on the estimation of the costs under the scenario of full harmonisation. Section 3.6 explains how the costs under the partial harmonisation scenario have been determined.

3.1.Option 1

Costs of governance of EU and national legislation

These costs include:

Costs of management of the Fertilisers Regulation by the Commission (A.10);

Costs related to the organisation of Fertilisers Working Groups meetings (A.20);

Costs of governance of national legislation (A.30).

A.10    Costs of management of the Fertilisers Regulation by the Commission

Currently, 2 FTEs are allocated by the Commission for the management of the Fertilisers Regulation. The total yearly costs are estimated at EUR 150 000 (A.10).

A.20    Costs related to Fertilisers Working Group meetings

The Commission is assisted by the Fertiliser Working Group, which is composed of experts from the Member States, in the presence of observers from industry to ensure the correct implementation of the Fertilisers Regulation. Such meetings are currently organised twice a year. The annual costs of the meetings are described in Table 17.

Table 16: Analysis of the costs for the management of meetings of the Fertilisers Working Groups

A.20

Travelling costs reimbursed to each national expert (EUR)

Number of meetings

Number of expert
(BE is not reimbursed)

Annual salary costs 116
(EUR)

Time spent (fraction of FTE/year)

Annual Adminis-trative costs
(EUR)

Commission

   750 117

2

27 118

n/a

n/a

   40 500

Member States

Travelling costs for additional national experts

   750

2

8 119

n/a

n/a

   12 000

Salary costs for preparing and attending the meetings

   

34

72 250 120

0.018

   44 220

Industry

Travelling costs for industry experts

   750

2

20

n/a

n/a

   30 000

Salary costs for preparing and attending the meetings

   

20

75 000

0.018

   27 000

Total

153 720

A.30    Costs of governance of national legislation

The costs related to the management of national legislations have been estimated based on information collected from four Member States representing the most important regulatory approaches for fertilising products. The figures obtained are then extrapolated to the EU 28 Member States to determine the overall costs relating to the management of national legislations in the EU. These costs cover the management of national legislation and the preparation of technical files supporting requests for derogation made in accordance with Article 114 TFEU.

Table 17: Analysis of the costs for managing national legislations

A30

Country specific annual salary costs 121
(EUR)

Time spent (number of FTE/year)

Annual Administrative costs (AAC)
(EUR)

France

100 000

2.5

   250 000

Czech Republic

40 000

0.2

   8 000

United Kingdom

76 000

0.3

   22 800

Netherlands

75 000

1

   75 000

Average for 1 MS

72 250

1

   88 950

Total for 28 MS

   2 490 600

As it is assumed that those 4 MS are representative for the EU average (in terms of e.g. wages, size of the country, etc.), the figure above represents only a rough estimation of the costs of managing national legislation.

Table 18: Summary of the costs incurred by all stakeholders for the management of the EU and national legislation under Option 1 as identified under A.10, A.20 and A.30 above

Stakeholder groups

A.10 (EUR)

A.20 (EUR)

A.30 (EUR)

Total annual costs (EUR)

Commission

150 000

   40 500

   190 500

Member States

   56 220

   2 490 600

   2 546 820

Industry

   57 000

   57 000

Total

150 000

   153 720

2 490 600

2 794 320

Costs of registration and standardisation

The assessment of these costs has been divided into four categories:

The costs related to the preparation and assessment of applications for the registration of fertilisers under EC law (B.10);

The costs related to CEN standardisation activities (B.20) which cover:

The annual costs to prepare draft standards and maintain published EN standards for the product categories covered by the current CEN mandate on EC Fertilisers (B.21),

The costs of participation in CEN meetings (B.22),

The EU budget allocated to the CEN CENELEC Management Center (CCMC) to manage the current mandate (B.23);

The costs related to the registration of fertilisers as national fertilisers (B.30) per year for the whole sector;

The costs related to the Mutual Recognition Regulation of national fertilisers (B.40).

Costs related to the preparation and assessment of applications for the inclusion of fertilisers as 'EC Fertiliser'(B.10)

Since the entry into force of the current Fertilisers Regulation, 18 technical dossiers for the inclusion of new types in its Annex I were submitted to the Commission and then examined in the Fertiliser Working Group. This corresponds to an average of 3 dossiers per year. The costs for the Commission for dealing with these dossiers is included in the cost calculated before under A.10.

The cost for Member States is composed of the costs for the Member State supporting the dossier and the costs for the other Member States to review the application for listing the new type.

In general, new entries in the Fertilisers Regulation are subsequent to its approval for national fertiliser. Therefore, the costs for the supporting Member States are covered by the costs for registration of national fertilisers calculated under B.30.

The costs for industry relate to the submission of a technical dossier for analysis by the Fertiliser Working Group. The most sophisticated and costly national registration procedure (i.e. France) was taken as the basis for this calculation given that companies often use the same information that was previously submitted for obtaining a national authorisation/-registration. It is therefore assumed that the cost related to the preparation of a technical dossier at EU level amounts to approximately EUR 50 000 122 . Multiplied by the average number of 3 dossiers per year, this translates into a total annual cost of EUR 150 000 (B.10).

Only the costs to evaluate the substance in the framework of the Fertilisers Regulation have been evaluated (i.e. agronomic efficacy, safety of products, availability of test method). The REACH registration costs have not been taken into account as they do no result from the requirements of the current Fertilisers Regulation – even though according to the technical guidance, dossiers submitted under REACH could be used to assess the safety of a substance used as the main component of a new fertiliser type.

Costs related to CEN standardisation activities (B.20)

In order to fully understand the cost related to the development of standards by the European Committee for Standardisation (CEN), a description of the standardisation work is available in Section 4 of this annex.

The standardisation work related to the Fertilisers Regulation is currently performed by CEN/TC 260 'Fertilisers and liming materials' 123 . The total cost related to this work can be divided into the costs of drafting standards (Table 20), the costs of TCs meetings to discuss and approve the EN standards (Table 21) and the EU budget to support CEN activities in relation with the Mandate M 335 on fertilisers and liming materials (Table 22):

Table 19: Analysis of the annual costs to support the drafting of EN standards

B.21 – Annual costs to prepare 10 draft standards for inorganic fertilisers and liming materials 124

Number of Working Groups

Annual salary costs (EUR)

Number of participants

Time spent (fraction of FTE equivalent)

Annual Administrative costs (CA)
(EUR)

Member States (National Standardisation Bodies) supervision work only

n/a

72 250

27 125

0.045 126

87 780

Industry

6

75 000

10

0.015 127

67 500

Others (universities…)

6

75 000

7

0.02047

63 000

Table 20: Analysis of the costs for technical committees to discuss and approve the content of the draft EN standards

B.22 – Participation in CEN/TC 260 meetings

Number of annual meetings of the Working Groups

Travelling costs (EUR)

Annual salary costs
(EUR)

Number of participants

Time spent (fraction of FTE equivalent)

Annual Administrative costs (CA)
(EUR)

Member States

6

6

750

n/a

n/a

72 250

5

5

n/a

0.03 128

   26 250

   67 500

Industry

6

6

750

n/a

n/a

75 000

12

12

n/a

0.03

   63 000

   189 000

Others (universities…)

6

6

750

n/a

n/a

75 000

13

13

n/a

0.03

   68 250

   204 750

For each category of participants, the first line presents the travelling costs and the second line the salary costs of the persons attending the meetings.

Table 21: Description of the costs relating to the current CEN mandate on fertilisers and liming materials

B.23 – CEN Management Centre 129 – EU budget allocated to CEN/TC 260

Since 2003, an overall EU budget of EUR 1 375 000 130 (corresponding to the development of around 100 standards) has been allocated to the CEN Management Centre by the Commission. This corresponds to an average annual budget of EUR 137 500 for developing 10 standards.

The EU budget covers the costs of the CEN/TC Secretariat for organising the meetings of the CEN/TC and its related working groups, drafting the documents and the minutes of the meetings, the sampling and distribution of samples, travelling costs of CEN/TC Secretariat, service contract for experimental work etc.

Costs related to the registration of fertilisers as national fertilisers (B.30)

Data from four Member States representing the most common procedures for the placing on the market of national fertilisers were collected through the Fertilisers Study in order to estimate the costs of registration for the Member State authorities and industry (including the costs of the development of national standard where relevant).

The Fertilisers Study has found that the costs incurred by the competent authorities relate to the analysis and management of the risks, liaison with industry, accredited laboratories and enforcement activities and drafting legislation. The costs borne by industry vary largely depending on the regulatory system in place. It ranges from the costs relating to the demonstration of compliance to general safety and agronomic criteria to the costs of preparation and submitting application files (sometimes fees and additional testing might need to be paid) and the development of national standards.

Table 22: Description of the costs to include new fertilising products in national legislation

B.30 – Annual costs for inclusion of national fertilises under various regulatory scenarios 131

Registration fees and costs of additional testing/per request and per company(EUR)

Preparation of the technical dossier for application/per request and per company(EUR)

Average number of products registered annually

Country specific annual salary costs(EUR)

Time spent (fraction of FTE/year)

Administrative costs (AC) to include new national fertiliser (EUR)

France

Competent authorities

100 000

3.0 132

300 000

France

Industry

50 000 133

8 000

30

1 740 000

The Czech Republic

Competent authorities

40 000

1.5

60 000

The Czech Republic

Industry

6 000

5 000

160

1 760 000

The United Kingdom 134

Competent authorities

The United Kingdom

Industry

The Netherlands

Competent authorities

75 000

0

0

The Netherlands

Industry

5 000

20

100 000

Average costs for Competent authorities to manage all requests

105 025

Average costs for industry to include a new type or ingredient in a positive list or get a market authorisation 135

900 000

Annual total costs for EU-28

Comp. auth.

Industry

2 940 700

25 200 000

As mentioned under Table 17, the figure above can only be considered as a rough estimation of the costs of registration of new fertilising products as the four Member States may not be representative as regards the size of the fertiliser markets in the 28 MS.

Costs related to the Mutual Recognition Regulation (B.40)

According to the survey on administrative costs carried out in the Fertilisers Study, the costs for competent authorities to analyse requests for mutual recognition of national fertilising products have been estimated to be 0.2 FTEs x 28 x EUR 75 000 = EUR 420 000 (B.40) for the whole EU.

The costs of market surveillance of products placed on the market under the Mutual Recognition principle is covered by the costs detailed in Section C.10.

Table 23: Summary of the total annual costs incurred by different stakeholders for the placing on the market of new products (EC and national brands) under Option 1

Stakeholder groups

B.10

(EUR)

B.21

(EUR)

B.22

(EUR)

B.23

(EUR)

B.30

(EUR)

B.40

(EUR)

Total annual costs (EUR)

Commission

137 500

137 500

Member States

87 780

93 750

2 940 700

420 000

3 542 230

Industry

150 000

67 500

252 000

25 200 000

25 669 500

Others

63 000

273 000

336 000

Total

150 000

218 280

618 750

137 500

28 140 700

420 000

29 685 230

Costs of market surveillance

Costs related to the market surveillance of fertilising products (C.10)

The Member States competent authorities consulted during the collection of data for the four case studies were unable to differentiate the costs of market surveillance of EC Fertilisers and national fertilisers (inorganic national fertiliser, liming materials, organic fertiliser, soil improver, growing media, plant biostimulants). Market surveillance authorities carry out controls at the premises of producers, retailers, farmers and at the external borders of the EU for products imported from Third Countries.

The frequency of controls depends very much on the priorities of the authorities. Some Member States ensure that every national producer is controlled every 1 to 5 years depending on risk assessment and previous controls. Other Member States clearly mentioned that the control of fertilisers is not a high political priority and that controls depend on the availability of the necessary budget.

Table 24: Costs of market surveillance for all fertilising products currently on the market (Source: the Fertilisers Study)

C.10. Total annual costs for market surveillance

Annual budget for analysis (EUR)

Country specific annual salary costs of inspectors (EUR)

Time spent by inspectors (fraction of FTE/year)

Annual administrative costs (AAC) (EUR)

France

200 000

100 000

11.5

1 150 000

200 000

The Czech Republic

26 000

16 000

3

48 000

26 000

The United Kingdom

76 000

0.8

60 800

The Netherlands

75 000

1.3

97 500

Average costs

395 575

Total for 28 MS

11 076 100

3.2.Option 2

The description of several variants is required to describe the different roles of public administration and EU scientific agencies in the implementation of Option 2.

Variant 2A: only Member States administrations and the Commission review applications for listing types in the annexes of the revised Fertilisers Regulation.

The Scientific Committee for Health and Environmental Risk – SCHER - has been used in the past to evaluate the potential negative impacts to the environment or human health of the presence of contaminant in inorganic phosphate fertilisers or for its opinion on the risks for the environment and human health of an existing type of the Fertilisers Regulation.

The possibility to have recourse to SCHER has been discarded because it has been considered that it would not have enough staff 136 to assess the potential huge number of applications for registration of new types (up to 1000 – see pg 51) in the annex(es) of the regulation.

Variant 2B: the peer-review process for applications will be managed by the European Chemicals Agency (ECHA). An opinion will have to be delivered for each new entry proposed.

Variant 2C: the peer-review process for applications will be managed by the European Food Safety Authority (EFSA). An opinion will have to be delivered for each new entry proposed.

Costs of governance

Under variant 2A (assessment by the Fertilisers Working Group), it is assumed that in the Commission Services about 5 FTEs 137 (A.10: EUR 75 000 x 5 = EUR 375 000) would be required to manage the different requests for inclusion of new fertiliser type in the annex(es) to the future regulation.

Under variant 2B (assessment by ECHA) and 2C (assessment by EFSA), the figure for FTEs in the Commission mentioned for variant 2A will be lower, as some of the tasks for the peer-review process will be managed by such agencies 138 . Compared to variant 2A, it is likely that only 2 FTEs would be required (A.10: EUR 150.000).

For all variants, members of the Fertilisers Working Group would have to meet more frequently to discuss mainly about applications for the registration of new fertiliser types. Practically, it has been assumed that there would be at least 2 meeting per year for each category of products covered by the proposal 139 . The costs related to Fertilisers Working Group meetings will thus be multiplied by 4 compared to Option 1 (current situation) where the costs for two annual meetings were calculated 140 (Total costs A.20: EUR 614 880).

Under all variants of Option 3, there would be no more cost of governance of national legislation as the placing on the market of fertilising products would be fully harmonised (A.30: EUR 0).

Finally, EFSA or ECHA will need new staff to perform the assessment of the newly harmonised products. These additional costs are reported in a new column on costs for ECHA/EFSA as 'A.40'. Costs borne by ECHA/EFSA are allocated respectively to 'industry' under Option 2B (fees) and to the Commission under Option 2C (EU Budget contribution).

In order to estimate the additional costs of assessments of newly harmonised products, it is important to estimate the number of products not yet harmonised and the number of corresponding types. In the current Regulation, one hundred types are listed in Annex I, and about 2 400 EC Fertilisers products are placed on the market. On average, 1 type allows the placing on the market of 24 EC Fertilisers. No equivalent information is available for national fertilisers but it would be assumed that based on current market shares of EC Fertilisers and national fertilisers, the number of new types of inorganic fertilisers to be examined for inclusion into the new Fertilisers Regulation could amount to 30-40.

For the other categories of products, the number of new products and the number of new types that would have to be listed in annex(es) to the new regulation have been estimated with industry representatives as explained in the table below 141 :

Table 25: Number of non-harmonised products and corresponding types that would have to be listed in the future proposal

Range of non-harmonised products in the EU market

Range of types covering the non-harmonised market

Inorganic fertilisers 142

840-960

30-40

Organic fertilisers

1 000-1 100 143

200-220

Organo-mineral fertilisers

600-700

25-30 144

Liming materials 145

150-200

10-15

Soil improvers

24 000-32 000 146

30-40 147

Growing media

450 000-550 000

40-60

Plant biostimulants and agronomic additives 148

625-665

625-665 149

Range of new types under Option 2

960-1 070

Under variant 2B, it has been assumed that the tasks allocated to ECHA would include an evaluation of the registration and preparation of an authorisation dossier. The REACH Regulation requires that companies pay a fee for certain services delivered by ECHA. These fees 150 are intended to cover the cost of the service provided in accordance with the volume of the product placed on the EU market per manufacturer. For the sake of clarity, the costs for the tonnage band of 10-100 tonnes/year under REACH have been taken as a reference for further calculation. The standard fees would then be respectively equivalent to EUR 3 454 plus EUR 53 300 for one type. Taking these costs into account for about 960 and 1 070 new types, the costs for industry would range between EUR 54 483 840 and EUR 60 726 780 for the registration of all existing products. If we assume a 20 year period by which all product types should be listed and a medium cost of EUR 57 605 310, the annual costs for ECHA registration and analysis of requests for authorisation would amount to about EUR 2 880 265 (A.40 for variant 2B).

Under variant 2C, EFSA would receive a payment from the Commission to carry out the peer-review process of the not yet harmonised products. Based on the experience of the EFSA Panel on the review of plant protection products, the costs of peer-review of one plant protection product has been estimated at EUR 20 000. Taking into account the number of types that would need to be included in the new legislation (between 960 and 1 070 types), the costs for the Commission could be evaluated between EUR 19 200 000 and 21 400 000 for all products. Again if a period of 20 years is assumed by which all the products would have been assessed, an annual cost of EUR 1 015 000 (A.40 for variant 2C) could be estimated.

The following tables summarises the governance costs under the various variants of Option 2.


Table 26: Summary of governance costs under variant 2A

Total annual costs (EUR)

A.10

A.20

A.30

Total

Commission

   375 000

   159 870

   534 870

Member States

   229 530

   229 530

Industry

   225 660

   225 660

Total

   375 000

   614 880

   989 880


Table 27: Summary of governance costs under variant 2B

Total annual costs (EUR)

A.10

A.20

A.30

A.40

Total

Commission

150 000

   159 870

309 870

Member States

   229 350

229 350

Industry

   225 660

2 880 265

3 105 925

Total

150 000

   614 880

2 880 265

3 645 145


Table 28: Summary of governance costs under variant 2C

Total annual costs (EUR)

A10

A20

A30

A40

Total

Commission

   150 000

   159 870

1 015 000

1 324 870

Member States

   229 350

229 350

Industry

   225 660

225 660

Total

   150 000

   614 880

1 015 000

1 779 880

Costs of registration and standardisation

It can be assumed that the costs for industry to prepare application dossiers for types will be higher than the average today as the data requirements will probably be higher. Since several years the Commission has observed that listing a new type or revising an existing type is generating much more questions from the Member States than in the past, especially as regards the safety aspects. This general trend is parallel to the overall strengthening of the regulations of farm commodities (e.g. plant protection products, feed additives…) which are destined to be transformed in food commodities. This would justify an increase in dossier preparation costs. It has been assumed that dossier preparation costs would approximately amount to EUR 50 000.

Member States would have to conduct the first evaluation of dossiers submitted and then participate in the peer-review process. Compared to Option 1 (in particular costs under B.10), Member States would need more FTEs per dossier as the dossiers would be more comprehensive and their number would increase. According to the figures mentioned above between 960-1 070 new types would have to be evaluated and peer-reviewed. Consequently, the number of FTEs would increase to 5 FTEs as for the Commission. Considering that a time span of 20 years would be needed to register all the types identified, each national expert would have to deal with approximately 10 peer-review processes annually. The costs for the Commission would be covered by the costs of governance reported under A.10.

The costs for participation at the Fertilisers Working Groups meetings are covered under A.20. Given that the costs for ECHA or EFSA are already included under the governance costs (A.40), there is no need to make a distinction between the variants here. Therefore B.10 covers the costs of preparation of application by industry and the costs of peer-review by the experts of the Member States before a final decision on the application is taken during a meeting of the Fertilisers Working Group.

Table 29: Costs related to the preparation and assessment of applications for the registration of products not yet harmonised under variants 2A, B and C

B.10 (EUR)

Number of national experts

Number of Member States

Annual salary costs (EUR)

Time spent (fraction of FTE equivalent)

Costs of preparation of application (EUR)

Number of types examined per year during 20 years

Annual costs

Member States

5

28

72 750 151

1

10 185 000

Industry

50 000

50

2 500 000

Total

12 685 000

Costs of standardisation work will mainly concern fertilising products for which European analytical methods (EN Standards) have not been developed so far i.e. mainly organic fertilisers, plant biostimulants and agronomic additives.

For plant biostimulant, the objective is not to check the content of defined forms of plant nutrients in the final product but to verify that the ‘active’ substance is present in the amounts claimed/guaranteed by the manufacturer. The number of EN standards for plant biostimulants would in principle be considerable as every active substance, where relevant, as claimed by the manufacturer (e.g. marker substances in case of complex mixture, such as plant/algae) would have to be identified through an appropriate analytical method to be part of an individual CEN standard. The European Biostimulant Industry Council has identified 100 active substances for which CEN would be required to develop specific analytical methods.

In addition, some analytical methods for agronomic additives that are not yet harmonised would have to be developed albeit in lesser amounts than for plant biostimulants as the number of new additives will likely be lower than for plant biostimulants. For organic fertilisers, some existing EN standards for soil improvers or growing media would have to be checked for their reliability.

The costs of developing and maintaining one standard could be derived from the costs of standardisation calculated under Option 1 152 (EUR 97 450).

Table 30: Summary of the costs for developing standards (B.20) under all variants for Option 2 (in EUR)

Organic fertilisers

97450 x 20 =    1 949 000

Agronomic additives

97450 x 20 =    1 949 000

Plant biostimulants

97 450 x 100 =    9 745 000

Total costs under B.20 (standardisation activities)

   13 643 000

Annual costs assuming that 20 years will be needed to harmonise the whole market

   682 150

The allocation of costs between the Commission, Member States, industry and other stakeholders involved in the preparation and development of the standardisation work (B.20) would be similar to the distribution of costs calculated under Option 1.

Costs for managing national legislations and requests for mutual recognition of products would disappear (B.30 and B.40).

Table 31: Summary of the costs for the placing on the market of new products under variants 2A, 2B or 2C

B.10

B.20

B.30

B.40

Total annual costs (EUR)

Commission

   96 180

96 180

Member States

10 185 000

   126 880

   0

   0

10 311 880

Industry

2 500 000

   223 745

   0

   0

2 723 745

Others

   235 345

   0

   0

235 345

Total

12 685 000

   682 150

   0

   0

13 367 150

3.3.Option 3

As for Option 2, several variants will be analysed to describe the roles of public administration and different EU scientific agencies in the implementation of Option 3.

Costs of governance

Under variant 3A (assessment by the Commission expert group), it is assumed that 3 FTEs 153 at Commission level (A.10: EUR 75 000 x 3 = EUR 225 000) would still be required to manage the different requests for inclusions of ingredients in the legislation. Although most of the ingredients for the manufacture of inorganic fertilisers are known, the level of knowledge is different for other product categories 154 and might require a longer ‘phase-in’ period to reach fully harmonised lists of well-described ingredients – especially if each ingredient is defined with a significant level of relevant details to allow their clear identification and a common Union-wide understanding. Even after a reasonable implementation period, frequent adaptations to technical progress of the annexes will be necessary.

Under variant 3B (assessment by ECHA) and 3C (assessment by EFSA), the number of Commission staff involved in the peer-review process could be slightly reduced and therefore fewer FTEs would be required to ensure the tasks of peer-reviewing existing ingredients, reviewing new ones and adapt the annexed lists, where necessary. Compared to variant 3A, it is likely that only 2 FTEs would be required over the longer term (A.10: EUR 150 000).

As mentioned in all variants of Option 2, Members of the Fertilisers Working Group would have to meet regularly to discuss the applications for the registration of new ingredients. Practically, it is assumed that the costs related to Fertilisers Working Group meetings would be less than the costs indicated for the variants under Option 2 as there would be a lower number of requests for registration of new ingredients compared to 'types' (i.e. several types – each requiring separate listing under Option 2 – could be composed of different mixtures of the same ingredients – requiring only 1 listing). Compared to Option 1, the costs have been assumed to be multiplied by 3 (total costs A.20: EUR 461 160 for all variants of option 3).

Under all variants of options 3, there would be no more cost of governance of national legislation as the placing on the market of fertilising products would be fully harmonised (A.30: EUR 0).

On the other hand, as for variants 2B and C, the agencies will need staff to assess the request for inclusions. Based on the information from the Biocides Directive, the Plant Protection Product Regulation and REACH, these costs might be substantial and would have the form of fees that industry would have to pay to ECHA or budget subsidies from the Commission allocated to EFSA.

In order to estimate the additional costs of assessments of newly harmonised products, it is important to estimate the number of products not yet harmonised and the number of new ingredients that would be required to manufacture those products.

Based on the information received from the various industry associations and review of several national legislations following this legislative approach, the number of products on the market per product categories and the number of different ingredients that would have to be listed in annex(es) to the new Regulation could be estimated as follows 155 :

Table 32: number of new ingredients that would have to be listed under Option 3

Range of non-harmonised products placed on the EU market

Range of ingredients not yet harmonised

Inorganic fertilisers

840-960

5-10

Organic fertilisers

1 000-1 100

30-40 156

Organo-mineral fertilisers

600-700

20-30

Liming materials 157

150-200

3-6 158

Soil improvers

24 000-32 000

30-40

Growing media

450 000-550 000

50-60 159

Plant biostimulants and agronomic additives

625-665

120-125 160

Range of ingredients under option 3

258-311

Similar to variant 2B, ECHA would be required to check the registration and prepare authorisation dossier for each ingredient registered. The standard fees would be respectively equivalent to EUR 3 454 plus EUR 53 300 for one ingredient. Taking into account that between 258 and 311 new ingredients will have to be included in the annexes of the future proposal, the costs for industry would range between EUR 14 642 532 and EUR 17 650 494 for all the ingredients not yet harmonised. If we assume a 20 year period by which all product types should be listed and a medium cost of EUR 16 146 513, the annual costs for ECHA registration and analysis of requests for authorisation of ingredients would amount to around EUR 807 325 (A.40 for variant 3B).

As for variant 2C, the costs for the Commission to support the work of EFSA under variant 3C will depend on the costs to peer-review the safety and agronomic data of each new ingredient and the estimation of the number of ingredients not yet harmonised. From the experience of the EFSA panel on the review of plant protection products (costs of evaluation EUR 20 000 per dossier) and the number of ingredients not yet harmonised (between 258 and 311), the costs for the Commission could be evaluated between EUR 5 160 000 and 6 220 000 for all ingredients. Again assuming a period of 20 years by which all the ingredients would have been assessed and a medium costs of EUR 5 690 000, an annual costs of EUR 284 500 could be estimated (A.40 for variant 4C).

Table 33: Summary of total governance costs for each variant of Option 3

Governance costs

A.10

A.20

A.30

A.40

Total annual costs (EUR)

Variant 3A – no EU agency

   225 000

   461 160

   686 160

Variant 3B – ECHA

   150 000

   461 160

   807 325

   1 418 485

Variant 3C – EFSA

   150 000

   461 160

   284 500

   895 660


Costs of registration and standardisation

Similar to Option 2, it can be assumed that the costs for industry to prepare application dossiers for ingredients will be higher than the average for type registration today, as the data requirements will probably be higher. It has been assumed that dossier preparation costs would be comparable to Option 2 (i.e. EUR 50 000 161 ).

Member States would have to conduct the first evaluation of dossiers submitted and then participate in the peer-review process. Compared to Option 1, (in particular the costs B.10), Member States would need more FTEs per dossier on average (as the dossier would be more comprehensive) and many more dossiers would have to be evaluated and peer-reviewed, albeit fewer than in Option 2. According to the figures mentioned in Table 29 between 258 and 311 new ingredients would have to be evaluated and peer-reviewed. Consequently, the number of national FTEs would increase by 1 FTE compared to Option 1. Considering that a time span of 20 years would be needed to register the ingredients identified in Table 29, each national expert would have to deal annually with approximately 13 requests for inclusion. The costs for the Commission would be covered by the costs of governance reported under A.10.

The costs for Member States for participation at Fertilisers Working Groups meetings where the application would be discussed are covered under A.20. The costs for the Commission would be covered by the costs of governance reported under A.10. The costs for the involvement of ECHA or EFSA under variants 3B and 3C are covered under A.40.

Table 34: Costs related to the preparation and assessment of applications for the registration of ingredients not yet harmonised under variants 3A, B and C

B.10

Number of national expert

Annual salary costs

Number of Member States

Time spent (fraction of FTE equivalent)

Costs of preparation of application

Number of ingredients examined per year

Annual costs

Member States

1

72 750

28

1

2 037 000

Industry

50 000

13

650 000

Total

2 687 000

The costs of standardisation activities for analytical methods would be similar to option 2 as the test methods are not specific to each fertiliser type or ingredient but could apply across a broad range of products. Organic fertilisers, plant biostimulants and agronomic additives would still require substantial standardisation work compared to the other product categories as no CEN Technical Committees have been really involved in these product categories so far.

Table 35: Costs of standardisation under Option 3

Organic fertilisers

97 450 x 20 =    1 949 000

Agronomic additives

97 450 x 20 =    1 949 000

Plant biostimulants

97 450 x 100 =    9 745 000

Total costs under B.20 (standardisation activities)

   13 643 000

Annual costs assuming that 20 years will be needed to harmonise the whole market

   682 150

The costs allocation between the Commission, the Member States, industry and other stakeholders involved in the preparation and assessment of applications for registration and the related standardisation work would be similar to the distribution of costs calculated under Option 1.

Table 36: Summary of the costs for the placing on the market of new products
under Option 3

B.10

B.20

B.30

B.40

Total annual costs (EUR)

Commission

   96 180

   0

   0

   96 180

Member States

   2 037 000

   126 880

   0

   0

   2 163 880

Industry

   650 000

   223 745

   0

   0

   873 745

Others

   235 345

   0

   0

   235 345

Total

   2 687 000

   682 150

   0

   0

   3 369 150

3.4.Option 4

Costs of governance

Under all variants of Option 4, it is considered that only 1.0 FTE (i.e. A.10: 75 000 x 1.0 = EUR 75 000) would be sufficient for managing the system in the Commission. As no more evaluation procedure for individual applications would be required at EU level, the Fertilisers Working Group would have to meet less frequently, and it is assumed that one meeting a year would be enough to ensure the correct implementation of the future legislation (Total costs A.20: EUR 76 860).

Further, there would be no more costs of governance of national legislation as the placing on the market of fertilising products would be fully harmonised (A.30: EUR 0).

Finally, there would be no need to involve ECHA or EFSA in a possible peer-review process (A.40: EUR 0).

Table 37: Summary of governance costs under Option 4

Total annual costs

A.10

A.20

A.30

Total (EUR)

Commission

   75 000

   19 980

0

   94 980

Member States

-

   28 675

0

   28 675

Industry

-

   28 205

0

   28 205

Total

   75 000

   76 860

0

   151 860

Costs of registration and standardisation

The costs of preparation and assessment of new applications for listing types or ingredients in the annex(es) to a future regulation would be replaced by the costs of product certification. Several scenarios have been envisaged.

Variant 4A – Module A (Producer Self-Certification 162 )

The manufacturer establishes the technical documentation which makes it possible for him to assess the products conformity to the essential requirements defined in a new regulation (nutrient content or other quality criteria, information on contaminants, etc.). The documentation also includes a general description of the method of production. The manufacturer keeps technical documentation at the disposal of national authorities. The manufacturer ensures that the manufacturing process and its monitoring are such that the products comply with the technical documentation; the manufacturer then affixes the CE marking to his products. The manufacturer provides a written declaration of conformity for each compliant product and keeps it together with technical documentation.

By allowing self-certification, the costs for administration and testing would be relatively limited. The costs for the manufacturer would be limited to the collection and preparation of technical documentation demonstrating the compliance of the final product with the essential requirements in the legislation. According to the SME survey (see Annex IV), producers spend on average EUR 30 000 each year for their quality assurance scheme. However, these costs might be considered as business-as-usual costs, i.e. costs resulting from collecting and processing information which would be carried out even in the absence of the legislation and therefore should not be taken into account in the current evaluation of administrative burden costs, i.e. B.10 for variant 4A: EUR 0.

Variant 4B – Modules B+C combined: third party certification regarding the composition of the final product and its fulfilment of essential requirements

Under module B, the manufacturer has to prepare the technical documentation to demonstrate that the product complies with the essential requirements set out in the legislation and submit a representative specimen of the envisaged product to a notified body. The notified body examines the technical documentation as well as the actual product, performs appropriate examinations and tests if necessary and issues an EC type examination certificate declaring that the type meets the essential requirements of the legislation. The certification would be valid for the commercial life of the product unless new raw materials and/or new production process are introduced by the manufacturer.

The costs of product conformity assessment by notified bodies are typically one-off costs that would be required before the first placing on the market of a product.

Under module C, the manufacturer takes the necessary measures so that the manufacturing process is in compliance with the approved type described in the EC-type examination certificate delivered by the notified body under module B. The manufacturer affixes the required conformity marking to each product and draws up a written declaration of conformity. This module does not require the further involvement of a notified body.

Variant 4C – Modules B+C1 combined: third party certification regarding the composition of the final product and its fulfilment of essential requirements plus tests on additional aspects of the product

Under variant 4C, on top of the requirements and costs identified under variant 4B, notified bodies would carry out regular tests on specific aspects (e.g. verification of the contaminant content, detonation test for ammonium nitrate fertilisers, etc.). The costs for additional testing would mainly depend on the characteristics of the products that need to be verified. For clarity reasons, it is assumed that the presence of contaminants 163 and occasional verification of the quality parameters through testing would take place and that all products placed on the market would follow the same examination at regular interval (i.e. every five years).

Variant 4D – Modules B+C2 combined: third party certification regarding the composition of the final product and its fulfilment of essential requirements plus product checks at random interval

Module C.2 (conformity to type based on internal production control plus supervised product checks at random interval conducted by a notified body) is used where additional assurance is required due to certain risks. A notified body or an accredited in-house body will carry out one or more tests on each product. The conformity assessment procedure ensures that the final product is in conformity with the type described in the EC-examination certificate issued by the notified body. The manufacturer affixes the CE mark on his product together with the identification number of the notified body indicating that the test results were positive.

Under variants 4B, 4C and 4D, the costs of certification by notified bodies will be covered by fees paid by industry.

(1)Estimation of products to be certified and possible mitigation measure

The costs for industry under options 4B, 4C and 4D will depend on the number of products placed on the market. Assuming that each manufacturer would continue his current practices, the number of products could correspond to the number of products currently placed on the market in the EU 164 (sum of EC Fertilisers and national fertilisers). Based on the information received from the various industry associations, the number of products placed on the market can be estimated as indicated in the second column of the following table.

Table 38: Number of products currently present on the market according to industry federations

Estimation of all existing products placed on the EU market per various categories

Estimation of families of products

Inorganic fertilisers

3 500-4 000 165

5-25 166

Organic fertilisers

1 000-1 100 167

16 168

Organo-mineral fertilisers

600-700 169

13 170

Liming materials

2 000-2 500 171

4 172

Soil improvers

24 000-32 000

5 173

Growing media

450 000-550 000

4 174

Plant biostimulants and agronomic additives

625-665

8 175

Total number of products or families

481 725-590 965

55-75

As shown in Table 38, the number of individual products to be certified could be huge in particular for growing media. Therefore, similar to the Biocide Regulation, products presenting the same level of safety and efficacy could be grouped into one family of products.

Notified bodies would verify that the whole product family complies with the relevant safety and agronomic requirements by verifying the compliance of test materials. If during the examination of samples, a product fails to meet the essential safety or agronomic requirements, the whole family would be deemed to fail. This would allow a reduction of the costs of certification for SMEs without reducing the level of protection of human health or the environment (see column 3 of Table 38).

As a notified body could only assess product families which are manufactured by the same manufacturer, it has been estimated that each EU manufacturer and importer (around 10 000 according to Annex I) would on average register 5 families of products i.e. 50 000 families of products would have to be evaluated and certified.

(2)Evaluation of the costs of third party certification and additional testing

A study on the impacts of the revision of Council Directive 88/378/EEC on the safety of toys (RPA, October 2004) showed that SMEs were predicted to face costs of EUR 1 000 on average for Third Party verification/certification. However, those costs are likely to vary between notified bodies and therefore a maximum costs of EUR 2 000 has been assumed as worst case scenario. The costs for verification of product conformity under variant 4B could therefore be assessed as follows:

Table 39: Evaluation of the costs for Third Party certification under variant 4B

B.10

Variant 4B: Modules B+C

Third party certification for all products

Third Party certification of families of products

Number

Range: 481 725-590 965

Assumption: 50 000

Cost of notified bodies

EUR 2 000
(fees under module B)

EUR 2 000
(fees under module B)

Total costs

EUR 963 450 000-1 181 930 000
for all products on the market over their whole commercial life

EUR 100 000 000
for all families of products on the market over their whole commercial life

Annual costs assuming a commercial life of 20 years

EUR 53 634 500
average costs distributed over the whole commercial life

EUR 5 000 000
average costs distributed over the whole commercial life

Under variant 4C, some recurring costs would be charged to industry to regularly test (every 5 years) the compliance of the products with the essential safety criteria. It has been assumed that notified bodies would charge maximum EUR 950 for regular verification of the compliance of products with safety limits on contaminants (see Annex IV Section 3 – impacts on SMEs for more details).

Table 40: Evaluation of the costs for Third Party certification under variant 4C

B.10

Variant 4C: Modules B+C1

Third party certification of all products

Third party certification of groups of products

Number

Range : 481 725-590 965

Assumption: 50 000

Average costs of notified bodies plus specific tests

EUR 2 000
(fees under module B+C)

+

EUR 950
(recurring costs every 5 years
176 for testing under module C1)

EUR 2 000
(fees under module B+C)

+

EUR 950
(recurring costs every 5 years for testing under module C1)

Total costs (number of products multiplied by the average costs of notified bodies and specific tests)

Module B+C:
EUR 963 450 000-1 181 930 000 (one-off costs)

Module C1 177 :
EUR 1 830 555 000-2 245 667 000

Module B+C:
EUR 100 000 000

(one-off costs)

Module C1:
EUR 190 000 000

Annual costs assuming an average commercial life of 20 years

Module B+C: EUR 53 634 500
average costs distributed over the whole commercial life

Module C1: average annual additional costs during the commercial life assuming a re-testing of all products every 5 years:
EUR 101 905 550

Module B: EUR 5 000 000
average costs distributed over the whole commercial life

Module C1: annual additional costs during the commercial life assuming a re-testing of all families every 5 years:
EUR 9 500 000

Under Option 4D, the frequency of additional checks would increase to every 2 years. Consequently the costs under module C2 would increase proportionally.

Table 41: Evaluation of the costs for Third Party certification under variant 4D

B.10

Variant 4D: Modules B+C2

Third party certification for all products

Third Party certification of groups of products

Number

Range: 481 725-590 965

Assumption: 50 000

Average costs of notified bodies plus specific tests

EUR 2 000
(fees under module B)

+

EUR 950 178
(recurring costs for testing at random interval under module C2)

EUR 2 000
(fees under module B)

+

EUR 950
(recurring costs for testing at random interval under module C2)

Total costs (number of products multiplied by the average costs of notified bodies and specific tests)

Module B+C:
EUR 963 450 000-
1 181 930 000

(one-off costs)

Module C2 179 :
EUR 4 576 387 500-
5 614 167 500

Module B+C:
EUR 100 000 000

(one-off costs)

Module C2:
EUR 475 000 000

Annual costs assuming an averaged commercial life of 20 years

Module B+C: EUR 53 634 500
average costs distributed over the whole commercial life of all products

Module C2: Average annual additional costs during the commercial life assuming that a re-testing of all products is carried out every 2 years: EUR 254 763 875

Module B+C: EUR 5 000 000
average costs distributed over the whole commercial life of all products

Module C2: Additional costs during the commercial life assuming that a re-testing of all families is carried out every 2 years:
EUR 23 750 000

Table 42: Average annual costs for third party certification under each variant

B.10. Average annual costs for each variant (EUR)

Type of certification

Variant 4A – self certification

Variant 4B – third party certification

Variant 4C – third party certification plus tests on additional aspects

Variant 4D – third party certification plus checks at random intervals

Fees to be paid to notified bodies for certification of products
(Module B)

Individual products

0

53 634 500

53 634 500

53 634 500

Family of products

0

5 000 000

5 000 000

5 000 000

Annual recurring costs for testing carried out by notified bodies (Modules C1 or C2)

Individual products

0

0

101 905 550

254 763 875

Family of products

0

0

9 500 000

23 750 000

Total annual costs

Individual products

0

53 634 500

155 540 050

308 398 375

Family of products

0

5 000 000

14 500 000

28 750 000

The costs for standardisation under Option 4 would increase as new EN standards could be required to facilitate examination of commercialised fertilising products and additives and to turn existing EN Standards into EN harmonised standards. Compared to Option 2 and based on experience from other sectors, an additional annual budget for standardisation of EUR 200 000 during 20 years was assumed to be necessary to support the development of these new standards (EUR 882 150). The costs of governance of national legislation and mutual recognition would disappear.

Table 43: Summary of the costs for industry to place new products on the market
under all variants of Option 4 (in EUR)

B.10

Type of certification

B.10

B.20

B.30

B.40

Total annual costs

Variant 4A

Not applicable

0

882 150

0

0

882 150

Variant 4B

Per product

53 634 500

882 150

0

0

54 516 650

Per family

5 000 000

882 150

0

0

5 882 150

Variant 4C

Per product

155 540 050

882 150

0

0

156 422 500

Per family

14 500 000

882 150

0

0

15 382 150

Variant 4D

Per product

308 398 375

882 150

0

0

309 280 525

Per family

28 750 000

882 150

0

0

29 632 150

The costs of market surveillance would be reduced according to the level of control by notified bodies (See justification in the main text under 6.5.1.1.c

Costs of quality assurance

These costs would include the costs of accreditation and the costs of implementing new harmonised EN Standards.

Accreditation is the attestation by a national accreditation body based on harmonised standards that a notified body has the technical competence to perform specific conformity assessment activity. Accreditation is used in the regulated sector to meet the requirements of certain legislation and the voluntary area where there is no specific legislation. It is based on a peer evaluation system that ensures the proper functioning of accreditation across the EU.

Regulation (EC) No 765/2008 provides a legislative framework for accreditation at the national and EU levels and puts into place an overall policy with its rules, procedures and infrastructures. In order to ensure a level playing field for fertilising products deriving from waste and in accordance with the EU EoW criteria developed by JRC, it is proposed that accreditation of notified bodies will be made mandatory in a future Regulation. 

This is very difficult to provide an accurate estimate of the likely accreditation fees for notified bodies as this depend on the complexity of scope of accreditation being sought. These fees include not just the time the assessment team spend at the premises of the notified bodies (audits) but also office time and travelling expenses. In the frame of the future regulation it is foreseen to keep the number of essential requirements as low as possible in order to avoid unnecessary costs for notified bodies who will charge eventually companies.

ORBIT/ECN (2008) produced an overview of quality assurance costs for compost according to the main schemes currently in place in various countries. Table 44 shows that the quality assurance costs (fees to be paid to notified bodies) are mainly determined by the size of the composting plant and range from below EUR 0.08/tonne of input to more than EUR 3/tonne of input. The quality assurance costs in Table 44 covers the external expenses in the renewal procedure of accreditation certificates or quality labels during the continuous operation of the plants. In the first application and validation period (first one to two 'recognition' years) costs are considerably higher on account of a first evaluation of the plants and the higher frequency of tests.

The total compost production costs in a best practice composting plant with 20 000 tonnes capacity were estimated at 45 Euro/tonne of input (Eunomia, 2002). A comparison with the typical quality assurance costs for a plant of this size according to Table 44 shows that the external quality assurance costs represent less than 1 % of total production costs but for smaller plants, quality assurance can make up more than 15 % of total costs.

However, several composting and digestion plants have already suitable quality assurance systems in place (at least one fifth of all composting plants in the EU), and most others regularly carry out some form of compliance testing, so that not all of the quality assurance costs associated with the EU end-of-waste system would be additive.

Table 44: Cost of compost quality assurance in selected European countries Source: ORBIT/ECN (2008).

Quality assurance costs/tonne input and year (EURO excluding VAT)

Output/year (tonnes)

AT (1)
(ARGE)

Agriculture

plants

AT (2) (KGVÖ)
Industrial

plants

DE (3) 
(BGK)

IT (4) (CIC)

NL (5)
(BVOR)

(Green C.

plants)

NL (6) 
(VA)

(VFG
plants)

SE (7)

(SP)

UK (8) 
(TCA)

Use in agriculture/ horticulture

UK (9) 
(TCA)

Other
uses

EU

Mean
value

500

2.15

3.36

1 000

0.94

1.80

2 000

0.97

1.32

0.82

1.62

1.99

1.21

1.13

1.10

1.26

5 000

0.63

0.67

0.52

0.48

0.76

0.80

0.48

0.45

0.44

0.59

10 000

0.44

0.58

0.34

0.46

0.53

0.40

0.29

0.28

0.27

0.42

20 000

0.26

0.44

0.31

0.45

0.39

0.20

0.15

0.23

0.22

0.32

50 000

0.17

0.36

0.19

0.43

0.21

0.08

0.06

0.20

0.19

0.23

Sources: Personal information from:

(1)    KGVÖ Compost Quality Society of Austria — operates mainly bio-waste treatment plants. Costs include membership fees, laboratory costs and external sampling.

(2)    ARGE Compost & Biogas Association Austria — decentralised composting of separately collected bio-waste in cooperation with agriculture. Costs include membership fees, laboratory costs, external sampling and external audits of composting/digestion sites

(3)    BGK German Compost Quality Assurance Organisation. Costs include membership fees, laboratory costs and external sampling.

(4)    CIC Italian Compost Association CIC — including company fee according to turnover plus external sampling and laboratory costs

(5)    BVOR Dutch Association of Compost Plants — costs at green waste plants which include membership fees, laboratory costs and the costs for yearly audits by external organisations — no external sampling.

(6)    VA Dutch Waste Management Association — costs at bio-waste (VFG) plants including membership fees, laboratory and external sampling costs, and the costs for yearly audits by external organisations. The expenses are slightly higher compared to BVOR because of additional analysis of sanitisation parameter and the external sampling.

(7)    SP Swedish Standardisation Institute execute the QAS scheme — costs include membership fees, laboratory costs, and costs for yearly audits by SP — sampling is done by the plants besides the yearly audit.

(8)    TCA the UK Compost Association certification for compost in agriculture and horticulture — total costs associated with certification scheme fees for all parameter and lab testing. Costs associated with testing the compost are higher compared to other application areas, as the compost producer is required to test parameters like total nutrients, water soluble nutrients and pH in addition sampling is done by the plants. For compost used in agriculture and field horticulture, the UK Quality Compost Protocol has introduced for the land manager/farmer the requirement to test the soil to which compost is applied. The costs associated with soil testing are not incorporated here because it is mostly not the compost producer, but the farmer or land manager who pays for.

(9)    TCA the UK Compost Association certification for compost used outside agriculture and horticulture — total costs associated with certification scheme fees and lab testing. Sampling is done by the plants.

It can be expected that the major changes in QA costs by the possible introduction of EU end-of-waste criteria, compared to existing systems, will be related to product testing. These changes originate from likely modifications to the requirements for independent sampling, measurement of organic pollutants and the use of harmonised EN standards instead of national standards.

Several Member States already require external sampling, whereas others allow the plant operators to perform the sampling themselves (e.g. in the UK). The estimated costs for external sampling, based on information from experts, vary widely and are estimated around EUR 200 per sample. In Member States where independent external sampling is already considered an established practice, reported prices for independent sampling generally tend to be the lowest. Nonetheless, the current proposal includes the possibility of reducing external sampling after the recognition year, requiring only one yearly independently collected sample for plants up to 10000 tonne annual input and 3 for plants up to 50000 tonne annual input, effectively reducing the cost for external sampling to less than a few cents per tonne.

The costs of purchasing harmonised EN Standards to verify the compliance of products to the requirements of the future legislation is another issue. Harmonised standards will be available in national linguistic version(s) from national standardisation bodies. The costs ranked from around EUR 10 to around 100 per standard. In the future Commission proposal, it is foreseen to keep the number of essential and labelling requirements as low as possible in order to avoid unnecessary costs for industry and competent authorities of buying harmonized standards.



3.5.Option 5

Costs of governance

Compared to Option 4, the Commission services would face similar workload, but less than in Options 2 or 3, as all product categories would be regulated following the New Approach. At Commission level, 1 FTE (i.e. A.10: 75 000 x 1.0 = EUR 75 000) would be required to manage the system. The Fertilisers Working Group would have to meet less regularly than under Options 2 and 3 and similarly to option 4, it was considered that one meeting a year would ensure the correct implementation of the future legislation (Total costs A.20: EUR 76 860).

Finally, under Option 5, there would be no more cost of governance of national legislation as the placing on the market of fertilising products would be fully harmonised (A.30: EUR 0) and no more costs of agencies (A.40: EUR 0) for the products covered by the New Legislative Framework approach. The following table summarises the governance costs for Option 5.

Table 45: summary of governance costs for Option 5

Total annual costs

A.10

A.20

A.30

Total

Commission

75 000

   19 980

   94 980

Member States

   28 675

   28 675

Industry

   28 205

   28 205

Total

75 000

   76 860

   151 860

Costs of registration and standardisation

All product categories would follow the New Approach legislative format. Third party involvement in the assessment of conformity with the essential requirements varies between material categories, and is highest for waste and other secondary materials with potentially variable composition and for plant biostimulants and agronomic additives for which of a verification of the claims by a third party would be required (See Annex IX for justification). The costs of self- or third-party certification identified under variants of Option 4 would apply.

The essential safety requirements for plant biostimulants and agronomic additives would require the registration of such products into REACH. Under that scenario, the following costs could be identified.

Producers would be required to register plant biostimulant not yet covered by REACH prior to the placing on the market of products containing them. Fees would be charged to manufacturers for registration of plant biostimulants. The Commission implementing Regulation (EU) No 254/2013 on the fees and charges payable to ECHA defines such costs depending on tonnage.

The volume of plant biostimulants placed on the market is likely to be less than 10 tonnes per year and per product which corresponds to a fee of EUR 1714 for individual submission. The European Biostimulant Industry Council (EBIC) has identified 100 active substances, 50% of which are currently exempted from REACH registration (Annex V of REACH). Therefore the fees would amount up to EUR 1714 X 50 = EUR 85700. Assuming a commercial life of 20 years, this would result in an annual cost of around EUR 4285.

The costs of compiling a dossier would increase compared to options 2 and 3 as additional studies could be required to assess the potential toxicity of the substances. The study on legal framework for plant bio-stimulants and agronomic additives of 2013 estimated such costs at around EUR 130.000. Therefore the costs of compiling data for 50 substances not yet registered within REACH would be estimated at 130.000 X 50 = 6 500 000 EURO namely EUR 325 000 per year assuming an average commercial life of 20 years for each substance

Agronomic additives are already registered within REACH and are therefore not covered by the evaluation of the costs of registration

The table below summarizes the costs for industry.

Table 46: Assessment of the costs of registration under REACH and conformity assessment for plant biostimulant

B.10
Annual registration costs for industry

Number of substances

Costs for compiling data for one dossier
+

Fees to be paid for one registration (EUR)

Total one-off costs supported by the sector for the registration (EUR)

Annual costs for the sector assuming a commercial life of 20 years (EUR)

Plant biostimulants

50

130 000 + 1 714

6 585 700

329 285

The following table summarizes the proposed regulatory system

Table 47: Estimation of the costs for industry for placing on the market new products (B.10) tailored to their expected risks to the environment and human health of each product category

Type of products

Regulatory option

Highest estimation of the number of products marketed
in EU

Annual certification costs for one product assuming a commercial life of 20 years (EUR)

Total annual B.10 costs for each specific category under each proposed option (EUR)

Inorganic fertilisers

Variant 4A

Variant 4B

3 550

100 180

0

100 181

0

10 000

Inorganic fertilisers:

Ammonium nitrate based products manufactured for use as fertilisers and containing more than 28% by mass of nitrogen in relation to ammonium nitrate 182  

Variant 4C 183

100

2 600

260 000

Organo-mineral fertilisers 184

Variant 4B

1050

100

105 000

Organic fertilisers

Variant 4C

650

290

188 500

Liming materials

Variant 4A

Variant 4B

2 150

100

0

100

0

10 000

Soil improvers (SI)

Variant 4A (inert materials used as soil improvers) 185 Variant 4C (organic soil improvers derived from waste)

3000

25 000

0

290 186

0

7 250 000

Growing media

Variant 4A

500 000

0

0

Plant biostimulants and agronomic additives

Variant 4A 187

Variant 4B

Variant 4A

560

65

40

0

100

0

0

6500

0

Plant biostimulant (costs of registration under REACH)

329285

Total annual costs for industry

8 159 285

As described under Option 4, the possibility to group products presenting the same level of efficacy and safety could be granted to producers. As shown in column 3 of Table 46, only 27 000 fertilising products and additives would have to be examined by certified bodies. This represents only 5% of the products quantified under Option 4 (Table 38) and therefore it is assumed that the number of groups could be reduced accordingly 188 . As a majority of products would follow variant 4C, the evaluation and certification costs by group of products under option 5 have been based on the assumptions described in Table 40. It results that the costs of certification by groups of products would amount to EUR 14 500 000 x 0.05 = 725 000 EUR.

Similarly to option 4, new standards would be required to facilitate examination and declaration of conformity with essential requirements and existing standards would have to be transformed in harmonised EN Standards. (B.20: EUR 882 150)

For plant biostimulants and additives, producers would be required to provide analytical methods for the determination of the pure active substance and the verification of the claims that would be described in the essential quality requirements. Since standard development can be lengthy, coordination group should be mandated to issue guidance for how to interpret essential legal requirements in the meantime.

The situation is described in the following table.

Table 48: Summary of the costs for industry and Member States to place new products on the market under Option 5 (in EUR)

B.10

B.20

B.30

B.40

Total annual costs

COM

124 385

124 385

Member State

164 080

164 080

Industry

8 159 285

289 345

8 448 630

Others

304 340

304 340

Total

8 159 285

882 150

9 041 435

The costs of market surveillance would be equal to similar costs under option 4A.

3.6.Partial harmonisation scenario

Under this scenario, Member States would have to maintain at least partly their legislation on fertilisers. Following the results of the SMEs consultation (Figure 16 of Annex IV), it was assumed that around 20% of the existing products would remain on national markets. The costs of governance of national legislation (A.30: EUR 498 120)) have been reintroduced accordingly for each of the examined option above. The costs of governance of EU legislation and meetings at EU level would remain unchanged (A.10 and A.20) under each option.

If 20% of the existing products would remain on national markets, the costs of intervention of EU agencies (A.40), the costs of registration under a revised EU fertiliser law (B.10) as well as the costs of standardisation activities (B.20) would be reduced proportionally

As the objective was to estimate the costs of partial harmonisation for existing products, it has been assumed that the costs of registration of new products as national fertilisers (B.30) would remain void. The costs of mutual recognition (B.40) would similarly remain void as in the presence of EU legislation, it was considered that requests for mutual recognition of national fertilisers would remain exceptional. The costs of market surveillance (C.40) would remain unchanged under each option.

Table 49: Summarising the annual administrative costs (EUR) of the different options (full and partial harmonisation scenarios)

A.10

A.20

A.30

A.40

B.10

B.20

B.30

B.40

C.10

Total

(full)

Total

(partial)

Option 1

150 000

153 720

2 490 600

-

150 000

974 530

28 140 700

420 000

11 076 100

43 555 650

43 555 650

Option 2A

375 000

614 880

-

-

12 685 000

682 150

-

-

11 076 100

25 433 130

25 257 820

Option 2B

150 000

614 880

-

2 880 265

12 685 000

682 150

-

-

11 076 100

28 088 395

25 337 030

Option 2C

150 000

614 880

-

1 015 000

12 685 000

682 150

-

-

11 076 100

26 223 130

23 844 820

Option 3A

225 000

461 160

-

-

2 687 000

682 150

-

-

11 076 100

15 131 410

14 955 700

Option 3B

150 000

461 160

-

807 325

2 687 000

682 150

-

-

11 076 100

15 863 735

15 526 560

Option 3C

150 000

461 160

-

284 500

2 687 000

682 150

-

-

11 076 100

15 340 910

15 108 300

Option 4A

75 000

76 860

-

-

0

882 150

-

-

11 076 100

12 110 110

12 431 800

Option 4B

Per product

Per group

75 000

75 000

76 860

76 860

-

-

53 634 500

5 000 000

882 150

882 150

-

-

9 968 490

9 968 490

64 637 000

16 002 500

54 231 790

15 324 190

Option 4C

Per product

Per group

75 000

75 000

76 860

76 860

-

-

155 540 050

14 500 000

882 150

882 150

-

-

8 860 880

8 860 880

165 434 940

24 394 890

134 648 620

21 816 580

Option 4D

Per product

Per group

75 000

75 000

76 860

76 860

-

-

308 398 375

28 750 000

882 150

882 150

-

-

7 753 270

7 753 270

317 185 655

37 537 280

255 827 670

32 108 970

Option 5

Per product

Per group

75 000

75 000

76 860

76 860

-

-

8 159 285

725 000

882 150

882 150

-

-

9 968 490

9 968 490

19 161 785

11 727 500

17 851 620

11 904 190

4.Description of the standardisation work

Within CEN, the development of European Standards is carried out by CEN Technical Committees (CEN/TC). A CEN/TC is composed of representatives of national standardisation bodies (NSB). NSB delegations can also contain a representative of the competent national authorities. Each of the 33 NSB members of CEN can send a delegation of up to three people to the Technical Committee. These delegations relay the position of their national stakeholders to the CEN/TC. Participation in a CEN/TC is not limited to national delegations. Representatives from CEN Associates or Affiliates, the European Commission and relevant European Industry Federations can participate as observers in the TC's activities without voting rights.

The secretariat of the CEN/TC is held by one NSB. A chairperson is appointed by the CEN/TC to manage its plenary meetings. The chair conducts meetings impartially and ensures that balanced, transparent and prompt decisions are taken. The chair has no voting rights. Typically, TCs meet once or twice a year in plenary sessions but much work is carried out by correspondence.

The CEN/TC is a technical decision making body with precise scope and work programme established by the CEN Technical Board to mainly manage the preparation of the CEN deliverables. The technical work of drafting European Standards is conducted in the Working groups (CEN/WG) established by the CEN/TC, with a secretariat and a convenor. The standards are drafted by experts who are appointed by the NSB.

The experts of a specific Working Group develop draft standards within a given time-frame. When a first draft is ready, it is submitted by the secretariat of the CEN/TC, after consultation of the chair, to a public enquiry open to all European stakeholders. The purpose of the enquiry is to further refine the draft standard by gathering broad comments on its content. Following this enquiry, the comments received are examined and commented by the experts of the CEN/WG. The documents are transmitted to the members of the CEN/TC which decide whether the draft standard can be submitted to the final vote.

The CEN Management Centre in Brussels launches formal voting processes. The standard must receive at least 71% positive votes (weighted votes) to be adopted. Following its approval, CEN members are obliged to accept the new European standard as national standard without modification and to withdraw any conflicting national standard.

On the basis of a legal act, the Commission can issue a mandate to CEN for the development of technical standards or reports. If the mandate is accepted by CEN, a financial proposal is submitted to the Commission which can then co-finance the work programme. Any financial support by the European Commission for European Standardisation Bodies is covered by the requirements of the 'Framework Partnership Agreement – 2009’.