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.

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.

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.

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.

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.

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

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.

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.

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.

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

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)

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

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.

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.

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

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.

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.

(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

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

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.

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

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

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.

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

(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

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

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.

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

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

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.

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

(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

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

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

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.

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])

* 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)

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)

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)

(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)

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)

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])

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)

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)

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)

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

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 .