Category: Chemicals / Metals
“The best way to predict the future is to create it,” Abraham Lincoln once said. While we cannot predict the future, we have created a mission to responsibly feed the world, and protect the planet.
The next few years will become more difficult than those behind us. In 2016, the fertilizer industry was confronted with oversupply and falling margins. We cannot influence global production and pricing, however we can influence how we run our own operations. Our response to tougher times is the Yara Improvement Program. This is the largest company-wide improvement program in Yara’s history, positioning Yara for further growth and making us fit for the future.
In a world of emerging protectionism, isolation and fear, we find consolation in our company vision of creating a collaborative society; a world without hunger; a planet respected. We contribute to realizing this vision by exploring methods for better and more efficient fertilizer production and by increasing our agronomic support to farmers globally, and, most importantly, through agricultural intensification.
At Yara, the farmer and the yield is always at the center of what we do. Our innovation, research and development units find new and better ways to combine application rates, and our growing force of agronomists are out in the fields, meeting farmers, learning their needs and supporting them with our solutions.
For instance in the United States and Brazil, both key countries for citrus farming, our agronomists play an instrumental role in supporting local citrus farmers to use integrated crop management systems to strengthen their defense against diseases that threaten not only their yield, but their very livelihood. Just like humans need healthy, nutritious diets, citrus trees are also in need of a balanced input of nutrients, provided at the right time and in the right amount. At Yara, we help farmers grow a healthy yield.
Through expanding our industrial solutions to new markets, our environmental solutions help shipowners and industries across the world to reduce their NOx and SOx emissions. Last October the International Maritime Organization decided to implement a global cap on SOx emissions from vessels, which was a great step towards a more environmentally friendly shipping industry.
No operation or task is more important than making sure we always secure a safe work environment. When we fail – the consequences can be devastating. In 2016, we had one fatal accident. We lost a 26 year old contractor working for us in Costa Rica, leaving behind his wife Melissa and their daughter Amanda. To us, this is not only tragic, it is also totally unacceptable. Everyone in Yara – our employees and contractors alike – should return safely to their loved ones after an ended shift.
This is why we have thoroughly analyzed all the 119 Total Recordable Injuries (TRIs) that occurred in 2016, to understand why they happened and how to prevent them from ever happening again. There is a father, a mother or a friend behind each and every number in our TRI rating.
We continue our relentless work towards our ambition of zero accidents and I am glad to see our TRI rate is moving in the right direction, to a company-wide 2.5 in 2016. We fully believe every accident can be prevented and every time we experience a near miss, we work to understand why it happened to ensure it never happens again or develop into a future injury.
Ethics & Compliance is Yara’s license to operate. Our successes can only be celebrated when achieved in the right way, and the way we do business defines us as a company. We focus on making the right decisions, and speak up when situations fail to meet our high standards. For instance our colleagues across the world have proactively combated facilitation payments wherever we have come across them, showing that zero tolerance to this practice is possible.
Safety goes hand-in-hand with reliability and operational efficiency. In the Yara Improvement Program we are looking into how we can run a better business. We will realize contributions from across the company and deliver at least USD 500 million EBITDA in annual cost and operational efficiency improvements by 2020. This is how we create the future of Yara, to return to Abraham Lincoln.
We will change the way we work, and we will succeed by involving our employees and the unions, through transparency and open and honest dialogue. We lean on our globally integrated business model and our operational segments. Based on our company values, ambition, curiosity, collaboration, and accountability, Yara will remain successful and come out of the current negative cycle as a stronger, more competitive company. Looking further down the road, we know there will be an increasing demand for food grown on the same agricultural land as today.
In 2016, our Production segment produced 7% more ammonia and 1% more finished products, due to improved operational reliability and fewer maintenance stops. Additionally, we committed more than NOK 2.5 billion in new investments in our plant at Rio Grande in Brazil, to help serve a growing Brazilian agricultural market. We have seen a significant increase in demand for our premium products in Brazil, growing more than 60% from 2015 through 2016.
On a different continent, we also took historic steps, signing the agreement to acquire Tata Chemical’s fertilizer plant in Babrala, India. The plant is located in the middle of the Indian agriculture belt and the acquisition represents another substantial step in our growth strategy, creating an integrated position in the world’s second-largest fertilizer market. India has strong population growth and increasing living standards, and we see great potential to improve agricultural productivity in the country, creating a larger market footprint for Yara and enabling increased premium product sales. We seek to formally close the deal during 2017.
Three decades ago, the Brundtland Commission defined sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. Today we are failing the “Brundtland test”. Now is the time for the business sector to step up and take greater responsibility. The United Nation’s 17 Sustainable Development Goals provide a common roadmap for sustainable business.
Why is this so important to Yara? First, we need to take a look at the bigger picture. More than 800 million people go to bed hungry every night. One in four children under the age of five suffer from stunting, which is often due to malnutrition during their first three years. And more than 150 million children are forced into child labor.
As a Commissioner in The Business & Sustainable Development Commission, I have taken part in developing the report “Better Business – Better World” which takes an in-depth look into areas where global business can contribute to create more inclusive societies.
We believe, that by contributing to solving some of the world’s biggest challenges, we can create new business opportunities, increase our profitability and ensure long-term, sustainable growth for Yara. By changing the way we do business to embrace more sustainable and inclusive economic models, at least USD 12 trillion can be realized in new opportunities, according to the report. Global agriculture will be a key driver, particularly in Africa and India, due to the large share of cropland and low levels of productivity. To Yara, this is about building a future business platform and this is why we have chosen to place the UN Sustainable Development Goals at the core of our business strategy.
Modern farming can contribute to solve two global challenges. With improved access to input, and agronomic knowledge, new technologies and better supply chains, there is a potential to produce more food on less land, ultimately eradicating hunger. At the same time we can protect our forests and reduce agriculture’s impact on the climate. It is easy to forget that agriculture counts for 25% of global greenhouse gas emissions. Half of this through land use change. While science needs to progress the accuracy, for instance with regards to calculations of land use change, our preliminary estimate shows that emissions from grain production would be eight times higher than it would be if Yara products were used.
Yara was founded on innovation, and we keep innovating. Our patented catalyst cuts Yara’s and our customers’ greenhouse gas emissions with more than 23 million tonnes per year globally – the same amount of greenhouse gases the Norwegian Government is aiming to reduce by 2030.
2017 will bring new opportunities and we will be ready when they emerge. Our dedicated workforce of close to 15,000 employees across all continents, believe we have a mission bigger than the company itself, and they have committed to live our values, and continue building our company through Ambition, Curiosity, Collaboration and Accountability. Their knowledge, capabilities and engagement truly shape the Yara of today – and that of tomorrow. Together, we can contribute to creating a future that is sustainable and inclusive – in the next five, fifteen and fifty years to come. This is how we create our future.
Svein Tore Holsether
President and CEO