Okay. Good afternoon, everybody, and welcome to the Origin 2022 Capital Markets Day presentation. It's been three years since we had our last Capital Markets Day, obviously, because of COVID, and the business has faced a number of challenges over the last three years. We've had Brexit, COVID-19, a very challenging weather year in 2020, which had a follow-on impact in 2021. Finally then, the war in Ukraine, which is obviously impacting our colleagues in Ukraine far more significantly than any of us in this room. Thankfully, our colleagues are safe as far as we're aware. A few of them have joined the frontline, but the business is coping reasonably well and 2022 has been a tremendous trading year.
The war, while it is unfortunate, in relation to our colleagues in Ukraine, is having some very significant impacts on the overall food supply chain and some positive benefits for the business overall. We'll start with the typical safe harbor statement and we'll move on to a general update on how the business has coped, I suppose, in those intervening three years. We've had to focus primarily, I suppose, on monitoring the things that were within our control. First and foremost, that meant putting our people first, investing in our people, and bringing them through the organization. We've seen some managerial change at various levels right throughout the organization. We've been very focused on operational performance of the business, and you'll see evidence later on of an improvement in the business from a margin perspective.
The financial team has been hugely focused on improvement of the balance sheet, and we've extracted a significant amount of capital from the balance sheet over that period of time. Finally then, we've really put sustainability at the heart of the organization. I suppose today's presentation really is concentrating on the organization's strategy and how we are putting sustainability at the heart of the organization. Unfortunately, some of the Capital Markets Day challenges that we had set ourselves haven't been fulfilled, and primary amongst those is our M&A strategy couldn't be fulfilled because of the balance sheet pressure that that would have put us under. We did manage one reasonably small acquisition, important nonetheless in Green-tech, which was primarily financed through the disposal of our Pilart business last year.
A very limited amount of M&A activity over the intervening three years, but it has brought us into a very interesting space from a natural capital perspective, and we're very happy with that. You're going to see presentations from the presenters here on the slide. We'll move into some of the ways that we are challenging our business to change, and Peter and Claire will talk about some of the things that we're doing to change our business internally to adapt to the new world, and particularly the environmental challenges that are being thrown at us through various changing regulatory environments.
Following that then, we have a number of video presentations and panel discussions, which each of the business unit leads shown on the slide here will talk through their individual businesses and how they're coping with the changing environment. In addition to that, we have a number of other senior members of our management team present here today who are not speaking, but they are available in the fringes of the meeting, and hopefully you'll get a chance to catch up with them. At the end of the presentation, we have some questions and answers, so you'll be able to catch up with them at that stage. I'm also grateful for a couple of our non-executive directors showing up here today.
Gary Britton, our Senior Independent Director, and Chris Richards, who's our foremost expert on crop protection within the board, have made themselves available, and they've come along to join us today, so we're very happy with that. A quick overview of today's agenda. TJ will touch on the progress against the metrics that we set ourselves in 2019 from a Capital Markets Day perspective. I'll begin to unpick the strategy and some of the underpinnings of the strategy, and the reason why we're moving in the direction that we are from an environmental and sustainability perspective. As I said, we're gonna have a number of videos, presentations in the room, and also panel discussions which will touch on how each of the individual business units are coping with the changes that we're facing.
TJ will then bring it all together in terms of the financial model for the next five years. Finally then, I'll talk about some of the strategic priorities that we're setting ourselves over the next 12-18 months in particular. Finally then, there's an opportunity for questions and answers at the end, and myself and TJ will try to moderate those questions. If you want to ask questions of any member of the management team who you've seen speaking or any of the other management team members in the room, feel free to ask those questions. TJ, I'll hand over to you in relation to some of the things we've been working on over the last 3 years.
Very good. Thanks, Sean. As Sean said, the last three years have presented significant volatility for the business, whether that be in the form of weather, COVID, and more recently, the war in Ukraine and the supply chain challenges that has created for us.
Across the business, the management team has been focused on a few key areas. Working capital has been a key focus, a key priority for the group over the last two and a half years. We've taken out approximately EUR 50 million underlying from a working capital position, and that's, you know, resulted in the improvement in net debt and also will feed through to the improvement in return on capital metrics that we're seeing and will see for the remainder of this year. From a product mix and margin perspective, again, I would say it's a key theme and focus of management to focus on the profit profile of our product portfolio. So really driving to focus on and enhance the more profitable elements of our portfolio, acknowledging that we are, you know, a commodity business as well.
Within that mix, we have the opportunity to focus on the higher margin proprietary crop protection, seed, micronutrient, and fertilizer portfolios. We do that through a combination of, as I said, in-house product development and also leveraging supplier exclusives. That has been a continued focus of the team, and something that we will continue to drive out over the coming years of the plan. We'll talk in a little bit more detail about that later.
From an earnings concentration and volatility perspective, I suppose one of the things that FY 2020 has taught us as a management team is that the extent of exposure and volatility of earnings to both UK, Ireland, ag, and weather dynamics is something that ultimately we need to try to diversify away from and improve the mix and concentration of our profits over time, such that we have less exposure to those areas. We'll give a little bit more color on that as we work through the afternoon. Just looking at 2019 to...
FY19 to 2022 in total then, as we said, we've touched off some of the headwinds, whether that be the type of one in 35- to 40-year weather events that we had in late 2019, whether it be the impact of Brexit or the type of currency depreciation that we saw in the Brazilian real to euro, for example, all headwinds that we have had to manage over that period. I would say our response has been very much focused on controlling the controllable areas of the business. Really that has boiled down to, as I said, managing tightly the margin profile within the product portfolio, optimizing for cash extraction across the group, and ultimately driving return on capital metrics across the business.
Again, the challenges of FY 2020 have certainly put that under pressure, but we are pleased to note the recovery that we're seeing through FY 2022. In tandem with that, and again, it's a theme we'll touch on through the day, is creating new footholds both in our core markets and in near adjacent markets. Whether that be through expansion such as our CRF capability in Brazil or the acquisition of Green-tech, as Sean touched on, you know, our intent, again, is to improve the mix of profit and the profile of profit in the group such that we, over time, lessen the exposure to those weather and pure ag dynamics that we see in the UK, Ireland context.
Group capabilities, I think, is a theme that you will see come through throughout the afternoon as we listen to each of the speakers. You know, for us, that really is about leveraging the capability of the group assets, whether that be the group commercial team, the group R&D team, or Throws Farm facility, for example, in the UK. Very much about bringing those together under the group asset umbrella and sharing best practices right across the organization. Team development. Over the last few years, there has been some natural attrition and retirement of people across the executive team. That level of change and dynamic in the group exec team has been something that's been ongoing and has been managed over the past few years.
In terms of delivery, I'll talk in a little bit more detail later about FY 2022 and how we're seeing that unfold. Also I'll just give a little bit of color in terms of the metrics that we gave at the capital markets day in FY 2019 and how we're progressing against those. Leadership in sustainability is a theme I think that you'll see come through right through the afternoon. Very much see ourselves placed at the center of that in terms of how we run the business and how we manage the business. Sustainability as a theme is no longer a parallel piece to our business. It is very much core and center to how we think about the business.
Through the afternoon, what we'll hear from the various speakers is some insights in terms of some of the highlights across the business over the past few years. Fortgreen, as I touched on, very strong organic growth within that business. We'll hear from the team about the delivery from our new controlled release fertilizer plant and the further opportunities for organic growth that we see in the Brazilian market. Across both the Romanian business and more broadly in our continental Europe business, we'll hear about, you know, again, the progress that's been made in terms of the consolidation piece of the two legacy Romanian businesses, as well as some depth and color in terms of performance across the market in general, including an update on Ukraine.
Origin Amenity has recently consolidated three of its key brands, and we'll hear from Chris Clarke as he outlines how that is acting as an enabler for us to drive further growth in the core amenity offering, and the opportunities that present in that space out over the coming years. Across the portfolio then, as I mentioned, focus and investment very much around leveraging those group assets. I think that will become evident as we hear from the various speakers today. Digital, as an enabler, both in terms of our on-farm agronomists and also our general on-farm advisory team, has become an even more important key theme and focus of the business, as well as the inherent demand from a precision ag perspective that we're seeing across our customer base.
Again, their teams as we see our digital presentation later, that will be evident and come through. That point, again, around leveraging best practice and capabilities across our B2C agri business is very much enabled by the capabilities that we've built around a central commercial team leveraging the assets such as our Throws Farm as an R&D center and also as a training hub, again, that allows the share of best practices right across the B2C organization. Standing back and looking at the business and looking at how the group has evolved over the last few years, I mean, at our core, we're very much a people business. That theme carries right through our engagement model right across the organization.
We have signed up to the UN Global Compact, very much enshrines the concepts around human rights, good labor, anti-corruption practices while operating in an environmentally responsible way right across the business. Again, you will see that theme come through later. You know, as we look at our Nurturing Growth sustainability program, you'll see that, you know, it's very much embedded in our commitment to building roadmaps across both our B2C and B2B businesses in delivering sustainable agriculture practices in those businesses and also in our amenity businesses. Again, from that point of view, when we look at ESG, very much led by our board governance practices set in place right across the businesses.
You know, in doing that, we are complying with the best practice frameworks such as complying with the sustainable SBT targets, TCFD reporting, and that's very much core to the operations of the business. Extending that theme across our portfolio growth, mindful as we talk about M&A later, that taxonomy is a key theme that we are very mindful of as we build out our capabilities across different parts of the business, whether that be across the amenity business or the general natural capital space. Systems and capability has been an ongoing focus of the business, particularly digital, as I said, but equally over the last year we have been replacing our core ERP systems across the UK and Ireland businesses.
That's a program of work that is due to conclude in 2023, and then we'll look across the rest of our businesses to again drive further enablement from an ERP perspective as we drive growth across our businesses. Digital, I touched on earlier, a continued focus and again, an ever-evolving landscape in the area of precision ag and ultimately about enablement of our on-farm agronomy and advisory teams. Touching on FY 2022 then, I mean, as you will have seen, we upgraded earnings last week to a range of EUR 0.49 to 0.57 EPS. That's coming off the back of an earlier upgrade in April of EUR 0.45 to 0.49.
Really what we're seeing back to the start of the year, I suppose it started with you know very strong planting season across our geographies. Crops have been well established and are generally in good condition, albeit probably a need for some moisture in the UK, certain parts of the UK right now. All geographies generally performing ahead of expectations with trading momentum overall very, very strong. Soft commodities, again, as you will be aware, have been strong and that has helped underpin demand. I mean, liquidity on farm, we would say generally has been very, very strong as we came through the season. Farmers were benefiting earlier in the season from high commodity prices, and the full impact of input costs hadn't necessarily flown through.
We've seen that benefit and tailwind in terms of cash performance come through as a result of on-farm liquidity. I'll talk a little bit later about that, and we do expect some of that to unwind in due course. Overall, that has been a key feature of the business. Again, back to the Ukraine situation, and even in advance of that, you know, supply chains have been challenged through the year, but we have been successfully navigating that. That has ultimately overall allowed us to increase the earnings guidance range to those levels of EUR 0.49 to 0.57. The buyback program is, you know, well underway at this stage. We launched that on the eighth of March.
It's over 80% complete, and overall, very pleased with the progress of that program, and we expect that it should complete well ahead of schedule, which was around the end of October this year. Briefly, just touching back on the targets that we set in FY 2019. The base year for those targets was FY 2018 up to FY 2023, so we're kind of coming to the tail end of that program. Overall, I was pleased to note that through this year, return on investment and free cash flow metrics have been very, very strong. I mean, despite the headwinds of FY 2020, some recovery in FY 2021, but seeing really a further push through in terms of performance in FY 2022.
Across the segments, FY 20 did clearly challenge the UK and Ireland performance. Again, the base year for these metrics was FY 18, which was quite high, and FY 20 clearly challenged the UK and Ireland business, you know, significantly. That said, pleased with the progress and recovery that we're seeing coming through in FY 22. From a continental Europe perspective, Poland and Romania performing, you know, on target. Excluding Ukraine, obviously with the current situation there, the performance is heavily challenged this year. Overall LatAm, the key headwind in LatAm was currency. So as we translated the real back to euros, we're getting significant hits as that depreciation hit on the currency.
Underlying a very strong performance in the LatAm business and, you know, seeing some relaxation in that currency headwind through this year, but underlying very pleased with the LatAm performance. Again, that's a theme that we'll pick up later as we hear from the LatAm team. With that, I'll hand it back to Sean on strategy.
Thanks, TJ. I suppose, you know, the thinking about how we run the businesses for the future, the way we want to adjust the businesses, course correct, I suppose, to a certain extent, within some of our existing businesses and how we think about M&A is very much underpinned by some of the challenges that we're facing from a regulatory perspective. A huge amount of regulatory change and challenge has taken place over the last three years. You've had change in agricultural regulation with the publication of the EU Farm to Fork policy, change in reimbursement with the UK Agricultural Bill moving to ELM schemes, and the EU CAP model being changed, and change in development land, where biodiversity net gain is now being mandated as a requirement for any development land.
All of that is feeding into a backdrop which leads us to, and we have been putting sustainability at the heart of the organization. Last year, we published our Nurturing Growth document, which spoke to the way in which we want to put sustainability at the heart of the organization, and that's common in a number of different forms. In terms of our advisory businesses, our agronomy businesses have been very focused on the Green Horizons manifesto, and that document was published about 18 months ago now in terms of how the agronomy businesses are focused on sustainability.
Last year, our fertilizer businesses published a Fertile Future manifesto, we're changing our product set, we're changing the way in which we're interacting with our customers from a product capability perspective, and reducing the nitrogen levels within fertilizer, but giving the same yield with different combinations of products. Product innovation and continually reviewing our product set has been important part of the mix of how we're coping with the new world. As TJ said, M&A is now very much focused on sustainability, and I suppose the lens through which we're viewing any new potential M&A will have sustainability at the heart of it. That will be important.
We're doing lots of good stuff on the reporting side as well, and our ESG committee at a board level is hugely involved in the sustainability steering committee that we run at an executive level. At least one member of our board will sit in on the quarterly meetings that we have at an executive level with a sustainability steering committee at the heart of it, working on different projects in sustainability and innovation, our own carbon footprint, and how we're impacting the business from a social perspective. All of that, as TJ said, is leading to increased level of commitments from the business, and we will adopt at the end of this fiscal year science-based targets from a greenhouse gas perspective and adopt an environmental management system in line with ISO 14001.
A huge amount of work and commitment is ongoing in the sustainability space. From a strategic perspective, how we view a number of the crises facing the globe and how humans as a whole interact with the globe is hugely important. You hear lots of noise and lots of comment and dialogue around the climate crisis and the impact of carbon emissions on the globe in general. That's been the one that's been, I suppose, most loudly spoken about from a general public perspective. What you hear less about, I guess, is the food and energy security crisis that the globe is facing as the population continues to grow towards 2050 and how the globe will feed itself.
I suppose the Ukraine war and the conflict between Russia and Ukraine is really only bringing that home and into public consciousness now. That's a crisis that the globe is facing. Finally, the biodiversity crisis that the globe is facing in terms of the underpinning of all of the activity that goes on from a natural capital perspective is also coming to the fore. Those three drivers, I suppose, are changing the way in which we view the historical uses of land, and traditionally, that would have been very much siloed with production and amenity, the two areas that Origin are most heavily involved in. The consciousness around development and the development of infrastructure, and urban development and commercial development, I guess, is now having to take on board ecosystems.
That model, I suppose, was very much focused on the provisioning services in the first instance, but is changing over time now to include regulatory services, cultural services, and underpinning services, which were very much in the background in the past, but are very much coming forward now. That changes how we think about the model for sustainable land use out into the future. Ecosystems will underpin all of the other uses of land, from production, to amenity and development. We think that that will then feed three macro growth drivers, for our business, which are at the heart of how we're thinking about running the business out into the future.
Coping with the challenges of feeding the globe, stabilizing the climate, and also restoring biodiversity essentially will drive out new macro growth drivers of sustainable agronomy because the world will need to be fed, and doing it in an ecological way is hugely important. Coping with that food supply risk that exists on a global level, and getting exposure to the emerging, nature economy, which is, you know, in its infancy. The Environment Act 2021 was only published at the tail end of last year and is really only becoming a requirement on development and developers right now.
Traditionally, the Origin portfolio would have almost been siloed in the same way as people thought about the uses of land, be it on a geographic basis or a product basis, or indeed across some of the services that we've provided, in the advisory and services area. The business units have historically been very much run in silos rather than interacting with each other. Following the Green-tech acquisition, there's been a huge change in how we're thinking about the business.
We've moved from, I suppose, the established Origin presence in food production and amenity historically now to developing areas in forestry and in development land and ecology at the heart of it to cover off those areas, albeit Green-tech is really only scratching the surface in those areas in the first instance, and there's a lot more to be done to develop in those areas. Our exposure to those macro growth drivers, as a business is, of course, at its strongest in sustainable agronomy. The Origin businesses have historically always been hugely competent in the provision of sustainable products, but more importantly, sustainable agronomic advice. Claire and Peter, I think, will discuss that in a lot more detail and give you a lot more color from a technical perspective on why that is the case.
We think we're well covered in that area, and we continue to be leaders in that area, certainly versus a lot of our competitor set across many of the geographies that we're operating in. The technical competency of our teams, the technical competency of our product set is much, much stronger than our competitor set. From a food responsiveness perspective, that varies very much by geography. The capacity of UK and Ireland, for example, to generate significant additional yield, I would say, is quite limited, and yield gains are certainly tailing off in that area. There is scope within Continental Europe and Latin America to drive further yield and production to meet the world's growing food demand.
From an emerging nature perspective, again, our amenity business is well set in that regard, but it is a growing area, and we will need to be active in terms of pursuing new acquisitions in that space to continue to grow. Our UK agronomy businesses and our UK fertilizer businesses have a part to play in that nature economy, both in terms of the product set and capability we have, but also in the implementation of ELMS schemes as they get introduced, from the UK government perspective. Our portfolio position we think is relatively strong. As I said, Peter and Claire will talk in detail to the technical advice and solutions, and some of the panel discussions will also touch on the opportunity from a sustainable agronomy perspective.
We see ourselves transitioning to newer product areas and newer product categories and also improving the product technologies that we use in order to continue to feed the world in a responsible way over the coming decades. Finally, then, we need to accelerate our investment, both from an organic and an inorganic perspective in terms of the emerging nature economy. Looking at the first of those in turn, as I said earlier, the approach to sustainable agronomy was set out in our Nurturing Growth document last year, primarily based on four pillars, balancing sustainability and outputs, soil and plant nutrition, innovative and integrated plant protection, and enhancing biodiversity and protection, protecting natural capital. Over all that, or underpinning all of that then is our digital capability, which supports a lot of the change in this area.
We'll see a combination of videos and presentations which will give you a deeper dive on this area later on. In relation to food security and the global food supply chain, this very much differs by geography because of the capability of each of the geographies really to respond with any significant growth in production. You know, the opportunity in UK and Ireland is very limited. The professionalism of the farming base there is strong, and the opportunity to agronomize farms in a better way and continue to extract yield growth, I would say, is relatively limited. In fact, it will be challenged enough to maintain yields in the face of what are changing regulatory demands and also product revocations over the coming years.
We're in a strong position there, and it's about defending that core base, and continuing to extract the maximum from that core base by widening perhaps our product portfolio in those areas. Within Continental Europe, obviously, the opportunity is greater and probably the production levels from some of our geographies, such as Poland or Romania, is maybe 30% or 40% at an agronomic level, worse than it could potentially be if you compared it to, say, a geography like Germany, which is the same soil type. The opportunity is there to increase yields to a fuller potential. Since we've acquired those businesses, it's been a relatively slow journey, and I think Alex and Mona Lisa will talk a little bit to the challenges in that area. We are well set relative to our competition set.
We are focused and fundamentally our sales teams and sales organizations there are about educating themselves and driving good agronomic practice relative to our competitor set, who are just more sales focused, and not as focused on driving good agronomic practice. We are planning on expanding our portfolio there, and Alex and Mona Lisa will talk to some of the things that we're doing to improve the product set and capability within that. We also plan to invest on a new foliar plant within the Polish market over the course of FY 2023, which will allow us expand our footprint there. Finally then, Eduardo and Leonardo will talk about the opportunity in Latin America. The yield capability there again can increase significantly.
We're very focused on an existing product set as a B2B supplier, supplying many distributors within that market, and indeed some export markets, of biosolutions, adjuvants, and controlled-release fertilizers. We do see ourselves extending that product range, organically into controlled-release fertilizer plants, growing those further, and also a biologicals business in the coming years. The third key market driver then is the nature economy, and I suppose consumer and societal expectations are driving all of this regulatory change that you can see here. The Environment Act 2021 has been, I suppose, a key driver of biodiversity net gain obligations for developers, in the UK and will be a driver of this area.
The challenge that we have in U.K. agriculture, in terms of transitioning the payment mechanisms to quite ill-defined schemes, I would say at this stage, Ronan, and maybe Ronan will touch upon this in his Q&A session. Certainly payments to farmers will now be centered more on environmentally focused payments rather than the basic payment schemes. Finally, you know, a whole swathe of corporate reporting legislation, which will drive companies to think about their impact on biodiversity and nature in different ways, and which will drive continued growth across this whole sector, which we already have an exposure to, but which we would like to expose ourselves to more, because we do see it as a very strong growing sector.
Linking our businesses across production and agriculture, linking those Environmental Land Management schemes to the obligations that are on developers, for example, and linking all of these things will be an important part in how we see sustainable land use out into the future. A quick overview of the next few presenters. As we mentioned earlier on, we're going to have panel discussions, videos, and also some direct presentations here in the room on a number of topics. Before the short break that we'll take, we're going to try and cover the Ireland, UK, and the CE businesses, and we'll have videos in relation to balancing sustainability and outputs, Origin Digital, and some technical presentations from both Peter and Claire. We'll take a quick comfort break then for about 10 minutes.
We'll come on to Latin America, and Eduardo and Leonardo will give you a good overview of what we're doing within our Latin American business. Finally, Ruth and Chris will come up on stage and talk to you a little bit about the biodiversity sector from an agri perspective, but also from an amenity perspective, and try and dovetail how those businesses will interact in future years. The first section is sustainable agronomy. We're going to start doing deep dives on those growth areas now, and we'll kick off with our first video, which is about balancing sustainability and outputs. By the end of this century, the world's population is expected to reach 11 billion people, up from 7.9 billion today.
In agriculture, producing safe and affordable food, ensuring food security and a commercially viable farming sector are the only acceptable outcomes. The more efficiently we can use the world's resources, the more sustainably we can farm. Our objective is to help deliver a twenty-first century green revolution, targeted at radically reducing the impact of food production on the environment globally.
High yielding crops are linked to lower greenhouse gas emissions and can maximize the non-crop land available for biodiversity to thrive. To meet global food requirements in the future, either more land needs to be put into food production with consequential loss of biodiversity, or the yield gap in productive regions like Eastern Europe needs to be closed. In Western Europe, the yield increases seen in the last 80 years are tailing off. Technology such as precision farming, digital tools, biosolutions, gene editing, lower carbon fertilizers and, critically, improved understanding of soil health will all deliver greater efficiencies. Our strategy for sustainable agriculture is about farming to meet economic and food production needs, while addressing the environmental imperatives of protecting biodiversity, enhancing soil health, and aiming for net zero.
To support this sustainable green revolution, we are implementing a Nurturing Growth strategy to drive real change and the adoption of more sustainable farming practices with our customers. It starts with soils. Farmers and growers have long understood the capacity of soils to sustain human life through growing food. We want to bring a scientific approach to building more resilient soils which can withstand the climate extremes we face. Our newly launched soil resilience strategy extends that understanding into farming practices and will form the foundation of our approach to crop management. Criteria related to sustainability will increasingly guide which products our agronomists prescribe. We already provide sustainability ratings for cereal seed to guide decision-making towards varieties with a stronger genetic foundation, providing natural disease resistance and traits which can help plants thrive in a more challenging climate.
This concept will be extended to greener crop protection alternatives such as biosolutions. Already, we have fertilizers profiled with their greenhouse gas emissions and nutrient use efficiency. Encouraging alternative cropping choices with enhanced knowledge and research is critical. Diversity breeds resilience, and the diversity in the plants we grow drives the resilience we need for sustainable crop production. We are creating a strategy on plant diversity that meets the twin aims of a more robust farming rotation and the enhancement of biodiversity. In order to deliver these commitments, we need to upskill our agronomists and sales staff to enable holistic support around environmental issues, soil management, and regenerative farming methods. Working with industry bodies in the UK, we are updating and creating the in-field training that will help lead farming through this transition process. This training plan will be adapted and replicated across the group.
Sustainable, secure food production and a competitive thriving farming industry is critical to all of us. As trusted partners, our strategy will assist our customers to navigate the complexities and the competing priorities faced by agriculture today and into the future, directed by evidence-based research and collaborations.
Okay, I think you're up, Peter. Hopefully, you,
Good news.
you can sync with your slides. We won't have a two-second delay.
Well, I've been asked to stand behind the lectern because of the interference, so that's going against my natural presentation style unfortunately. Anyway, bear with me. Hopefully the technology will work. Yeah, I'm Peter Scott, and I'm heading up the Soil Resilience and Plant Nutrition strategy for the group that Sean alluded to. Sustainability is absolutely at the heart of everything that we do, going forward. It might seem slightly illogical, given that the title of the presentation is Soil Resilience and Plant Nutrition, to start by asking you to think about and focus on the air that we're breathing in this room. 4/5 of what we're taking into our lungs, we're breathing straight back out, nitrogen. The biggest challenge facing us in terms of sustainable agriculture over the next few years is posed by nitrogen.
It's an inert gas. The reason we breathe in, 4/5 of the atmosphere is nitrogen, we breathe it in, we breathe it straight back out, is just exactly that. At this stage, it is an inert gas. That strikes me as something of a divine design flaw, because nitrogen is just as important as the oxygen that we're breathing in. Nitrogen is a fundamental building block of all life, plants, animals, everything. It's intrinsic to our genetic footprint, our DNA, our reproduction. It's intrinsic to photosynthesis, plant production, crop production. All protein on the planet, whether it's animal or plant, 16% of that protein is composed of nitrogen. Nitrogen is a fundamental building block of life that we cannot live without. At this point, it's an inert gas that does none of those building block exercises.
We have to convert it from an inert gas into reactive gas. Now, this happens in nature. It's been happening in nature ever since the creation. The nitrogen cycle, we're all part of the nitrogen cycle. We want to be part of the nitrogen cycle for as long as possible. We'll eventually be part of the carbon cycle, we want to delay that process. In nature, plants like clover and legumes, beans, pulses, they can convert inert nitrogen into reactive nitrogen. But as the global population increases, we've had to industrialize this process. So two very clever German scientists working for BASF a hundred years ago synthesized atmospheric nitrogen into reactive nitrogen using a process called the Haber-Bosch process. Like everything in development, that brings pros and cons.
The positive is that by doing that, we're able to produce nitrogen fertilizer that enables us to grow the crops that sustain the increasing global population. The downside is that the Haber-Bosch process uses fossil fuel, so we have a high carbon footprint in nitrogen fertilizer production. Putting that to one side, the fundamental is that 47% of total food consumption today is derived directly from the Haber-Bosch process and the synthesis of nitrogen fertilizer. We are fundamentally linked to this process in terms of driving global population. However, in creating reactive nitrogen, we've let the genie out of the bottle because, yes, it enables us to grow the food that we need for a growing population, but reactive nitrogen, it's a little bit like Ronseal. It does exactly what it says on the tin.
It is highly reactive, and it forms into all sorts of different compounds from nitrous oxide, 298 times the global warming potential of carbon dioxide. It's a major impact on climate change. Ammonia, 87% of which comes from agriculture, is a major atmospheric pollutant, and then we have nitrate, which has a detrimental impact on the quality of drinking water. Nitrogen, we can't live without it. The question is how do we live with it? Hopefully what I've explained is that nitrogen is absolutely at the pivot point of that sustainability seesaw between producing enough food for that growing population and protecting the atmosphere, the water, the environments in which we live. That's it.
The importance of nitrogen in this is reflected globally in the United Nations Sustainable Development Goals, in a European context or an EU context, in the Farm to Fork Strategy, which has specifically called for a 20% reduction in the use of nitrogen fertilizer. We'll probably see similar requirements in the environmental land management schemes that are being rolled out just now by Defra in the Sustainable Farming Incentive. We've just already seen an EU member state, the Irish government, have taken the Farm to Fork Strategy. They've taken this before it becomes a directive, and they've turned it into a climate roadmap towards climate neutrality. The Irish government have mandated farmers in Ireland to reduce nitrogen fertilizer consumption by 20% by 2030.
For us as fertilizer businesses, is this a threat or an opportunity? Actually, the way our business is structured and what we are doing as a business to counter these types of directives, it's actually an opportunity, and I'll explain why I see it as an opportunity in a minute. It's too blunt an instrument just simply to say we're going to reduce nitrogen fertilizer by 20%. What happens if food production in Ireland concurrently collapses or significantly reduces? We, as a business, are working closely with government in the development of nitrogen use efficiency as a KPI of sustainable farming. Because if farmers can use that nitrogen more efficiently, then that will actually give us a win-win situation.
If a farmer can recover more of the nitrogen that's applied into his crop, then de facto, he's improved his financial return on the investment and at the same time has reduced the amount of nit-reactive nitrogen that can be lost to the atmosphere or to water. It's a win-win-win situation for the farmer and for the environment. Nitrogen use efficiency fundamentally is a measurement of we're measuring the amount of nitrogen that's taken off in crops, in milk, in meat, and comparing that against the amount of nitrogen that's gone into the system. The theoretical ideal would be 100% or a one-to-one ratio. In practice, there's a lot of room for improvement. As you can see there, 25% nitrogen use efficiency, typically in dairy, typically 60% in growing wheat and barley.
A lot of room for improvement. This is focusing a lot of our attention across various business units within the group. What can we do to increase nitrogen use efficiency? Bearing in mind that if we can, and we have demonstrated that we can, but if we can increase nitrogen use efficiency, we are improving our farmers' ability to grow crops in a sustainable manner. Three key areas which I'll just run through. One is soil health and resilience, integrated nutrient management planning, and enhanced efficiency fertilizers. You heard from Amy on the video that Agrii have just rolled out in January of this year, Soil Resilience Strategy. 95% of global food production comes from the soil. The soil is the raw material of agriculture.
If we can build and improve healthy, fertile soils, we're creating the building block for increasing nitrogen use efficiency, sequestering carbon, improving resilience, improving our ability to withstand the effects of drought or excess water. It's this process of understanding the farmer's objective, doing the investigations, the analytics, creating the data through analysis, using the skill of the agronomist to interpret that data and ultimately to turn it into an output and action for the farmer. That's a very, very brief overview of what is a very complex strategy that we're in the process of rolling out over the next few years. Secondly, integrated nutrient management planning. What is an integrated nutrient management plan? It's where we take that data from things like the Soil Resilience Strategy.
We analyze the nutrient content in soils, in a growing crop, in the crop that we harvest, in the organic manures and slurries and digesters that we apply, and we think of it holistically and take it all together, run it through our digital tools that we're creating with our colleagues in Origin Digital, and the output is an integrated nutrient management plan that basically forms a blueprint for the farmer to work out how much product is, nitrogen or phosphate or potash, whatever, does he actually need to apply to get the right balance to tick all these boxes in terms of increased nitrogen use efficiency, to balance his productivity, reduce his nutrient losses, sequester carbon that we're hearing more and more about, and ultimately improve his resilience and his sustainability.
Then finally, we're working and have been for a number of years, and I would say without fear or favor, we are in the vanguard of developing enhanced efficiency fertilizers. The market in the UK and Ireland is not asking us for more fertilizer. What it's asking us for is better fertilizer, and that's what we are focusing on as a business, is doing better fertilizer. We are working, pulling together additives, enhancers, so that we can produce exactly the right amount of fertilizer, the right amount of nutrient in relation to the analytics that we've created, in the nutrient management plan. This is one of our key points of difference. Where we stand today, I started in the fertilizer industry, a few years ago, 38 years ago, precisely. I was 6 years old at the time.
We had 4 nutrients and 20 products. Today, Origin Fertilisers has 14 nutrients across 15,000 products. That's how we'll increase nitrogen use efficiency, through broad-spectrum, multi-nutrient prescription nutrition. Our blending model allows us to do that. Primary fertilizer manufacturers can't actually play in that space. We've got to make tracks that others can't follow. That's what we're doing through our NutriMatch prescription fertilizer service. We're building state-of-the-art, modern blending plants, computer-controlled, that allow us to select from these choice of 14 nutrients, the soil analysis or whatever might say, "Well, in this particular case, only 9 are needed." We select those 9 in the relative proportions, and we create a perfect match. That means that we're able to produce fertilizers where there's no excess of nutrient, no deficiency of nutrient, no compromise in terms of farmer choice.
We've built out a series of brands, enhanced efficiency brands over the last few years, and we're seeing growth in our enhanced efficiency product range, and that's across agriculture, across amenity. We've developed inhibitors to reduce those nitrogen losses I talked about, phosphate enhancers, micronutrient coatings. Also we've been working for a number of years in the production of controlled-release fertilizers and continuing to do that with our colleagues in Brazil who have just recently built a brand-new state-of-the-art controlled-release fertilizer plant in, I won't try and pronounce that, in Brazil. Controlled-release fertilizers are, again, what they say on the tin, where we're actually able to manipulate the release period of each of the nutrients to tie in with the uptake requirement period of each of the nutrients.
Fortgreen are building out these brands of controlled-release fertilizer. Hopefully that's just a quick overview, very quick snapshot that gives you a flavor of what we're doing as a group of businesses working together, breaking down the silos, integrating our knowledge and expertise to put together a soil resilience and plant nutrition strategy for sustainable agriculture. Thank you.
Good afternoon, everybody. Nice to see everyone in person. We've missed seeing people like this, actually, physically, so it's fantastic. I'm gonna talk a little bit about innovative ways to protect crops, but what I'm specifically going to focus on today is biosolutions. A little bit of background, I guess. We, as providers of leading-edge agronomy advice, play a really important role in helping our customers balance the sometimes conflicting twin aims of food production and also protecting the environment. For decades, we have helped plug that knowledge gap between science and agronomy, and delivering this important information to our customers. Now, many of you will be familiar with Throws Farm, but for those of you who are not, this is a technological hub for all of the Origin businesses, and it was established back in the 1950s.
We undertake about 400 trials every year on a whole range of crops, both covering horticulture, agriculture, and amenity, and we're looking at testing products, varieties, nutrition, and integrated ways to protect crops against pests, weeds, and diseases. The key aim of these trials is to generate independent advice for our customers. It's now a LEAF Innovation Center, and therefore research into sustainable practices has really ramped up. Now really for sustainable food production, most experts view maximizing yield as, a really important component. We need to get the most we can from existing land so that those areas which are not being used to grow food can maximize their biodiversity, potential.
It's important that we therefore look at plant protection products as part of our integrated approaches, and you can see there that at the moment, they are protecting between 20% and 40% of yield potential across a range of different crops. They're absolutely vital to competitive food production, a competitive industry, and also food security. In addition, they actually the higher the yield of the crop, the lower the greenhouse gas emissions. For every ton per hectare of yield produced, that lowers the CO2 equivalent per ton by about 34 kilograms. In addition, they actually only represent about 1% of greenhouse gas emissions from agriculture. It is true to say that they are coming under pressure for all the reasons that I've listed up there.
They are extremely safe, but the cost of bringing new active ingredients to the market has escalated. In fact, it's now doubled in the last 20 years. It's around $300 million for a new active ingredient, and it's also taking a long time to bring these products to the market. It's now around 11 years, for example, in the EU. In addition, we have things like resistance, which is a problem, so pest weeds and diseases can overcome these products. They are also being focused on very, very carefully, and we are losing some of the old active ingredients that we used to have on the market. They're coming under pressure. We have always used them in integrated approaches.
We don't rely on chemistry as the first line of defense, so we're always exploring things like resistance in varieties to see how well we can combat any agronomic challenges without necessarily having to use chemistry. These IPM approaches have been thoroughly researched and are promoted to agronomists and customers as the most sustainable approach to growing crops. There are some really interesting emerging innovative technologies that are coming through. They have been assessed as having a positive, negative, or neutral effect on these macro factors listed on the left-hand side, so things like biodiversity and climate change. It is really important that these are looked at in the round for unintended consequences. I have listed some of these technologies across the top there, and you will see there's quite a lot of red, for example, around mechanical practices.
Things like electro weeders, which are talked about and are being developed, they have a very high energy cost. They quite often have fairly heavy batteries, so they can cause soil compaction. Laser weeders, which also are being investigated, can have an impact on pollinators, for example. While they're not chemistry, they do have unintended consequences which do need to be evaluated. Something like plant breeding techniques, however, are a win-win, and techniques such as gene editing, which has now been recently approved in the U.K. for scientific development, will allow us to cut breeding cycles in half to about six years. This means that we'll be able to incorporate things like pest and disease resistance, healthy food traits into crops in a far shorter space of time.
These are not GMOs, at least not according to the U.K. government, who have ruled in their favor and allowed us, as I say, to start researching them. Today, however, I'm gonna focus on biosolutions, and as you can see from the table, they are all judged to have a neutral or positive benefit on those macro factors that I have outlined. What are these biosolutions? Well, you can describe them in various different ways, but we simply put them into two categories. On the left-hand side, you can see bioprotectants. These are essentially natural products which can be used to control pests, weeds and diseases. They have to go through a similar registration process to chemistry in order to get a label to say that they are controlling those problems.
Biostimulants, on the right-hand side there, do not yet have to be registered. They will do, however, in the EU and Northern Ireland from the middle of this year. Certainly, in the U.K. at the moment, there are no plans to have to register those. The focus of these is on stress mitigation, and also, as Peter has said, he's mentioned nutrient or nitrogen use efficiency as being a really important target. You can see the very positive compound annual growth rates, which are predicted for both of these sectors. You'll see some examples of the bioprotectants there on the left-hand side. Say you've got things like bacterial biopesticides, which can help with pest and disease control.
You've got elicitors, which basically turn on the plant's own resistance mechanisms to diseases, and we're exploring all of those. On the right-hand side, we've got some, otherwise known as stress busters, biostimulants there, so things like, seaweeds, which can help plant health and rooting, bacterial plant growth promoters, which can help fix nitrogen. Now, that's really important, linking back to what Peter was saying. Anything that we can do to help plants access the nutrients they need without necessarily having to apply them, it's going to minimize the amount of nitrogen fertilizer that we need to apply. All of those have, again, got some very good, and positive traits to them.
In terms of the market, if you have a look at the EU, the market for biosolutions is predicted to grow rapidly, albeit from a fairly low base, and this is really driven by the EU's Farm to Fork Strategy and some other factors as well. Now, at the moment, most of these are being used in high-value crops rather than broad acre arable. It's quite a young and evolving industry, and we have many start-ups approaching us with the new kid on the block, the new biosolution that they've been exploring. At its current rate, I'd say we are approached probably once a week by businesses who clearly see us as a value-added route to the market. We need to make sure that we are selecting the best.
We need to make sure that they are as reliable as they can be and that they are being used and coming to us at an acceptable cost for those positions in the market. We do view these as a very important component of food production and amenity protection going forward for the reasons I've listed up there. They could be alternatives to products which we have lost from the market due to increased regulation. They might assist us in a drive towards residue reduction, which is being demanded by supermarkets. Also, they can reduce stress caused by waterlogging or drought, which has come about as a result of climate change. There is no doubt that registration costs are cheaper, and they come to the market much, much faster, much more quickly.
There's always a but, performance is more variable than conventional plant protection products. Applications quite often need to be more frequent because they don't have the same degree of persistency. We have a rigorous evidence-based testing procedure in place that we follow. We will not take manufacturers' claims at face value, nor will our agronomists, nor should our customers. To solve this performance conundrum, we are looking at a really strong science-based approach. We want positive field trials data. We want a good scientific basis behind some of these products. We want to be able to demonstrate some positive effect on the environment. Who we work with really matters. You know, we've been spoiled for choice. We've been working with the likes of Bayer, BASF, Syngenta, big multinationals who do give us very, very good product support.
We look at these criteria, and we use that to judge whether or not we should be adopting one of these products on behalf of our customers. The science behind it is really, really important because we want to really understand how these products work. If we understand how the products work, we are in a much better position to decide how we should use these in a variety of crops. We do collaborate with scientific institutions. You will have heard, I guess, and it's already been mentioned this morning, about the 70 million EUR project, the CONSUS project that we have with University College Dublin. They are now producing some exciting endophyte technology, which is basically, endophyte means within plants.
They've been extracted from wild wheat relatives from all over the world, categorized by UCD, tested in the glasshouse, in the laboratory to see whether or not they can have some activity against plant diseases. We are putting our first endophytes into field trials this year. As I say, if we understand the science, we're actually in a much better position to be able to use these effectively. We're also very privileged to have Fortgreen as part of our Origin Enterprises, and they help us considerably in terms of delivery to the market. They have earmarked a five-year investment plan, and no doubt you'll hear a little bit more about it later on, of BRL 20 million, so that's about $4 million, into their first ag biotech project.
They're recognizing that this market is likely to grow exponentially, so they have invested particularly into bio insecticides and bio fungicides, state-of-the-art development labs, growth chambers, glass houses, and they're using these to create their own technology and also support other businesses within Origin with testing facilities. The biggest markets for these bios at the moment are the EU and the U.S. The greatest growth is likely from LATAM, because currently there's fairly low adoption rates, and the reason for that is that the legislation was very tight around them, and as I understand it now, the legislation has been relaxed and therefore those opportunities in LATAM will certainly be there. There's greater understanding of the benefits that biosolutions can offer in that geography as well.
To conclude, while we've got many promising emerging technologies, in the short to medium term, synthetic plant protection products are still going to play a vitally important role in food production. Biosolutions, in particular, we are using not necessarily a standalone, but to complement, existing plant protection products, and we believe our approach, our what works approach, is absolutely market leading, and so too with the Fortgreen expertise we have, you know, a particular competitive advantage, we believe. We mustn't knock scientific collaborations. They are absolutely vital and fundamental to improving and enhancing our understanding. I mentioned a lot of other new technologies at the beginning, which I haven't spent much time on due to my limiting in time today.
We are looking at all of these new technologies and assessing them for as potential improvements and innovative ways to help protect crops in the future. Thank you very much indeed.
Thank you. What we saw there from Amy and from Peter and from Claire were all a treatment and a discussion, I suppose, of some portfolio-wide themes that are at play across the Origin group. What we're going to do now in a series of discussions is move to the actual application of those in divisional and business unit strategies. I'm joined here by Ronan from the UK Agrii business and Brendan from the B2B businesses across UK and Ireland. Ronan, maybe to start us off, can you provide a brief overview of the markets in which Agrii UK operates and the position of your business within those?
Yeah, sure. We operate exclusively in the UK. We provide independent and innovative advice and strategic crop inputs to cereal and horticulture growers. We work with over 20,000 customers where we provide total crop management advice and solutions, and we influence decisions taken on about a third of the UK arable cropping area. We have over 250 BASIS-trained agronomists, and they sit at the very heart of our customer relationships. Their customer relationships are based on trust. They're often very long-term and sometimes multi-generational. Our agronomists and our customers rely very heavily and are supported by our trials and our research capability, where we provide integrated agronomic solutions. We work with all of the leading major manufacturers and breeders, providing both seed, nutrition and crop protection products.
In terms of market shares, our crop protection market share in the UK is about 35%, our seed market share is about 20%, and our fertilizer market share about 12%. We support all of that through an industry-leading logistics and storage capability.
Brendan, moving to the B2B side, maybe can you give us an overview of the seed and fert similar, the market context and Origin's businesses?
Good afternoon, Muireann. I suppose I'll just begin with our feed ingredient business. We operate that business through a joint venture between R&H Hall and W&R Barnett. The business is involved in supplying grain and non-grain feed ingredients into the various compound feed mills, who in turn then produce rations for whether it's dairy, beef, sheep, pig farmer. The business itself, it's operating on an all island basis in Ireland. It's a significant business. It has a market share of in and around 50%, which is supported by, it has strong warehousing and infrastructure close to various deep water ports in Ireland, which gives us an advantage given that most of the material that we supply is imported.
We've got a broad supply line across throughout the whole world, which is ever important, given the constraints that we're faced with, in Ukraine, et cetera. Turning to the fertilizer business. Again, it's a relatively simple business. We basically procure, we import shipments of granular fertilizer. We then blend that material, which is effectively physically mixing the various raw materials to provide a specific analysis or a blended solution. We're not a manufacturer in terms of there's no chemical process involved. It's a physical blend.
We package and distribute. That business also is a B2B type of business. We sell through the trade, the co-ops and merchants in Britain. Ronan's Agrii UK business would be one of our customers. We have about 16 blending and bagging facilities across Ireland and the UK. They're well located both from a shipping perspective, because effectively there's no manufacturing, essentially, so everything has to be imported, and also from a customer distribution perspective. In terms of our market position, in relation to UK or Ireland, we probably have about 25%, so we're the number one player in that wholesale B2B position.
Everything we've heard already this afternoon, Ronan has effectively described a very dynamic space in UK agriculture. Can you share with us your own perspective on the challenges and opportunity areas that Agrii is going to be addressing?
Yeah, sure. I mean, there's a lot happening at the moment for sure, and it's a very interesting and exciting space. I'm gonna touch on two areas in particular. Firstly, the kind of post-Brexit subsidy regime and the U.K. government strategy has been very clear. They're focused on greening and the environment. They don't want to support farmers with direct payments for production. They wanna support the industry through the implementation of public money for public goods. So what that means is they're focused on improving the environment, on reducing emissions, and improving animal health and welfare, and they're doing that through the environmental land management schemes that have been released recently. It's a bit of a transition phase at the moment.
We've seen the BPS payments starting to taper down from 2021. They will disappear at the end of 2027. As I said, a bit of a transition phase. I guess our role at the moment is to support our customers through that with the best advice, services, and product solutions. The second area is the whole kind of environmental awareness. At Agrii, I guess the concept of sustainability and integrated pest management has been practiced for many years. There's certainly a greater emphasis and focus on the environment now, so producing safe and healthy crops, minimizing the environmental footprint and impact, while at the same time trying to narrow that gap between the biological and the physical yield is paramount.
Supporting our customers and our agronomists through that with specialist advice and training is key. We, as you've seen earlier on from the presentations, have our biosolution products and range that Claire presented on, and we have our enhanced efficiency fertilizer products that Peter presented on. In addition to that, we supply environmental schemes and products in that space. We have an Agrii Environmental List, which is focused on the sustainability ratings. We have our precision application of precision agronomy. We're trying to cover all of the bases to support our customers in that environmental awareness.
Brendan, I presume you're seeing some of the same dynamics at play?
I mean, it's certainly articulated in Peter Scott's presentation earlier, I suppose the environment and trying to manage the balance between optimizing yield and also the environment. Okay, that's nothing new to us. We've been developing and promoting our own range of enhanced efficiency fertilizers over the last number of maybe 10, 20 years. Essentially what they do is basically they're blends. Given our scale, we have access to a number of additives which when we incorporate into the blends, effectively it improves the efficacy of the product. It limits the losses of the nutrients to the sky, to the water, and also improves the carbon footprint, which is only a bigger issue in the last number of years.
What we try to do is we underpin that with branding to kind of differentiate us from the competition. Also we try and work with customers because we're dealing with customers who are competing with each other to give them their own individual brands. The final part of that jigsaw is also the operational part. You know, it's fine having the sales and marketing piece, but you have to deliver as well. With these additives, you're dealing with liquids, you're dealing with microgranules, you're dealing with powders. It's how to manage that and incorporate into blends. We've, you know, invested significantly over the past number of years at our operational level because we need to be able to have a continuous production of those bespoke recipes. That's, you know, the key piece for us.
We are a B2B product provider. We need to be seen up to the customer as a trusted partner and also from a supply line. I mean, it's very challenging position at the moment, but where we have scale and we have legacy and we've developed and fostered long relationships, they see us as a go-to to the customer channel. It's a combination of those that keeps the business resilient.
Brendan, maybe two questions. What proportion of the portfolio now would be in that enhanced efficiency space? How are you thinking about newer materials from a circular economy perspective?
Okay. Well, just answer the first question. I mean, the percentage is in around 20%. If I look back maybe six-seven years, it's probably about 11%. It has improved. I mean, the opportunity to improve that is small margins because obviously there's competition. To answer the second piece, you know, we are exploring, we're evaluating alternative sources of nutrient. I mean, a lot of people will have heard a lot of conversations around digestate, whether it's plant origin or animal organic manure.
We're just trying to develop that in a kind of uniformity and in a form that we can incorporate into our blends, into our recipe, and that deals with that whole circular economy piece, which again, I think Peter alluded to in terms of that, how nutrient use efficiency, it's trying to get that as close to that one mark as possible. These are all evolving propositions. It takes time, but that's where we see the market orienting, particularly when price levels are so high and access to supply on chemical fertilizer is more constrained.
Ronan, maybe from a U.K. Agri point of view, your strategic priorities for the coming years.
Yeah. We've just completed our strategy refresh and launched our Go to Market 2030 strategy, which focuses on three core areas. It focuses on getting closer to the customer, broadening our offer, and focused on operational and sales excellence. I guess that's being delivered or will be delivered through our Green Horizons lens, which focuses on improving farm viability and efficiency, on improving soil resilience, on improving the environment. There's a couple of key areas within that. I think the whole digital and data space that we're in. We have 800,000 hectares on our Contour platform. We provide satellite and radar imagery. We provide pest and disease modeling. We provide variable seed nutrition application services. We're providing a broad range of digital solutions.
The other area I think that's really important and exciting is the whole innovation and technology space. We're looking at things like remote sensing equipment. We're looking at drone use and the use of robotics.
I think now following up on your reference there to the digital, we're going to move to a video on Origin's digital and data capabilities.
On a global scale, AgTech has an important role in achieving food security and combating climate change. Digital technologies support businesses and farmers to run more profitable, efficient, sustainable operations and relationships. The data generated through these activities offers a route to measurability and reporting. Origin Enterprises understands this and has established effective digital capabilities to act as an enabler for its group businesses and beyond. Unlike many other AgTech providers, our advantage lies in our ability to provide technology that not only links inputs with land output, but through customers such as Agrii, we can bring this information more readily to farmer and grower relationships. This ability to link spatial data insights with people and on-farm activities and then build on that feedback loop is why we're so enthused about the potential in Origin Digital. Unlocking these insights at scale enables benchmarking of relative crop and farm performance.
Using the data to identify performance drivers, be it soil type, crop variety, weather, or fertilizer usage, improves our customer's ability to have credible conversations on farm. Offering both aggregated and detailed insights allows them to focus on the areas of their operations and relationships that need most attention.
Remote sensing and predictive analytics allow us to generate new data at scale. For any farm or field, our business intelligence tools can then visualize the spatial data to support the relationships between our customers and their farmers. Aggregating the data over time and across many farms unlocks insights and benchmarking capabilities that support business success across our customers' organization, all of which allows us to monitor, measure, and recommend actions towards the sustainability goals of our customers and the farmers they work with.
What is the big picture, we have powerful tools that can help analyze the detail at farm, field, and zone level. Contour and GrassMax help our customers' frontline staff who are engaging with farmers to build stronger relationships by demonstrating how they can improve yield and margin performance through advanced planning and recommendations.
Contour gives us access to weather data, environmental information, crop and soil information. This allows myself, the agronomist and the farmer to make quicker, better informed decisions throughout the season. This allows us to tailor inputs to the crop we have in field, so we can put the right amount of product in the right place and at the right time.
We work closely with our customers and partners throughout our product development process, helping us to prioritize, learn, and ultimately deliver better tools. Our product vision helps guide our activity today, but we always have one eye on the future. Unlocking innovation through agronomic science, in-house and partner technology is at the core of how we work.
ClearSky is a great example where we've partnered to exclusively bring a world-first innovation to arable farming. By combining radar data with groundbreaking machine learning techniques, we've removed the problem of clouds blocking satellite images and can now guarantee our customers imagery every six days to help monitor crop growth and inform planning decisions. Nutrient planning is another key part of our product vision, and making compliant nutrient plans both more accessible and more closely linked to measurable crop performance will stay a core focus. By providing precise fertilizer recommendations, our tools help growers use the right product in the right amount in the right place, supporting sustainable farming operations. Our recommendations are checked against government guidelines to provide peace of mind when it comes to compliance reporting.
Our company has its roots in precision, and through research and customer partnerships, we're progressing in areas such as nitrogen use efficiency and advanced recommendations. Through our digital products, we continue to bring advisors and farmers closer together, providing them with all the tools they need in one place.
That includes grass. Two-thirds of the world's agricultural land area consists of meadows and pastures for grazing livestock, representing 3.3 billion hectares worldwide. GrassMax is a precision agricultural platform that brings together cutting-edge technologies to deliver value to milk processors through the harnessing of data, while also helping farmers maximize efficiencies in their paddocks. For example, we're now evaluating remote measurement of grass yield at paddock level using satellites. This will be a game changer. Having yield data for every paddock on every farm on the platform will enable our customers to validate sustainability credentials such as nitrogen use efficiency and percentage of milk and meat from grass, as well as saving each farmer over 80 hours of work per year, putting us in a strong position to take GrassMax beyond Ireland to serve livestock industry globally.
Our close working relationship with Origin Digital is building a strong digital portfolio that's already enabling Agrii and Rhiza to link technology, people, and processes to deliver better results to our farmers. The scale offered by Origin Group businesses working together means that other industry partners are open to sharing their innovation with us since we offer them a route to farm, enabling us to bring third-party innovation while protecting our farm relationships. Our vision is to build a one-stop shop digital agronomy solution that enables all levels of the Agrii organization and our farmers to fulfill all of their digital needs in one place, strengthening the Rhiza proposition and removing multiple system use. That depth of offering will allow us to manage the gateway to the farm, providing accessible insights, strengthening our customer relationships, and supporting our core inputs business.
For Agrii, having a leading digital ecosystem is a key part of achieving a competitive edge for sales execution and closeness to our customers.
Origin Digital are expanding this ecosystem globally. In Africa, the value of granular agronomic data we can provide is now being used at enterprise level, where businesses can have transparent conversations with their farmers at scalable levels. Agricultural data techniques and the technology delivery model is transferable between markets. This is generating enterprise and government conversations in several countries. These conversations are unlocked by scalable data sets, both for current season monitoring and historic performance analysis, which support benchmarking decisions and enable business development.
Within Origin Enterprises, integrating sustainability and innovation into both the strategy and operating model is central to our vision of being a leading and trusted partner of choice.
Sustainability encompasses many areas, harnessing talent and experience from across the group is central to developing the digital tools that will have the greatest impact. Nitrogen as a key input in crop production is a good example, as it carries a high environmental burden. Increasing nitrogen use efficiency is a high priority for the industry. We're working in partnership with AIC, NFU, Defra, group businesses, and technology partners to develop the right framework to measure and manage it better. That's just one of our many research threads which are jointly prioritized across sustainability, next gen scouting, and benchmarking, with the ultimate goal of generating commercial value and differentiation through knowledge and leadership.
Whether it's applying new research or upgrading existing features, we operate a software delivery framework that allows us to deliver value through multiple product streams from a single prioritized backlog across our engineering teams.
This framework enables us to stay focused on producing the highest value features for our customers while providing us with the agility to respond to whatever comes our way. Add in our motivated software developers, based here in the UK and overseas, and our professional digital engineering function gives us every capability to deliver the technology underpinning our ambitions.
Origin Digital brings strength to Origin Enterprises as both an enabler and differentiator, joining the dots between business, advisor, and farmer through solutions underpinned by data in agronomic science. We now have strong foundations to enhance the group's farmer and grower relationships, as well as creating a meaningful environment for our people to work in. We're excited to be part of Origin Enterprises as we build towards a future of sustainable food production.
Moving eastward now, Alex, Ukraine is one of the three markets within Origin's continental European operations. Before we move on to a broader discussion, could you give us an update of the latest developments there?
No, thank you for asking. The safety and the well-being of our colleagues and their families in Ukraine has been the key focus for us for the last 6 or 7 weeks. To put that in some context, we've got 248 employees in Ukraine. We've been in daily contact with the management team over the past 6, 7 weeks. I'm pleased to say so far, everyone is safely accounted for. Many of the team are actually in the west of Ukraine in relatively safe areas now. We've also had a number of families and colleague members who have moved, you know, outside of Ukraine into Poland and other countries. We've had fantastic support, I think, particularly from the Polish and Romanian teams in helping support the families as they move across the border.
I'm really pleased. In a way, it's brought out the best of, I think, the Origin family of businesses and how we've supported our colleagues in Ukraine.
What is the latest on the ground there?
From an operational point of view, all of our warehouses are now open and operating. Our systems are all operating as well. The market is of course extremely challenging. There's challenges around liquidity and safety. To give a feel in terms of the planted area, it's probably around 70% of the normal planted area, so reasonably, you know, significantly reduced from normal. Our focus really is on trying to support Ukrainian farmers as best we can. We're working closely with suppliers to do that, and at the same time, we're trying to manage our financial exposure as carefully as possible.
Poland and Romania make up the majority of the continental European division. Could you talk us through those markets and the place of the Origin businesses within those marketplaces?
Sure. Our businesses in continental Europe, so Poland, Romania, and Ukraine, these are B2C businesses. We're providing, just like in Agrii UK, providing an agronomic advice and selling products and services to farmers in those countries. Now those, these markets tend to be more fragmented maybe than the UK market or some of the other Western markets like France and Germany. They're both fragmented at the farm level, so there's more diversity around the farm size, but they're also more fragmented at the distributor level. Now, to give you a flavor there, take the average farm size in Poland and Romania is closer to about 10 hectares, which is lots more than the UK, which, I don't know, 80, 100 hectares is sort of more like the average.
Within that average, you've got a huge spread. You've got big corporate farms that can be tens or even hundreds of thousands of hectares at one end, all the way down to very small sort of family-run farms at the other end. Now, our target customer base is in that 50 hectare to sort of 10,000 hectare range. The reason for that is that's where we can bring the most value in terms of the agronomic expertise and knowledge that we have from across the group. The other piece I'd probably add is, you know, our value proposition here is all around adding value to the farmer, to the customer. If you look at the other players in these markets, you've got, let's say, other distributors at one end who are probably more traditional distribution businesses.
More, I would say, low value add, sort of a box shifting, you know, model, more centered around logistics and credit. Our model is very much more of a value add model, trying to help farm profitability improve, customers de-risk, touching on sustainability, some of these other topics. Of course, you've got suppliers at the, you know, the other sort of, you know, players, if you like, in the market. Suppliers aren't generally selling direct to customers, but what they are doing is influencing, creating demand on farm for products. Again, that model, you know, the downside of that model is it has a more narrow portfolio. No one supplier can supply all of the products the customer needs.
It just puts us in a really nice position in terms of our ability to have a broad agnostic portfolio of products, and really bring best advice with those products to customers.
Thanks, Alex. Mona Lisa, you lead the Romanian business. The last capital market day, you spoke here about plans to bring the two businesses together there. Could you talk to us about how that has gone? What has the intervening period brought?
Thank you. Yes. In 2019, I had the opportunity to stand in front of this audience talking about our plans and our ambition of integration of two very different companies, but very successful in Romania. It was a huge challenge for us because at that moment I didn't imagine that the model of integration will be tested within the COVID period and in a very dry season, you know, of 2020. I'm very glad that today I'm able to speak in my name, in the name of Agrii Romanian team as one team. It's a team that shares the same vision, the same agenda, the same strategy. The vision, our local vision is that in Romania, agriculture will be professional, will be intelligent, made by professionals for professionals.
Sharing the same values that we also brings with the Agrii rebranding, communicating the values and applying these values in practice gave us more substance in this transition period to Agrii. I would like to emphasize something, that Agrii brand in Romania help us also from market position, we created real differentiation between us as a distributor and others. Because Agrii is a different conversation with the farmer, it's a different. Has a different, it's a business model with a real value added. What we've done differently, we have experience in distribution with logistic capacity, we have a product portfolio, we have availability of portfolio. But what we are doing different now is the fact that we test all our solutions in trial plots in demo center.
We bring the digital capabilities, we transfer these digital capabilities at the level of sales force, and we have a very strong commercial discussion with our farmers, giving them the right solution for the farm. This is the difference between us and others, and give us in a very short period of time, because there are two years, in two years we create a very strong awareness of Agrii in Romania.
Maybe to add some more color to that, could you give us an example maybe of a few initiatives that you've been able to put through that new business model that might not have been possible in the previous businesses?
For sure. We consolidate the biostimulant amino acid and micronutrients in a separate business line, and we change 100% to the proprietary products. It give us, in two years, we have the similar market share, but additional gross margin. I'm very glad that having foliar in our portfolio and formulating based on the know-how and experience that we share with the Brazilian team, it's a huge success for us. On the same sense, I will give you another example. We bring genetics from different suppliers in an exclusivity basis for Agrii Romania, and we create a brand, Atlas, and we share these products less for our farmers, including we tested entire plots in demo center and things like this.
Digital capabilities, it's a real, let's say, success because we realized in Romania in a very short period of time to transfer information to farmer and also educate our sales force in using the digital capabilities. We have today 200,000 hectares digitalized, and also with a lot of services associated like soil sampling, leaf analysis that give them additional value added for the business. They are good example for us, and we'll continue to do the right things in this respect.
Alex, as you look across the strategy for the region as a whole, building, I'm sure, on some of those initiatives, what are the strategic priorities, and how do you see them contributing to the business in the coming years?
I mean, the customer is the heart of everything we're trying to do, and particularly, I guess, the focus a lot of is on farm profitability and trying to help farmers maximize the profitability of the business. Sean mentioned earlier some of the yield gaps as well between the biological potential in some of the CE countries and where the actual yields are. That's again part of the opportunity here is to using the agronomic knowledge, expertise, portfolio we've got to close that gap. It's more than just yield, it's that whole farm profitability. Now, there's two main ways we're doing that. None of this is new, we've been doing it for a number of years, but I think we're getting better at how we do it.
As Mona Lisa said, we're starting to see some of the benefits of this coming through now. The two areas, the first is around portfolio. It's, I call it optimized portfolio, but principally it's about more exclusive products and more proprietary products. These are products which are then strong technically because we qualified them into the portfolio. It allows us to tell a different story to customers as well, and then how you use those products, you know, again, to get the most out of them. The Fortgreen and foliar products that Mona Lisa referenced is a core part of that. We're also doing more white labels in some of these other areas, so really building out that proprietary portfolio. The second piece is the sales team.
These are the agronomists and the sales teams in each of the countries. It's absolutely fundamental that we've got a team that are able to position those products on market with farmers and explain how to get the most out of those products and why they should be using those. It's a combination of training and agronomic training as well as sort of sales skills training in the teams. It's the combination of those two things which are really powerful, the proprietary portfolio with a technical team that are really able to have a strong relationship on farm. Where we bring those two things together, we're very successful.
Thank you very much. We are going to take a break now. To respect some of our viewers online, we're going to be quite disciplined in the 10-minute piece. We'll be delighted to see you back here in a little time. Thank you.
Now we're going to change hemisphere. I'm joined up here by Eduardo and Leonardo from the Brazilian Fortgreen business.
Eduardo, maybe to start, could you help set the scene, on the broader Brazilian marketplace in agriculture?
For sure. Thanks, and nice to meet you all. Brazil, well, just to recap the big numbers, Brazil is one of the 15 biggest economies in the world. It is the fifth largest surface area and also the fifth largest population in the world. It's a huge country. In the last decades, there has been a very great transformation in agriculture and we became one of the major suppliers of the world, of food for the world. That said, agriculture is a great piece of our economy. Today, if you took all the, like, service production, food production, and the production of agriculture, we are.
Agriculture is 30% of the GDP, so it's a big employee and a big part of our economy. One of the important things also in Brazil is that we have a very diversified agriculture, so there is a lot of different kinds of plantations and different kinds of soil and regions. That makes us the major supplier of corn, soybean, cotton, sugarcane, and meat for the world. It's a very representative aspect of our economy.
Within that market backdrop, tell us about Fortgreen and where it fits in.
Fortgreen is different from some businesses that appear here. We are a more B2B business, so we are on the production and the marketing of high-value products. We also are doing dealing directly with the farmer. We're starting that. We have a chain of distribution of over 400 channels and clients that we're marketing our product, and they resell to the farmers. If you look at the Brazilian farmers, they are looking for the yield, as shown here. They are looking to increase this yield and all the diversity of areas and regions that we have.
If we took like soybean, for example, soybean came from 40 bags per hectare to almost 60 bags per hectare over the last 20 years. It's a high improvement on yield. Fortgreen fits very well on that because with our portfolio of products, we can help the producer to have a better yield.
The business has grown significantly in recent years. What have been the key drivers of that?
We are working in three major strategies that first of all is developing new products. We launched for three years our new adjuvant, so Drive is a new adjuvant. We also are launching products for the plant nutrition business. The second strategy is going on an expansion. As we have this huge proportion in Brazil, we are now planting more than 75 million hectares in Brazil. That represents almost 9% of the whole Brazil surface. Expansion to the center west and also the southeast of Brazil.
We are growing our participation in markets like Mato Grosso, that is the biggest corn and soybeans producer in Brazil, and also in regions like state of Minas Gerais, that is one of the biggest coffee players in Brazil and in the world also. We're just hiring new people and making the expansion. We launched our new plant of CRF last year. The what that is in Minas Gerais. There is a market that they have a more adoption of CRF technology used in coffee.
Maybe to go into that product portfolio in some more depth, Leonardo, can you talk us through the categories that the portfolio comprises?
Okay, thank you. Today we have four different platforms, but we are working strong with three different platforms. The first one is plant nutrition and biostimulant. Today this part of platform is different from, like Peter Scott showed, because we can split this platform, so we can apply fertilizer by soil or by leaf. In this special platform, you apply our product by leaf or seeds or in the furrow. This is high special fertilizer, okay? Inside this platform, we have a biostimulant product that enhance the performance of the plant. This is a big platform today in Brazil, in the world, that we can improve the quality of the food, we can improve against stress that happens. The other platform we are leading this platform is the adjuvant platform.
Today, Brazil, it's a huge country, and every growers try to promote better application, spray application on the field using adjuvants. We are a leader today in Brazil with this platform. I try to explain better. Adjuvants helps the crop, the chemistry products enhance this kind of product against the weather, for example. The third platform that we are working very strong, it's a CRF, controlled-release fertilizer. I believe Peter Scott show it, so different kinds of fertilizer. We are very strong in this platform. This platform is different fertilizer that we can apply, for example, once during one season and apply again the next year.
A good advantage about this kind of product is we can save money because sometimes the grower need to apply three or four times during the season of the crops. With this kind of product, we can apply once. This helps to save money, to save diesel, to enhance the performance of the fertilizer. The fourth platform we are working very strong, it's a biological platform.
Is that a focus for innovation in the smaller than the others today?
The biologic, the fourth platform, it's the most important focus today for us, why we are trying to achieve a big part of the market for traditional chemistry. Today, we can see in Brazil the traditional chemistry, it's around $12 billion per year. Part of the growers are replacing the chemistry by biologic. Why? Resistance is just one of the things that the growers wants to control. The second one is the decrease the dependence from active ingredients from other markets. Today in Brazil, we have a huge market to explore with biologic platform. This kind of platform, we can match plant nutrition together, so this is a big advantage for the future with this platform.
Leonardo, as you spoke there, you referenced a number of problems that these products are solving for growers. Do you want to talk about, as a theme, what kind of problems you're trying to solve?
If you ask for all growers in the world, everybody is worried about water management, arable land and inputs. We are working in these three key problems today with Fortgreen. For water management, for example, we are focused in adjuvants. Adjuvants, normally the growers when go to the field to spray 200 liters of water. If the growers change the nozzles and apply some adjuvants with a highly efficient, we can decrease the use of water for 50 liters per hectare, for example. This happened today in Brazil. This is an example. For arable land, today we can see in Brazil that we have rich soils, but we have poor soils, sorry.
In this situation, the growers are adopting new technology. Good example is the CRF. It's an innovative product that the growers can apply, and you avoid losses by fixation by the soil or leaching, something like this. The third is about inputs. If you ask the growers why today, what is the fear for the growers? It's the new season, because nobody knows how the chain, the supply chain will happen in the future. Biological is a new approach with the growers to change the idea that I need to use crop protection chemistry, traditional chemistry crop protection, for a new technology as biological, for example. Today in Brazil, when you talk with the growers about it, you get the attention from them.
We are working these three different issues for the future with Fortgreen products.
Eduardo, building on from that product aspect of the strategy, what are the other elements of focus for the next few years for the business?
By looking at all the technology that we have and the labs that we see on the video, and the same as Alex told us, I think people is the first strategy of us. Hiring people, continues to hiring people and developing them, so we have a very strong training process and also allowing a intern module that come with us on the technical part and then go to the field, because knowing the right prescription, knowing how to teach the farmer how to use these new products is very important to another strategy, continues that. Our second thing is a new plant of CRF. We just finished it, the plant last year. The market adoption of the market is doing very well.
On this side that Leonardo told us that the worry of the producer on the input side, and the CRF is having a very good adoption on the usage. The third thing is improve our capability of production and logistics, as Brazil is a huge place. With a better strategy on logistics, we can assist better our farmer, our clients.
Thank you very much.
Sorry. Any other question that you have, I'll be happy to be with you. Thanks a lot.
Very good. We're going to move on from there, and I suppose maybe, Leonardo, on to some of the sustainability themes that you talked about there. The next video is in relation to Origin's position with biodiversity, enhancing biodiversity actions and protecting natural.
In 2015, the World Health Organization documented that without biological diversity, our entire human and animal population will cease to exist. By using our natural capital wisely, we can protect and strengthen our ecosystem services to enhance wellbeing through the adoption of proactive measures, to create healthier habitats for plants and animals, and by adopting responsible water conservation.
With the introduction of mandatory measures in England to deliver biodiversity net gain on or near development sites, Origin is actively supporting its customer base across many ambitious tree planting projects, including Northern Forest, Trees for Cities, and Thames21, as they build new infrastructure projects. Few plants self-pollinate. The vast majority depend on animals, wind, or water for reproduction. Estimated at over $200 billion annually around the world, pollination services are critical for 75% of crop species and for 88% of flowering plants. By advising growers on best practice techniques to enhance their environment, pollinator numbers and species diversity can be increased, helping to protect bees at times when insect pest control is necessary in food crops.
To support this approach, Origin has instigated many educational projects, such as engaging wildlife farming to determine the flowering hedgerow species required over winter to reduce the hungry gap for pollinators, encouraging the establishment of beetle banks and field margin management to aid pollinators and mining bees by leaving corners of fields bare to allow bees to create burrows, and digital technologies such as BeeConnected, a web-based notification system that notifies neighboring beekeepers when protection products are being applied to crops. To ensure our agronomists are kept up to date on best practice advice and products, they participate in continuing professional development. Urban areas provide equally exciting opportunity for pollinator corridors through the creation of bee highways and bee bus stops. These small vegetation patches can unlock biodiversity, ecology, and habitat creation. By connecting these smaller areas, we can enhance natural colonization.
As urban environments become more densely populated, concern has grown over exposure to air pollutants, increased flood risk, poor quality rivers, and lack of access to natural environment. Natural capital in urban settings provides multiple benefits, removing air pollutants, absorbing and storing carbon, reducing urban heat island effects, and reducing flood risk while improving water quality. Additionally, growing evidence is also showing a positive link between rich urban biodiversity and human health due to promotion of positive emotions. As a result, the green roof industry is growing in importance, meeting both planning obligations and consumer expectations. The sustainable drainage systems used by Origin in the creation of green roofs are also incorporated into urban street planting, where they create a reservoir to ensure trees are supplied with water. With the added option of adding mycorrhizae, natural fungus products, into the drainage cells to support optimal establishment and plant survival.
In addition to urban setting, these systems also play a role within our sports turf operations, where they're applied under sports pitches to capture water and provide flood mitigation by slowly releasing captured water or reusing it to keep turf watered. With operations spanning across agriculture, horticulture, amenity, and urban landscapes, Origin is uniquely positioned to support the expansion and the protection of natural capital throughout the United Kingdom. Supporting all stakeholders, including our customers, employees, and wider society, as part of our commitment to Nurturing Growth.
Chris, when we've been talking agronomy so far today, we've always been talking about it in the context of agriculture. Can you define for us what amenity is?
Certainly. Amenity is the agronomy of leisure land, very simply. The two outputs that a sports turf professional is looking for is an aesthetic appeal for the venue, but more importantly, a playing surface that performs. A lot of these venues are quite literally the world stage for these events, and failure to provide can be severely career limiting for these guys. Okay.
Against that backdrop of it deeply mattering, can you talk to us about Origin's amenity business, B2B and B2C?
Sure. The division splits into two. The B2B section first comprises two manufacturing businesses. The first is a specialty manufacturing, a personalizer business that manufactures fertilizers for specialist applications, amenity being one of them. That is the original business that came into Origin, okay, and the foundation, the true foundation block of amenity today. Everything else I will talk about has been acquired since. The second manufacturing business is Linemark, the Linemark Group, which principally manufactures line-marking paint. Again, you know, it's white paint. It looks simple, but there's a lot of technology in there. We hold a Queen's Award for Enterprise: Innovation and a Queen's Award for Enterprise: International Trade (Export). Over a decade ago, you would have been using 20 liters of paint to mark a pitch.
Today, using the advanced paints, ready-to-use paints and the application machinery, you now need 1.2 liters to mark a football pitch. From a business point of view, that's opened up a whole export market, so we now export to 53 countries around the world and, of course, it's more sustainable. There's less water use and less water for contractors to move around to facilitate the market.
On the B2C side of the business, Chris?
On the B2C now, it's Origin Amenity Solutions, formed during the COVID lockdowns. That comes from three prior acquisitions, the first being Rigby Taylor, which was a broad-based offering for sports turf maintenance. Anything ferts, seed, chemicals, construction materials, line marking. Anything that a sports turf professional would need to maintain a venue, Rigby Taylor could provide. The second acquisition in the set really was Headland. Headland was a narrower focus, but with more technical depth, so that reinforced the depth of that offering, across the board. Then the last acquisition there was Symbio, which is a market-leading biologicals company, and that really extended the breadth of the offering. All market leaders in their own right, put together now as Origin Amenity Solutions. Typical customers would be anything from Wembley, okay?
The National Football Centre in St. George's Park, through Topgolf venues, many of Premiership clubs, EFL clubs, football clubs as well, rugby through to rough sports turf for horse racing, for polo pitches, et cetera. Anything to do with sports turf, we can service with OAS.
What kind of market share would OAS be?
We carry about a 30% market share. Again, 11 years ago, that was 0.
Chris, maybe sounding back to the market now, what are the key trends that you're seeing within the amenity marketplace?
Okay. The key trends there, and obviously, during COVID, the business didn't fare too well. Lots of golf course closures, venue closures, cessation of sports and recreation. That was a difficult time. Post-COVID, it looks a lot better now, and there's certainly a pent-up demand for recreation and sports. You're seeing, for example, in golf clubs, participation increasing. Membership waiting lists are back, and I've not seen those in the last decade. Again, people want that outdoor space, that interfacing with nature, that sports and amenity provides.
The sustainability aspect to the marketplace?
Okay. Sustainability in amenity really is a push-pull dynamic. We've heard a lot about the revocation of chemicals. Now, that pervades in amenity as well. Chemicals are being revoked for two reasons, really. Some of them are not very environmentally friendly or friendly to biodiversity. Some of them are okay, but actually in a small niche market like amenities, they're just not economic to register. They're not all dangerous or unfriendly, okay? That's the push.
Now, the pull is that, again, there's a general interest, more of an interest in sustainability from also the sports turf professionals, but as well as the membership or the governing bodies, sports bodies, the Premiership, EFL, et cetera, are all now focused on sustainability. Again, that's the pull that we see in there. It really is a push and a pull. That's working well. We're responding to that well with the biologicals business. Although the evolution of the market at the moment is more as best of both. It's conventional and biological is where the market's at, and that's where we're putting lots of our research in to develop those sorts of programs.
Previously, the Symbio business would've been, it's been knocking on people's doors for 20 years and as they would say to me, "Chris, we're knocking on doors for 20 years." In the last 3 years, everybody's knocking on ours. It's their time, and they really feel that. Their view would've been it's all or nothing, so it's biological or nothing. What we're finding now is it's actually best of both that's working well at the moment.
It sounds like those are core elements of your strategy. How would you describe the Origin Amenity strategy at the moment in terms of priorities?
Okay. Well, focusing on the biological and the combined application and programs during the COVID lockdowns. In fact, the first day of lockdown one, the digger went into Throws Farm to start constructing an amenity research facility. That was completed within the last 12 months, and trialing has started. Again, that allows us to develop both the conventional product approach in a sustainable way, but also interface with the biological and develop the biologicals as well. That's a best-in-class facility. It's fully instrumented, it's digital, and just nobody else in the industry is doing that sort of research to that depth and that fast. Okay?
Chris, what might be an example of? What are you bringing to market? What are you commercializing out of that activity?
Okay. A good example, we've commercialized two products from the early trials so far, which would have returned, the two of those together would have returned the initial investment on that facility. The most interesting one, I guess the best example is, football pitches. EFL and Premiership would renovate their pitches every year. They'll take the top off, they'll redress it, they'll reseed it, and they'll grow it back in. Now you have the time from the last match of the season to the first match of the new season, and you have to reproduce a pitch in that time. Establishment, rooting, grass cover is everything. We've developed a program using conventional and biologicals again, that will grow that in quicker and with more grass cover.
Our research program in conjunction with the seed varieties as well. It's a whole holistic approach that grew in with 43% more grass cover than a conventional program. That's down to the products, but also it's down to the timing and when they're applied. There were many different scenarios in that, and we managed to isolate the one that worked the best. That's now commercialized and is selling now, and it will in fact be growing right now.
Chris, maybe moving on from the more established businesses within Amenity, Origin recently acquired Green-tech. Can you talk to us about what that business does? We saw some of it there on the video. Maybe what does the business do, and what is the general market that it is participating in?
Okay. The landscaping market is essentially adjacent to Amenity and already OAS would trade into that market in facilities management, ground care, et cetera. But not in the soft landscaping products. Soft landscaping products are tree planting sundries, ground stabilization, ecology, et cetera. It's not pavers and brick walls and the harder landscaping aspects. We'd always wanted to get more into landscaping. We'd had several forays in different methods and couldn't get there. Really the only way to get into landscaping proper was to buy our way in, and that's where Green-tech came from. That was four years in the making, from start to finish. We had to shut that down in COVID and then reenergize it. Eventually, you know, a year ago, we bought the business.
It's a broad-based supplier and manufacturer to the landscaping industry. Much like Rigby Taylor was in Amenity, this is now the foundation block to grow from again, so it's the same blueprint repeated. They would supply to landscapers, forestry as well, and in a small way, ecologists, urban planting, which as you see walking here today, you'd see all the different sorts of urban planting, the green roofs that we've seen, the technology that goes beneath urban pavements, and that support the trees. They would do all of that, okay, to a greater or lesser extent.
Sean and TJ mentioned it has performed well since acquisition. What are your focuses for growth in the coming years with Green-tech?
Okay. Yeah. Since acquisition, we've seen double-digit growth, that probably mirrors the market as well. The whole market's seen a lift, driven by all the sort of stuff we've seen on the videos, Northern Forest, HS2, that's government infrastructure projects as well as private infrastructure projects. Even, you know, house builders now see the value in landscaping housing estates. They will make an investment in that landscaping more than they would've done in the past, makes the houses more desirable. They sell faster, they sell for better prices, so they actually get an instant return on that investment. You know, okay, they may just view that from a business point of view, and they may view it from a moralistic approach, but it gets done. The drivers are fundamental.
It's the low-carbon economy, it's sustainability, it's biodiversity. All those things are playing into the expansion of the landscaping market.
Ruth, turning now to you, I think, Chris's enthusiasm there for Amenity and biodiversity within that is very obvious. You've made another career switch from Amenity into agriculture. Could you share with us some of your perspective on the value that you see of these businesses, both agronomy-based businesses sitting beside each other in a portfolio?
Yeah, absolutely. From my perspective, there's three main benefits of having the businesses across the different industries. The first of these is in plant protection development products of the products. For any specialty chemical company, they will always develop their active ingredients for the larger arable market. Once those products have been researched and authorized, they will then look for further markets that they can increase their market share. That means that the early experiences that we have in Agrii with those products, we can direct Origin Amenity in the ones that we will perform best within the Amenity arena. We can also then look at that competitive advantage and the economies of scale within that. Secondly, and conversely to that, for the biosolutions, it's very rare that they start life within the arable industry.
From an Origin Amenity point of view, where those biosolutions really are looking at how they can manage that surface. Where we're not looking for yield, but we're looking for perfection, Agrii can then gain from that benefit, and we can be directed by Origin Amenity as to where those products fit and how they fit into our integrated portfolio. Then the third element is in protecting the natural capital and enhancing biodiversity. If we tried to do this as isolated businesses within isolated industries, we run the risk of creating isolated ecosystems, and it's well known that the productivity of an ecosystem is much greater than the sum of its fragmented parts.
By us being able to create integrated landscapes that could run from farmland through golf courses and into urban infrastructure, we can then create the wildlife corridors that will allow the movement of populations and species and ensure that we don't create any genetic bottlenecks. In that way, Origin is able to give its customers the benefits of all of its industries, but also help to protect the and enhance the environment.
When Ronan was speaking here with us, he spoke to some of the vision for the future of agriculture. You bring a perspective that there's a lot to be taken from the journey that the amenity industry has gone as we look at how that journey is going to go on the agri side. Would you share some of that with us?
In reality, the sports turf industry has had to become much more sustainable. It's much more in the public eye, and therefore, it really has been the push-pull that that Chris has talked about. You can think about that sports turf as a perennial crop. Within that crop, there is a much greater ability to look at exactly when you manage pest weeds and diseases, and therefore we can use the biosolutions much more pedantically, because we are not having to worry about growth stage timed applications. We are looking at when it's exactly right for the pest weed or disease. If we look at diseases as an example, there are three elements that will result in a disease. One is that the pathogen is present, and we can accept that the pathogen is just about always present.
The other is the host crop is in the ground. We're gonna put that host crop into the ground, and the third is the environmental conditions. By using the digital approach that we have presented, where we can look at the environmental aspects that are going to encourage that disease to develop, we can then start to look at moving away from these growth stage timed sprays and actually really homing in on when biosolutions can come into the agricultural market, which might be a little bit disruptive, but will allow us, especially if we look towards the digital technologies, the drones, and moving forward with robotics, that we can actually create those timings and those sprays much more effectively.
Thank you very much, Ruth. On that note, we're gonna wrap up these discussions, and we're going to hand back to TJ. Thank you.
Thanks, Muireann, and thanks to all the panelists for what hopefully you found was a fascinating insight into our businesses. Moving into the financial piece and the look-forward piece, just to recap on some of those focus areas that I mentioned had been and have been a theme for the business. As we look out, we will, you know, seek to continue to maintain the disciplines around working capital that we have achieved over the last number of years. As I mentioned earlier, there are inevitably some headwinds that we're facing in working capital as liquidity, the high levels of liquidity that we've seen in the agri sector may dissipate and unwind over the coming period.
Nonetheless, the disciplines that we have put in place, we look to maintain and build on those over the coming years. From a product mix and margin perspective, really again, about continuing to focus there, as I mentioned at the start, it is for us very much about looking to continually optimize that margin mix. As you heard from the presentations earlier, we certainly have opportunity by virtue of the product spaces that we're playing in to continue to drive that margin profile. Earnings concentration is something we will talk about over the next short while, as we look at our opportunities from an organic CapEx and inorganic CapEx perspective and the areas that are both nearing and core to the business where we'd seek to invest further.
Looking at the roll-up then of our operating profit, you know, given the challenges we have had with volatility in earnings, we are looking to present our operating profit on a cumulative basis over a five-year period from FY 22 to FY 26. That represents approximately a 25% uplift on the previous cumulative operating profit for the group from the period FY 17 to FY 21. Some call-outs on that FY 22 to FY 26 number. It does assume cumulative EBIT contributions from M&A of EUR 50 million. It also does reflect a volatile year of earnings.
Given we have had volatility, significant volatility in FY 2020 and FY 2021, we have assumed another bad weather year event for all intents and purposes in that forward-looking FY 2022 and FY 2026 period because we do know and we have learned, it isn't a straight line business in terms of earnings profile. That's how we're looking at reflecting the performance of the group out over the next five-year period, and that is the period from FY 2022 to FY 2026. As I mentioned, the volatility of the earnings on the left-hand side of this chart, as you can see, has been significant through FY 2020 and FY 2021. Our ambition really is to narrow that range of volatility over the upcoming period.
As I said, it's an upward in terms of overall earnings of about 25% over that five-year period from FY 2017 to 2021 to 2022 to 2026. As I said, the key for us really is to, as I mentioned earlier, try to you know, reduce the concentration of earnings that are exposed to those volatile dynamics, whether they be weather or the dynamics of UK, Ireland ag. From a capital allocation perspective then, just again, a brief recap in terms of the capital allocation approach that the business took between FY 2017 and FY 2021. We generated total cash of EUR 285 million, of which free cash flow was 257. Then we benefited from disposal proceeds, partly property and partly driven by the Pilart disposal in FY 2021.
That gave us overall cumulative cash of EUR 285 million. How we deployed that then, we deployed just under 40% of that as dividends to our shareholders, and that was, you know, a relatively strong rate of return despite the challenges that the business had in FY 2020 and FY 2021. Because this is FY 2021, this doesn't include the buybacks. They are included in the FY 2022 forward position, which I'll come to in a second. The reinvestment number of 61% really reflects some of the investments we made.
For example, the acquisition of Fortgreen, the acquisition of Green-tech is in there as well, and some earlier acquisitions that we would have done the first phase, such as the Bond Fertilisers acquisition back in the earlier part of that five-year window. Consistent with how we're talking about the profit profile on a go-forward basis, we're looking at free cash flow on a cumulative basis over the five-year period from FY 2022 to FY 2026. Again, that's broadly consistent in terms of the profit generation drop, dropping to cash. We're looking at a roughly 25% growth, as I said, on a cumulative basis on profit and similar on a cash generation basis over the life of the plan. Again, this assumes that, you know, working capital optimizations that we've been able to deliver to date maintain.
I think that is a variable piece. Clearly, working capital by definition does move around a bit. That feeds into the rationale and logic of why we're talking about this on a cumulative five-year roll-up basis. That translates into average cash conversion, so PAT to free cash flow conversion of over 80%, and that compares with over 100% actually in terms of the conversion ratio that we've delivered over the five-year period from FY 2017 to FY 2021. Again, how we think about capital allocation in the context of the forward-looking position.
I mean, ultimately our view is that we, you know, we are best placed to optimize return to shareholders by reinvesting CapEx, either back into the business or through acquisitions that fit the strategic plan of the group. Then balancing that with the shareholder needs, and I'll come back to that theme just a little bit later. This is the slide we used actually in FY 2019 capital markets day to outline our capital deployment approach. You know, at that point, M&A focused on European or LatAm specialty product businesses, bolt-on fert and amenity opportunities, and in there we had bolt-on distribution businesses also.
From a strategic CapEx perspective, investing in blending plants, investing in digital platform and product-based capabilities for organic growth, all in being captured then in the disciplines of, you know, returning capital metrics in that range of 12%-15%, being very disciplined around multiples that we pay for businesses. I guess the bit that's not written here is being patient, and I think that is certainly a characteristic of how we will think of and are thinking about M&A opportunities as we look forward. When we look at our FY 2022 to FY 2026 capital deployment approach, we're largely taking a similar approach with just a slight change of emphasis. You'll see that we have flipped out the distribution businesses for more of an environmental and ecological products and services focus.
As I said, very much consistent type approach with just a slight change of emphasis. Overall, still seeking to deliver ROIC in the range of 12%-15%. I say discipline and patience are probably the key themes that I would call out in terms of metrics that we will look to comply with, such as the reasonableness of multiples that we pay for these businesses and being patient as a buyer. Overall, we are looking at capacity of about EUR 150 million. When I talked earlier about the cumulative earnings profile, that was delivering a cumulative EBIT of EUR 50 million in the plan, that relates to about approximately EUR 150 million of CapEx that we can deploy over the life of the plan.
Our leverage metrics, we would look to maintain our half year leverage metrics, sub 2.5 times, and at full year, less than 1.5 times. Clearly, over the recent past, our net debt to EBITDA metrics have been much stronger than that. Benefiting from the recent strong cash performance that we've had in the businesses. As we look out medium to longer term, we feel that a sub 2.5 and sub 1.5 are reasonable metrics. They compare to bank covenants of 3.5 times at the half year, which is typically the peak of the cycle, from a working capital perspective in the business.
I mean, also just to mention, we have got facilities of EUR 400 million at the end of 2024. That ramps down slightly into 2025 to EUR 366 million. Our interest rate position is currently well managed. We are mindful of that in the context of current interest rate volatility, but we are in a good position as we stand today in that context. As I say, something that we are mindful of. Looking at the piece around shareholder returns. Overall, we will continue to target a dividend payout ratio of 35% of PAT. Then we will consider shareholder returns beyond that then in the form of either share buybacks or special dividends. That's you know, very much driven. It's a function of timing.
It's a function of the available M&A targets that we see, the opportunities that we see and when they present themselves as to when and how we would deploy further capital back into shareholders' hands. I think I'd use, you know, FY 2022 as an example of that, where the opportunity with the Cork Property proceeds presented itself, and we took the opportunity to deploy that plus another EUR 20 million back into shareholders' hands. I think we'll do that on an opportunistic basis. As I say, our primary focus and our belief is that, you know, we can maximize returns for shareholders by reinvesting back into the core business and by being patient, prudent buyers through an M&A lens of businesses that are consistent with the strategy of the group.
With that, I will hand it over to Sean for some concluding remarks.
Thanks, TJ. Hopefully what you've seen this afternoon gives you a good sense for some of the ways in which we intend to tackle the challenges that are being thrown at the business by changing regulation and a changing dynamic. Certainly from an agricultural perspective, the challenge when we looked at some of the developing regulations two and three years ago in terms of reduced fertilizer application, reduced pesticide application, might have painted a very bleak picture for the businesses. You can see that by continuing to invest in good people, continuing to invest in good technical capability, and concentrating on what we're good at, the specialist agronomic advice and the specialist technical advice that we provide, we think that we can outperform the market.
Our capabilities on the technical front from a product perspective are very strong, and we believe that the advice that we give is very strong. The businesses will continue to be strong, cash-generative businesses at their core, with the opportunities for growth perhaps more in the Continental European and LatAm segment of those businesses on the agriculture side, and very much so then on the emerging natural capital business on the Amenity side. We see that opportunity developing for us overall. Hopefully, the presenters as well have given you a flavor for some of the talent in the organization, and, you know, people is at the core of the Origin business.
By continuing to attract the best talent in the industries that we're in, by continuing to recruit good people and promote good people within the organization, we think that the business will outgrow our competitor sets. The presentations should have given you a flavor for how we intend to tackle some of what we think will be the key macro growth drivers over the coming years. I think we've had a good deep dive around the technical advice and solutions that we can provide, some of the biosolutions, and indeed some of the areas that we might intend investing M&A capital over the coming years, as well as returning a significant return to shareholders over that five-year period.
Just to touch on M&A for a second, I mean, we can see there that the opportunity around sustainable agronomy and the opportunity to continue to add technologies to enhance, I suppose, our capabilities in both the supply chain challenges that we have and the agronomic challenges that we have is strong. We believe that by continuing to invest in product capability, both in terms of crop protection and biological products, but also in the fertilizer space, you know, we will deliver continued enhanced margin and grow our margin over time.
On the environmental and ecological side of things, while it may be less pronounced in our agricultural businesses, and the ELM schemes are only beginning to be formulated at a UK level, and perhaps it'll be confined to Western Europe in the first instance, I think the concerns at an environmental level are not as pronounced in Eastern Europe and certainly not as pronounced in a Brazilian context. Acquisitions in the environmental and ecological space, certainly from a Western European perspective, will be important, not just in agriculture, but also in the emerging nature economy. You've seen these slides before in terms of the areas for potential acquisitions, and I suppose pulling it all together, the agronomic product technologies that we can potentially acquire in those areas around biologicals and micronutrients.
Seed technologies, as we mentioned earlier on, and as Claire mentioned earlier on, seed is hugely important in that space, and plant nutrition and specialist plant nutrition are hugely important. They are faster-growing markets than the general ag market. On the environmental and ecological side, we have a ready pipeline of discussions ongoing. We've been using a third-party research agency to reach out to a significant number of players in the UK in particular around urban landscaping and environmental services. We do have an active pipeline of discussions ongoing in the area of habitat creation, natural habitat services, tree protection, and ecological services and products. Those discussions are ongoing. I suppose there is the opportunity to add those businesses to the portfolio over time.
Ideally what we'd like to see is deepening, as Chris mentioned earlier on, the penetration of our landscaping business, which we've added. Green-tech has roughly about 10% of the UK market, and we'd like to deepen our expertise in that area, but also broaden our services out into other areas on the ecological side, providing advisory services and actual habitat construction, for example, may be an area that we'd like to enter into on the ecological side. The priority actions over the next 12 to 18 months, firstly, in terms of, you know, strengthening the foundations that we have, it's all about investing in people and making sure that our people are well-equipped, well-trained, have that access to technology, have the access to the tools that they need to do their jobs properly.
you know, as TJ mentioned, we're investing in an ERP system. There's work on going to invest in CRM systems. There's work on going to invest in online portals to allow our customers and our staff access all of the technical material that we prepare for the market. Continuing to maintain working capital discipline as we have done over the last few years. Continuing to drive product innovation and mix from an organic perspective as well as an inorganic perspective. Beyond that then, we see ourselves investing in growth. Deepening that expertise in landscaping, in the landscaping area, broadening our amenity service offering, growing our biologicals business organically if at all possible, but potentially also with some small acquisitions in that space.
Also developing ecology services acquisition to round out the offering that we have across agriculture and also across the landscaping and ecology landscape. I think you've seen incredible depth in some areas of the business. I think you've seen a good opportunity for Origin to present a complete picture in terms of sustainable land use over time, and we think that opportunity exists for us, and it's rooted in the R&D and technical capability that we have in the organization. That's been there and has been around for a very long time. I'd like to thank a couple of people. I mean, the presentations today didn't come about by accident. Muireann, who moderated the discussions, has actually been working with us for 12 months now in terms of developing a strategy.
Poking and prodding the executive management team in terms of defining what our strategy should be, but also at a business unit level, working with each of the business units levels to make sure that that's been built from the foundation up in terms of each of the approaches there. Brendan, in terms of the professionalism of today's presentation and, the work that's gone into it. Brendan has done a huge amount of work, and he's not just involved in the investor relation aspects of things. Brendan is very important in terms of driving the sustainability engagement that we have with external third-party stakeholders, and driving the sustainability agenda and ESG agenda internally within the company as well.
I'd very much like to thank Muireann and Brendan for all of the work that they've put in in those areas over the last 12 months. I'd like to thank all the presenters who've been here today. We'll move on to questions and answers. Perhaps, TJ, if you join me on stage, we'll try and take a combination of questions from the floor, and also we may have some participants online who'd like to ask questions of us.
Yeah. Can I just ask a couple of kind of large questions in relation to if you look at the R&D capabilities of the business and the product suite you have, and you put that up against the kind of biodiversity challenge, especially around pollinators and kind of the deterioration in insect populations and so on, like have you got the toolkit to actually do something big here if agriculture embraces what you're proposing as solutions? Like, is that possible from what's coming out of all this? One. Two, related to that in terms of water quality and managing runoff from agricultural land into waterways, like how material can we make progress in reversing the damage that's been done, say, over the last 40 or 50 years?
If Peter is still here, perhaps we'll ask him to address the water quality issue. I don't know if you've any particular expertise in that area, Peter, but do you want to take that one first?
Not really. I'm not an expert. Well, I touched on it earlier. Nitrates in drinking water is a human health issue. It was addressed across the EU in 1991 with the introduction of the Nitrates Directive, and it was then further strengthened through the introduction of the Water Framework Directive. Those are, you know, directives that are still in place throughout Europe, well, across the EU, and post-Brexit have been homologated into UK law as well. Actually, water quality has significantly improved in the last 30 years. I think it's a key point that we don't make as an industry. I don't just mean us as Origin, I mean Agriculture PLC. We've been doing an awful lot over the last 30 years to improve our impact or mitigate our impact on the environment.
Actually, the question about nitrates in water or water quality is a really, really good example of very, very good work that we've done as an industry, and it's demonstrable and measurable, and the improvements are there. That's not to say that there's not more to do. There's always more to do, but we have done a lot in terms of water quality through the Nitrates Directive. I don't know if that answers the question. Yeah.
Yeah. Just maybe Claire, then just in relation to insecticides.
Sure.
Yeah, sure. Yes, thank you for the question. You asked about toolkits and something to replace insecticides. None of us like using insecticides. Let me just make that very, very clear. We do so in a very targeted way. We are making more of pest thresholds. We are actively trying to bring varieties through which have got, for example, resistance to BYDV. Without getting too technical, insecticides are used in the autumn to control aphids, which transmit a virus. There is varietal resistance coming through, and we are shouting very, very loudly about that and encouraging the breeders to bring through more varieties with that sort of level of resistance. Use of pest thresholds, forecasting systems. We're also looking at new technologies and in fact, somebody came to me at the break time to talk about RNA interference.
RNAi, which is a very specific technology that's coming through, which basically disrupts the pest's ability to thrive and stops it from feeding on crops. Now that's hard to regulate, but we have absolutely put ourselves out there as a partner for any business that's looking to bring through RNA interference. We're looking at companion cropping, so things that can disrupt the way the pest can actually find the crop. You might have heard of cabbage stem flea beetle. The neonicotinoids were banned. Cabbage stem flea beetle is a massive pest. It's why the acreage of oilseed rape has come back by 50% just at the wrong time, just when we're looking for something to replace sunflower oil because of the tragedy in Ukraine.
We're looking at integrated ways to manage pests and even things like leaving stubble long will reduce the effect of cabbage stem flea beetle's ability to land on oilseed rape and feed on it. We've done probably about 70 trials, I kid you not, trying to combat flea beetle in its own right, and we are with an integrated approach. We have an eight-point plan looking at various ways to mitigate problems. We're also looking at adjuvants. Some adjuvants have got properties which can reduce insect pests as well. Believe me, we are trying everything, and our toolkit is getting bigger and bigger by the day. Okay.
I think, Joe, maybe just to round out the question, and you probably. Your question related to, you know, is this an opportunity for us to explode the business and suddenly grow very quickly? You probably need to bear in mind, you know, Agrii has, you know, possibly 30% of the market from an agronomic perspective. Green-tech has 10% of the market from a landscaping perspective, and our amenity business, as Chris said, is about 30% of the market. I think ideally, we'll deepen our expertise and broaden our market share in that landscaping sector first and foremost. We're the only player who can bring those threads together and, you know, there are very limited other offerings who are playing in all of those spaces.
I think, you know, is there scope for us to grow our overall market share as a result of that? Yeah, ideally, there would be. First and foremost, we've got to build out the landscaping and ecology services side of the business first, and you would hope that more business will gravitate towards us then over time. You know, if we can provide two corporates, for example, some kind of certified reality for, you know, the action that they would like to take as corporates and pin our colors to the mast in that respect, you know, you would think that that would be a good thing, but we're some way away from developing that. Yeah.
Yes.
Yeah, thanks. Jason Molins from Goodbody. Just you mentioned oilseed rape there and obviously the issues there with Ukraine. Just how quickly do you think other markets can pivot into plugging that gap and what potential that might give for Origin and for Agrii? A lot of the thread today around sustainable agronomy. Can you maybe just talk about the backdrop on regulation around products, how that's maybe shifting or potentially might shift given the growing need for food security and food demand that you've mentioned a number of times? Sort of final question, just around the assumptions, TJ, you've made, firstly on Ukraine, maybe just parse out what that expectation is in some of your numbers. Finally, the cash conversion target, the 80% versus what you've delivered.
Is that because the differential with the working capital that you've, I guess, extracted, is that now maxed out? Just parse that, differential, please.
Well, maybe I'll take the two cropping questions first and the likelihood is that, you know, this autumn will see probably a significant shift in some of our geographies in what gets planted. I mean, already the UK market is talking about almost doubling the oilseed rape area that will be planted, and typically that planting takes place in July, August, for harvest into next year. You know, we're at about 350,000-360,000 hectares this year, and there's some talk of the market going to about 600,000 hectares or more in the upcoming planting season.
Romania has always been a very strong market for oilseed rape, as has Poland, and believe it or not, our early season sales in both of those markets for seed has been very strong. What you would imagine is that the seed breeders who traditionally have sold into Ukraine or sold into Russia, which were large growing areas for sunflower and oilseed will divert some of that seed capability into other markets. I think, you know, the dynamic will change in terms of where those products will be grown. In the short term at least, certainly into next winter and into much of next year, we are going to see food shortages, and we are going to see crop shortages across all of the major crop areas. You know, there will be no doubt about that.
The global stocks to use ratio had already declined to very low levels over the last two to three years. The U.S. use of bioethanol in fuel has increased quite substantially, and the states in the U.S. who mandate the level of bioethanol used in fuel have been sharply increasing that level over the last kind of two years. That drive and demand for crops for use in fueling cars and engines, I suppose, has increased. There's no doubt that gas and diesel prices will continue to play into that dynamic. Using crops for multiple uses ultimately is leading to crop shortages, quite apart from the challenges that exist within the Ukrainian and Russian production systems. You know, there's plenty of grain in silos in Ukraine.
Given what's happening around the southern coast and the lack of rail infrastructure and other infrastructure to be able to take grain out of Ukraine, the reality is that the market is becoming quite illiquid very fast, and last year's product is simply not moving out of the country fast enough. The market is becoming very illiquid very quickly, and the infrastructure simply isn't there to get it out of the country. You know, the global situation, I think, is going to become even more heightened, and that will lead to good output prices for at least the next 12-18 months. That, that's a key driver for our business as well. You know, if the farmer is securing high output prices locally, they will spend on crop protection products. They will spend on fertilizers.
That's, you know, that is a key driver and key dynamic for the business over the next 12-18 months.
Just a question, Jason, on our assumptions around Ukraine. I mean, as you would have said previously, the trading performance in Ukraine up to the point of the war and the invasion had been challenged over the recent couple of years. We are, you know, assuming a level of a loss this year, as you might expect. Given the uncertainty and lack of clarity in terms of how the situation is going to evolve, we've assumed broadly breakeven position out over the remaining years of the plan. I mean, that's obviously all to unfold.
By virtue of doing that is a headwind in terms of that future five-year profit pool in CE relative to the history, because it was a profit contributor back in the early part of that five-year window from FY17 to FY21. Albeit, as I said, the last couple of years have been more challenging from a trading perspective. Obviously, current situation aside. i.e., the free cash flow conversion, I think we have. There's a lot of work being done across the businesses to extract working capital from the business. As I said, it is a variable thing. It is difficult to forecast even in the near term, not alone over a five-year window.
That said, I think what we're seeing in that ratio is just, you know, some headroom to allow for, you know, organic growth, which is what you would expect. You'd expect your working capital to grow broadly in line with revenue in a normalized market. Again, I think back to the point of showing this on a cumulative basis, it is reflective of the fact that it is difficult and a variable piece to model. Yes, to your question, we are, I suppose, giving ourselves some space for growth in terms of that organic working capital position over the plan.
Jason, there's one last question for regulation.
Yeah.
Okay.
Yeah, just in terms of regulation, it's always a danger whenever I talk about biosolutions, that I paint a kind of black picture of the future around crop protection. Actually, the truth is that there are many, many new active ingredients coming through. They're just not coming through at the same pace that they were 20, 30 years ago. The two big markets are probably cereal fungicides and cereal herbicides. We have a new cereal herbicide coming through from BASF, Luximo, which is very good on our biggest grass weed in the UK and also parts of Northern Europe. That's coming through for this autumn. In terms of cereal fungicides, it's always difficult with diseases because they're very good at ducking and diving and getting around the latest chemistry that we're using to control them.
We have three or four new classes of fungicides that are coming through. For those two big markets, we do have alternative solutions. I think the other thing to say is, yeah, I've talked a bit about bios, and I have mentioned that they are less reliable. The point is that many of these biological companies are being bought out by the likes of BASF, Syngenta, and they're bringing their formulation expertise into some of these products, and they're finding ways to make them work more reliably and for longer. Like I say, they are a lot cheaper to bring to market, and they're much faster to come to market. That's before we even get to Fortgreen's expertise around that and the knowledge that they've got around that.
In terms of maintaining yields for the future, I think we are okay. The problem with losing chemistry, that came about because we moved from a risk-based system into a hazard-based system. Therefore, you know, if you're a car, you're dangerous, you get banned from the road. Well, you don't. In the old days, you had the highway code to keep you safe, and it changed with the EU. Under post-Brexit, there was a lot of promises made from CRD that there would be very much science-based approval system, not political based approval system. Unfortunately, CRD are in a slight pickle at the moment 'cause they've got some very young people that have come into the regulation, and they're on a learning curve.
We've got a lull at the moment, and products are coming through more slowly. Eventually they will ramp up and they have promised it would be very much science-based approval and not influenced by politics. Again, at some point that should be very positive for the UK in particular. GB.
All right. Roland.
Hi, it's Roland French from Davy. Three questions if I could. There was a reference earlier around digital capabilities and your ability to use data to benchmark around yields. I'm just wondering, does that give you some optionality around pricing and potentially unbundling that invoice, so to speak, with the customer? Second question then. I think in 2019 you gave a target for non-UK profit contribution. Maybe just slightly twisting that, by the end of 2026, have you a target for non-UK arable profit pool? I guess that's including M&A and including organic growth and amenity. I had a third, which was actually just listening to the pre-recorded videos earlier. There was definitely a sense that food security is ranked junior to the broader environmental sustainability debate.
Clearly that's arisen in context of what we've seen. The question is, how does that manifest itself in terms of subsidies, policy, regulation? Is there any semblance there that there may be some reprieve around potential tapering towards the back end of ELM, for example? Or the government coming in and subsidizing certain elements? Any color there?
Yeah. I'll try and remember all of the questions.
Okay.
Would you put the last one first 'cause I can remember that one.
Yeah.
The subsidy situation, I think, you're likely to see some moderating of the targets. I know from an Irish political perspective, for example, Leo Varadkar was talking to his political party yesterday and talked about, you know, no farmer having to give up a cow or reduce his herd size or reduce the amount of land. The political noise is certainly around perhaps moderating the targets to a certain extent. You know, all of the reaction that we've been getting to the fertilizer shortages that have existed and the supply chain challenges that have existed have been quite positive about keeping fueling the fire, certainly in an Irish context, to keep Irish agriculture operating effectively and operating well.
I would imagine that food security will very much be back on the agenda. I mean, the real food inflation hasn't hit yet. You know, it's hitting, but it hasn't hit yet. You know, this is going to be an even bigger political issue in 12 months' time. If you look at what's happening in more marginal economies, you know, like Sri Lanka and other areas where growing rice is becoming a problem, you know, there's gonna be huge political upheaval as a result of the types of challenges that we're seeing at the moment. Do we have a target for non-UK agricultural businesses? I guess certainly what we do have is an ambition.
Amenity probably in a normalized year of trading and accepting this year is not really a normal historic year of trading, but Amenity probably represents about 10% of our total group operating profit. I'd like to see that grow between ecology, environmental and Amenity to 20%, over the 5 years of the plan. You know, we can't identify whether we're going to place M&A acquisitions in the bucket of, you know, sustainable biologicals acquisitions or product-based businesses or ecology-based businesses. We'll have to take each of those opportunities as they come, maintaining that financial discipline that we talked about earlier on. I think investment in, ecology-based businesses, environmental-based businesses, and landscaping businesses can grow the overall portion of Amenity within the total profit pool to about 20% over time.
Then you've got other organic growth and other product-based growth within the other businesses. We don't see ourselves, you know, we are reinvesting in people in the UK context. We're reinvesting in plant capacity and capability in the UK context, but we're not going to buy a significant number of UK agricultural businesses. I don't think the CMA would allow us buy a lot more in a UK context anyway. You know, keeping our UK businesses running, ticking over and operating well and efficient and generating significant cash is what they'll be about. You know, it's growth outside of UK arable and UK fertilizer, I would say, in the main.
I guess the.
I probably missed the first question.
The first one effectively using.
Well, maybe either John or Derek, do you wanna comment just on the extent to which we leverage data within our digital capabilities?
I suppose what we're really seeking to do through the use of, maybe I'll stand up here so people can see me. Through the use of data and benchmarking is to be able to, I suppose, answer empirically through data that question of, you know, I've made all these interventions on farm, I've taken all these agronomic insights, and what has that empirically made a difference? You know, what is the percentage benefit that I have seen typically in yield? Our offer in terms of Agrii is really an integrated offer. You know, we're leveraging all of the research and developments that we're doing.
We're leveraging all of the products both across seed, crop protection and fertilizer and, you know, all of the some of the products that Peter will have talked through today. Really what we're doing is using data and benchmarking and using technologies like remote sensing to be able to demonstrate to our farmers the value of that offer, you know, versus their peers in their locality growing the same sort of crop. That's really why we're driving the use of data and benchmarking, is to give that empirical evidence to our farmers behind the propositions that we've developed.
Yes. The question is, then looking at your map over the next couple of years, that invoice look different potentially, will you be able to harness that benchmarking to potentially unbundle?
Yeah. I'm not sure we'll unbundle the invoice on the back of it, but if we can prove that the advice that we're giving is yielding to better results for farmers, then we should be able to attract more customers. It's something we're already doing manually through an aggregation of farmer data in what we call the map data collection system, comparing farms to their neighbors or the regional averages. We're doing that in one or two of our regions manually, where the agronomist is collecting the data. We're going to try and automate that through the digital technology and system that we have, and then we should be able to prove that the advice that we're giving is giving better results than the average farmer in your locality, in your region.
We give you a better result than your neighbor, and ideally then, more people will buy our services and buy that agronomic advice and buy that capability from us rather than buy it from the average competitor that we have. What we're going to try and do, I suppose, is prove that in practice and try and win market share on the back.
Hello, this is Anne Crowe from Madison Group. Just one quite short question about fertilizer demand. Because earlier in 2022, Wynnstay Group was talking about fertilizer sales and demand, and it just flagged a potential risk that the price of fertilizer might get so high that farmers were actually discouraged from applying quite so much. I was wondering whether you were seeing any signs of that or whether actually the expected prices that farmers were getting for crops were such that they were carrying on with the usual volume of applications. Thank you.
Yeah. Thanks, Anne. The fertilizer application rates are typically linked to crop prices in a mathematical ratio. If you take the current crop prices of about GBP 330, say for wheat, fertilizer prices would need to be down at about GBP 600 per ton in order to break even. They're currently trading at about GBP 750-GBP 800 per ton. It's slightly uneconomic at the moment for the farmer, but most arable farmers would have already bought the product that they would apply in this current spring season through the winter and in the early part of the spring. It is impacting demand. Overall, our unit volume sales at the moment are down by about 15%-20% across the UK and Irish marketplaces.
There are some farmers taking what they call a P and K holiday and applying nitrogen and not applying the other elements to an extent. In general, fertilizer prices have been moving backwards towards a level which sees them continue to operate at a roughly break-even level. I would think the food supply shortages that we've talked about in relation to Ukraine and other global challenges may well see crop prices move up further, and there may be a little bit of softening coming into the new season pricing for fertilizer, which, you know, starts in the autumn period, which will see that balance being rectified and ratified. It's, they're not too far apart from where they need to be.
Thank you.
Yeah, Kevin.
Hi there, Kevin Fogarty from Numis. A couple of questions, please. Just firstly on the biosolutions side, you've obviously got some capability within the group in terms of Fortgreen, et cetera. And you've talked about a number of parties coming to you with their solutions. I just if we think about going forward, how important is it for you to own those solutions within the group or not? That's the first question. Second, in terms of the yield gap in Continental Europe, I mean, that's existed for quite some time. And I just wondered if you could sort of pick through why you're sort of confident of narrowing that gap as we go forward, whether there's any kind of structural challenges you're managing to overcome or anything more complex there.
Just finally, in terms of M&A, when you think about environmental and ecological services, it feels like quite a sort of nascent market. I just wondered about the availability of targets there and perhaps the valuation multiples you think you might pay relative to the past.
Yeah. Well, maybe I'll take the last one first again, Kevin. You know, there are, I would say, a significant number of businesses who are generating profit or EBITDA in the kind of EUR 1 million-EUR 5 million range in that ecological space. We certainly are looking at a number of them who are competent individuals or competent companies and look to have expertise in areas which initially at least, we would like them to have some exposure to the ag market and the agricultural sector. That would be important. On the supplies or product-based businesses, again, there are a number of players who, you know, wouldn't be quite as big as Green-tech, but might be reasonably close in size from a revenue perspective as Green-tech.
There's certainly a reasonable list of targets out there. Alex, do you want to take the question about the yield gap? I know you differentiated already between our market and the general market.
Yeah. I think in terms of the yield gap, if you look, you have a huge spread across different farmers and customers on yield. Averages always have to be taken with a sort of pinch of salt or sort of understand below that. Now, if you look at our own customer base, then you know, we've seen increases now where we've got new customers, we've been able to bring new agronomic practices in. We can see the yield improvements come through. We know we can deliver that. It's absolutely possible to do. It's just it's really being focused on the right target customers. That sort of 50-hectare to 20,000-hectare, where they're big enough that we can put the agronomic time in to help them lift yields.
I think you're always gonna have, in some of the European countries, a lot of small farms with very low yields, which probably drag down the average. Okay.
Kevin, I've forgotten your first question again.
Yeah.
Well, I think there's a related question in multiples, Kevin, which-
Oh, yeah.
You can take maybe. I mean, multiples, you know, kind of fragmented type of, the market is fragmented as Sean said, and typified by those businesses in the kind of EUR 1 million-EUR 5 million. You know, typically owner-managed type businesses that can trade somewhere between 6.5x-8x typically. That's the type of range we're looking at. I mean, it is nascent, so I suppose it hasn't attracted the large PE monies as yet. That's probably kept the lid maybe on multiples and expectations. That's typically I think of what we're seeing in discussions that we have with those types of businesses, that in that range is probably reasonable.
Biosolutions, what's the
Yeah. I think we're agnostic really on what we'll own and what we won't own. I mean, we would like to develop organically in that space within Fortgreen. Typically, as Claire mentioned, you know, you're getting one a week coming towards us. They might have one or two products. These are founders who don't necessarily have an extensive range of products. So, you know, we're agnostic really on whether we own or don't own those businesses, as long as we're garnering a reasonable distribution margin, which is competitive with the plant protection margin that we're getting on traditional products in that space. As long as there's a good pipeline coming through, I think we're agnostic on whether we need to own or we're just happy to distribute certain products.
So-
Oh, sorry, Dan Aarons
Hi. Thanks. Dan Aarons from Cantor Fitzgerald. I was just wondering on the strategic CapEx that was mentioned on the slide on adding new plants, is this mostly related to CRF in Brazil, or are you also looking to adding new blending plants in UK and Ireland? How comfortable are you with the headwind that exists in the form of the 20% reduction in nitrogen usage in fertilizer in the EU and potentially also UK? Maybe secondly, in the presentation about Amenity business, something that caught my ear was that there's a product that's already being exported to 65 countries. I was wondering, in general, can maybe walk us through how exportable the Amenity business in general is and what your thoughts are in that regard? Thanks.
Okay. On production plants, yes, it is very much within Latin America and Continental Europe. There are certainly certain infill capabilities that we don't have within our Polish and Romanian business, for example. We have an extremely good technical seed dressing plant within our Polish business, which we would like to develop within our Romanian business. We have the foliar plant obviously in Poland, and we have a micronutrient element plant in our Romanian business. We don't have fertilizer blending capability in either Poland or Romania, so we would see an opportunity to perhaps introduce technical fertilizer blending capability in both of those markets over time. We use third parties to develop the blended fertilizer in those markets at the moment.
I wouldn't see us adding any more plants in Ireland and UK other than the Cork site, where we have sold an existing plant for land use to a third party, which is in the city center, and we intend to move that plant outside the city center. It's Brazilian plants and plants from a CRF perspective in that market and also infill of capability, which is for organic growth for existing markets that we already have but use third parties to produce in seed and fertilizer in Romania and Poland.
On export.
Sorry.
Export.
Export. Chris, how easy is it to export the broader range of Amenity products apart from Linemark?
It can be done outside. Yes, it can be done. Regulation's fairly low, so there's low barriers to export in that we export all over Europe extensively now. Obviously Linemark further afield. We're looking at using those channels and analyzing those channels to take the other products to market.
Would you already do it? You've got relationships with Scandinavian and-
Oh, yeah, we already do.
Italian, French.
Yeah.
Apart from Linemark, we already sell to other distributors.
Yeah. We export the Amenity products and also fertilizer from our PB Kent specialist fertilizer manufacturer to other distributors in Scandinavia, Europe, et cetera. Yeah.
In the interest of time, there has been some questions come in online.
Oh, yeah.
maybe, Marie-
Sorry, Marie.
So-
Obviously many of these have been addressed already, so I'm just gonna group them thematically, maybe two themes that haven't been so covered already. The one in relation, TJ, to capital allocation and maybe particularly decisions as regards share buyback versus special dividends. Another one then on, you know, assuming that the fertilizer supply situation was to remain constrained as it has been, especially geographically, what implications might that have for the business in future years?
Okay. I mean, on the capital allocation point, I mean, there's a number of factors that go into the decision around, you know, as I said, repeat the point around any decision to distribute in excess of a 35% payout, either through special or buybacks, would be dependent on other alternate uses of capital, as I said, or preferences to reinvest for growth back into the business through either organic or inorganic capital deployment. That said, as a decision around a buyback versus a special, you know, so a few different factors. Obviously, the relative value of the share price is a factor, or the relative share price and associated value that we would see in the share price at any point in time.
There's also a piece around just liquidity of the share and the impact that buybacks can have on that. I think it's something we kinda keep under continuous assessment as to a decision point between a buyback or a dividend. I think this year we clearly saw with the opportunity of the Cork Property proceeds, we saw the opportunity in the value of the share and also listening to our shareholders, frankly. You know, the other variable is the shareholder needs and desires in that context, which we are mindful of and we do listen to. To the extent that that's a part of that equation, obviously it's something we would factor into any decision on that.
Great. Brendan, you might take the fertilizer.
Sorry. Just in relation to the fertilizer supply, to say it's a challenge is certainly an underestimation, all right. Obviously this year we've had to deal with a lot of challenges. I mean, we've had production on and off because of the cost of energy, particularly in Europe. We've had quite a number of geopolitical plays, so certainly a lot of countries where there is
Domestic production, export restrictions have come into play, and we've had to then orient toward other supply lines. The big challenge now is obviously as a consequence of Ukraine, Russian material in particular, over the last number of years, it accounts for a significant proportion of a UK and Ireland, supply, perhaps up to about 25%. From our perspective, you know, we have a broad range of supply lines, right? We've managed to maintain our supplies notwithstanding those issues. The challenge, and it's not just a challenge for ourselves, but we have to orient to further, geographies. You're looking at material coming in from Egypt, Algeria, Jordan, et cetera, where we already have supply lines.
It's just challenging in terms of supply, in terms of lead times, the obvious stuff around working capital, and the other aspect is commodity price risk. Because instead of moving materials from the Baltic or from mainland Europe in small coasters, you probably have to commit to a larger vessel from those other jurisdictions. I would say that, look, we have a strong market position. We have a long history. We have good supply lines and good supply relationships, and we're a go-to for all those suppliers as well. It is going to be a challenge because more and more of the industry is going to be chasing a much more reduced supply. Look, it's something we've walked through before, and we'll have to just continue.
As I said, relationships are the key piece to unraveling that.
Thanks, Brendan. Nothing else, Muireann?
No, I think thematically they've all been.
Okay.
Cathal, I think it is.
Sorry, Cathal.
Yeah. Just two quick questions from me, Cathal Kenny from Davy. Firstly, just to roll this out to 2026. Don't think it was really touched on today just in terms of the opportunity set around that for Origin. Second question, just on as you transition the portfolio to Bayer solutions, it's more specialized product. There's also an investment in, I guess, the environmental piece as well. Just the willingness for the team at the front end, the agronomists, your salespeople, to embrace it and then sell it, and by definition, is there a greater service overlay that will need to come in as we transition away from the current subsidy regime to a new one?
Sure. Roland, maybe we'll let you answer the question in relation to the agronomists. Firstly on seed, I mean, Cathal, the seed is an important component part of the portfolio. It's, you know, it varies from a margin perspective considerably between some of the players that we might be dealing with. One of the advantages the Polish seed plant has allowed us to develop, I suppose, is by dressing the seed, we're gaining additional margin, adding value to the seed all of the time as we progress through the supply chain. Hence the reason and the desire to add that capability in the Romanian market, and we've got seed plants already in the UK. You know, seed is important.
You're going to get a mix of, because of higher grain prices over the next 12 months, perhaps moving more to what's called farm saved seed and the seed being dressed using mobile seed units, which we have in the UK. Again, different seed breeders, different seed manufacturers, for want of a better description, are offering varying margins. We've tended to build strong relationships with secondary seed breeders to get better margin, as a rule, rather than rely on some of the primary seed breeders. Seed is important. There are a number of different dynamics, including higher grain prices feeding through to perhaps more farm saved seed over time.
You know, it will continue to grow, and maybe in your answer in relation to the agronomists, you can touch upon, I suppose, the importance of seed in that overall mix.
Yeah. I mean, just in terms of the agronomists, I would say agronomists are, you know, fairly used to bringing through new technology. It's something that's happened quite regularly across the kind of, the crop protection portfolio. This is. As long as we have the data, as long as we have had the product in our trials, as long as it does what it says on the tin and the provenance is right, I don't think there's gonna be any, you know, real issue in adopting those new products. It's something that they do on a regular basis. Seed is very important. There's lots of, you know, new technology, being wrapped around seed. We, you know, we talked about varietal. We talked about gene editing earlier on.
I think I've certainly stood in front of my organization telling them about the importance of seed for the last 10 years and that it's going to grow significantly. I think we're at that point now where seed is a really important part of the agronomic risk management choice, and in particular, when we look at some of the challenges around the environment and sustainability. I'd echo your comments, Roland. You know, seed is a very important part of our future.
Great.
Okay. I think in the interest of time, I think that's the questions.
Yeah. Okay. Well, look, thanks very much everybody for attending today. You know, it's great to be back in person as Claire said earlier on in these sessions. We haven't had one for a couple of years. Hopefully you've gained some insight into the dynamics within the business and how we intend to optimize the business over the coming years, both in terms of changing the organization internally for a more sustainable future, but also aligning ourselves to more sustainable acquisitions from an M&A perspective. Thanks all for attending. I know it's a big time commitment and time chunk out of your day to come along here, but hopefully you've gained some insight into the business.