Grains and vegetable oils
As much as 99% of the grain Raisio acquires as raw material for the Finnish food and feed industry is from Finland. However, diminished cultivation area in Finland together with poor oilseed crops and other factors significantly impairing the conditions of oil milling industry.
Adequate supply of Finnish grain, shortage of rape seeds
Global market situation affects the price levels of Finnish agricultural products and farming supplies. Grain and protein raw material prices remained quite high during the first half of 2013. Good harvest of the new season both in Finland and abroad resulted in declined raw material prices. The volatility in grain raw material prices is expected to continue.
Raisio has some 2,500 contract farmers; we make a farming agreement with the farmers and purchase grain as raw material for foods and feeds from them. 99% of the grain Raisio uses in Finland is from Finland. Raisio is the biggest industrial grain processor in Finland.
With contract farming, Raisio aims to purchase good-quality grain cost-effectively and at competitive price as raw materials for Raisio's foods and feeds.
EU decision significantly undermined the operating conditions of oil milling industry
Raisio carried out the adjustment of the oil milling industry to the market situation in the winter 2013 and made investments in production efficiency and flexibility. However, these measures were not sufficient to secure profitable business in the changed business environment. Especially the EU's decision to ban the use of neonicotinoids from 1 December 2013 further weakens the availability of Finnish seed. The crushing of imported seed is not economically feasible.
On the basis of the employee cooperation negotiations held in late 2013, Raisio decided to continue its vegetable oil business but to lay off the personnel in early 2014 until further notice. Raisio assesses opportunities to begin operations again if the business conditions improve markedly from the current. Potential agricultural subsidy solutions supporting the oilseed cultivation in Finland are important for the future of the business.
Oilseed plants were grown on some 50,000 hectares in Finland last harvest season while three years ago, the area under oilseed cultivation was nearly 160,000 hectares. In 2013, oilseed crop was approximately 80,000 tonnes, which is only a quarter of the Finnish oil milling industry's need and does not enable profitable business in Finland.
Rapeseed meal, the main product from oilseed crushing, is an important protein-rich raw material used in Raisioagro's livestock feeds. Due to the lay-off of the vegetable oil factory staff, Raisioagro now imports most of the rapeseed meal needed in the production. Rapeseed oil is a by-product of the oilseed crushing. In addition to the company's own use, rapeseed oil is sold to Finnish and international food and feed companies.