Fertilizer Executives Weigh In On State Of The Industry

Fertilizer prices are rising at a much more subdued pace than skyrocketing crop prices — and that’s not necessarily a bad thing, said an executive with the world’s largest producer of potash, a key crop nutrient.

Wayne Brownlee, chief financial officer with Potash Corp. of Saskatchewan (TSX:POT), said he does not foresee a repeat this year of the massive fertilizer price run-up of 2008.

“What you’ve seen is a more moderated price increase in fertilizer that has not matched the increase in agriculture commodity prices. And so it’s leaving the farmer in a very healthy situation,” he told a Scotiabank fertilizer industry conference Wednesday in Toronto.

Brownlee said Potash’s customers — farmers — are earning record margins. Instead of experiencing another 2008-style bonanza, Potash foresees “having a firm foundation under customer engagement on an ongoing basis.”

“So we can see growth in prices, but on a moderated basis. That ensures that the volume does not become volatile again.”

Global grain demand has been outstripping supply for seven of the past 11 years, and that has led to deep draw-downs on inventories.

“To put this into perspective, just to stand still and not have the situation get worse, we need crop production this year in the grain sector of five per cent growth,” Brownlee said.

“To actually make a difference, you actually need to be higher than that. You need to be around seven per cent in terms of starting to replenish inventory levels.”

Since production growth is actually at around two per cent per year, farmers have a long way to go to even maintain the status quo.

“So we need almost perfect weather conditions, which we’re not getting,” Brownlee said.

“I think that you should expect sustained pressure on grain prices for the course of this year, and probably into next year.”

Earlier, the CEO of another major fertilizer producer, Agrium Inc. (TSX:AGU), said his company is poised to benefit from the broad-based rise in crop prices.

“The whole sector has really been coming along. If you look at 2008, it wasn’t as broad as this across all the sectors,” Mike Wilson told the conference.

“You don’t just have wheat or corn (doing well). It’s wheat, corn, soybean, cotton, palm oil — you name it. they’re all up high.”

He said Agrium is in a unique position because of its diversity.

The company has both wholesale and retail operations, a geographically dispersed business around the world and provides farmers with products for a wide variety of crops.

“We’re on just about every crop you can think of,” Wilson said. “We manage strawberries, we manage lettuce, obviously all the major crops, sugar cane, palm oil . . . bananas.”

“And by having that diversity, we’re not reliant on one crop.”

Wilson said Agrium, which has its base in North America and has expanded into South America and Australia through acquisitions, is looking at Central Europe as an area that’s ripe for expansion over the coming years.

“We just bought CerealToscana . . . and what that’s done is position and strengthen our European position, mainly in Italy, but we you see us now starting to move into Central Europe,” Wilson said.

“We’re in Bulgaria, we’re in Romania and we’re looking at Central Europe because we think that’s the place we want to be in five to 10 years. There’s a lot of growth opportunity. They’re not applying the appropriate amount of nutrients, they’re not using the latest technology on seed and chemistry.”

He described the North American spring planting season, which has been plagued by wet weather including flooding in Manitoba, as “very interesting.”

“April was terrible, one of the latest starts we’ve seen in history from a farmer point of view,” Wilson said.

“In May, it turned right around. May has been an incredible month. We can’t keep up to the demand.”

Agrium plans to increase its potash production by one million tonnes by 2014. It plans to achieve that growth through so-called “brownfield” expansions to its existing operations, rather than building an entirely new mine from scratch, as some of its rivals are doing.

“What you’re going to find is a lot of the potash expansions that are being talked about, they haven’t gotten in the field yet and they haven’t done their engineering yet, and when they do the capital costs are going to shock them at how expensive it is,” Wilson said.

(Source: The Canadian Press | Lauren Krugel)

Leave a Reply

State of the Industry Stories

State of the IndustryFertilizer Bracing For Slower Demand In 2015
January 5, 2015
Following a rough 2014, ag retailers expect 2015 to remain a challenge for crop nutrient sales for a variety of reasons. Read More
Crop Protection Bulk Storage
State of the IndustryCrop Protection Rise To Continue
January 4, 2015
Economics may tempt growers to reduce pesticide use, but ensuring yields may be more important. Read More
State of the IndustryYields Start With The Seed
January 3, 2015
There’s a reason seed sales were up in 2014 — new varieties are delivering the goods. Read More
USDA
Special ReportsUSDA Announces Funding To Train And Educate Next Generation Of Farmers
April 14, 2014
Nearly $20 million in grants to help train, educate and enhance the sustainability of the next generation of agricultural producers is available through the Beginning Farmer and Rancher Development Program. Read More
Top 100 Articles
CropLife 100Southern States Coop Hosting Drone Flight This Friday
August 3, 2015
Southern States Cooperative — No. 9 on the CropLife 100 — is hosting an FAA-approved drone demonstration at Grandview Farms Read More
CropLife 100Allied Ag Distributors Adds Four New Owners
July 30, 2015
Aligned Ag Distributors LLC has announced the addition of four new customer/owners to Franklin Holding Co. LLC. They are: The Read More
CropLife 100Pinnacle Purchases California-Based Specialty Crops Retailer
July 20, 2015
Pinnacle Agriculture Holdings has successfully acquired California-based NH3 Service Co.  Operating as part of Pinnacle’s Performance Agriculture brand, the new locations Read More
Asmus Farm Supply liquid fertilizer facility features 20,000 square feet
CropLife 100Slideshow: Asmus Farm Supply Shows Off Its New Liquid Fertilizer Facility
July 15, 2015
Asmus Farm Supply, Rake, IA, recently added a new liquid fertilizer facility to its company operations. The new liquid fertilizer Read More
CropLife 100Wilbur-Ellis Feed Division Facilities Receive Safe Feed/Safe Food Certification
July 13, 2015
Wilbur-Ellis Co.’s Feed Division, a marketer and distributor of value-added feed ingredients for the aquaculture, livestock and pet food industries Read More
CropLife 100BRANDT Expands To Brazil With Acquisition
July 8, 2015
BRANDT has acquired a majority interest in Target Brasil Fertilizantes Ltda. through its Brazilian subsidiary. Target Brasil manufactures, distributes and Read More
Latest News
StewardshipOhio Grower: Why Water Quality Matters To Me
August 3, 2015
Fresh off the first anniversary of last summer’s unfortunate Toledo Water Crisis — which was largely attributed in mainstream media Read More
Young soybean field
Industry NewsH.J. Baker To Build New Facility In Emporia, KS
August 3, 2015
H.J. Baker has announced the expansion of its Animal Health and Nutrition division with the ground breaking of a new Read More
Young corn plants
Crop InputsNufarm Reorganizing Ag, Industrial Vegetation Managemen…
August 3, 2015
Today Nufarm announced a reorganization of its Agriculture and Industrial Vegetation Management sales and marketing organizations effective August 1, 2015. Read More
StewardshipExcellence Through Stewardship Reaches 30 Members
August 3, 2015
Excellence Through Stewardship, a non-profit that promotes the adoption of best practices and stewardship in agricultural technology, reached the milestone Read More
CropLife 100Southern States Coop Hosting Drone Flight This Friday
August 3, 2015
Southern States Cooperative — No. 9 on the CropLife 100 — is hosting an FAA-approved drone demonstration at Grandview Farms Read More
CropLife 100Allied Ag Distributors Adds Four New Owners
July 30, 2015
Aligned Ag Distributors LLC has announced the addition of four new customer/owners to Franklin Holding Co. LLC. They are: The Read More
FungicidesReport: Sudden Death Syndrome Symptoms Appearing In Soy…
July 30, 2015
Last week, symptoms of sudden death syndrome (SDS) began to appear in April 15-planted soybeans at the University of Illinois’s Read More
Seed/BiotechAdvanta Seeds Adds New Phoenix Corn Hybrids
July 30, 2015
Corn growers in the High Plains and Western states have new options available for the 2016 growing season from Advanta Read More
ManagementTechnology and agriculture: a Futurist’s Perspective
July 30, 2015
Futurist David Zach, speaking at this week’s InfoAg Conference in St. Louis, shared thoughts on the benefits and limitations of Read More
Biofuels Plant in Lousiana
Industry NewsIdle Biofuels Plant In Louisiana To Reopen As Ammonia F…
July 30, 2015
A Lithuania-based company plans to spend $265 million to reopen an idle biofuels refinery in Grant Parish as an ammonia Read More
FFA at Monsanto Booth at the 2015 National Farm Machinery Show
Industry NewsFive Students Receive The 2015 Monty’s Plant Food Compa…
July 29, 2015
This fall, five college-bound students will have financial support through the Monty’s Plant Food Company FFA Scholarship. All five scholarship Read More
GYPSOIL Blendable Pellets
Crop InputsBeneficial Reuse Management Launches Pelletized Gypsum …
July 29, 2015
Beneficial Reuse Management (BRM) announced this week at Ag Media Summit that its GYPSOIL Pelletized Products Division will open a Read More
StewardshipOhio Water Quality Project To Determine How Much Phosph…
July 27, 2015
Researchers with the College of Food, Agricultural, and Environmental Sciences at The Ohio State University are looking for farmers in Read More
FertilizerKoch Agronomic Services Launches N-TEGRATION Technology
July 27, 2015
Koch Agronomic Services, LLC (KAS) has launched  N-TEGRATION Technology, a process technology platform designed to enable production of enhanced efficiency fertilizers at Read More
HerbicidesExpert: IARC Herbicide Classifications Leading To Confu…
July 24, 2015
Few people in the crop protection industry had heard of the International Agency for Research on Cancer (IARC) before this Read More
ManagementFCI Trade Summit Update & Precision Tank Turns 50
July 23, 2015
Editors Dave Frabotta and Eric Sfiligoj discuss the upcoming FCI Trade Summit in Las Vegas, NV, and how Precision Tank Read More
Palmer pigweed seedhead in cotton
HerbicidesUSDA Deregulates Dow AgroSciences’ Enlist Cotton Trait
July 23, 2015
The USDA today issued its decision deregulating Dow AgroSciences’ Enlist cotton trait in the U.S. The USDA has now completed its Read More
Industry NewsVerdesian Life Sciences Showcases Versatile Product Por…
July 23, 2015
Technology has revolutionized agriculture by bringing farmers, retailers and distributors to the forefront of the digital age. To meet the Read More