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 IndustryAgriculture’s Troubled Waters
March 3, 2014
Water quantity and quality issues threaten to hamper agriculture on a wider scale in the not-too-distant future. Technology breakthroughs and improved practices are providing potential solutions. Read More
State of the IndustrySponsor Profiles: Simplot, SST And WinField Support CropLife State Of The Industry Report
January 8, 2014
The sponsor partners of the CropLife State of the Industry report have demonstrated ongoing leadership including their support of this report. Read More
State of the Industry2014 State Of The Industry: Agricultural Concerns Creep In
January 2, 2014
With many strong sales years under its belt, the agricultural community is hoping for another positive growth experience in 2014, but mindful of a few challenges that might keep this from happening. Read More
State of the IndustrySeed Systems Top Watch List
January 2, 2014
Retailers are closely following herbicide tolerance and drought resistance traits. Read More

Trending Articles

CropLife 100Agrium To Cut 500 Jobs, Sell Some Businesses
November 11, 2014
Among the businesses Agrium will try to sell are its micronutrients and European UAN (urea-ammonium nitrate) lines. Read More
HerbicidesMonsanto, Sumitomo Chemical And Valent Extend Crop Protection Collaboration
November 10, 2014
The agreement extends their strategic partnership in Monsanto’s Roundup Ready PLUS Crop Management Solutions platform for soybeans and cotton in the U.S. Read More
FertilizerCorn Rootworm Hybrids And Potassium Uptake
November 4, 2014
To achieve successful yields, grower-customers can’t afford to cut back on their potassium use with corn rootworm hybrids, say experts. Read More
StewardshipResponsibleAg Begins Auditor Training
October 31, 2014
ResponsibleAg auditor training is now underway at the Ford B. West Center for Responsible Agriculture in Owensboro, KY. Read More
InsecticidesNew Research Study Shows The Value Of Neonics
October 29, 2014
The study evaluated seed treatment, soil and foliar uses of neonicotinoid insecticides in the U.S. and Canada. Read More
Crop InputsPlatform Specialty Products To Acquire Arysta LifeScience
October 20, 2014
Once the acquisition is complete, Platform Specialty Products will combine Arysta LifeScience with previously acquired companies Agriphar and Chemtura Crop Solutions. Read More

Latest News

EquipmentAGCO Announces Operator Of The Year Finalists
November 20, 2014
Four custom applicators have been selected by AGCO Application Equipment as finalists for 2014 Operator of the Year, an honor that recognizes them as being among the top professionals in their industry throughout North America. Read More
MicronutrientsH.J. Baker Expands Tiger-Sul Business
November 20, 2014
H.J. Baker has created and filled two strategic positions in business development and sales within its Crop Performance Division. Read More
soybean field
FertilizerGeneral Mills Honors United Suppliers For Nitrogen Opti…
November 19, 2014
United Suppliers winning proposal detailed SUSTAIN, a consulting network that provides customized products and services for farmers using a needs-based system approach. Read More
EmployeesOhio AgriBusiness Association Awards $25,000 In Scholar…
November 19, 2014
Each year, the Ohio AgriBusiness Association Educational Trust scholarship program awards scholarship dollars to students enrolled in an agriculture-related field attending several state colleges. Read More
ManagementServi-Tech Names New CEO
November 17, 2014
Servi-Tech has named Greg Ruehle its new president and CEO. Read More
CropLife 100Pinnacle Ag Acquires Colorado Aerial Application Outlet
November 17, 2014
Ft. Lupton, CO-based Reck Aviation — a full-service chemical application company providing aerial crop applications of fertilizers and crop protection products — will operate as part of Pinnacle's AgOne Application Services brand. Read More
Eric SfiligojMcDonald’s Message: Biotech Crops Scarier Than Cancer
November 17, 2014
Despite their potential health benefits, one of the world’s largest potato users will pass on a new biotech offering. Read More
MicronutrientsWinField Releases 2014 NutriSolutions Results
November 14, 2014
A number of significant regional and national crop deficiency trends emerged from the 2014 WinField NutriSolutions tissue sampling program. Read More
FertilizerH.J. Baker Opens Chinese Production Lines
November 14, 2014
The occasion was the official launch of the Tiger-Sul sulphur Bentonite production line of two much anticipated fertilizer products in China, T90CR sulphur fertilizer and TZinc micronutrient enhanced sulphur fertilizer. Read More
ManagementOhio Certified Crop Adviser Program Accepting Nominatio…
November 14, 2014
The award recognizes an individual who delivers exceptional customer service for farmer clients in nutrient management, soil and water management, integrated pest management and crop production in Ohio. Read More
HerbicidesSyngenta Announces Acuron Trial Plot Results
November 14, 2014
Acuron was tested at 167 trial locations across 35 states. Trials included 95 Syngenta locations, 54 university locations and 18 distributor locations. Read More
Crop InputsVerdesian Expands Sales Force
November 13, 2014
The new sales representatives will work with growers, retail partners and distributors to oversee technical training and product education. Read More
EquipmentAGCO Raises $100K For Wounded Warrior Project
November 13, 2014
AGCO Corp. partnered with local AGCO dealers across the U.S. and Canada to raise nearly $100,000 in support of wounded service veterans. Read More
HerbicidesDow AgroSciences Announces Launch Of Enlist Duo Herbici…
November 12, 2014
It will be launched in conjunction with a stewarded introduction of Enlist corn, and seed production of Enlist soybeans in 2015. Read More
FertilizerH.J. Baker Expands Tiger-Sul Business
November 12, 2014
Agricultural firm H.J. Baker has created and filled two strategic positions in business development and sales within its Crop Performance Division. Read More
Blenders13 Fertilizer Blenders For 2015
November 12, 2014
Dealers can find a fertilizer blender to deliver any speed, volume and custom mix they want. Read More
CropLife 100Wilbur-Ellis Vice President Receives Honorary FFA Award
November 11, 2014
Jim Loar, vice president of operations of Wilbur-Ellis’ Agribusiness Division, was awarded the Honorary American FFA Degree at the 2014 National FFA Convention and Expo in Louisville, KY. Read More
FertilizerBASF Makes Limus Nitrogen Management Available In U.S.
November 11, 2014
Reducing ammonia losses by more than 90%, Limus nitrogen management has demonstrated increased crop yields on average of 6%, according to 2013 replicated research. Read More