Grain farmers challenge potash pricing

Tuesday, March 16, 2010

by BRIAN LOCKHART

The price for most agricultural fertilizers has declined in recent months but potash hasn’t followed suit. Now, many Ontario farmers want Competition Bureau Canada to investigate.

The “upward pressure” on potash prices suggests there is “more behind it than just market demand,“ says Grain Farmers of Ontario media spokesperson Erin Fletcher.

A resolution tabled at the commodity organization’s semi annual meeting in London on March 8 calls for a formal complaint to the Competition Bureau regarding three Saskatchewan potash companies and Canpotex Limited, the joint venture they operate.

According to the company’s website, Canpotex is the world’s largest exporter of potash with sales in the range of eight to nine million metric tons per year — mostly to an Asian market. The company represents the entire Saskatchewan potash industry and includes mining companies Mosaic Canada Crop Nutrition, LP, Agrium Inc., and Potash Corporation of Saskatchewan Inc.

The resolution questions why “potash prices at the wholesale level have not followed price declines that have been seen in other fertilizer components such as nitrogen and potassium fertilizers and agricultural commodities they are used to grow.”

A January 26 report in the National Post states that beginning in 2008, Potash Corporation (Campotex’s largest member) cut millions of tonnes of production in an effort to keep prices strong as demand dropped during the recession.

Grain Farmers members from District 11 representing Dufferin, Simcoe, Halton, Peel, and York Regions, are concerned that potash pricing out of Saskatchewan may not be following the supply and demand trend. They think it should, Fletcher explains.

Although Saskatchewan is the world leader in potash production and export, there are other expanding producers who will affect the market and Ontario farmers are keeping a close watch on international market prices.

“China just signed a deal with Belarus so there is a world market price for potash,’ Fletcher says.

Company policy prohibits disclosing information about pricing, stated Canpotex spokesperson Jennifer Siemens in an email. Representatives of the company’s major shareholders could not be immediately reached for comment.

The District 11 resolution also calls for the Competition Bureau and Canpotex partners to justify the continued existence of the venture. The resolution notes that the bureau permitted the establishment of the company to protect the Canadian potash industry as it started out and it continues to protect shareholders when they are now “strong and dominant players in the worldwide potash industry.”

Fletcher says the Grain Farmers’ government relations committee will first review the resolution prior to making a recommendation to the bureau, which will ultimately decide whether to pursue the complaint. BF