Potash: BHP or PCS - Which is the best deal for farmers? Farmers of North America Comment...What do you think?

Potash: BHP or PCS - Which is the best deal for farmers.

Commentary from FNA-STAG

The coverage of the offer by BHP Billiton to buy potash mining giant Potash Corporation of Saskatchewan (PCS) has been missing one very important element - the potential impact on agricultural producers. This important stakeholder is, after all, the end consumer of the important fertilizer product.

There has been full and complete analysis and speculation of the impact of the deal for shareholders, governments, and citizens of Saskatoon and Saskatchewan. These are all important stakeholders to be sure, but the potential impact of the takeover on the farmer who uses that potash seems to have been left out of the mix.

Bob Friesen, CEO of FNA-STAG, comments, "Have either of these companies talked about their farm customers yet? What effect would this deal have on farmers? Fertilizer costs are one of the biggest expenses for most farmers, but there hasn't been any talk about retail pricing and the impact it has on farmers' ability to grow the crops that feed the world".

Farmers are in a bad position compared to the fertilizer companies who set prices based on what they think they can extract from farmers for crop nutrients. Add to that the small handful of potash companies out there, and you have a situation where the farmer has no choice but to pay the price that's given.

In June, 2008, according to a Bloomberg report, potash jumped to $650 a metric ton from $190 a year earlier. This was in response to rising grain prices, including corn and soybeans, two major crops that use potash. Friesen points out, "When a farmer finally catches a break and the price of grain goes up, the fertilizer companies go right after that margin by increasing the price of fertilizer."

Friesen continues, "When the price of grain went up in 2008, there was a perceived food shortage and farmgate prices were blamed for some people having to go hungry. Yet there were reports of some farmers around the world not producing because they could not afford to buy the requisite fertilizer".

FNA-STAG questions which company would be the best for farmers. PCS's history of managing production to increase the price may be good for shareholders, but it has a negative impact on the price for farmers and the price of food. It seems unlikely that they would change this monopolistic behavior. As the potential new owner, would BHP continue the same price strategy that is used by PCS, or would they increase production and sell higher volumes? This important question has so far not been addressed.

FNA-STAG also urges the Governments of Saskatchewan and Canada to consider their farm constituents and use whatever tools they have to ensure the interests of farmers and input costs are considered. FNA-STAG's number one priority is farmer profitability and believes profitable farms are just as important to the economy as mining companies.

As the debate about the future of these two companies goes on, FNA-STAG would like to ask both PCS and BHP: Do either PCS or BHP care about the impact that fertilizer prices have on farmers and what are you planning to do about it?

▶ Reply to This

Replies to This Discussion

Permalink Reply by Bristow on October 7, 2010 at 11:59am

As you can see by the response no one cares. You know that the price is going to go up who ever buys it. And I bet ten to one the Saskatchewan and Canadian governments will buy shares with your tax money to get the lions share out of the higher prices you will be paying, after the deal is done.

▶ Reply

▶ Reply to Discussion

RSS

Welcome to
Ontario Agriculture

Sign Up
or Sign In

Agriculture Headlines from Farms.com Canada East News - click on title for full story

Low commodity prices and high input costs a double whammy for Manitoba farmers

Manitoba farmers are facing a perfect storm of low grain prices and soaring fertilizer costs that are threatening profitability for both the current harvest and next year’s crop. Current harvest delivery prices have fallen to $7 per bushel for hard red spring wheat, $13.25 for canola, $11 for soybeans and $4 for oats, representing harvest pricing typically seed at the lows of a pricing cycle. On the cost side, fertilizer costs have climbed significantly from the numbers used in Manitoba Ag’s 2025 crop cost of production guide, which was compiled last November. Urea has jumped to $850-900 per metric tonne, about 30 per cent higher than the $690 per tonne used in those calculations. Data from Manitoba Ag show a surge in crop production costs in 2022. Those have stayed elevated and, when combined with current grain prices, the cost pressure is particularly acute.

US wheat finds new markets in Asia

Flour millers in Asia have ramped up imports of U.S. wheat in recent weeks, driven by competitive prices from American suppliers and delays in shipments from the Black Sea. Indonesian importers have finalized deals for around 500,000 tons, while buyers in Bangladesh secured about 250,000 tons and millers in Sri Lanka acquired around 100,000 tons. Millers are taking both U.S. soft white wheat and hard red winter wheat varieties. Apparently, there were some weather issues which delayed cargoes from the Black Sea region, and U.S. prices have been pretty competitive. This is additional demand for U.S. wheat in Asia, complementing purchases by traditional buyers such as Thailand, the Philippines and Taiwan.

Federal, Provincial and Territorial Ministers of Agriculture (FPT) Meetings Highlight Farmer Concerns

Industry leaders and government officials kicked off the FPT meetings at a Manitoba farm. Farmers and representatives from the Canola Council of Canada (CCC), CCGA, and provincial commissions shared their concerns directly with Minister MacDonald and Parliamentary Secretary Kody Blois. A key message was clear: farmers cannot borrow their way through these trade disputes, they were not of their making. Farmers are feeling the damage directly in their pockets. With canola selling at a discount between $60-$100/tonne...on an average 20MMT crop, that translates to estimated losses of $1.2–2.0 billion from lost exports to China. Federal Announcements: Some Support, but Gaps Remain The federal government announced $370 million in biofuel funding and additional trade diversification support. While these measures are a step in the right direction, they fall short of addressing the direct impact on canola farmers and exporters in lost bookings. Concerns remain over the lack of timelines for re

The Last Word (For Now) on Rest Stops During Long-Distance Transport

When the Canadian Food Inspection Agency (CFIA) began to muse about requiring that cattle be unloaded and provided with a rest stop after 36 hours of transportation, Agriculture and Agri-Food Canada (AAFC) and Canada’s beef industry funded a series of research projects led by Karen Schwartzkopf-Genswein’s team at AAFC’s Lethbridge Research Station to determine whether a rest stop would benefit weaned calves. The research began before the regulations were revised, but the regulations were revised before the research could be completed. Three consecutive research trials conducted in 2018, 2019 and 2020 found that providing a rest stop during long haul transportation offered no consistent, measurable benefits for animal welfare. A companion project led by Trevor Alexander at AAFC Lethbridge looked at bacterial populations in the respiratory tract of those same calves. In September 2023, this column described how microbiological testing from the 2018 transportation trial found that rested

Federal Plastics Registry has new compliance requirement

The federal government has created new reporting requirements under its new Federal Plastics Registry. The registry is being phased in over a few years, however phase 1 requires Canadian brand owners to report on plastic packaging placed on the market by September 29, 2025, for the 2024 calendar year.

More…

Badges | Report an Issue | Terms of Service