Agrium, Potash Corp merger shouldn’t have much of an impact yet

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CNS Canada – Farmers shouldn’t be too concerned yet that the recent Agrium, Potash Corp of Saskatchewan merger will cause an increase in the price of fertilizer, at least according to the president of one provincial producer group.

“(The merger is) a hard one to find a whole bunch of negatives or positives about it. A year from now it might be a different story,” said Todd Lewis, president of the Agricultural Producers Association of Saskatchewan (APAS).

Initially announced in 2016, the merger between the two Canadian-based international companies received final regulatory approval from the United States Federal Trade Commission the last week of December. The new company, Nutrien, was officially formed as of Jan. 1. In order for the merger to go through the companies had to receive clearance from Canada, India and China, as well as the U.S.

There were concerns for producers before the merger, according to Lewis but now with the new company being final thoughts are mixed. APAS was concerned there would be a lessening of competition as there have been numerous mergers in the agriculture industry lately, however they are pleased to see it being two Canadian companies merging.

Dan Mazier, president of the Keystone Agricultural Producers (KAP) echoes Lewis’ sentiment, stating if at the end of the day it makes the companies stronger it is good for Canada as a whole.

“I understand that they don’t plan on shutting down any mines or shutting down any nitrogen manufacturers, it’s actually letting Sask (Saskatchewan) potash into the network of Agrium and vice versa. So probably at the end of the day it’ll be a much more robust company,” he said.

Before the merger the companies had said they expected to see an annual operation synergy of up to US$500 million from the deal. Nutrien is now Canada’s third-largest natural resource company at a value of approximately US$36 billion.

Mazier is concerned the new company could have an effect on independent retailers who sell Nutrien’s products. Nutrien has its own retail division, Crop Production Services, which was previously part of Agrium.

“It’s more where people get their supplies from and if this is actually cutting out retailers or cutting out where people (get the) products (from) … I’m still thinking the Canadian way though … if I’m going to support anything we definitely support the Canadian companies,” he said.

According to Craig Klemmer, the principal agricultural economist with Farm Credit Canada, the merger had to undergo rigorous scrutinization before being approved.

“When we think about specifically the nutrient market and these mergers and acquisitions that we’ve seen and the recent merger there’s a number of safe guards that have been put in place that help to protect consumer prices,” he said.

Things could change but as of right now, both APAS and KAP aren’t concerned there will be an immediate effect.

“(It’s) yet to be seen as far as the pricing. But it’ll be the supply and making sure that they stay viable at the end of the day,” Mazier said.

About the author


Ashley Robinson - MarketsFarm

Ashley Robinson writes for MarketsFarm specializing in grain and commodity market reporting.


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