Fertilizer plan excites farmers


Farmers of North America is pleased with the initial grower re-sponse to its proposed $1 billion nitrogen fertilizer manufacturing plant.


The group has conducted 50 town hall meetings across Western Canada that have attracted 1,000 farmers. The idea is to explain the project and raise seed money for the venture.


“They’re going really well. It surpassed our expectations,” said Bob Friesen, spokesperson for FNA Fertilizer Limited Partnership.


“We had targeted 1,000 seed capital units in 60 days and I mean we got that in 10.”


Farmers have purchased 3,600 seed capital units at a cost of $1,000 per unit. 


That means $3.6 million has been raised to finance environmental studies and civil and environmental engineering activities and pay the securities regulatory costs and legal fees required to move the project to the equity investment stage.


Friesen said he didn’t know when FNA will conduct an equity drive. The plan is to continue with the town hall fundraiser meetings indefinitely.


Most of the meetings have been held in Western Canada, but this week the focus is shifting to Ontario and Quebec.


“We’re going to continue to hold these meetings until we feel that the farm population has been saturated,” he said.


The goal is to raise seed money but also to build farmer excitement and participation in the project.


FNA wants at least 50 percent farmer ownership in the $1 billion plant. The facility would be built at a western Canadian location that has good strategic access to rail, road, water and natural gas.


BMO Capital Markets has been hired to provide financial advice for the project and to find a third party investor that will run the plant.


Cheap natural gas and strong demand has spurred significant interest in building nitrogen fertilizer plants in North America.


North Dakota Corn Growers and CHS Inc., the largest farmer owned co-operative in the United States, have both announced plans to build $1 billion plants in North Dakota.


Quebec’s Coop Fédérée plans to build a $1.2 billion plant near Trois-Rivieres, Que., in conjunction with IFFCO, one of the world’s largest fertilizer co-operatives.


Yara International plans to double production at its plant near Belle Plaine, Sask., to 2.2 million tonnes annually by 2016. 


Ohio Valley Resources wants to build a $1 billion facility in Rockport, Indiana, and Iowa Fertilizer Company intends to build another $1 billion plant in that state.


The latest announcement came from CF Industries Holdings Inc., which has board approval to spend $3.8 billion building new ammonia and urea/UAN production units at its complex in Donaldsonville, Louisiana, and new ammonia and urea units at its plant in Port Neal, Iowa.


David Asbridge, president of NPK Fertilizer Advisory, said there isn’t enough room in North America for all these new nitrogen fertilizer plants.


“There’s a good possibility that not all of these are going to get built,” he said.


The competing projects don’t faze Friesen.


“We are not building the plant to compete in the market as such. We are building this plant for farmer investors. Those farmer investors are also going to be the captive market for the fertilizer that is produced at the plant,” he said.


“It would be a mistake to think that this plant is being built only because natural gas prices are at record lows. This is meant to put farmers up the value chain.”


There is big money to be made right now in the fertilizer business. Viterra recently reported year-to-date fertilizer margins of $157.74 per tonne compared to $126.46 per tonne for the first nine months of 2011. 


That compares to grain handling and marketing margins of $39.54 per tonne.


“That’s the reason why we think it’s important for farmers to get involved in fertilizer margins, simply so that they can share in those profits and use those profits to offset the input costs of the nitrogen they use on their farm,” said Friesen.

2 Responses

Post a response
  1. Brad Will on

    I find this arrival very interesting! I have competed against FNA for the past years since they came to Canada and found they are cheep because they don’t follow Canadian laws on warehouseing of chemical , importation of 34-0-0 or support jobs at a decent scale so the move they are making is possibly a good one. PS. Have fun with our laws and regulations FNA! The producer will benefit so this is a good thing and maybe when you don’t sell enough I can buy what you don’t use and retail it too at a higher price to pay for my staff wages!

  2. Came to Canada? You mean started up in Saskatchewan?

    Sounds like someone doesn’t like the competition…

Respond





You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>