Federated Co-op Ltd. has begun work on two high-throughput fertilizer terminals in Western Canada.
The terminals in Hanley, Sask., and Brandon will cost $75 million and are expected to be operational in early 2017.
“These facilities will warehouse, blend and distribute a full suite of crop nutrient products that will then be available to producers through their local retail co-ops,” FCL chief executive officer Scott Banda said in Saskatoon July 26.
The Hanley terminal will store up to 45,000 tonnes of fertilizer and Brandon will hold 27,500 tonnes.
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Banda said the process has been two years in the making, which included the creation of a six-person central procurement team at FCL to do market analysis, provide regular updates to retailers and source product.
“We’re able to pool, if you will, that entire volume to be more efficient and economical in procuring the product, but also by creating these central facilities now, the ability to ship direct to farm and prevent certain retails from having to invest all of that capital at the local level,” he said.
Dan Mulder, FCL’s fertilizer director, said the project is a good investment for the company.
“As these terminals get built and we have rail access, that’s going to put us in a really good position to be able to source product all the way from the Gulf of Mexico and New Orleans.”
Added Banda: “We’re looking for the best deal, the best quality we can find for our members.”
Both hub-and-spoke fertilizer terminals are centrally located for distribution to Co-op Agro Centres in Western Canada.
Mulder said more producers want to be able to buy all their crop inputs from a single location.
“Approximately 800 growers across Western Canada have indicated it’s very important for a one-stop shop,” he said.
Added Banda: “We want to provide a better way for our retail co-op members to combine all of their individual purchasing power and maximize the benefits here at home.”
Twenty-five to 30 full-time construction workers will be hired at each terminal, followed by a permanent staff of five or six people at each site.
However, the projects will also have other economic and employment impacts at the local retail level.
“First, for those co-ops that are currently in the agriculture business and fertilizer as they expand and grow, but more importantly for those who aren’t in the fertilizer business today,” said Banda.
“This will ease their transition, and that will create a lot of activity across Western Canada.”
Sixty-four of the 120 Co-op Agro Centres in Western Canada now sell fertilizer. This number is expected to rise because of pressure from members.
“We feel over the next five to seven years that we will, through acquisitions or greenfield investments, have another 12 to 17 locations that we will be selling fertilizer from in Western Canada,” said Mulder.
The new terminals will have high speed blending capabilities and be able to load a super B trailer in 10 minutes and dispense up to 400 tonnes of straight fertilizer in an hour.
“Ten minute loading time would be as fast as anything that’s available today,” said Mulder.
“I would venture that if someone came in and poured themselves a cup of coffee, you’d have to have a take-out cup for them to take back in the truck because as soon as they came in to get the paperwork, they’d be going back out to drive the truck off the yard.… We put a lot of the investment on the load-out capacity to be able to speed up service and convenience.”
