The debate over potash company ownership in Saskatchewan has sparked a call for an examination of the entire fertilizer industry.
Canadian Federation of Agriculture president Ron Bonnett said company ownership is not the issue for farmers.
“I think what farmers are saying is let’s take a look at the whole issue of volatility,” he said a day after the federal government nixed BHP Billiton of Australia’s $38.6 billion bid buy Potash Corporation of Saskatchewan.
Western Canadian farmers use little potash, but the mineral’s price influences the cost of all fertilizers.
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Bonnett said something should be done to avoid the dramatic price swings in the sector.
“When that run-up in price took place several years ago, it not only hurt producers who got caught having to pay more for their product and then it fell in price, but there was a lot of the fertilizer suppliers like local co-ops that got caught with very high-cost inventory,” he said.
The House of Commons agriculture committee called on the Competition Bureau earlier this year to study the marketing and pricing practices of the fertilizer industry. The request was part of a report on competitiveness.
Bonnett said the recent discussion about the sale of PotashCorp has brought the issues of competitiveness and stability to the fore.
Potash is a strategic asset that is directly tied to farmers’ bottom lines, he added.
Sylvain Charlebois, associate dean of research and graduate studies at the University of Guelph’s college of management and economics, said farmers would likely have seen more stability if BHP had been successful.
He said farmers could have expected “more reasonable pricing points” in the future.
BHP plans to add more production capacity by building Saskatchewan’s first new potash mine in decades at Jansen, Sask.
However, it also said it would withdraw from Canpotex, the offshore potash marketing company owned by PotashCorp, Agrium and Mosaic Canada Crop Nutrition.
“People are comforted by the fact that Canpotex exists and things are working well, but really the bottom line is that you have a (monopoly) trying to get the best price possible for the three big companies,” Charlebois said before industry minister Tony Clement announced he would not approve the deal.
After the announcement, Charlebois said Canada must be ready to deal with the possibility that Canpotex could become a lightning rod for future debate.
“Because of the new world order in food, the practice of artificially inflating potash prices and laying off workers when inventories are too high is becoming increasing obsolete,” he wrote in an e-mailed commentary.
“BHP Billiton’s prediction of Canpotex’s short future is likely dead on.”
However, Charlebois also said BHP played its card too early in the game, and its call for the end of Canpotex should not be repeated.
