The rumours last spring that something fishy was going on with fertilizer prices have been confirmed, says Keystone Agricultural Producers president David Rolfe.
“We’d heard lots of anecdotal comment last spring, so we wanted to verify that the information was accurate,” he said.
“We have it here.”
KAP hired PricewaterhouseCoopers to survey five retail outlets in North Dakota and 12 in Manitoba. The study found that fertilizer prices from April 15 to May 15 averaged 33 percent higher north of the border.
Anhydrous ammonia 82-0-0 showed the biggest price difference. Last spring, while North Dakota farmers were paying $522 per tonne, Manitoba farmers had to pony up $852 for the same amount – a 63 percent markup.
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“If you look at the information from Stats Can, there has been a little bit of a differential historically, somewhere in the region of $30 to $40 tonne, but there’s obviously some other factors at work here,” Rolfe said.
The study, which also looked at farm gasoline and diesel prices, found that fuel costs on both sides of the border were roughly equal. It also found that U.S. suppliers acquired fertilizer from both sides of the border, while their Canadian counterparts bought only from domestic sources.
Fuel and fertilizer account for 15 percent of farm expenses. Canadian fertilizer production is centered in Saskatchewan and Alberta. Half of Canada’s nitrogen fertilizer production is exported, along with 95 percent of its potash, the report said.
KAP discussed the survey’s results with federal agriculture minister Gerry Ritz last week, and plans to present the information to the federal Competition Bureau.
At the time of the study, the Canadian loonie was 89 to 90 cents compared to the U.S. dollar, Rolfe said. While not yet at parity when the study was done, the Canadian dollar’s higher exchange rate should have helped make fertilizer prices cheaper rather than more expensive compared to the year before.
“It certainly caused some aggravation in Manitoba especially, when product that was produced in Canada was apparently being sold cheaper in the U.S.”
He also doesn’t accept the supply-and-demand explanation. An increase in demand in the United States as more farmers planted fertilizer-hungry corn instead of soybeans should have pushed prices up in that country rather than down, he added.
Arlynn Kurtz, District 1 director for the Agricultural Producers Association of Saskatchewan, said he has also noticed a difference.
“The retailers I deal with tell me that it’s the manufacturers that have raised the price. It’s a commodity that is traded worldwide and they keep saying that it’s world demand that has driven the price up,” he said.
“I guess my question to them is: if the dollar is at par, are our prices coming down because of it? I would hope so. Now there should be no excuse.
Canadian fertilizer should be less expensive than American because there is less freight on it.”
Clyde Graham, vice-president of strategy and alliances at the Canadian Fertilizer Institute, said the industry group doesn’t monitor or keep data on prices.
“CFIA members we have talked to have indicated that the KAP report is not consistent with their actual experiences this spring,” he said.
Glenn Caleval, vice-president of marketing and sales for the input buyers group Farmers of North America, said the usual excuses for charging Canadian farmers more for fertilizer aren’t credible.
“The stuff is manufactured here. It should be available to Canadian farmers at a lower price than it is to Americans,” he said.
Kurtz, who farms near Stockholm, Sask., said more study is needed to restore farmer confidence.
“Commodity prices have gone up, but everybody fails to realize that last year’s and this year’s crops were probably the most expensive crops ever planted in the history of agriculture because of fuel and fertilizer prices.”
