OTTAWA – It was a clash of two visions – the seller and the buyer.
Leaders of the Canadian fertilizer industry met last week to bask in some very good news.
North American grain acreage will increase this year and demand for fertilizer will be strong, Minneapolis-based Cargill Inc. economist Mike Rahm told the Canadian Fertilizer Institute annual meeting March 6.
“Clearly, unless grain and oilseed production increases in 1996, there will be demand rationing next year,” he said.
It will mean a seven to nine percent increase in ammonia use next year, he predicted. Potassium and potash fertilizer use also should increase.
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Asked about the price implications, Rahm told the meeting he would not make a prediction but he dropped a hint.
Strong demand, low supply
There will be strong demand and limited supplies, he said. “What that does to price is up to you to guess.”
Jack Wilkinson doesn’t have to guess.
The Ontario farmer and president of the Canadian Federation of Agriculture appeared before the fertilizer industry convention to offer a buyer’s view of this good news.
Fertilizer prices are escalating and farmers are unhappy, said Wilkinson.
In fact, the CFA is considering whether it can afford to create a price monitoring service which would give farmers information about price increases in different areas and whether there are alternatives to high fertilizer prices.
“The concern is that there are rising prices and little competition,” Wilkinson said in an interview later. “It sure takes some of the bloom off the rose of higher commodity prices when input prices go up so much. This was supposed to be a time when farmers replenish their bank accounts.”
He said a CFA price monitoring system could at least let farmers know about trends and alternatives.
Wilkinson said the fertilizer companies argue that they have been through lean years and this period of strong demand, high farm prices and limited supplies is a chance for the industry to make some money.
“I understand that argument,” he said. “On this, we agree to disagree.”
High fertilizer prices helped prompt a Commons agriculture committee study into input costs last autumn.
It concluded there is no need for government intervention into market trends, but a system of monitoring would be useful.
