Buoyed by the success of its cheap glyphosate campaign, Farmers of North America is tackling another common farm input.
The bulk-buying group has secured an economical source of nitrogen fertilizer that it is offering to its 5,500 members.
FNA claims it can deliver rail cars of granular urea (46-0-0) at a substantial discount to product found at local retailers.
“We’re able to get it to the rail siding between $40-$50 per tonne less,” said FNA vice-president Glenn Caleval.
Farmers of North America gained notoriety last year when it facilitated imports of 5.7 million litres of generic glyphosate from the United States through the Pest Management Regulatory Agency’s Own Use Import program. Individual farmers can import under the program without Farmers of North America, but FNA laid the legal groundwork for the practice and imported most of the glyphosate under the program.
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FNA’s fertilizer program is not related to the OUI program, but the concept of importing fertilizer was made feasible by the dramatic increase in membership sparked by the popularity of the company’s ClearOut 41 Plus glyphosate campaign, said Caleval.
Fertilizer requires no special import permits.
Caleval wouldn’t be more specific other than to say the product was coming from somewhere in Asia. FNA members have to order it by rail car and pick it up at the Canadian National Railway siding of their choice.
Each rail car holds 88 tonnes of urea. The delivered cost varies from siding to siding. For example, the price in Brandon will be $407 per tonne but it rises to $419 in Saskatoon and $430 in Calgary.
Payment must accompany orders, which should be placed before the end of February. Product is to be delivered between Feb. 15 and April 1, Caleval said.
The company has already gone through two shiploads of fertilizer, said Caleval.
Steve Biggar, manager of sales for Canada for Mosaic Co., one of the largest fertilizer manufacturers in North America, said this is part of a broader trend where cheaper offshore fertilizer is rapidly displacing domestic production.
North American product is losing ground to nitrogen fertilizer made in Iran, Egypt, Oman, Saudi Arabia, Indonesia and Vietnam, where manufacturers have access to cheaper gas. That one input represents 70-90 percent of the production cost of anhydrous ammonia, the building block of nitrogen fertilizer.
Since natural gas prices began to rise in 1999, the U.S. has lost 22 nitrogen fertilizer plants, according to the Fertilizer Institute.
Nitrogen fertilizer imports now account for nearly 45 percent of U.S. sales, up from 15 percent in the 1990s. And that situation isn’t about to change.
More than 10 million tonnes of new urea capacity has or will be commissioned at 15 new overseas nitrogen production facilities that have either been built or are scheduled for construction between 2004 and 2007.
Most of that residual supply will be targeted for the U.S. where urea imports are expected to rise to nine million tonnes in 2007, up from 5.5 million tonnes in 2005.
Production facilities on the Canadian Prairies have been largely insulated from the effects of imports due to geographic isolation and access to the cheapest source of gas in North America.
But if natural gas prices stay as high as they are now, it is only a matter of time before less expensive imports find their way into the prairie region, as evidenced by the FNA program, said Biggar.
“They just won’t be able to compete as more of these export-oriented plants are constructed in areas that have cheap gas,” he said.
Caleval scoffed at the notion that gas prices are solely responsible for keeping fertilizer prices so high. He offered a different explanation.
“The basic and most fundamental answer is there is a lack of competition.”
He said that is evidenced by the reaction of traditional input providers to the FNA program in at least one market this year.
“After the rail car arrived, the local fertilizer price for everybody was dropped by $50 per tonne,” said Caleval.
