SASKATOON – World fertilizer prices are dropping, but prairie farmers wonder when they’ll see the benefits.
Vicki Dutton, a farmer and grain dealer at Paynton, said high phosphate prices at home forced her to import a semi-truck load from the United States. She saved a bundle, about $600 on the deal.
“I can get phosphate delivered here from the U.S. for $447 a tonne, but it costs $475 at my local dealer,” she said.
“I guess I’m wondering, why am I paying $28-a-tonne difference?
“We hear all about gas-price fixing, but it’s happening with fertilizer,” she said.
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The imported product (11-52-0) wasn’t identical to what she could get locally (12-51-0), but it met her needs. The local product was made in Alberta by Viridian Inc. (formerly Sherritt), the only phosphate manufacturer in Western Canada.
Dutton said U.S. futures markets show fertilizer prices dropping since early 1996. Analysts say big importers such as India and China overbought last fall and are now trying to pressure markets down.
Allan Johnston, of Welwyn in southeastern Sask., agrees with Dutton.
The trucker and grain dealer regularly imports fertilizer for Canadian clients. He said his operation is bare bones. There’s# no blending and transactions are cash.
Local dealers have legitimate overhead costs for the service they provide, he said.
“But when it’s all said and done, that doesn’t mean somebody can’t sell it to a guy cheaper,” said Johnston.
Manufacturers seem to discourage competition, he added.
“The dealer in Saskatoon is not supposed to sell to someone in Kindersley or in Davidson because there is another dealer there. It’s pretty tight knit,” he said.
Richard Zimmer, owner of Green Acre Fertilizer Service in North Battleford, Sask., has also had problems with manufacturers and is importing rail cars of low-cost 10-50-0 from the U.S.
“This price for 12-51-0 has nothing to do with the dealership. It’s totally to do with the manufacturer’s price to us,” he said.
“The problem is, Canadian manufacturers are hanging on for one last shot. One last kick at it.”
“The proof is in the $470-$475 a tonne (Canadian price) for phosphate – it really should be what it is in the States.”
But he warned anyone importing U.S. phosphate to beware. Quality can be disappointing compared to Canadian-made product.
Paula Myson, Viridian corporate affairs manager in Toronto, said prices vary according to the grade, where the product came from and when it was ordered.
She noted Canada and U.S. prices aren’t parallel because of the difference in seeding seasons.
“The western Canadian market tends to lag behind the U.S. For example, there was a price increase last year in the U.S. and we didn’t see as much of that increase. We get in on the tail end of it,” she said.
Also, with delayed seeding in the U.S., some manufacturers might be discounting surplus volumes.
Barry Clarke, a fertilizer markets analyst in Vancouver, said the only phosphate-rich areas in the world are North Africa and the U.S. southeast.
“Western Canada is particularly vulnerable to phosphate prices because it doesn’t have any supply. All the phosphate has to be imported … from Togo (in northwest Africa) and doing that is becoming more costly. So generally, phosphate prices are likely to go up (in the long term),” he said.
