Farmers of North America (FNA), an 8,000-member farmers’ cooperative headquartered in Saskatoon, Sask., is moving more aggressively into the fertilizer market in Canada ?Çô and stirring up anger among some agri-retailers who resent its business tactics.
FNA has been supplying its members with competitively-priced products since the 1990s. It charges an annual membership fee of $625 for new members, but the fee structure varies depending on the length of time of membership. One of its initial successes was to import a generic glyphosate herbicide called ClearOut®, which offered Canadian growers a cheaper alternative to RoundUp®.
FNA first made fertilizer news two years ago when it brought in a vessel carrying 10,000 mt of Russian ammonium nitrate to the Port of Churchill in Manitoba to supply farmers in Western Canada (GM Oct. 22, 2007). The move set off alarms among some in the Canadian fertilizer industry, however, including the Canadian Association of Agri-Retailers (CAAR), who argued that retailers were better equipped to keep AN secure from would-be terrorists than growers storing the fertilizer in bulk quantities on their farms. FNA countered that CAAR’s claims were based less on security issues and had more to do with control and distribution (GM March 10, 2008).
Now, in addition to AN, crop protection products, fuel, feed, and a wide range of farm equipment, FNA is supplying imported urea, UAN, MAP, and a blended 16-16-16 fertilizer to its members, and is extending its reach into Eastern Canada. According to a May 15 press release, FNA has launched a “major expansion into Quebec at the request of farmers operating in the province,” and has partnered with Pro Ethanol of Varrenes to provide customer service and products to FNA members.
While ammonium nitrate and urea have been offered in prior years, this is the first year FNA has marketed MAP and UAN to its members. After the unprecedented high levels that fertilizer prices reached in 2008, FNA says its direct-to-farm sales approach is gaining traction among growers looking for lower cost inputs. “In Quebec, we have quadrupled our membership in the last four months based solely on our ability to give them access to competitively-priced fertilizer,” Glenn Caleval, executive consultant for FNA, told Green Markets. “It hasn’t been fertilizer-driven until this year specifically.”
FNA’s May 15 press release cites a Quebec grower, Gerard Keurenties of Henryville, as saying FNA will save him $100/mt on some 150 mt of urea alone this spring, for a total cost savings of more than $15,000. Quebec farmers have been “victims of price discrimination,” Caleval said. “The predatory pricing models tolerated for too long will come to an end if farmers are willing to organize into the business alliance that is FNA.”
Caleval offered no particulars on overall fertilizer volumes being transacted by FNA, saying that doing so would allow “non-competitors too much understanding of how much we’re doing.” He said the majority of the fertilizer is sold before it is actually purchased. Members agree to tonnage commitments, and then FNA’s “negotiating team” goes out to secure the best deal in the global marketplace.
FNA’s fertilizer success this year is being driven in part by hardships at the ag retail level, not the least of which is the presence of lots of “toxic inventory,” as one traditional retailer described the high-priced fertilizer tonnage, booked last year when replacement costs were at historically high levels, that is currently owned by dealers.
“It’s been a difficult environment for retailers and wholesalers,” said an Ontario fertilizer industry source. “Consumption is down dramatically at best on P and K in particular. It’s a scenario fraught with difficulties at all levels. And on top of that, we didn’t have a season that breaks early and runs hard.
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