Some 160 industry representatives convened in Banff, Alberta, Aug. 13-15 for the Canadian Fertilizer Institute’s 62^nd Annual Conference. The conference’s business session speakers tackled a range of subjects, but the impact of biofuels, global trade, and security were common themes.

“The North American fertilizer industry is doing very well, and we expect to see an increase in the use of our products across the board,” said CFI President Roger Larson in his opening comments. Larson said the industry’s success depends on access to the import/export pipeline, however, and critical transportation issues lay ahead, as do ongoing concerns about safety, security, and the environment.

“Nutrients from every source are facing increased scrutiny,” Larson said, in reference to environmental issues such as runoff and greenhouse gas emissions. “But nutrients from fertilizer will always be the first target.”

Bill Doyle, president and CEO of Potash Corp. of Saskatchewan Inc., also talked of the need to “continue to address big challenges to our industry,” including global population growth, particularly in the developing world; declining agricultural land; more grain needed to feed cattle; high oil prices; record low wheat and coarse grain stocks; and climate change. “If our industry doesn’t meet these challenges head on, it won’t do well,” he said.

Doyle outlined numerous opportunities stemming from these challenges, including continued strong global economic growth; increases in grain and meat production as global diets switch from starch-rich to protein-rich foods; crop uses for aquaculture feed; and “tremendous room for biofuels growth.” Doyle talked of the ethanol boom, noting that more corn will require more fertilizer. “This is the cake, and a rich, moist triple-chocolate cake it is,” he said.

Other plusses for the industry include rising commodity prices and improved fertilization to raise yields, particularly in China, India, and Brazil. “Our world needs more food,” Doyle said, noting a global move to balanced fertilization and higher application rates, as well as a longer-term push to bring more land into production in Africa and Latin America. Doyle said food production must increase 50 percent in the next 20 years to feed a population that will be one-third higher than it is today.

Doyle also touted the Nutrients for Life Foundation’s educational and research programs, which were highlighted at this year’s Southwestern Fertilizer Conference as well. “Everyone in this room is directly dependant upon the success of this organization,” he said. “We need to get the positive message out.” That sentiment was echoed by CFI’s Larson, who noted that Canada is trying to develop its own Nutrients for Life Foundation.

Dr. Michael Rahm of the Mosaic Company painted a rosy economic picture for the fertilizer industry, noting that “production agriculture is revving up worldwide.” Rahm predicted that global grain and oilseed stocks will continue to fall, even 11 months into a robust growth cycle and pricing environment. He said past commodity price spikes were due to supply shocks, but the current rally is due to demand pull. As a result, prices are likely to remain high for the next three years. Rahm also noted rapid growth in key Asian fertilizer markets, as well as stable growth in key Latin American fertilizer markets.

“It’s still largely a food game that we play,” Rahm said, noting that biofuels play a significant role but are not the main driver in the fertilizer market. Biofuels demand will, however, boost grain and oilseed use and continue to have a significant impact on commodity prices.

Regarding the food versus fuel debate, Rahm said the U.S. can support a 15-20 billion gallon corn-based ethanol industry and still meet feed requirements, food uses, and export needs with a 90 million acre corn crop. Noting some 460 biofuels plants either operating or under construction in North America, with a capacity of 7.2 billion gallons, Rahm painted an optimistic forecast for global nutrient demand.

Rahm predicted that corn prices will drop due to the large crop this fall, but still noted a “pretty decent price,” along with fundamental strength in demand. As for other crops, Rahm said oilseed stocks are expected to decline significantly, and new crop soybean prices will remain at high levels. The wheat market is tightening and wheat prices continue to climb, approaching all-time records set in 1996. New crop wheat prices remain at high levels as well, Rahm said, and will affect grower planting plans in the coming months. In fact, Rahm predicted a “battle royale” as crops compete for acreage in 2007/08, with a “little bit of a switch” back to oilseeds and wheat after this year’s big corn push.

In his nutrient demand outlook, Rahm talked of “very positive demand fundamentals” for nitrogen, fueled by record urea imports to India. China remains the wild card, however, and could export between 3.5 and 4 million tons of urea this year. This factor, coupled with new global capacity coming online, will result in significant urea supply available for the North American market, Rahm said, matching the brisk demand outlook with a good supply picture.

Regarding phosphates, Rahm said DAP/MAP stocks have declined to low levels. China remains the key swing factor in the phosphate market as well, he said, noting large DAP/MAP exports from that country that may actually be shorting China’s domestic market. Rahm talked of a rebound in global import demand for phosphates, with big increases in processed phosphate imports – particularly in Latin America. “Brazil is back, and is reinvigorated by higher commodity prices,” he said.

As for potash, Rahm predicted increasingly tight stocks and very strong demand growth, with import demand rebounding to record levels, particularly in China and India. Canadian offshore potash exports have rebounded 53 percent in 2006/07, he said, while domestic shipments have rebounded 24 percent and are projected to increase another 3 percent in 2007/08. Canadian potash production is also projected to increase to record levels in 2007/08, he said.

The conference also featured several open house panel discussions, including one by Canada’s Fertilizer Safety and Security Council that produced some pointed exchanges between certain panel members and attendees. “There will be security requirements; that’s an absolute,” said John Read, director general of TDG (Transportation of Dangerous Goods) for Transport Canada, a government department charged with developing transportation-related regulations and policies.

Responding to a question about the potential economic burden of security regulations for the fertilizer industry, Read said the regulatory authorities “are written to be as flexible as possible.” He cautioned, however, that the industry needs to get involved and actively participate as the regulations are formulated. “Security has this huge potential,” he said. “It’s staring you in the face, and has the potential to strike you really hard. You really should be doing your homework.”

With the Canadian Rockies offering an awe-inspiring backdrop, some 120 industry representatives gathered Aug. 12-13 at the stately Fairmont Banff Springs Hotel in Banff, Alberta, for the North American Fertilizer Transportation Forum.

The event brought together a range of businesses involved in the rail, truck, and marine transportation of fertilizer products, and offered a look at some of the logistical challenges and opportunities facing the movement of crop nutrients in the U.S. and Canada. Assessments varied from sobering to optimistic, but change was a common theme, as was safety and security with regard to toxic-by-inhalation (TIH) commodities such as anhydrous ammonia and chlorine.

Brian Jean, Parliamentary Secretary to Canada’s Minister of Transport, Infrastructure and Communities, detailed some of the “bold and forward-looking initiatives” Canada is undertaking to advance trade, including its Asia/Pacific Gateway national policy framework, designed to make Canada’s West Coast ports the gateway for trade between Asia and North America.

While noting successes such as co-production agreements between the Canadian National (CN) and Canadian Pacific (CP) railroads to keep huge ports like Vancouver running smoothly, Jean talked of the need for infrastructure improvements, particularly in mainland Canada. He also detailed the progress of Canada’s shippers’ rights bill, and said both Class 1 railroads need to focus on enhancements, such as longer notices for rate changes and arbitration/mediation policies between shippers and carriers.

Lee Clair, a Chicago-based partner at Norbridge Inc., talked of the “new normal” for freight transportation, which includes congestion at critical “choke points,” higher freight rates, demand exceeding supply, slow growth rates in rail and truck capacity, and customers bidding for the limited capacity there is.

Clair said it is time to reinvent the North American fertilizer supply chain, referring to an “obsolete” inland waterways system, insufficient rail capacity at key locations, and no excess capacity for seasonal surges. He said railroads are heavily de-marketing single car shipments and taking away storage tracks, while also facing dramatically higher costs for new cars.

Necessary changes, according to Clair, include increasing load capacity, minimizing empty miles and unproductive time, enhancing equipment utilization, and improving forecasting. He said partnerships and joint initiatives with the railroads are necessary to design a new network that decreases seasonality and the dependence on single-car distribution, but the changes will require a heavy capital investment.

Henry Ward, director of transportation safety and security for the Dow Chemical Company, talked about new rail tanker car designs for the transportation of TIH commodities. “The noise in the public was such that the current tank car is not going to carry us into the future,” he said. “We do need a better tank car.”

Ward detailed the so-called “enhanced 105” first-generation designs for TIH tank cars, including retrofit options to maximize the utilization of existing cars with head shields, nanotechnology thermal protection, multi-layered crush zones, and enhanced steel jackets. He also talked of “tank-within-a-tank” designs for the next generation that are much more complex and costly.

While noting that the initial Phase 1 prototypes are expensive, Ward said “we believe improvements are possible at a competitive cost, and are necessary for the industry to be sustainable.” He said small-run production chlorine tank cars will be available for service trials by the first quarter of 2009, with full TIH fleet replacement to be completed between 2010 and 2014.

Jean-Jacques Ruest, senior vice president of marketing for CN, talked of the railroad’s efforts to address safety, capacity, and labor concerns. On the safety front, Ruest detailed CN’s Responsible Care program and talked of the railroad’s increased safety standards for TIH commodities. Ruest said the CN response includes a consolidation of all TIH rates into one general tariff, with an introduction of differential pricing for tank cars according to safety specification by 2008/09.

On the capacity front, Ruest said CN is focused on targeted, specific investments in infrastructure; siding optimization; fuel efficiency and modernization in its locomotive fleet; and moving to private car ownership in its fertilizer hopper car fleet. He also detailed new hires for the company, saying CN is focused on train crew renewal, particularly in its western division.

CP’s Judy Harrower assured conference attendees that “agriculture is important to CP,” and that the railroad is committed to safety. Grain, fertilizer, and sulfur shipments make up 30 percent of total CP revenue, she said, noting that the railroad has spent $250 million over the last three years on network capacity expansion. Other key investments have been in hiring new employees and purchasing additional covered hoppers and locomotives.

Harrower said CP is not moving to a “tariff environment” regarding TIH commodities, but the railroad is evaluating pricing differentials. “We need a cooperative-type approach to address TIH issues,” she said. “There should be incentives for customers to move to the safest alternatives for the transport of these commodities.”