Skip to main content

Energy and Resources Saskatchewan Premier backs potash merger, but farmers are wary

Potash Corp. and Agrium are grappling with weaker fertilizer markets, where a surplus of potash has sent prices down 60 per cent over four years.

The Potash Corp. of Saskatchewan Inc. and Agrium Inc. merger has won tentative support from Saskatchewan Premier Brad Wall, even as farmers complained that it would reduce competition and increase fertilizer prices.

Mr. Wall, who helped stop Anglo-Australian BHP Billiton's bid for Potash Corp. in 2010, sees benefits flowing to his province, especially given that the merged company would be headquartered in Saskatoon.

"Here is a chance to solidify two existing companies into one larger Canadian champion headquartered in Saskatoon," he told reporters. "I am glad we fought the fight we did five or six years ago. Without it … there wouldn't be a Potash Corp. of Saskatchewan and there wouldn't be an opportunity to create an even larger, more significant entity headquartered in our province."

Story continues below advertisement

Potash Corp. and Agrium are grappling with weaker fertilizer markets, where a surplus of potash has sent prices down 60 per cent over four years.

Both companies have reduced their full-year profit outlook and Potash Corp. has had to cut its dividend twice this year.

A merger would lead to $500-million (U.S.) in annual savings, the companies said. They are targeting four main areas: distribution and retail integration, administration, suppliers and "production optimization."

Mr. Wall could not say whether the executives promised not to cut any jobs in Saskatchewan or keep the mines open.

"We have asked the question directly and production was not listed for the source of the savings. But it is something that we are going to watch for," Mr. Wall said. "The direct answer has been around logistics."

Potash Corp. already cut hundreds of jobs when it closed a new potash mine in New Brunswick earlier this year. In Saskatchewan, the miner operates five potash mines and Agrium operates one.

The companies said they would keep a corporate head office in Saskatoon, where Potash Corp. is headquartered, as well as a corporate presence in Calgary, where Agrium is headquartered.

Story continues below advertisement

Alberta was less enthusiastic about the deal.

"Our government will work to ensure the interests of Albertans are protected, especially farmers, during this merger," Alberta's Economic Development and Trade Minister Deron Bilous, said in an e-mailed statement. "We will be monitoring federal competitiveness process to ensure farmers and consumers are protected," he said.

Meanwhile, farmers on both sides of the border worried over the loss of a major fertilizer player.

"Any time we lose competition it is a negative for producers. Right now we are quickly going down in number of fertilizer suppliers," said Norm Hall, president with the Agricultural Producers Association of Saskatchewan. "They talk about synergies and efficiencies. Well, that is more than likely going to accrue to the shareholder."

More than 250 U.S. farmers and ranchers descended on Washington this week to lobby lawmakers against a raft of mergers in the agriculture industry. Those include a tie-up between Dow Chemical Co. and DuPont Co., and China National Chemical Corp. and Syngenta AG, as well as potentially between Monsanto Co. and Bayer AG.

The National Farmers Union, which represents more than 200,000 farmers, fishers and ranchers in the United States, has already said it opposes the Potash Corp., Agrium tie-up and will fight to stop it.

Story continues below advertisement

The Competition Bureau in Canada and either the U.S. Justice Department or Federal Trade Commission will review the deal for antitrust issues.

Mr. Hall said the Competition Bureau asked for his input when Agrium bought Viterra's Canadian retail shops from Glencore PLC in 2013.

At the time, Mr. Hall said he told the Canadian antitrust regulators that there were areas in Western Canada where farmers had to drive well over 160 kilometres 100 miles to get outside of Agrium's "influence area." "We raised that as a concern," he said.

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter