Farmers frustrated with the high cost of fertilizer have indicated overwhelmingly an interest in building a farmer-owned fertilizer plant, with the campaign towards building one led by the organization, Farmers of North America (FNA), including many producers from the Weyburn region.
Entitled “ProjectN”, the FNA initially asked farmers to show their support for the project by investing $1,000 in seed capital.
“We were hoping to achieve 1,000 units in 60 days,” said Bob Friesen, spokesman for ProjectN and vice-president of government affairs for FNA. He indicated that as of right now, over 7,000 seed capital units of $1,000 each have been sold, with 6.5 million acres committed for buying the fertilizer product.
“Depending on what size the plant is, we’re already getting close to 60 per cent ownership by farmers,” said Friesen.
No location has been decided on yet for this proposed plant.
He said FNA is currently doing their due diligence in studying a number of suitable locations for a fertilizer plant, but was unwilling to say what locations are under consideration until one is selected.
Friesen said a location should be chosen soon, and later this year FNA can begin an equity drive towards actually building a plant.
“It will be a very strategic site, with access to natural gas, water and a rail line, so we want to make sure the site is the best one we can find,” said Friesen.
Meantime, they will try and line up a professional operator, and give that operator the opportunity to also invest in the plant.
“We will have to get a third party involved because we know nothing about producing fertilizer. We want to engage a professional operator to run the plant. If we can get between 60 and 100 per cent ownership by farmers, we’d give that operator the opportunity to invest in the plant as well,” said Friesen.
He added they also want to structure the fertilizer company in such a way that it won’t fall prey to an outside interest who could buy it up and take it away from the farmer-owners.
The interest has come from producers from B.C. right across Canada to Quebec, and the interest stems from the frustration of farmers over the high price of inputs.
Friesen noted that when they had a fertilizer programs going, as soon as it was available in a given area, the price of fertilizer would go down — but as soon as the program ended, the price would go back up again.
“Farmers are getting frustrated that fertilizer companies are saying they’re putting up the price, because they can,” said Friesen.
Looking at the reasons for building a plant, Friesen said it’s as much as about allowing farmers to be a part of the value chain, and not so much about competition with fertilizer companies.
The FNA did a survey of their farmer members, and had 74 per cent in favour of getting involved with the fertilizer industry.
“This is about improving farmers profitability. We’re not being critical of the money that agricultural companies are making. They’re simply doing their job, which is maximizing the profits for their shareholders; we want to do the same, and share in the profits,” said Friesen.
Pointing to a survey of farmers by Farm Credit Canada, the results show farmers are more worried about input costs than about commodity prices.
“Many farmers are now seeing input costs as being a greater obstacle to profitability than market prices, and it’s nice to see farmers join forces to change the industry environment from a situation where fertilizer companies increase the price ‘because they can’ to farmers owning fertilizer manufacturing ‘because they can’,” said Friesen.