Thursday, June 7, 2001

Fertilizer maker cutting production

John Stucke - Staff writer

A leading fertilizer company will idle several plants until market conditions improve.

Agrium Inc., an Alberta company that produces nitrogen from Canada's massive natural gas supplies, is a major player in the Pacific Northwest's fertilizer industry.

But weather conditions and an energy crunch that has pulled hundreds of thousands of acres out of production have lowered fertilizer demand.

Agrium, which closed a major sales office in Spokane, is responding with summer factory shutdowns it hopes will ease inventory until sales improve.

Many farmers in Eastern Washington and Idaho grow winter wheat and spread fertilizer on their fields during the fall.

The shutdown includes the company's urea plant in Fort Saskatchewan, along with its ammonia facility.

Others include two ammonia plants and a nitrogen facility.

Agrium's other plants are slowing production.

During the past year, the company has profited from higher gas prices, which in turn drove fertilizer prices up 30 percent to 40 percent.

Because fertilizer is among the most expensive ingredients for farmers, the higher fertilizer costs have been a concern along with higher fuel costs and sagging commodity prices for nearly every crop.

In a quarterly report filed earlier this year, the company announced that high natural gas prices led to closure of nitrogen plants, which tightened supplies and forced up prices.

With prices expected to remain volatile, the company said it anticipated nitrogen production declines, and hence, higher fertilizer costs for the next several years.

Agrium is the largest producer of nitrogen fertilizers on the continent. Its proximity and ties to natural gas, the company claims, give it an advantage over its competition.

Last year, Agrium purchased the agricultural products division of Unocal Inc. for about $321 million. Among the assets bought was a large nitrogen fertilizer production complex outside Kennewick.

Last year, Agrium recorded profits of $82 million, compared with 1999 profits of about $62 million.

During the first quarter of this year, the company reported profits of $7 million. During the first three months of last year, the company lost $4 million.

•Staff writer John Stucke can be reached at (509) 459-5419 or by e-mail at johnst@spokesman.com.

http://www.spokesmanreview.com/news-story.asp?date=060701&ID=s974341&cat=section.business

-- Martin Thompson (mthom1927@aol.com), June 08, 2001