FNA Members have been working in the business alliance that is Farmers of North America, essentially from its founding in 1998, to create competition in the nitrogen fertilizer sector and to turn around the huge impact that excess fertilizer prices have on farm profitability.
Many years ago, fertilizer companies began to consolidate, and/or use large marketing agencies, leading to an oligopoly – very few sellers to many buyers. This allowed manufacturers to price their products to what the market will bear (primarily relative to the price of corn), rather than pricing based on the cost of production (relative to the price of natural gas) plus a reasonable profit, as would normally exist in a competitive marketplace.
By now you know that FNA Members are acting decisively to change that situation, by taking a direct stake in the fertilizer industry. If we are successful, these farmers will permanently have a lower cost base than any other Canadian farmers by transforming a huge input cost item into a revenue item, a capital asset and preferential terms on the fertilizer itself.
The question has been asked, why is the Seed Capital drive only being offered to FNA Members?
It is because FNA Members, through their membership dues, have made all of this possible.
You may be familiar with some of the history of these efforts:
- Faced with an oligopoly, FNA made many representations to the Competition Bureau and the Standing Committee on Agriculture about this situation, but the regulators were unable to deal with it.
- So FNA moved to create alternative fertilizer options for FNA Members by finding non traditional suppliers or markets outside Canada. We demonstrated that, if pushed, it is possible to ship fertilizer across two continents and an ocean and deliver it to farm sidings at prices lower than the domestic market provides.
- As a result, FNA and its designated suppliers have shipped fertilizer into Churchill, hauled it up the Mississippi, worked with suppliers in Russia, the Middle East, and New Orleans. We’ve brought fertilizer to FNA Members by boat, barge, rail and by truck. But these programs were not and are not permanent solutions. Although they deliver real value to FNA Members, they do not address the foundational need to secure a fertilizer supply at reasonable prices — prices which should be at or near the cost of production, or at costs less than or comparable to farmers in other countries.
Since FNA Members have become involved in the fertilizer industry, there’s been a shift in nitrogen production and pricing dynamics, with consistent, significant, North American fertilizer production deficits coupled with rising farm commodity prices. At the same time, natural gas prices have dropped significantly in North America. In fact, today our natural gas prices are some of the lowest in the world. These facts bring farmers to a unique historical juncture — with funds available for investment; a lack of control over long term certainty of supply of a key input; and an opportunity to recapture excessive mark-up in the fertilizer supply chain.
So it is natural that FNA is taking the next step in the progression. With a decade of history in the fertilizer industry alone; with expertise hard won by breaking the pricing structures on farm chemical prices; by building a world-class project aimed at buying the Vancouver port terminal; and by dealing with the biggest players in the world in agriculture supply and marketing to become a direct participant in the fertilizer supply chain; FNA management has achieved a measure of influence and experience over this critical input for the best business interests of Members.
Through the costs cloaked in your fertilizer prices, you are already paying for the investments other companies have made in and the profits they have gained from the fertilizer manufacturing sector. The choice you face now is whether you wish to benefit from a direct investment in the fertilizer industry to offset the high cost of fertilizer, or whether other investors will benefit from your purchasing of fertilizer as the ultimate consumer. One way or another, others’ investment money and their profits will come out of your pocket.
In fact you can be part of this new fertilizer project. You can stop paying for the investments of others and achieve those gains for yourself. The first step is to join our farm business alliance – join FNA. That membership is valuable for hundreds of reasons beyond fertilizer. But it will make you eligible to get in on the ground floor of this brand new fertilizer manufacturing business.
It is important to remember that FNA does not build plants, nor is FNA a manufacturer or retailer or some kind of “volume buying club” that the media often uses to describe us. FNA is very literally a business alliance of farmers with a laser focus on improving our Members’ farm profitability. FNA organizes farmers and industry partners, where possible, to create efficiency, competition and profitable opportunities for its Members.
So joining FNA is taking the first, required step to be part of the fertilizer project, it is not the fertilizer project itself. The entity that is offering Seed Capital investment is in fact a legal partnership, FNA Fertilizer Limited Partnership. You can find all the details on the web site.
It is not a question of if more fertilizer plants will be built, as many are on the drawing boards of investor groups. The question is whether or not farmers will participate in the opportunity to effectively reduce the largest out of pocket cost in their farm budgets, while guaranteeing a source of supply for their own use at wholesale prices. It is our expectation that this will not only provide you an opportunity to share in the benefits of ownership, but also, through additional commitment, the ability to access both a secure supply of nitrogen fertilizer and wholesale prices once the plant is built.
Go to www.ProjectN.ca to learn more about the dynamics of the fertilizer industry and the sound business case for building a plant. Help establish the base of support for building a plant by clicking on “Let’s Build It!” and, if you wish, purchase Seed Capital Units in the FNA Fertilizer Limited Partnership.
As always, feel free to call an FNA Representative, who will be more than happy to discuss this exciting initiative with you.
President & CEO
Farmers of North America