Are We “Losing Control?” Potash and Phosphate Issues Resonate

FertilizerIn Saskatchewan, I’m sure it is a bit like an earthquake.  The news of a hostile takeover of the Potash Corp. of Saskatchewan by Australian-based BHP Billiton is surely buzzing in the Tim Horton’s coffee shops of Saskatoon.  Is this a good thing or should your Canadian sensibilities be welling up inside you?

Potash is one of those essential elements for crop development.  Your loyal scribe is a bit lucky because that hard pavement that I farm on which some locals call “Dawn Clay” is naturally rich in potash.  So in my whole career and in two generations before that there’s never been any potash put on that land.   I reserve that for my sandier soils, which require potash like no tomorrow.

Of course it was almost 2 years ago that we were paying $1500 for a tonne of potash.  At the time I can remember the Potash Corporation of Canada cutting back production.  That might have seemed strange to many of us farmers on the back concessions, but my agricultural economic roots told me the monopoly was simply maximizing revenue.  The only problem was farmers stopped buying and demand dropped off, putting potash prices at half of what they were in 2008 this past spring.  Still, Saskatchewan farmers welled up with pride when talking about Saskatchewan’s potash.

News of the hostile takeover of the Potash Corp. of Saskatchewan was real buzz on the Bloomberg news channel of my satellite radio.  I love my American friends and colleagues but I got a kick out of the Bloomberg commentary.  The American hosts thought the words “Saskatchewan” and “Saskatoon” we’re such a hoot.  They spun the story as an obvious result of the health of the North American agricultural industry.  Simply put, every analyst they could get on the show was bullish on agriculture and we all need that potash in the future.

At about the same time I received an e-mail from one of my readers who is very concerned about the potash situation as well as an increasingly at risk phosphate supply in the United States.  For instance he directed me to an article (http://www.reuters.com/article/idUSTRE66C5M320100713) which documented the Mosaic’s Corporation’s challenge to fight off Florida environmental groups who would like to close their phosphate mines in Florida.  He asked the question, “Are we going to become dependent on other countries for our food supply?  If yes, then at what cost?  He was very concerned about the specter that in the future the importation of phosphate will leave North America at the mercy of producing countries like those in the Middle East, North Africa and China.  He topped off his e-mail with a reference to a United Nations report, which says we will have to double our food production by 2050 to a growing world.  He quoted the Washington DC based “Fertilizer Institute” as saying China and India use half as much potash in their fields as US farmers.

It was an interesting perspective.  For instance North American farmers have grown accustomed to taking our fertilizer for granted.  Sure in 2008 we sizzled with anger, but our collective rejection of high potash prices in the end set the market straight.  With both corn and soybean demand rising and production struggling somewhat to keep up, it’s pretty obvious fertilizer demand into the future will be rising too.  Having those fertilizer resources in “offshore” hands adds a degree of uncertainty to the equation.  Maude Barlow, the chairperson of the Council of Canadians said this to CBC News about the potential sale of the Potash Corp of Saskatchewan to BHP.

“This is the wrong way to go,” she told CBC News. “When you hand over all the power over these resources to international investors, be they backed by a large country or just private investors, you lose control, you lose the ability to take care of your local economy, your local environment.” (Maude Barlow, Council of Canadians)

So who is right?  As farmers we are spectators in this war, although our actions in using this fertilizer make the whole thing work.  In many ways it’s like the chicken and the egg.  In order to make those big crops we need the fertilizer.  However, what happens if that fertilizer supply gets little shaky?  Is the fertilizer business one with national security implications?  Is it on both sides of our border?

The answer is probably not.  Clearly though, the issues at hand over the sale of the Potash Corp. of Saskatchewan as well as the environmental concerns of some Florida residents need to be weighed in farm country.  Fertilizer simply just doesn’t happen!  It’s a big business, the lifeblood of our production machine and something we shouldn’t take for granted.  We all want it cheap, but at the end of the day we all want it.  Ditto for BHP Billiton and ditto for others.  As farmers we can only hope that supply keeps coming.