Grains Oilseeds

[johnlw]

Canada's livestock herd shrinks to lowest level in a decade: StatsCan


By Dina O'Meara, Calgary HeraldFebruary 16, 2010 12:02 PM


CALGARY - Hog farms and cattle herds in Canada and Alberta have shrunk to their lowest levels in more than a decade as high grain prices and the aftermath of tighter border restrictions were felt by the livestock industry in 2009.

Canadian exports of live cattle and calves fell 32 per cent last year, while slaughter levels fell four per cent, according to a new report by Statistics Canada released today.

In Alberta, cattle inventories slid 4.3 per cent, year-over-year, the federal agency said.

On the hog side, the number of hogs in Alberta fell 5.3 per cent during the same time period to 1.5 million head.

Provincial numbers closely followed a national trend which saw the Canadian breeding herd drop 4 per cent in 2009, and the inventory of sows drop to 1.3 million head, levels not seen since 2000.

Demand for grain-produced ethanol in North America since 2007 jacked up feed costs for producers also hit by poor grazing due to drought in Alberta.

As well, last year U.S. Country of Origin Labeling regulations were fully implemented, reducing the competitiveness of the Canadian export market.

[johnlw]

Carbon farming


Buy Red Deer Advocate Photos Online
By Harley Richards - Red Deer Advocate

Published: February 10, 2010 8:56 PM

Instead of incurring the high cost of pumping carbon into the ground, the Alberta government should pay farmers to sequester greenhouse gases.

This was a suggestion of Ron Witherspoon, a prominent ag venture capitalist who shared his expertise and opinions at the AgChoices 2010 conference in Red Deer on Wednesday.

A former senior executive with Farm Credit Corporation who now owns or provides consulting services to ag-related companies, Witherspoon described how the provincial government is proposing to spend about $100 a tonne to mechanically sequester carbon. He’d like to see farmers offer to do the same thing biologically for $50 a tonne.

“How do you think you’re going to get re-elected if you go out to your constituents and say, ‘No, we’d sooner pay a hundred bucks a tonne to these oil industry guys and not pay people in rural Alberta.”

At $50 a tonne, the revenue would pay for a biodiesel refinery in about eight years, said Witherspoon. The cost of a facility to process organic waste could be recouped in just over five years, he added.

Pasture land planted to forest could generate revenues to replace beef production, he said, pointing out that the United States and Australia are both jumping into agri-forestry.

“Farmed trees are going to be big in the future.”

Witherspoon also discussed advanced wood combustion, which would use forestry by-products and farmed trees to generate heat and power. They already exist in Europe, with more than 1,000 advanced wood combustion facilities in Austria alone, he said.

“If Europeans are doing this already at their land cost, it should be a no-brainer that we can make it work here.”

Witherspoon said he always seeks opportunities out of problems.

Two of the companies he’s involved in are producing dietary and nutraceutical products that help address North America’s obesity and health crises. Another is converting organic waste material into high-value fertilizer and other outputs — diverting material from landfills, addressing the pending shortage of phosphorous and sequestering carbon in the process.

Clean Canadian water could be used for aquaculture operations to help fill the huge Asian demand for fish that isn’t contaminated; empty hog barns might be converted for the production of chickens that would be shipped to China for final processing; and beef and elk could be produced here and cut in China where labour is plentiful and cheap, said Witherspoon.

“China is a huge opportunity for Alberta.

“The growth of wealth in China is where you want to be.”

Conversely, he cautioned against relying too much on sales into the United States, where the massive debt could spur inflation and reduce buying power.

“As a customer, I would say they’re a drunk who has charged up their credit card up to the maximum.”

Witherspoon also worries about selling to countries that could default on their payment obligations.

“We sold wheat to Russia back in the ‘70s that we still haven’t been paid for.”

In the case of Japan, he added, a 2 1/2 per cent jump in world interest rates would drive up the cost of servicing its national debt by more than the value of government revenues.

“So I’ve got real worries about chasing Japan.”

About 250 people registered for AgChoices, a one-day event held annually in Red Deer.

[johnlw]

U.S. firm buys stake in Alberta’s top carbon offset company


By Dave Cooper, edmontonjournal.com
January 26, 2010



EDMONTON — Element Markets of Houston has taken an equity stake in Agri-Trend Aggregation Inc., Alberta’s leading aggregator of agriculture carbon offsets.

Robert Saik, Agri-Trend CEO, said the move will expand his Red Deer-based firm’s capacity to help farmers implement greenhouse gas (GHG) reduction and removal technologies in Alberta, Saskatchewan and other provinces.

“As this market unfolds, we value the role Element Markets will play in expanding our business across Canada and into the U.S.,” Saik said in a statement.

Firms such as Agri-Trend Aggregation work with farmers using a tillage protocol that documents carbon sequestration in soils through advanced farm management practices. Customers purchasing carbon offsets from Agri-Trend include fertilizer, oil and gas, chemical and cement firms.

[johnlw]

Viterra sales fall 17.6%

Agricultural giant reports small loss in fourth quarter

Calgary — The Canadian Press Published on Thursday, Jan. 21, 2010 9:40AM EST

Major grain handler and fertilizer supplier Viterra Inc. (VT-T10.03-0.55-5.20%) fell to a small loss in the fourth quarter as revenue tumbled 17.6 per cent on a significant decline in commodity prices from record highs a year earlier and the impact of higher costs related to its expansion into the Australian market.

Viterra said Thursday its revenue in the quarter ended Oct. 31 was $1.4-billion, a stark contrast to a year-earlier $1.7-billion. It reported a small loss of $900,000 or less than a cent per share, compared with a profit of $46.8-million or 20 cents a share a year earlier.

Nevertheless, Viterra's president and chief executive described 2009 as a “defining year” for the company which, he said, is in solid financial condition and is prepared for future expansion.

“We completed the year as a more geographically diverse company, yet we maintained the financial stability that has become our hallmark,” Mayo Schmidt said in a statement.

Viterra retained more than $1-billion of cash and short-term investments and approximately $800-million is available for future growth initiatives, he added.

The company also announced plans to reduce the short-term debt of its Australian operations by $300-million before the end of this month with surplus cash.

“This action is expected to reduce the company's interest expense by approximately $1.3 million per month,” Mr. Schmidt told analysts in a conference call.

“This is a prudent course of action consistent with our global focus on operations and liquidity management.”

Several factors hit Viterra's profit in the fourth quarter, including a dramatic increase in financing expenses and higher costs related to the integration of acquired companies.

The company, renamed Viterra after Saskatchewan Wheat Pool bought Agricore United, incurred $5.1-million of integration costs during the quarter — more than double the $2.4-million recorded a year earlier.

Viterra said $2.3-million of the most recent quarter's integration costs were related to its recent acquisition of ABB Grain Ltd. in Australia and $2.8-million to Agricore.

In addition, financing expenses nearly quadrupled to $24.1-million, up from $6.3-million in the fourth quarter of 2008. The most recent quarter included additional interest expenses for $300-million of notes issued last July, $100-million drawn on a term facility and Viterra Australia's financing costs.

On the sales side, Viterra's sales and operating revenue from grain handling and marketing fell to $986.4-million, down nearly 17 per cent from $1.18-billion a year before.

Sales of agri-products fell even more dramatically, to $240.1-million from $308-million in the fourth quarter of fiscal 2008 — a 22-per-cent decline.

“With three year lows on fertilizer prices today, we expect growers will return to more normal fertilizer usage rates to replenish their soil nutrients for this coming year,” Mr. Schmidt said.

“How much price appreciation the industry will experience... is still dependent on global supply and demand fundamentals.”

He added that the company is optimistic about total grain production in Australia this year.

“Harvest will wind down by the end of January and we're very optimistic we will see a solid recovery in this business in fiscal 2010,” he said.

[kidl]

Fertilizer stocks fall after USDA corn report
11:13 EST Tuesday, January 12, 2010

* Corn futures tumble following bearish USDA data

* Shares of Potash Corp, Agrium, Mosaic and others fall

TORONTO, Jan 12 (Reuters) - Shares of major North American fertilizer companies fell on Tuesday after the U.S. Agriculture Department raised its estimate for 2009 U.S. corn production to a record high, sending grain futures crashing on the Chicago Board of Trade.

The U.S. corn crop was pegged at 13.151 billion bushels, up by 230 million bushels from the government's last forecast. The figure was also 330 million bushels higher than the average of analysts' estimates. The USDA also forecast a record 2009 soybean harvest of 3.361 billion bushels.

Corn futures on the Chicago Board of Trade fell the daily 30-cent limit in early trade following the bearish data in USDA's January crop reports, while soybeans and wheat futures also fell sharply.

The falling grain prices hit shares of fertilizer producers, whose shares are typically afffected by major moves in grain prices.

Shares of Potash Corp fell 3.2 percent to C$122.90 in morning trade on the Toronto Stock Exchange, while those of Agrium were down 1.3 percent at C$70.67.

Shares of Mosaic Co were down 3.3 percent at $64.14 on the New York Stock Exchange, while those of Terra Industries and CF Industries fell 1.5 percent and 2.1 percent, respectively.

[tothe]

SEED chart...Fidelity filing here

[johnlw]

CWB boosts 2009-10 export target
By The Canadian Press

Published: January 07, 2010 7:37 AM

The Canadian Wheat Board has boosted its export target for 2009-10.

The grain marketing agency announced on Wednesday that it is now projecting shipments of 18.7 million tonnes for the year, which would be the highest export total in a decade. The figure represents a two-million-tonne increase over CWB’s mid-summer forecasts, when the harvest outlook was grim.

However, favourable fall weather resulted in better-than-expected quality and yields.

“After experiencing a growing season in which crop production and quality was continually revised downward due to poor weather conditions, the CWB is pleased to be moving ahead with a strong export program notable for its high-quality grain,” said Ward Weisensel, the CWB’s chief operating officer, in the agency’s annual Grain Marketing Report.

The export target consists of 13.5 million tonnes of wheat, 3.5 million tonnes of durum and 1.7 million tonnes of barley — including up to 1.3 million tonnes of bulk malting barley.

Weisensel cautioned that there could be a global oversupply of durum this year, with weak demand and large crops pushing prices down.

Malting barley prices have also been under pressure, and feed barley export markets are unattractive compared to the domestic feed market.

[johnlw]

Barley future not so certain

By Will Verboeven - Stettler Independent

Published: December 30, 2009 9:00 AM
Updated: December 30, 2009 10:04 AM

It’s a good thing barley is still used for making beer, otherwise its future might be even more shaky. Growing barley is still big business on the prairies, but it is coming under increasing pressure from advances in corn breeding, which is rapidly becoming the super plant of all time - all of it thanks to genetic engineering.

Corn yields over the past 20 years have increased from 70 to 150 bushels per acre and scientists believe the plant has the ability to see yields of as much as 400 bushels per acre. Compare that to barley where yields have remained virtually static at 40 to 80 bushels. Production costs for corn have also decreased over time mainly because GM has reduced the need for insecticides and multiple herbicide treatments. Corn costs will continue to decrease as more genetic traits are stacked into future varieties. Some of those will include more efficient use of nitrogen and drought resistance.

So what has barley going for it? Well, it’s still a useful crop for short growing season areas. It still works well for growing silage in areas that will not support other crops. Corn continues to have a major short coming and that is it needs heat and lots of it along with a longer growing season. Corn breeders continue to push the borders of corn growing areas by breeding varieties that need fewer heat units to thrive - but it’s a long battle. The high yielding GM (genetically modified) varieties are still not designed for most of the prairies - they will be long time in coming.

In the meantime the traditional corn growing US midwest is seeing an expansion of their corn-growing area along with the increased yield. That has seen ever increasing supplies of cheap grain corn on the market and that keeps pressure on the price of barley. The past few years has seen increasing quantities of corn being railed in by the train load into southern Alberta cattle feeding areas. Even the increased demand for corn in the American ethanol industry has impacted barley feeding. The by-product of the ethanol process is dried distillers gain (ddg). It’s a product that is readily accepted as a barley substitute or supplement and has seen increased use in Alberta feedlots. Barley just can’t win it seems.

Luckily for barley, radical advances in corn production on the prairies could be many years away. In the meantime, governments through various agencies and research establishments have begun to take the situation seriously by making funding available for barley breeding research. The idea is to breed more productive barley varieties by means of hybridization or development of winter barley. The elephant in the room of all this is GM technology which, at the present time, is not being used in creating better barley varieties. It’s not that it can’t be used in barley, but backward reactionary elements in the grain marketing system are holding back GM technology in wheat and barley variety development.

It can all be traced back to the European Union, who remain slaves to politically correct green groups’ influence and their anti-GM crusade. I should say that attitude is shared to a certain extent in some other cereal grain markets in Asia and Africa.

However, given a market advantage with GM cereals, countries in those areas would probably seize the opportunity.

That major roadblock also causes the big seed companies like Monsanto and Syngenta to resist investing in barley variety development. Clearly, the quickest way to improve plant yields and production abilities is through genetic engineering. That process also gives seed companies a way to recoup their investment and make some profits. Standard breeding methods just aren’t attractive,

That leaves governments as the remaining source for barley variety development. That will see varieties being developed using traditional methods. As admirable as that may be, it is a slow process and success will be very incremental. In the meantime, GM corn breeding will continue to forge ahead - and its borders will inevitably expand. Worse yet, not just for barley growers but also for the cattle feeding industry - corn and its by-product ddgs will become so cheap relative to barley that cattle feeding will probably become even more concentrated closer to corn growing areas. GM barley might well have been its only hope - but it would seem that is not yet to be.

[johnlw]

How much longer will our Chinese food be delivered?

Jeff Rubin

If you think you’re eating local now, you haven’t tasted anything yet.

Food and energy are intertwined at many levels, not the least of which starts right at the production stage. Behind the green facade of the farm gate lies one of the most energy-intensive industries in the world. From fertilizer to farm machinery, most modern agriculture is really about making hydrocarbons edible.

No matter what the crop, the most important input is always energy — and it’s getting to be more so every day. Driven by ever greater fertilizer use and farm mechanization, energy represents half the cost of growing wheat (up from 30 per cent only a decade ago), and over 40 per cent of the cost of growing corn or sorghum.

That should tell you right away that a world of rising energy costs translates directly into a world of rising food costs.

And that’ll be even truer in the future. Arable land has not increased in over a decade and virtually every model of global warming predicts that it will in fact decrease.

And while Monsanto and other friendly producers of genetically modified seed claim that their laboratories keep crop yields rising, the real reason is energy. Those green fields in Iowa run on about five and half gallons of oil per acre.

But that’s just the cost of growing food. Even if we only ate what was grown in our own backyards, our food supply still has a troubling dependence on fossil fuels. What happens when we eat food imported from all around the world?

As more of our food is sourced from abroad, the average distance from farm gate to dinner table has now risen to over fifteen hundred miles. That’s a bad energy deal in its own right: for every calorie of energy delivered by imported food, you burn, on average, three more calories getting it to your dinner table.

But at triple-digit oil prices, bunker fuel costs will price many of those long-distance food imports right out of your shopping cart.

Look at Chinese food, for example. Last year, America imported $6-billion worth of food from China—a six-fold increase since 2000. Everything from bok choy to frozen chicken wings is sourced from cheap Chinese farm labor half a world away. But it’s bunker fuel that not only moves those chicken wings across the Pacific but keeps them refrigerated as well.

In a world of cheap oil, your taste buds can easily go global. But with the planet already on the cusp of triple-digit oil prices, your menu will have to change.

Start getting used to local produce, because there’ll be a whole lot less Chinese food delivered in the smaller world of the future.

[johnlw]

A farmer's ultimate ride

Paul Waldie

Globe and Mail Update Published on Wednesday, Dec. 09, 2009 8:15PM EST Last updated on Thursday, Dec. 10, 2009 2:27AM EST

It has almost twice the horsepower of a Porsche 911, costs about as much as a nice house in Toronto and comes complete with heated seats, a state-of-the-art stereo system and lights that could illuminate an airport runway.

It's the New Holland CR9090 Elevation – the world's largest combine. The list price? Up to $600,000.

“It's like taking a combine into the league of a Maserati,” said Patrick Kennedy, manager of the Agritrade Show in Red Deer, Alta., where the machine made its North American debut. “We had to actually clean it every night because there were so many drool spots. It's on everybody's wish list.”

As North American farms become larger and more corporate, manufacturers have been outdoing themselves to produce more powerful machines, although it's a tough time to introduce pricey equipment. After a year of record grain prices, commodity markets have turned downward and farmers are cutting back.

Still, it isn't uncommon for large farms – some Canadian operations are 12,000 acres – to change equipment every year, constantly upgrading to newer models that can harvest more crops, faster.

“There's just this general growth pattern and farmers have to be more efficient, so they have to be able to do more acres with the same amount of help,” says Dave Kaun, who farms about 3,500 acres near Red Deer and has two, one-year-old combines.

By almost any measure, the CR9090 dwarfs its competition. It stands just under four metres tall, has close to 600 horsepower and comes with GPS automatic steering, cruise control and an advanced computer system that tracks and adjusts grain flows. Last year, the machine set a Guinness world record in Britain by harvesting 451.2 tonnes of wheat (more than 20,000 bushels) in eight hours, beating an 18-year-old record by 93 tonnes. And the CR9090 set the record on a single tank of fuel (of course, that tank holds more than 1,100 litres).

The combine, which is compatible with biodiesel fuel, has been available in Europe for a while and is making its North American debut in Canada.

“We just started taking orders,” said Kyle Jensen, a New Holland representative based in Red Deer, adding that the price tag isn't daunting for some farmers. “Lots of farmers buy a new combine every year. They upgrade every year to stay with the current model and within the warranty period.”

Combines have come a long way since the first rotary blade models were introduced in 1975, he noted. Today's machines are more fuel efficient and have bigger cabs with large touch screens that allow farmers to monitor almost everything the combine is doing, without having to stop and get out. The CR9090 even has a refrigerator in its cab (which measures nearly six square metres), heated seats and large HID lights to allow farmers to work late into the evening.

“You can run them a lot longer hours,” Mr. Jensen said. “And you can sit in the cab a lot longer than you could 20 years ago.”

Future models will likely feature telemetry systems, similar to OnStar, giving a degree of remote control to the machine.

The downturn in commodity markets have had an impact on farm suppliers. Large international combine companies such as CNH Global NV (which owns New Holland), Deere & Co. and Agco Corp. (owner of Massey Ferguson) have seen farm equipment sales plummet this year. CNH reported a slowdown in its agricultural equipment sales, down 23 per cent in its third quarter, year over year, and a 19-per-cent drop in the first nine months of the year compared with 2008.

Deere reported a $222.8-million (U.S.) loss in the fourth quarter, compared with a profit of $345-million a year earlier, and sales fell 28 per cent to $5.3-billion. The company said it expects sales to be down 10 per cent this quarter. Agco's combine orders are down 50 per cent and the company has cut production by 31 per cent. Over all, farm equipment sales are down 22 per cent this year in North America from 2008.

“The volatility in commodity prices and the expectation of lower farm income have contributed to a great deal of conservation in farmers' equipment purchase decisions,” Ag0co's chief executive officer Martin Richenhagen recently told analysts.

He was likely referring to farmers such as Don Boles in Three Hills, Alta., northwest of Calgary. Mr. Boles farms about 1,200 hectares and owns one combine, a Lexion made by Germany's Class Group.

Mr. Boles took in the New Holland CR9090 at the Red Deer trade show and, while he was impressed, he has no plans to order one. “I'm not likely to be buying anything right now,” he said.

But others like Mr. Kaun expressed more interest. While he is not sure if he will buy one, he said “I definitely think there will be a market for it ... It's awesome.”

[kidl]

Job prospects drawing students to agriculture schools


David Mercer
Thursday, December 03, 2009

Champaign, Ill. — Tristesse Jones will probably never drive a tractor or guide a combine through rows of soybeans at harvest time.

There isn't a farm within miles of where she grew up on Chicago's west side, but she's set to graduate with a bachelor's degree in crop sciences from the University of Illinois' agriculture school next spring.

“People ask me what is my major, and they say ‘What is that? So you want to grow plants?'” Ms. Jones said.

She is one of a growing number of students being drawn to agriculture schools around the country not by ties to a farm but by science, the job prospects for those who are good at it and, for some, an interest in the environment.

Enrolment in bachelor's degree programs in agriculture across the country grew by 21.8 per cent from 2005 to 2008, from about 58,300 students to nearly 71,000, according to surveys conducted by the U.S. Department of Agriculture. And the numbers are likely higher — not all schools respond to the surveys.


National enrolment figures for 2009 aren't yet available, but numbers from major schools make clear the trend continues: The University of California-Davis has more than 5,490 students enrolled in agricultural majors – a jump of 210 from a year earlier. Purdue University has 2,575 ag students this fall, up 40 from last year.

Yet the number of farms nationwide has dropped for decades. There were about 2.4 million farms in the United States in 1978, and 2.2 million last year, according to the USDA.

Many students are choosing to major in agriculture, educators from across the country say, after finding out that much of what they'll learn is science – biology, chemistry and a long list of more specialized areas that can land them jobs at companies that produce the seeds and chemicals for farmers or in still-forming industries like biofuels.

Almost a quarter of the incoming freshmen at the University of Wisconsin each year say they want to do “something in biology,” said Bob Ray, associate dean for undergraduate programs and services.

Agriculture schools are doing their best to reach out to such students.

Texas A&M University's College of Agriculture and Life Sciences has several full-time recruiters on the road talking to high school students. It also uses its website, YouTube and social networking sites such as Facebook and Twitter to reach prospective students. A lot of the messages boil down to job prospects.

“Every one of our poultry science graduates, they average about five job offers per graduate,” college spokesman Bill Gibbs said.

Demand for science graduates, agriculture industry officials say, outstrips supply.

Monsanto , the St. Louis agribusiness giant that makes seeds, pesticides and an array of other farm products, can't hire enough.

“We find it really hard to find people in science, in particular, because they tend to get snatched up by medical and health care-related things,” said Monsanto spokesman Darren Wallis, adding that it has openings for 100 researchers in St. Louis.


UC-Davis' College of Agricultural and Environmental Sciences is one of the country's biggest ag schools and still has plenty of students studying in traditional areas, said Diane Ullman, the college's associate dean for undergraduate academic programs.

But more than 3,200 of UC-Davis' ag students — almost 60 per cent – are studying so-called human sciences, such as nutrition, or environmental sciences, such as environmental policy and landscape architecture.

“I think that young people are recognizing all of the issues that surround our society that have to do with food, and I think there's a real interest in new ways of doing things and solving some of these problems,” Ms. llman said.

Kate Molak is one of the students Ms. Ullman is talking about.


Ms. Molak is from Portola Valley, a suburb of San Jose, and plans to graduate in June with a bachelor's degree in community regional development. She wants to work in public health.

“I wouldn't say that agriculture necessarily has anything to do with that, but we do deal with a lot of environmental issues with public health,” she said.

At Illinois, Ms. Jones said she wound up in the ag department after her high school pompon coach – who happened to be a biology teacher – steered her toward a summer science program at the university.

“I always liked to pick apart worms – I thought I was a weirdo,” Ms. Jones said

Now she's applying to graduate programs and hoping she'll eventually be a research professor, maybe working on how to grow a better soybean.

“I love doing research,” she said. “Just having that hands-on experience, and being able to see the product, even if it takes years to see it.”

© Copyright The Globe and Mail

[kidl]

Job prospects drawing students to agriculture schools


David Mercer
Thursday, December 03, 2009

Champaign, Ill. — Tristesse Jones will probably never drive a tractor or guide a combine through rows of soybeans at harvest time.

There isn't a farm within miles of where she grew up on Chicago's west side, but she's set to graduate with a bachelor's degree in crop sciences from the University of Illinois' agriculture school next spring.

“People ask me what is my major, and they say ‘What is that? So you want to grow plants?'” Ms. Jones said.

She is one of a growing number of students being drawn to agriculture schools around the country not by ties to a farm but by science, the job prospects for those who are good at it and, for some, an interest in the environment.

Enrolment in bachelor's degree programs in agriculture across the country grew by 21.8 per cent from 2005 to 2008, from about 58,300 students to nearly 71,000, according to surveys conducted by the U.S. Department of Agriculture. And the numbers are likely higher — not all schools respond to the surveys.


National enrolment figures for 2009 aren't yet available, but numbers from major schools make clear the trend continues: The University of California-Davis has more than 5,490 students enrolled in agricultural majors – a jump of 210 from a year earlier. Purdue University has 2,575 ag students this fall, up 40 from last year.

Yet the number of farms nationwide has dropped for decades. There were about 2.4 million farms in the United States in 1978, and 2.2 million last year, according to the USDA.

Many students are choosing to major in agriculture, educators from across the country say, after finding out that much of what they'll learn is science – biology, chemistry and a long list of more specialized areas that can land them jobs at companies that produce the seeds and chemicals for farmers or in still-forming industries like biofuels.

Almost a quarter of the incoming freshmen at the University of Wisconsin each year say they want to do “something in biology,” said Bob Ray, associate dean for undergraduate programs and services.

Agriculture schools are doing their best to reach out to such students.

Texas A&M University's College of Agriculture and Life Sciences has several full-time recruiters on the road talking to high school students. It also uses its website, YouTube and social networking sites such as Facebook and Twitter to reach prospective students. A lot of the messages boil down to job prospects.

“Every one of our poultry science graduates, they average about five job offers per graduate,” college spokesman Bill Gibbs said.

Demand for science graduates, agriculture industry officials say, outstrips supply.

Monsanto , the St. Louis agribusiness giant that makes seeds, pesticides and an array of other farm products, can't hire enough.

“We find it really hard to find people in science, in particular, because they tend to get snatched up by medical and health care-related things,” said Monsanto spokesman Darren Wallis, adding that it has openings for 100 researchers in St. Louis.


UC-Davis' College of Agricultural and Environmental Sciences is one of the country's biggest ag schools and still has plenty of students studying in traditional areas, said Diane Ullman, the college's associate dean for undergraduate academic programs.

But more than 3,200 of UC-Davis' ag students — almost 60 per cent – are studying so-called human sciences, such as nutrition, or environmental sciences, such as environmental policy and landscape architecture.

“I think that young people are recognizing all of the issues that surround our society that have to do with food, and I think there's a real interest in new ways of doing things and solving some of these problems,” Ms. llman said.

Kate Molak is one of the students Ms. Ullman is talking about.


Ms. Molak is from Portola Valley, a suburb of San Jose, and plans to graduate in June with a bachelor's degree in community regional development. She wants to work in public health.

“I wouldn't say that agriculture necessarily has anything to do with that, but we do deal with a lot of environmental issues with public health,” she said.

At Illinois, Ms. Jones said she wound up in the ag department after her high school pompon coach – who happened to be a biology teacher – steered her toward a summer science program at the university.

“I always liked to pick apart worms – I thought I was a weirdo,” Ms. Jones said

Now she's applying to graduate programs and hoping she'll eventually be a research professor, maybe working on how to grow a better soybean.

“I love doing research,” she said. “Just having that hands-on experience, and being able to see the product, even if it takes years to see it.”

© Copyright The Globe and Mail

[johnlw]

Rogers Sugar Income Fund (C-RSI) - In the News

Globe says Schwartz sweet on Rogers Sugar

2009-12-03 06:25 MT - In the News
Shares issued 87,327,887
RSI.UN Close 2009-12-02 C$ 4.25

The Globe and Mail reports in its Thursday, Dec. 3, edition that Baskin Financial portfolio manager Barry Schwartz likes Rogers Sugar Income Fund. Jillian Glickman writes in The Globe's BNN Market Call column that Rogers Sugar Income Fund units retreated a nickel to finish Wednesday in Toronto at $4.25. The units have a 52-week range of $2.84 to $4.43. Mr. Schwartz says: "All the stars aligned for Rogers Sugar in 2009. The company benefited from high sugar prices, low natural gas input costs, flawless operating performance and the ability to export sugar to the U.S. Rogers pays a 10.7-per-cent yield with a sustainable payout ratio of 70 per cent." In his general outlook Mr. Schwartz says he expects modest gains from the TSX index in 2010. "Forward valuations still look reasonable when compared to historical multiples. Look for defensive dividend paying equities to outperform as investors trim their riskier cyclical names which have risen too high, too fast. Bonds with maturities of five years or longer may have a negative return next year as interest rates start to rise. Canadian investors should avoid making foreign equity purchases as the Canadian dollar will likely trend above par."

[Ed Monton]

I had the exact same response. A very ambiguous post indeed.

[DewDiligence]

I can’t tell if you’re railing against the terminator gene or in favor of it. More to the point, why does it matter? My understanding is that all major ad-tech companies abandoned such technology several years ago.

[tothe]

SEED, I am encouraged by China developing a GMO seed without the "terminator gene".

["Phytase is currently used as an additive in animal feed to breakdown phytic acid in corn, which holds 60% of the phosphorus in corn. Phytase increases phosphorus absorption in animals by 60%. Phosphorus is an essential element for the growth and development of all animals, and plays key roles in skeletal structure and in vital metabolic pathways."
http://finance.yahoo.com/news/Origin-Agritech-Announces-bw-2754575064.html?x=0&.v=1
US seed manufactures have dug themselves into a hole. A precarious situation of global food supply due to deterioration of quality farmland and potential inability of access to farm credit due to credit/future currency crisises are the number one and two bullets IMO right now...

There hasn't been many years with an increase in grain inventories in case anyone cared to notice...

Seed issues loom large with all the worlds farmers. In an escalating "Yield War" we require planting the highest yielding, drought tolerant, and fastest growing strains of GMO seed around just to survive. Once you do however you must sign contracts to "deliver" the crop back to them at harvest. You don't even own your own crop.

The "terminator seed" is the "Holy Grail" of agricultural bioengineering. Forget about all the GMO issues with splicing 'pesticide' and even animal genes into your food crops... with the literal control over the ability of the planet to feed itself there will certainly be dark days ahead for all.

The masses are sleepwalking into uncharted territory here... will they ever wake up before it's too late?

[trosh1]

Third quarter IPHS results.

For those interested:
http://biz.yahoo.com/e/091104/iphs10-q.html

(By the way, anyone know what is with all the automatic highlights and hyperlinks that went on my last post - or how to eliminate them?)

Thanks

[trosh1]

InnoPhos is looking interesting. (Nasdaq: IPHS)

Haven’t posted much. We were lucky enough to develop an over-the-counter treatment for MRSA staff infections, also effective for Herpes, Hepatitis and swine flu. (Tried beer John, but the FDA wouldn’t let us license it.) Anyway, been a bit busy since stores are now interested in it (we’re currently at inspirednutrition.com).

In the meantime, IPHS has attracted my attention. I haven’t entered it yet since I think there is a good chance of a sharp market decline between mid-Nov and the end of the year. That will make a nicer entry point. If not, I’ll have to pay more. This is what I know about it.

IPHS is a fertilizer-commodity company that is both a processor and value-enhancer for phosphate products. Trailing PE is 2, future PE (at current phosphate prices) is around 9.

They reduced net debt from $550m to $150m now – important in today’s market. Last year revenue was around $900m, this year will be around $680m due to drop in phosphate price. (This bodes well for pricing.) As the people on this board know, prices of semi-processed phosphate compounds dropped only 15-30% y/y (compare that to potash 1, POT, MOS, etc.).

The reason for this relative price stability can be found in a simple fact: phosphate is an essential input into many industries, including many noncyclical ones - whereas potash is mainly used as fertilizer. Phosphates are a part of our everyday life: pharmaceutical pills contain phosphates as do processed foods and baking mixes. In addition, phosphates are used in fertilizer.

Some analysts have given them "declining estimates", but this is from low predicted phosphate prices. We are all familiar with this, but I don’t agree that this will continue - how low can food demand go? As economic growth gets back on track, AG product and fertilizer commodities’ pricing will also.

When this materializes, IPHS stands to benefit with materially higher cash flow potential. (Actually, Q3 numbers are already CONSIDERABLY better than analysts had expected! It is not surprising that the stock is up recently!)

http://finance.yahoo.com/news/Innophos-Holdings-Inc-Reports-prnews-2779996672.html?x=0&.v=1

I also like their safety vs potential rise. So far, they have hedged their forward raw material supply. However, they also have the option to mine their own phosphate rock if raw material prices escalate. So they hedge from outside sources when material is cheap but they will develop their own captive resources when prices escalate.

I also have learned that the PROCESSING of phosphate may be as important as the mining - and IPHS owns existing phosphate processing plants all over North and South America. When global growth resumes on the AG side, phosphate prices will be the first to benefit from it. In the meantime IPHS holders capture a nice dividend. They also serve many niche markets where they are leader, (pharma, food ingredience, asphalt modification) giving them better pricing than many of their competitors will obtain

The most recent presentation can be obtained here:
http://files.shareholder.com/downloads/IPHS/740358753x0x263254/F9943B4F-791C-4790-9965-D7AC3EC27EC8/Investor_Pres_for_website_Jun_2009.pdf

[johnlw]

Medicinal herb to take root

Stubborn plant thrives in Alberta's cold

By David Finlayson, Edmonton JournalOctober 29, 2009


It might be the first crop introduced to Alberta because the climate is cold enough for it to thrive.

Rhodiola rosea is native to the frigid world of northern Europe and Asia, and because it's in great demand for its medicinal properties it was seen as a perfect new crop for central and northern Alberta.

The seeds of the stubborn plant, long regarded as a natural anti-depressant, can germinate only when it's very cold, and it takes four or five years to get to harvest.

"It needs a cold winter, and starts to grow in the snow, so we have the ideal climate," says Peter Haberli, chairman of Alberta Rhodiola Rosea Growers Organization.

Now five years after more than 30 scientists, agronomists and farmers began the Rhodiola Rosea Commercialization Project, what's believed to be the world's first processing plant opens in Thorsby, southwest of Edmonton, on Friday.

It will start processing the 5,000 to 6,000 kilograms of the first commercial harvest in a week or two.

The key feature of the 4,000-square-foot plant is the$250,000,15-tonne dehydrator that had to be custom-made in Ontario because it was literally a world first.

The herb appeal was generated by over-harvesting of the wild variety in northern Europe and China that created a world shortage.

Alberta production has been sold through 2012 to German and Alberta natural-supplement firms, and prices are strong enough this year to make it a viable business, says Haberli, who grows 8,000 plants at Spruce Grove.

In two or three years, when the plant startup costs are paid off, "it will be really interesting for growers," he says.

RHODIOLA

- Rhodiola Rosea, also known as roseroot or goldenroot, is an herbal adaptogen that increases the body's ability to adapt to stress by strengthening the immune, nervous and glandular systems.

- The major benefits are said to be boosted mental and physical performance.

- It's also purported to treat anemia, impotence, gastrointestinal ailments, infections and nervous-system disorders.

- A european clinical trial in 2007 showed it had an effect on patients with mild to moderate depression.

- It can be used as a fresh root, dried root, or an extract. it's commonly infused into tea, taken in capsule form, or in an energy drink or bar.

What started with 22 growers has already blossomed to 140, and the co-op wants more people on board. Haberli expects new growers and current members to apply for the next offering of co-op shares in February.

Natural-health-product companies prefer to deal with co-ops rather than individual growers, and they know ARRGO complies with ever-tighter regulations regarding over-the-counter-health products, he says.

Although rhodiola rosea is approved by Health Canada as a natural-health product, it's hoped clinical trials will begin early in the new year at the University of Alberta to assess whether rhodiola improves the quality of life for nursing staff on shift work.

Now that the processing plant is operating, Haberli hopes more research will result in a growing cycle of three years, rather than four.

Getting to the processing stage wasn't easy. The first obstacle was finding seed to plant, says Susan Lutz, senior development officer with Alberta Agriculture.

This plant is traditionally gathered in the wild, but they managed to get some seeds from Finland.

The surface-germinating seeds are so minuscule they are placed in salt shakers and sprinkled on soil-filled trays which are covered in plastic and placed outside in late winter.

The frost eventually cracks open the hard seeds, allowing them to germinate.

Industry experts believe it could eventually make the top 10 of medicinal herbs, Lutz says. "As far as we can see, rhodiola has the potential to be an $80-million plant in North America."

dfinlayson@thejournal. canwest.com

[johnlw]

Harvest hits a snag with snow


By Janet French, The StarPhoenixOctober 10, 2009


Mother nature is giving Saskatchewan farmers a rough ride in 2009.

First came a frigid spring, which delayed seeding. Then came the endless rains of July.

Things were looking rosy in September, when heat above 30 C smashed daytime high records across the province.

But this week, the fickle sky dropped between two and 10 centimetres of snow on the province.

Eric Mickelson, who farms grain near Birch Hills, said he was disappointed when he saw the white flakes fly.

"The biggest concern -- the snow and the weather is one thing -- is the amount of harvesting that we have left and the time of year it is," Mickelson said Friday.

Weather has already halted his harvesting for a week. A forecast of cloudy skies, cold temperatures and possibly more snow and rain may keep Mickelson inside for another week.

"The risk just keeps going up as the days tick by," he says.

Typically, by this time of year, Mickelson and his father are finished harvesting. Right now, they have 40 per cent of their crop in the bin.

"To get this crop in the bin, it's going to have to go to November, without a doubt," Mickelson said.

According to Grant McLean, cropping management specialist with the Ministry of Agriculture, about 76 per cent of the province's crops had been harvested at last count.

"Considering where we started from, we're blessed to be as far as we are," McLean said. "That doesn't make individuals who have a significant amount of their crop to be taken in feel any better."

Also, the progress of harvest varies by region of the province, he said.

Southwest Saskatchewan has about 93 per cent of its crop harvested, but the northwest has only 61 per cent of its crop in the bin and the northeast has 57 per cent of its crop off.

To blame for the early onset of winter is a mass of arctic air that has parked itself over the Prairies, says Environment Canada meteorologist Bill McMurtry.

On Thursday, between two and five centimetres of snow fell on most of Saskatchewan, he said, about 60 per cent of which melted when it hit the ground. However, by the time snow fell on eastern Saskatchewan, it was darker and colder, meaning areas such as Yorkton, Kamsack, Canora and Nipawin got more like five to 10 centimetres of snow.

Snow in early October isn't alien to Saskatchewan, McMurtry said -- it just usually melts within a day or two. With a forecast of cold, cloud and more precipitation for the week ahead, that's not going to happen any time soon, says the meteorologist.

McMurtry said this weather pattern is more typical for late November, and he expects it to stick around for another week. Unlike the sub-zero temperatures of Friday, the average daytime high for this time of year is 12 C, McMurtry said.

The longer-term weather forecast is brighter, though.

"We've got a long time in the next six weeks to get a push of warm air," McMurtry said. "I'd be surprised if (the snow) sticks around."

According to McLean, cereal crops such as wheat, barley, oats and durum are vulnerable to damage when conditions are wet. Oilseeds such as flax and canola are better at withstanding these conditions.

Mickelson isn't harvesting in the snow because he worries his crop will spoil if it's put in the granary while wet.

McLean said another problem with rain and snow is that farmers can't necessarily take heavy equipment into fields when the ground is wet.

He says farmers are in for a "long, challenging harvest" with shorter days to work in, possible deterioration of crop value and potentially extra costs to keep grain dry before it heads to market.

Farmers' fingers are crossed that the rest of the month will be warm and dry.

"We're optimistic this fall the majority of this crop is still going to come off, once we get this snow event out of here," McLean said.

[johnlw]

Hi Aaron
The drought is probably the big news here in my neck of the woods.
Wheat yield are ok, quality is great, canola is waiting for chlorophyll to cure out, so far no big killing frost yet which is a bonus. Haven't heard much about barley, the renters silaged ours rather than watch it burn up. I am guessing yields are down significantly as it doesn't do well when moisture stressed.
Insurance programs will be kicking in.

Cattle guys were dumping so many animals in the spring that the auction marts quit taking them. There was some relief for the pasture situation later on in the summer as some producers turned them out into crops. Feed is certainly not in an excess situation but the bottom is falling out of the barley market so that will help them.

Pork producers are taking a sh*t kicking from the H1N1 virus scare.

Not a banner year here but the strong will survive - they always do.

[earthfarm]

Subprime Down at the Farm?

Can't be long before we start to see some foreclosures out of this year? We are below the cost of production for wheat here in Australia for a significant percentage of farmers. Only those that managed fertilizer prices effectively prior to the spike or those well hedged are looking at a good year.

Our currency is killing returns and I would imagine that would likely be the case around the world (outside the US). A lot of fear in the market.

Whilst I don't buy the sentiment in these markets I won't be standing in their way. We are putting in firm groundwork for an even stronger bull market in prices but that doesn't necessarily mean a boom in farm profits. Farmers will be more cautious the next time around.

Significant areas of grain production will move to legume fallow and/or pasture which in itself reduces peak debt loadings because you don't need all the inputs with these options.

Interesting times. How are things fairing in Canada John?

[johnlw]

Nice story:

http://www.albertalocalnews.com/reddeeradvocate/business/local_biz/Helpful_neighbours_61122272.html

[johnlw]

Husky gets bucks for biofuels


By Dave Cooper, edmontonjournal.comSeptember 26, 2009 8:12 AM


EDMONTON — Husky Energy's Lloydminster ethanol plant got a boost from Ottawa on Friday, receiving up to $71.8 million in assistance under the federal government's$1.5-billion EcoEnergy program to sustain biofuel production in the face of volatile feed-grains markets.

"I can make gasoline cheaper than I can ethanol," explained Bob Baird, vice-president of upgrading and refining for Husky at a news conference to announce the aid.

With ethanol plants in Lloydminster and Minnedosa, Man., Calgarybased Husky is Western Canada's largest ethanol producer, making 260 million litres a year which is added to its Husky and Mohawk gasoline.

The Lloydminster plant made purchases worth $22 million from area grain producers last year, low-quality grain that was destined for feedlots. But price volatility has added a huge risk to the ethanol business.

The federal assistance works out to 10 cents per litre of production, but that amount will reduced as profitability in the ethanol market improves.

"At a time when the market is depressed, this allows us to offset production costs and compete in the marketplace," Baird said.

"This makes investment in facilities more sustainable by partially offsetting the risk associated with commodity prices," he said.

"Ethanol is a fledgling business; it is new and we have to support it in a fashion that will sustain it over the long term. Without this program Husky would have to evaluate its operations, but we have been in this business for 25 years and this is one of our marketing advantages. I don't think we would drop out, since we have the infrastructure and knowhow."

Federal Agriculture Minister Gerry Ritz said the goal of the subsidy program is to "strengthen the economies of communities like Lloydminster, to help build a strong renewable fuels industry in Canada. We're making sure our farmers can take full opportunity of emerging biofuels opportunities."

Ritz said Canadian targets for ethanol and other biofuels will consume less than five per cent of the nation's grain production.

"The vagaries of the weather are a much bigger problem than that. We are starting out small."

Baird said the grain bought by Husky is destined for feedlots, "and we are just taking the starch out of it. We do make feed grain afterwards with our distiller-dried grain for feedlots which is high in protein content."

He said feedlot operators don't like to have the starch in their feed. "For the farmer, it provides a second channel to put his grain."

Ritz sees a bright future for ethanol in Canada once more provinces insist it must be added to gasoline.

Alberta currently has not mandated any amount, but is considering making five per cent the standard.

"Ontario has said 20 per cent, but are now backing off," he said.

"I think five per cent is doable, but it does take facilities two or three years to get into production," he said.

Gordon Quaiattini, president of the Canadian Renewable Fuels Association, said in an interview with Reuters that Canadian biofuel production should rise 76 per cent in two years, as government subsidies for production plants and renewable-fuel requirements take effect.

Total biofuel production will reach 2.5 billion litres annually by 2011, including two billion litres of ethanol and 500 million litres of biodiesel, said Quaiattini. Canada currently produces 1.3 billion litres of ethanol annually and 120 million litres of biodiesel, he said.

Ottawa has now awarded funding to 23 biofuel plants under its program. Other recipients include Suncor Energy and Rothsay Biodiesel, owned by Maple Leaf Foods.

[johnlw]

Hay shortage averted, ranchers still losing money

By Harley Richards - Red Deer Advocate

The good news? Hay costs are lower than many feared a few months ago.

The bad news? Cow-calf operations are still a losing proposition.

Ted Nibourg, a farm business management specialist with Alberta Agriculture and Rural Development’s Ag-Info Centre in Stettler, says the severe hay shortage that some were predicting hasn’t materialized.

“The situation is definitely not as dire as what some of you media types originally set out to portray,” he said, referring to the spate of doom-and-gloom stories that emerged following the cold spring and subsequent drought.

“It scared the hell out of lot of people, and they panicked and maybe over-reacted,” he said, confirming that some hay did sell for “obscene” prices.

By July, however, rainfall had spurred hay growth and renewed pasture land. Later, extreme weather damaged some canola and grain crops, resulting in them being converted to green feed.

Another significant factor keeping hay prices in check was reduced demand.

Statistics Canada’s July 1 cattle inventory indicated a 9.5 per cent decline in Alberta’s beef cow herd, said Nibourg.

“The auction marts got so inundated they had to ration the amount of cows coming in.

“I think when we get our Jan. 1 numbers, we’re going to even see a more substantial decline in our cow numbers.”

Currently, hay for beef cattle is selling for between four and 4.5 cents a pound, said Nibourg. That’s far less than the $100-plus price per bale some were forecasting in June, but still exceeds the point where cow-calf producers can make a buck.

At 3.5 cents a pound, he said, a farmer would will lose about $20 an animal based on fall calf price projections. Bump that feed cost up to six cents a pound, and the loss swells to $80.

“These guys can’t afford to sell off their farm like that and remain in business. That’s why they’re pulling the pin.”

Doug Sawyer, a director and the finance chair with the Alberta Beef Producers, confirmed that many producers have sold their breeding stock or are talking about it. He hopes reduced cow numbers will bring some relief to the farmers who remain.

“The old supply and demand thing will kick in, hopefully.”

Unfortunately, said Nibourg, the strong loonie could prevent this.

“As the dollar goes up, our prices come down.”

Sawyer acknowledged that the dollar is a “huge factor,” and a weak market for fat cattle isn’t helping demand for calves.

“It doesn’t look very optimistic for this fall run, to me.”

The fact also remains that hay yields were down this year. And cow-calf operators like Sawyer, who farms near Pine Lake, must still feed their young animals.

“I’ve either got to take my calves somewhere to be custom-fed, in a feedlot, or sell them, because I simply don’t have any hay to feed them.”

By rights, said Sawyer, he should get out now. But he’s hopeful better times lie ahead, and after 25 years doesn’t want to leave the industry.

“My farming enterprise — I keep telling everybody — is a lifestyle, not a business arrangement.”

[johnlw]

Farmers' potash gamble has producers paying price

Farmers around the world have taken a major gamble with their crops by cutting potash applications in response to high prices. Yet so far, their move is working and it is the fertilizer companies that are paying the price.

When crop prices fell amid last year’s economic collapse, farmers had a problem because fertilizer prices, particularly potash, did not drop nearly as fast. The potash industry is extremely concentrated, and producers such as Potash Corp. of Saskatchewan Inc. collectively cut production instead of quickly lowering prices.

Farmers responded by simply reducing their potash applications. At the time, agronomists suggested that this strategy could not be maintained over the long term, as fertilizers need to be applied to keep crop yields up.

But a year later, farmers have maintained low potash applications and their crops are doing fine. Experts said this is about the longest they have ever gone with such low applications, and waiting any longer puts them in uncharted territory. But if their crops continue to do well (which depends largely on the weather), they may continue to hold out.

“Nobody has taken this chance before. But the farmers did it, and they haven’t had any negative yield impact,” said an analyst, who asked not to be named.

“Now the farmer is saying, ‘Hmm, maybe I’ll take my chances a bit longer.’”

That strategy has hammered the potash producers, especially Potash Corp. itself. At the beginning of 2009, the company predicted that it would earn US$10.00 to US$12.00 a share this year. On Friday, the company said it is now looking for just US$3.00 to US$3.25 a share as the sales volumes are much weaker than expected.

“Farmers are taking the economic signal that was presented to them by the fertilizer producers and the wholesale and retail system. It a very rational response,” said Marlene Boersch, a partner at agriculture consulting company Mercantile Consulting Venture Inc.

The events of the past year have also created some acrimony between the farmers and the potash producers.

Farmers are angry that the producers increased prices so quickly, and then tried to maintain them by cutting production, even though crop prices dropped.

That strategy ultimately failed, as potash prices fell anyway. They are down from an average of US$900 a tonne last year to about US$400 a tonne today.

“From a farmer perspective, I think there was a certain amount of arrogance with Potash Corp. saying ‘The hell with you guys, we’ll just hold it and you’ll buy it eventually,’” said Ron Bonnett, first vice-president of the Canadian Federation of Agriculture.

“They have to recognize that farmers are businessmen too. They can’t afford to pay more than they can get [from selling crops].”

The sharp drop in potash prices is literally the only one of its kind in history. For decades, prices increased very slowly. Then in the last few years, they accelerated as demand from emerging markets like India and China soared to unprecedented levels.

The record-high prices allowed potash producers to rake in massive profits. And even today, they are recording some of their highest earnings in history. But experts said that there are implications for having that blip in the long-term potash price chart.

“The next time prices go up, it will invite the debate about how sustainable it is,” the analyst said.

[johnlw]

Problems taxing potash


By Bruce Johnstone, Leader-PostSeptember 21, 2009



One ray of light in the economic storm clouds that have dampened hopes that Saskatchewan would escape the global recession in 2009 is the multi-billion-dollar expansion of the potash industry.

Despite falling potash prices, production cutbacks and mine layoffs, Saskatchewan potash producers are still proceeding with plans to expand their existing operations.

The total value of these planned and proposed projects is staggering. "Saskatchewan's potash industry could potentially see new investment of $6.5 billion in the province by 2020," according to Enterprise Saskatchewan.

That number seems conservative, with PotashCorp of Saskatchewan planning to spend close to $6 billion on expansion projects at Cory, Allan, Lanigan, Patience Lake and Rocanville and Mosaic announcing a $3.15-billion expansion of its potash operations in Esterhazy, Belle Plaine and Colonsay.

Besides these 'brownfield' expansion projects, a number of junior mining companies are proposing 'greenfield' developments -- projects that could see the first new potash mines developed in Saskatchewan in decades.

With greenfield mines costing anywhere from $2 billion for a solution mine to $4.5 billion for an underground mine, the total being invested by the industry could easily reach $20 billion by 2020. There is one fly in the ointment, however. Potash taxes -- as opposed to royalties that are paid on every tonne of potash produced -- are being revamped in light of potential new production coming on stream that would effectively pay no tax under the present regime.

Currently, potash producers pay a profit tax on production up to the average production levels in 2001 and 2002. Production above the average of 2001-02 is free of profit tax.

The tax holiday on production above 2001-02 levels was introduced by the former NDP government in 2003 as a means of encouraging new production.

In other words, under the current regime, new mines would pay no tax, since their production would fall within the tax holiday period. Not surprisingly, existing potash producers are crying foul over this potential unfair advantage for new entrants.

Darrell Zwarych, vice-president of finance for Mosaic Potash and chair of the tax committee of the Saskatchewan Potash Producers Association, said it's like new residents to Saskatchewan being given a tax holiday at the existing taxpayers' expense. "Under the current scenario, all producers pay a base level of tax and new entrants pay zero,'' Zwarych said.

But new producers are claiming that tax changes being proposed by Saskatchewan Energy and Resources would apply to the current tax regime on production from new mines, but at much higher levels than existing producers pay.

"We understand that the purpose of assessing the new producers some level of profit tax is to avoid putting existing producers at a competitive disadvantage,'' said a brief to Energy and Resources Minister Bill Boyd in June by three potash companies -- one established producer, Agrium Inc., and two new players, Potash One Inc. and Athabasca Potash Inc.

"However, the proposals have the effect of subjecting the new producers to a much higher rate of profit tax and now put the new producers at a competitive disadvantage. We do not believe any producer should be subject to tax at a higher rate than any other producer.''

The brief argues that larger, existing producers, like PotashCorp and Mosaic, would stand to benefit the most from the proposed tax changes, while smaller producers like Agrium and new producers would pay much higher levels of tax.

For example, PotashCorp, which is expected to have production of 10.4 million tonnes in 2015 -- nearly three times the 3.5 million tonnes it averaged in 2001-02 -- would have the most tax-exempt production. Under the new proposal, only 35 per cent of PotashCorp's total production would be taxable, the brief said.

Similarly, Mosaic -- which will have more than doubled its 2001-02 production of 3.6 million tonnes to 7.7 million tonnes by 2015 -- would pay tax on 43 per cent of its total production.

By contrast, Agrium, which had far less tax-exempt production in 2001-02 at 927,000 tonnes, would pay tax on over 50 per cent of its total production under the proposed regime.

New producers, with no production in 2001-02, but 1.2 million tonnes in 2015, would pay tax on 74 per cent of their production.

The brief maintains that neither the existing tax regime nor the proposed one is fair.

"We agree it's not equitable,'' said George Lim, chief financial officer (CFO) of Potash One, which is proposing to build a $2-billion, 2.5-million-tonne per year solution mine 80 kilometres northwest of Regina.

"We're not looking any handouts,'' added Jim Davidson, CFO of Athabasca Potash Inc., which is proposing to build a 2.8 million-tonne underground potash mine for anywhere from $2.5 billion to $4 billion.

"We're looking for something that is fair and creates a level playing field.''

In their brief, the three companies propose that all producers-- new and existing -- pay the same level of tax. "We recommend that the taxable sales tonnes simply be equal to 35 per cent of total sales tonnes. This alternative is simple and should be easy to understand.

"We strongly support the principle that all producers should have the same permanent tax rate.''

But Mosaic's Zwarych disagrees, saying that even under the proposed tax regime, Mosaic will still be paying more tax than new producers. "Even under this proposal, (new producers) will pay significantly less profit tax and base tax than we will ... I don't think current producers should be paying all the tax and the benefit goes to new producers.''

Boyd said the government has been listening to both sides of the industry, while trying to achieve a fair return for Saskatchewan taxpayers.

"We're trying to balance the interests of both larger and smaller producers here in Saskatchewan," he said.

"We have not made any decisions on this (potash tax). Until we do, it's premature to say that anyone is paying more than their fair share.''

While nothing has been decided yet, Boyd said maintaining the status quo -- with zero tax on new production -- is not an option.

"It's pretty obvious that the previous administration never anticipated seeing any potash expansion because the (new production tax) rate is at zero. Everybody in the industry recognizes that's not going to happen."

By the same token, Boyd is aware of the widespread belief in the industry that Saskatchewan's potash tax and royalty regime is one of the most onerous in the world. The Saskatchewan Mining Association contends that "70 per cent of every dollar earned in the Saskatchewan potash industry goes to taxes.''

"We want to be competitive with other jurisdictions that produce potash in the world ... We also have to work to make sure the interests of the people of Saskatchewan are represented as well.''

Boyd added the Saskatchewan Party government is eager to see new mines develop.

"We would like to see start up greenfield operations, absolutely.''

But Lim and Davidson argue that greenfield mines face higher capital costs -- as much as 40-per-cent higher -- than brownfield expansions.

If new producers were forced to pay higher takes, as well as higher start up costs, that could delay or deter new mines from developing.

"It would definitely dampen investor interest,'' said Lim. "Why would the government do this?''

[johnlw]

I like spurious rumours.
I wish POT would take a run at AGU with a 50 euro premium.

[kidl]

How's that for a juicy rumour?

Germany's K+S gains on talk of bid from PotashCorp
Fri Sep 4, 2009 5:51am EDT
Email | Print | Share| Reprints | Single Page[-] Text [+] Market News
Wall Street edges up after mixed payrolls data Oil drops below $68 after U.S. jobs data Gold slips below $990 after U.S. jobs data More Business & Investing News... Featured Broker sponsored link
FRANKFURT (Reuters) - Shares in K+S (SDFG.DE) rise on Friday as traders point to market talk that peer Potash Corp of Saskatchewan (POT.TO) might be considering bidding 50 euros per share for the German salts and fertilizer.
"The rumor is that Potash Corp is considering a 50 euros per share bid for K+S to strengthen its market position," says a Frankfurt-based trader.

K+S said it could not comment on the market speculation. Potash Corp was not available for immediate comment

At 0903 GMT, shares in K+S were 4.9 percent higher at 37.36 euros, having risen as high as 37.98 euros. They were one of the top gainers on the German large-cap index .GDAXI, which was 1.15 percent higher.

"The rumors seem a bit spurious to me. This is not the first time we've heard such a rumor and 50 euros per share is quite a premium" a second trader said.

(Reporting by Tyler Sitte and Patricia Gugau in Frankfurt, Blaise Robinson in Paris and Atul Prakash in London

[trosh1]

Forbes agrees John!

Potash is a little easier to skip a year than nitrogen. Don't know how the government would react and/or try to interfer with a POT take-over though.


The State Of The Farm
Alexandra Zendrian, 09.03.09, 06:00 AM EDT

http://www.forbes.com/2009/09/02/farm-agriculture-commodities-intelligent-investing-fertilizer.html?partner=yahootix

The recession is hitting the American farm. Agricultural investments likely reflect these dismal numbers already.

The U.S. Department of Agriculture forecasts that the American farm's profits will drop precariously this year. As the down economy strikes the farm, investors shouldn't take this as a reason to drop agriculture-related commodities and other investments. Just be cautious, do your research and don't bet the farm.

The USDA expects net farm income this year to be $54 billion, down 33.2% from last year. So what does less money in farmer's pockets mean to you? Vince Farrell, chief investment strategist at Soleil Securities, notes that stocks of fertilizer companies, such as Mosaic ( MOS - news - people ), Potash ( POT - news - people ), Intrepid Potash ( IPI - news - people ) and Monsanto ( MON - news - people ) would be affected first.

Since farmers can skip the fertilizer for a little while without noticing too much of a difference, if their wallets are pinched, they'll likely buy less fertilizer. Most of these company's stocks already reflect some of the negative projections for farms, with Potash, for example, trading at $86, down from its high of $179.58 last September. "Don't buy a full position today," Farrell says, adding that these stocks are "more of a buy than a sell."

If farm profits are down for a longer period of time, then it might start to impact farm equipment companies such as Deere & Co. ( DE - news - people ). Since items such as new tractors are a bigger investment for farmers to make, these stocks are less likely to be affected by one year's bad crops.

[johnlw]

Potash won't recover until 2011, analyst warns

Bumper crop projected in U.S., China, puts pressure on demand


Steve Ladurantaye

Globe and Mail Update Last updated on Tuesday, Sep. 01, 2009 09:57AM EDT

The potash market won't recover until 2011, CIBC World Markets warned on Tuesday as it cut its price target on Potash Corp. of Saskatchewan (POT-T96.59-0.59-0.61%) – the industry's largest producer of the fertilizer component.

“We continue to see pressure on potash demand given the bumper crop being projected in the U.S. and China,” analyst Jacob Bout wrote in a morning note to clients. “Grain pricing and weather will be the key determinants of potash demand but there has been no strong relationship between the lack of potash application and 2009 crop production.”

Analysts have been suggesting that demand would return in 2010, because farmers can skip a year and still get strong yields from their fields. But with a bumper crop this year, Mr. Bout said they may be inclined to go another season without the nutrient. Prices have come down from about $1,000 (U.S.) a tonne last year to closer to $650 this year.

He left his price target and rating unchanged for Agrium Inc. (AGU-T51.80-0.55-1.05%) unchanged at $60 and “sector outperform,” saying the company's retail operations help to shield it from potash price fluctuations.

For Potash Corp., he lowered his target by $10 to $110, while leaving his “sector outperform” rating in place. He said the possibility of a takeover should help the company's shares retain their value.

“Potash's valuation should benefit from a takeover premium with diversified mining and various entities looking to enter the potash industry,” he said. “Potash is the crown jewel of the industry due to its collection of potash assets in a politically stable environment.”

[earthfarm]

Now starting to see a kind of subprime unfolding in agriculture. Low prices for a high cost year. Land prices beginning to fall. Fixed interest rates spiking (9% for 5 year here in Oz). Nowhere is it written you can't have a food crisis running concurrently with a debt crisis down at the farm ... especially while the USDA keeps talking up the size of this credit and drought crunched world crop. Mob of information manipulators. Fertilizer will find it hard to rally like it did in boom part 1 until shortages begin to emerge ... hope all are well. Been a bit slack lately ...

[johnlw]

Energy Benchmarking: Canadian Potash Production Facilities

http://oee.nrcan.gc.ca/publications/infosource/pub/cipec/Potash-production/benchmarking.cfm?attr=20

[timhyma]

fwiw, the crops around our area look great

[johnlw]

Drop in production expected for all major crops: StatsCan


Saskatchewan News NetworkAugust 22, 2009



A late start to the growing season combined with drought in some areas are contributors to an anticipated drop in production for all major crops on the Prairies compared with 2008, say estimates from Statistics Canada.

"In the west, late germination caused by unfavourable conditions this spring has held back progress by about two weeks compared with normal," said the July farm survey released Friday.

"In the drought-stricken areas of Saskatchewan and Alberta, higher than normal abandonment was also shown to be a factor in the loss of production."

Saskatchewan-specific statistics indicate reduced production of barley, canola and durum wheat is due to a decrease in seeded acres. But lentil and mustard seed production should increase in the province.

Statistics Canada said barley production is expected to decrease 20 per cent to 3.7 million tonnes from 4.6 million tonnes in 2008 as a result of reduced seeded area.

Production of canola is expected to decrease by about 18 per cent to 4.6 million tonnes from a record high of 5.6 million tonnes in 2008.

The agency noted seeded area only decreased 50,000 acres from 7.7 million acres in 2008 to 7.65 million acres, but yield is expected to decrease 17 per cent to 26.9 bushels per acre.

Durum wheat production is expected to decrease 20 per cent to 3.5 million tonnes, a combination of less seeded area and lower yield.

Meanwhile, more lentil fields should help lentil production rise by 25 per cent. Harvested area increased 580,000 acres to 2.3 million acres to record levels, with production estimated to hit 1.3 million tonnes.

REGINA LEADER-POST

[trosh1]

Good article Sumisu. A key statement: "in the 12 months to this June, food prices were up 5.5%, during a recession, when the key cost in the agriculture sector — energy — was falling."

What happens if/when oil continues up? The current rise hasn't even been reflected in food prices yet. Unless the world goes vegitarian next year (right), it could get nasty!

More likely, the new Asian meat rage will back off a little to give us another year or two. That is, of course, barring any radical weather or political developments.

Sad thing is that it is only a matter of time. In spite of investing opportunities for those aware, it is going to make a much uglier world!

[sumisu]

Food crisis: Fields of gold

The world food crisis is front and centre on Bay Street's radar.

By Jeff Sanford

[Jeff Sanford has worked as a business journalist since graduating from Ryerson University in 1999. He has held staff positions at National Post Business magazine and Investment Executive, a bi-weekly newspaper for financial advisors.]

http://www.canadianbusiness.com/markets/commodities/article.jsp?content=20090914_10004_10004

A bumper crop of corn set to come in at harvest in the U.S. this year. A global recession hogging all the attention. That’s all it took, and all of a sudden the Global Food Crisis, such a topic of conversation last year, is nowhere to be seen.

The quick disappearing act has some wondering where good sense has gone. “One good year and the problem is over? That’s ridiculous,” says Donald Coxe, a well-known commodity fund manager. His latest work of art, the Coxe Commodity Strategy Fund (TSX: COX.UN), was the biggest IPO on the TSX last year (raising $297 million from investors). So you know where his interests lie. Nevertheless, he is concerned that we are still just one bad crop away from another round of volatile food prices. “We’ve just had the worst deflation in the postwar period, and yet the prices of food are still high,” says Coxe. “We’re still right on the edge.”

The edge he’s referring to is the amount of grain that has been carried over from the harvests of previous years. In eight out of the past nine years, the world has consumed more grain than has been produced. The net consumption has come out of existing stocks, and those stocks have been dangerously drawn down, which means we’re still flirting with a global food crisis.

The leaders who recently gathered in L’Aquila Italy for the G8 summit acknowledged this. Amid talk of food security and “farmland grabbing” (a new global scourge that sees rich countries like Saudi Arabia buying up farms in Africa to produce grain for the homeland), the leaders also released a statement that suggested that “while the prices of food commodities have decreased since their peak of 2008, they remain high in historical terms and volatile.”

But even as the world food crisis has faded from headlines, Bay Street is ramping up its reaction to the world grain shortage. Over the past few years, a couple of farmland-focused investment firms, including Agcapita Partners LP and Assiniboia Capital Corp., have been buying up western farmland. The goal: to package those holdings into securities that can be bought by retail investors as a way to hedge their investments against food, fuel and monetary inflation.

Earlier this year, Sprott Resource Corp. announced the latest of these corporate-level farmland ventures: One Earth Farms Corp., launched in March.

Sprott Resource has seeded One Earth with $27.5 million, which the founders have used to hire a management team and lease the company’s first 12,000 acres, in production this year. The company plans to lease up to 100,000 acres next year. It will then significantly increase to an eventual goal of becoming the single largest farming operation in Canada.

It’s true the current recession may see prices fall yet, over the short-term. However, according to Steve Yuzpe, the CFO of Sprott Resource, ongoing population growth, dwindling arable land, water issues, even the falling yield productivity delivered by genetically modified seeds will be the big drivers for continued record demand—pushing food prices ever higher. “We had a little taste of what’s happening last year with the riots and grain export bans. But when you put the macro pieces together, you see why we’re excited about this,” says Yuzpe.

One Earth will harvest the economic efficiencies that size will deliver (the company will have an agronomist on staff and will be able to utilize its equipment far more efficiently than any smaller farm). But the founders’ initial impulse to create the organization stems from a confluence of trends at the global level. And it’s this that has made grains such an in-demand commodity.

The latest Farm Credit Canada farmland value report suggests these new farmland plays are already generating good returns for unitholders, before they’ve even sold a bushel. The report found Canadian farmland increased in value by an average of 5.6% in just the past six months of 2008, with Saskatchewan farmland (where Agcapita is focused) up an amazing 8.8%.

A quick glance at the most recent inflation numbers from Statistics Canada confirms why this might be happening. Inflation decreased in June for the first time since 1994—but in the 12 months to this June, food prices were up 5.5%, during a recession, when the key cost in the agriculture sector—energy—was falling.

The story in the U.S. is the same. According to a recent report from Benjamin Tal of CIBC World Markets Inc., food inflation stateside is still running at a “red hot” 5%. What’s more, the gap between food inflation and core inflation is the widest seen since the food crisis of the 1970s (with the exception of 2004). That is puzzling. The trend for the past 40 years has been that food inflation leads the inflation cycle by four or five months. According to that pattern, we should have seen food prices come down before energy prices did in this cycle. But that didn’t happen. And that, says Tal, suggests there is a bigger trend at play here. “Clearly there are some structural shifts going on that are overwhelming the cyclical forces that would normally prevail over food inflation in the midst of one of the deepest postwar recessions on record.”

He’s referring to global macroeconomic shifts in how we consume. Improvements in agricultural energy intensity (the amount of energy needed to grow a given amount of crops) has fallen from 4.5% in the 1980s to 0.5% today. At the same time, there has also been a massive shift to a more western, middle-class diet in the rapidly expanding Chinese and Indian economies. Tal says that consumption of meat has risen from 27 kilograms per capita in the ’70s to 40.5 kg today. That puts a significant strain on the global grain supply, as it takes a lot of grain to produce meat. And let’s not forget new demand from the biofuel industry. According to a report released last July by the Conference Board of Canada, the 80% rise in the price of agricultural commodities from 2005–2008 was not a matter of speculation, but rather hoarding and ethanol production in the U.S., where one-third of the corn crop is going to biofuels.

Coxe says he is disappointed to see Obama, the former state senator for the grain state of Illinois, get behind that country’s ethanol program. By directing corn into the gas tanks of the nation, it directs precious supplies away from food markets, sharpening shortages and putting upward pressure on grain prices. “I’d rather pay 50¢ more for a gallon of gas than produce huge amounts of ethanol, which is ethically and morally unjustifiable,” says Coxe. But with no one stepping in the way of the ethanol train, it looks like the boom in farmland is going to be with us for some time yet.

What’s more, as Coxe indicates, there is a possibility that prices will experience further upward spikes this fall. Here in Canada, the Canadian Wheat Board reports shipments for the 2008–2009 year ending July 31 are the highest they’ve been since 1999–2000—but intensely dry weather has delayed crop development by a couple of crucial weeks this spring. At the same time, the U.S. Midwest is experiencing its third-coldest July on record, a matter of the current “global cooling” trend caused by low sunspot activity. “The jet stream is over Chicago. It should be much further north at this time of the year,” says Coxe. So while there is a record amount of corn ripening in the Midwest this summer, there is also a real danger of an early frost. That counters the notion of a bountiful crop and bears out Coxe’s concern that grain supply is still not as resilient as it needs to be. “The carryover [the amount of grain left over at the end of the growing season] is still negative. So I don’t think we should stop talking about food policy,” says Coxe. “We are still one bad crop away from trouble.”

[johnlw]

Rain may be too late to satisfy farmers


By Dina O'Meara, Calgary HeraldAugust 6, 2009



The rain that finally came pouring down across most of the province after months of drought-like conditions could be too little, too late for many farmers, with the threat of early frost exacerbating poor conditions, according to insiders.

Farmers on Alberta's parched land welcomed the precipitation that started falling last week after a late, cool spring was followed by a late, dry summer. But not all parts of the province were rejoicing.

"For the most part, any rain that has occurred over the last couple of weeks will not have a dramatic impact on the crop yields in Alberta, mainly because the plant growth was determined earlier this spring," Rod Scarlett, executive director of Wild Rose Agricultural Producers.

"The rain may assist a little bit helping (fill out) some grains, but it won't make a substantial difference for this year."

All indications point to lower-than-average crop yields, Scarlett said.

However, pastures are in better shape for cattle producers, lowering demand for non-pasture feed and easing some of those additional costs.

Agriculture Financial Services Corp. released its first yield estimate for the 2009 season, as of July 30, indicating below-average results for all grains and legumes.

According to the estimates, spring wheat production was expected to average 70.6 per cent, or 29 bushels per acre, compared to a five-year average of 41.1 bushels per acre. Winter wheat hit the lowest result, coming in at an expected 57.6 per cent yield, or 25.6 bushels per acre.

Cash crop canola yields were forecast to average 71.6 per cent, or 24.2 bushels per acre.

In central and southern Alberta, crop conditions improved with the heat, with an expected barley yield of about 83.8 per cent of average, or 46.1 bushels per acre.

"Right here, the rains that came in on the weekend were good enough to save the crop," Doug McBain said. "We had a little bit of hail damage, but not much. We should be in good shape now."

McBain cultivates malt barley, feed barley and canola on 810 hectares outside of Cremona. He noted crop conditions in Alberta were all over the map, ranging from zero to average, but none a bumper crop.

"A lot of the crops were late because it was so cold in June," he said. "But this is going to help finish the crops off here. And help the pastures come back."

Crop conditions at the end of July were hit by intense heat and little if any moisture, according to the latest crop report.

"Our crops are not very good," said Albert Wagner, a grain farmer west of Edmonton. "They've suffered a lot from the drought. We did get rain and it has improved what's there, but there's not much there."

Wagner has cultivated 1,335 hectares, leaving some 688 hectares for pasture and hay. His wheat and barely crops are thin, about 60 per cent to 70 per cent of normal yield, and although the canola was looking better, he wasn't sure it would make it.

"It all depends on what happens in the next little while, because if we get a frost, there will be a lot of feed," Wagner said.

[johnlw]

'There's nothing to harvest': Alberta farms devastated

A weekend hailstorm hit a swath of Alberta farmland that had escaped earlier damage from drought

By Gina Teel, Calgary HeraldAugust 5, 2009 7:05 AM

Farmer Bob Reid stands in a what was once a field of waist high barley on his farm near Carstairs. The metal grain silo was blown over half a mile from a neighbour's property and landed in the field. The damage was the result of a powerful hail and wind storm that cut a swath through the area on Sunday August 2, 2009.
Photograph by: Gavin Young, Calgary Herald

CALGARY - The malt barley crop at the Reid family farm barely reaches above the ankle, a dramatic change from the lush, waist-high growth this same field boasted just days earlier.

The seed heads of what was a decent crop now lie smashed flat on the sodden ground. Some of the plump, green heads are severed completely from the plant while others cling by fibrous threads to bent, broken and shattered stalks.

"There's nothing to harvest," said Bob Reid of the devastation to parts of the farm Sunday night by a fierce storm that unleashed grape-to walnut-sized hail in the Carstairs area, and went on to pummel crops across central and southern Alberta.

The storm carved such a path of destruction that officials with the Agriculture Financial Services Corp., the province's crop and hail insurance provider, anticipate they'll receive over 1,000 hail claims--more than five times the amount typically arising from a bad storm--based on the volume of calls received so far.

Standing in the Reid family's devastated field northwest of Carstairs, it's easy to see why the provincial insurer is expecting an avalanche of hail claims.

Underscoring the storm's severity is a badly damaged grain bin, sent spinning by the wind, resting on its side in the flattened barley field.

The bin, which left a debris field as far as the eye can see, belongs to a neighbour whose farm is more than a kilometre away.

For Reid, the loss of his crop is a particularly hard hit, as he'd for the most part escaped the drought plaguing parts of the province earlier this summer.

"This was a nice, 90-bushel-an-acre crop," said Reid at the farm he and other family members operate along with his father, Gordon Reid, of Cremona.

"The sad thing is, you put all your inputs into it, you put the right weed spray on and lots of fertilizer and you expect to have good income off of it, and you end up with this," he said.

Of the 365 hectares of barley seeded by the family, 283 have been lost to the storm, he said. More than half of their 200 canola hectares are gone as well.

Other fields in the area have been similarly ruined by hail, trees in wind belts have been split in half or knocked down, and a thick layer of debris of leaves and branches line the roads.

Homes with siding are riddled with huge holes. Such is the case at the home of Hendrik Schipper and Piep Nieuwenhuis, where the hail sheering in from the north stripped the bark from their trees. A plastic garden table out back has fist-sized holes in it, and their canola crop is decimated.

Schipper, who was more concerned about the welfare of his badly injured trees, took the damage in stride.

"In this world, there are worse things," he said.

Doug Dueck, regional manager for the southern region of Alberta Financial Services Corp., said as of late Tuesday approximately 800 to 900 claims had been logged by district staff in his area alone, which runs from Airdrie to Lethbridge.

However, as farmers have three days to report their hail claims to the insurer, the full extent of the damage won't be known until Wednesday or Thursday, he said.

"I would say on a scale of one to 10, this is a large one, and normally . . . if you have 50, 60, 70 claims on a hailstorm, we hope that's all we hear, but when you get upwards of 800 or 900, it's significant," Dueck said.

The situation comes on the heels of two years of record hail payouts for Alberta Financial Services Corp., starting in 2007, when it paid out more than $175 million.

Sunday's storm started west of Olds and tracked through Carstairs, Didsbury, Airdrie, Strathmore and then headed south through Langdon and Carseland. It continued south through Enchant, east of Taber and into Burdett. It reportedly affected Warner and Milk River as well.

On Tuesday, the provincial insurer was still trying to build a picture of the width of the storm. Meanwhile, phones at their regional offices were ringing off the hook and staff are going full bore serving clients, officials said.

Near Airdrie, a vacant barn built in 1913 was blown over in severe winds battering George Dowler's place.

The 33.5-metre-long structure, which was secured with posts in concrete footings and cables, lies in a jumble in the yard, its piles of exposed rafters looking very much like the ribs of a long-ago shipwreck.

"It was a landmark, and you appreciate it, like those old grain elevators that used to be around, and it was the biggest barn I've ever seen," said Dowler, who was at Pigeon Lake when the barn went over early Monday morning.

The storm flattened his vegetable garden, leaving his rhubarb patch an unrecognizable heap and ripping the leaves from his raspberry canes.

The hailstorm is just the latest blow for farmers this year, after a cold spring delayed crop maturity. Many areas in East central Alberta were then hit by drought, resulting in a below-average crop in many areas.

In early July, the Alberta Financial Services Corp. said it was then facing a potential payout that could rival the $800 million paid to farmers in the 2002 drought year, due to the disastrous growing conditions.

While southern Alberta was one of the bright spots in the province, with both dry land and irrigated crops doing well, the area was also hit by hail damage over the weekend.

The hailstorm was news to Brian Otto, 16 kilometres east of Warner. He spent the long weekend combining his crops.

The weather was hot, and there were thunderstorms around in the evening, but he didn't catch any of them at his place.

All things considered, Otto said he's feeling pretty lucky.

"We're going to have an average crop I think," he said.

[johnlw]

Agrium earns $370-million (U.S.) for the second quarter
Ticker Symbol: C:AGU


Agrium earns $370-million (U.S.) for the second quarter


Agrium Inc (C:AGU)
Shares Issued 156,908,223
Last Close 8/4/2009 $50.68
Wednesday August 05 2009 - News Release

Mr. Richard Downey reports

AGRIUM EARNS $370-MILLION IN SECOND QUARTER 2009; SEES STRONG FUNDAMENTALS

Agrium Inc. released today its second highest quarterly net earnings at $370-million ($2.35 diluted earnings per share) for the second quarter of 2009.

All amounts are stated in United States dollars.

"Solid results from Retail, Advanced Technologies and our Wholesale nitrogen businesses resulted in Agrium achieving our second strongest quarterly net earnings in our history. We were able to do this despite the challenge of a short-term reduction in potash and phosphate application rates and Retail crop nutrient margins. The outlook for our businesses and products remains strong and we are starting to see signs of improving demand fundamentals as we approach the fall season. Our Retail crop protection and seed businesses in particular delivered excellent results and we ended the season with normal crop nutrient inventories in our Retail business. We continue to anticipate a recovery in potash demand later in the second half of 2009." said Mike Wilson, Agrium President and CEO.

With respect to Agrium's proposal to acquire CF Industries Holdings, Inc. ("CF"), Mr. Wilson stated "We remain fully committed to acquiring CF, with continued conviction that an Agrium and CF combination would create significant value for all stockholders and other stakeholders. We will continue to press CF to execute a mutually beneficial merger agreement despite the fact that CF has so far ignored a clear mandate from their stockholders' to conclude a transaction with us. Our offer remains far superior to any alternative articulated by CF, including remaining independent or paying a premium for Terra."

The 2009 second quarter results included gains of $15-million ($0.07 diluted earnings per share) on derivative financial instruments and a $4-million expense in stock-based compensation for the quarter. It also included an inventory write-down of $32-million (a $0.15 decrease in diluted earnings per share) primarily associated with our Wholesale purchase for resale business.

Similar to previous years, we intend to provide earnings guidance for the second half of the year when we release our third quarter results.

KEY RESULTS AND DEVELOPMENTS

- The strength of our crop protection and seed businesses was evident again this quarter providing excellent results for these product groups, jointly contributing $480-million in gross profit, 80 percent of Retail's total gross profit in the second quarter. Despite significantly reduced fertilizer rates and temporarily low crop nutrient margins we expect EBITDA from our Retail business to approximate $400-million in 2009.(1) Retail EBITDA of $307-million in the second quarter of 2009 was the second highest of any quarter, behind only last year's exceptional second quarter results. Despite crop nutrient use being well below normal, we moved through the majority of our high cost crop nutrient inventory position and did not incur any inventory write-down in our Retail business in 2009.

- Wholesale performance, for urea and ammonia products in particular, was strong this quarter with nitrogen contributing $182-million in gross profit, 86 percent of Wholesale's total gross profit. Equity earnings from our MOPCO Egyptian investment were an impressive $10-million this quarter. Potash margins were $377 per tonne but sales volumes were well below historical levels.

- Recent potash settlements in India have provided additional clarity to global potash prices and we anticipate demand to recover to normal levels in both our Retail and Wholesale businesses in the second half of 2009.(2) Agrium remains committed to our brownfield expansion and continues to evaluate greenfield opportunities.

OUTLOOK, KEY RISKS AND UNCERTAINTIES

A second consecutive year of delayed corn and soybean planting in the U.S. Corn Belt led to a high level of volatility in grain and oilseed prices during the second quarter. Grain prices came under pressure following the completion of spring planting and pressured further when the USDA reported significantly higher than expected corn and soybean planted area at the end of June. Prices have stabilized since then, but significant uncertainty remains with respect to global grain and oilseed production and prices for 2009/10 at this early stage of the year. The USDA is currently forecasting that global grain ending stocks will increase slightly. This assumes normal yields globally, although weather and crop nutrient levels will play an important role in determining final yields. Dry weather has hampered grain production in Western Canada and Argentina, leading to the lowest planted area of wheat in Argentina in recent history. In addition, monsoon rains in India are below normal for the first two months of the growing season. The significant reduction in global fertilizer use this past year is expected to have some impact on yield potential this year and could result in potential nutrient deficiencies for 2010/11, which could lead to higher than normal application rates starting this fall.

Wet spring weather delayed demand for crop protection products in North America this year but higher corn acreage provided solid demand for seed and most crop protection products. The one exception was lower demand for glyphosate based products this spring. We expect retail demand for glyphosate to improve in the second half of the year after declining 19 percent in the first half of 2009. Stronger than historical grain prices and crop margins are expected to support continued growth in the seed and crop protection product lines into the next crop year.

The outlook globally for urea and ammonia markets appears stable as producers are comfortable with their bookings through August. This has been supported by increased demand from India, Pakistan and Brazil and seasonal turnaround at a number of facilities internationally. Urea prices in the U.S. Gulf have increased 20 percent since May, and have returned to a point where the U.S. has become an attractive market for imports. U.S. urea imports for the first five months of 2009 were down 11 percent from 2008 levels, which have contributed to tight U.S. inventory levels. Chinese export taxes on urea are currently 10 percent and will remain at that level until September 15, at which time they are expected to increase to 110 percent until the end of October. Chinese offer prices have increased in parallel with global prices and are currently acting as a cap on the market. The UAN market may experience additional pressure relative to urea prices in late 2009 as the new Trinidad UAN facility is expected to come on-stream at that time. At current crude oil prices, European formula-based natural gas prices will increase in the fourth quarter which could put upward pressure on nitrogen prices.

The delay in 2009 contracts between major potash producers and Chinese and Indian buyers created considerable uncertainty in the marketplace, resulting in many other buyers delaying their purchasing decisions. As a result, producers have continued to reduce capacity utilization. In the first six months of 2009, TFI reported North American potash production was down over 60 percent from the high rates in 2008, and North American inventory levels were at historically high levels at the end of June. Recent contract agreements between India and global potash producers have been concluded at prices significantly below 2008 contract values. This is expected to influence benchmark prices for the near term but has provided additional clarity on prices to the market. As a result, demand is expected to improve in the second half of 2009 and rebound strongly in 2010. There continues to be uncertainty with respect to both volumes and price of 2009 potash contracts with China.

Global phosphate markets have recently shown some signs of stabilizing. The TFI reported U.S. DAP/MAP June inventory levels were 9 percent below the five year average and only 4 percent above 2008 levels. Apparent wholesale DAP/MAP disappearance in the U.S. was down 37 percent in the 2008/09 fertilizer year compared to the previous year. We anticipate global and North American demand will continue to recover in the second half of 2009 and into 2010. India is still expected to purchase additional import volumes in the second half of 2009 and South American import demand is expected to continue to improve. The reduction in Chinese export taxes to 10 percent has been extended through August, but at current market prices, China is not expected to be a major factor in the export market. A risk to the phosphate market is a build in exportable Chinese inventories when the export tax is increased, which could cap the market in November when the export tax is again reduced.

 
  
                  CONSOLIDATED STATEMENTS OF OPERATIONS 
         (in millions of U.S. dollars, except per-share amounts) 
  
                                      For the three months   For the six months 
                                         ended June 30,       ended June 30, 
                                         2009      2008      2009      2008 
  
 Sales                                $  4,140  $  3,942  $  5,935  $  5,103 
 Direct freight                             50        72        92       126 
                                      --------- --------- --------- --------- 
 Net sales                               4,090     3,870     5,843     4,977 
 Cost of product                         3,168     2,609     4,630     3,324 
 Inventory writedown                        32         -        50         - 
                                      --------- --------- --------- --------- 
 Gross profit                              890     1,261     1,163     1,653 
  
 Expenses 
  
 Selling                                   281       220       485       323 
 General and administrative                 56        53       100        86 
 Depreciation and amortization              29        26        60        39 
 Potash profit and capital tax               7        50       (16)       67 
 Earnings from equity investees            (11)       (1)      (17)       (2) 
 Other (income) expenses                   (15)      (91)       64      (169) 
                                      --------- --------- --------- --------- 
 Earnings before interest, income  
 taxes and non-controlling interests       543     1,004       487     1,309 
 Interest on long-term debt                 21        17        46        28 
 Other interest                              6         8        12        10 
                                      --------- --------- --------- --------- 
 Earnings before income taxes and 
 non-controlling interests                 516       979       429     1,271 
 Income taxes                              146       311       119       408 
 Non-controlling interests                   -        32         -        32 
                                      --------- --------- --------- --------- 
 Net earnings                              370       636       310       831 
                                      ========= ========= ========= ========= 
 Earnings per share  
  
 Basic                                $   2.36  $   4.03  $   1.98  $   5.27 
 Diluted                              $   2.35  $   4.00  $   1.97  $   5.24 
  
 

[trosh1]

Vale may have competition from BHP for MOS

http://www.onn.tv/videos/sidewinder/virgin-media-inc-vmed-and-mosaic-co-mos/

(Been awhile, but:) "Market chatter is suggesting that BHP Billiton has finalized a takeover bid for MOS – this is unconfirmed, but rumors suggest that the bid is $72 per share for all outstanding shares."

Who knows - but I will be watching closely since I still have some 2010 options that I may cash in early if it jumps to the $65+ range.

I agree with Aaron (by the way, congrats Aaron) and am long DBA. It bypasses the credit/finance/political ag stock risks, and food IS bottom line.

Rain could be a problem for Canada. I am in the westerly air flow in the Pacific NW and we have had record heat and projected continued dry. It's headed your way.

[johnlw]

Rain is of the essence

By Harley Richards - Red Deer Advocate


Many farmers in east-Central Alberta could be headed for either an early harvest or a late one — with neither a desirable result.

Dry conditions in the region have already resulted in some crops being written off, with others teetering on the edge of viability.

“I’m thinking if we don’t get rain in the next week and a half, two weeks, you’re going to start seeing some cereal crops harvested either as green feed or for forage purposes,” said Harry Brook, a crop specialist with Alberta Agriculture and Rural Development’s Ag-Info Centre in Stettler.

If rain does come, producers could still find themselves dealing with crops that were delayed by the cool spring. Some will also have plants at two levels of maturity: those that germinated shortly after seeding and others that didn’t start growing until moisture conditions improved.

“You’ve got one third of your crop coming that will be mature in August, and then the majority of it’s going to be ready to cut something around Christmas,” said Brook.

But the immediate concern is moisture.

Canola fields have probably been the hardest hit by the hot, dry weather, said Brook. Wheat and barley crops are also showing signs of stress, however.

Some pea crops were looking good earlier in the season, but many of these are developing small pods and are unusually short.

“The trick is, how are you going to pick those things off the ground?” asked Brooks, pointing out that too much dirt in the harvested peas could bump them down to livestock feed grade.

Rainfall earlier this month was a big help, but precipitation levels varied greatly from region to region, said Brook. Even fields that got a good soaking are now in need of more moisture.

“A crop uses up to five millimetres of moisture (a day) when it’s at heading and filling time.”

Jeff Nielsen, who farms near Olds, agreed that growing conditions appear worst to the east. But prospects for farmers in his area also leave something to be desired.

“They’re not good — less than average crops for sure.”

Nielsen, who is a director with the Canadian Wheat Board, said spotty germination in the spring and an early June frost have adversely affected crops. Growth is also behind schedule.

“The stands aren’t what they were last year, and we’re still going to need timely rains to progress the crop. But what we really need is a fairly long period into September without any hard frosts.”

Kevin Bender, who farms near Bentley, said the situation in his neighbourhood is OK — for now.

“Our crops are looking good yet, but they’re at the point where they’re going to have to have some water soon.”

Canola is suffering from the current heat, he observed, and continued dry weather will reduce the yields of other crops as well.

Bender, who’s president of the Western Canadian Wheat Growers Association, a delegate with the Alberta Barley Commission and a director with the Alberta Canola Producers Commission, is also worried about the slow start to the 2009 growing season. A reckoning could come when the first frost hits, he acknowledged.

The Canadian Wheat Board has forecast a general decline in crops this year, said Nielsen. The picture should become clearer once a current crop analysis is completed.

One bright spot identified by Bender is the fact producers’ costs have come down in the areas of fertilizer and interest rates.

Still, noted Brook, the cost of growing and harvesting a crop remains about $250 to $300 an acre. Many producers can’t afford a bad year, he said, even if they have crop insurance.

[johnlw]

Potash Corp. earns $87.1-million (U.S.) in Q2 2009

2009-07-23 05:08 MT - News Release

Mr. Bill Doyle reports

POTASHCORP REPORTS WEAKER SECOND-QUARTER EARNINGS

Potash Corp. of Saskatchewan Inc. has recorded second quarter earnings of 62 cents per share ($187.1-million) compared with $2.82 per share ($905.1-million) in the same quarter last year. Fertilizer buyers continued to be extremely cautious in the wake of the global economic downturn, creating an unprecedented decline in potash and phosphate sales volumes as well as phosphate and nitrogen prices. In this environment, second quarter gross margin fell to $170.6-million -- with approximately two-thirds of that generated by potash -- compared with $1.4-billion in the same period last year. Earnings before interest, taxes, depreciation and amortization of $355.9-million, and cash flow prior to working capital changes of $304.7-million were also down compared with the same quarter in 2008. All dollar valued are stated in United States currency unless stated otherwise.

Offshore investments in Arab Potash Company Ltd. (APC) in Jordan, Sociedad Quimica y Minera de Chile S.A. (SQM) in Chile, Israel Chemicals Ltd. (ICL) in Israel and Sinofert Holdings Ltd. (Sinofert) in China contributed $70.2-million to second quarter performance, 25 per cent less than in the same period last year as these companies faced similar challenging conditions. The market value of the investments in these publicly traded companies was $6.6-billion as of market close on July 22, 2009, equating to approximately $22 per PotashCorp share.

"The breadth and depth of the global recession continued to be very difficult to predict, but the response was not," said Potash Corp. president and chief executive officer, Bill Doyle. "We faced the most significant deferral of demand the industry has ever seen, yet remained steadfast in the commitment to operate with a long-term view. We have been and will continue to be a patient company, preparing for the strong demand that we expect will follow current conditions and protecting the value of the core assets for the future."

Market conditions

Potash buyers continued to operate conservatively during the second quarter, carefully managing cash in a tough economy and waiting for price definition. With dealers and farmers globally continuing to work through inventories and reducing applications during the quarter, potash prices moved lower but avoided the significant declines seen in phosphate and nitrogen. While contract negotiations continued in India and China, customers in Brazil began purchasing toward the end of the quarter to replenish largely depleted inventories in advance of their key planting season. In North America, estimated potash applications for the fertilizer year (July, 2008, to June, 2009), declined by the largest amount on record, down approximately 40 per cent on a year-over-year basis. Shipments from North American producers fell 73 per cent compared with the same quarter last year and 53 per cent for the fertilizer year, leaving United States dealer inventories at very low levels heading into the fall application season.

In phosphate, United States producer solid fertilizer sales to United States customers declined 27 per cent compared with the second quarter of 2008. For the fertilizer year, sales declined 38 per cent and application rates were down approximately 30 per cent. With strong demand from India and renewed interest in Brazil near the end of the quarter, offshore sales from United States producers rose 30 per cent compared with the same quarter last year.

In nitrogen, United States sales volumes and prices declined as a result of weak industrial demand and liquidation of inventory by customers. Low natural gas costs made United States producers more competitive with their global counterparts, resulting in reduced imports.

Potash

Potash generated gross margin of $106.2-million in the second quarter versus $886.4-million in the same period last year. This decline reflected an 86-per-cent drop in sales volumes, as shipments fell to 400,000 tonnes from 2.7 million tonnes in the second quarter of 2008.

Despite limited product movement, the average realized potash price for the quarter was 15 per cent higher than second quarter 2008 levels, but 11 per cent below the previous quarter. Offshore realized prices were below those of the trailing quarter as market pricing recalibrated to lower levels. Prices of most product shipped by PotashCorp to Canpotex Ltd. (the offshore marketing company for Saskatchewan potash producers) in the latter half of the quarter was adjusted to levels commensurate with those recently established in the offshore market. Offshore realized prices for the quarter were also affected by the allocation of transportation and distribution fixed costs over fewer sales tonnes. As in the first quarter of 2009, North American realized prices were affected by the above-normal proportion of industrial volumes relative to fertilizer.

In keeping with the long-held strategy of matching production to market demand, the company took 50 shutdown weeks across the potash operations in the second quarter, compared with two weeks taken in the same period last year. As a result, total potash production of 600,000 tonnes was 73 per cent less than in second quarter 2008. In the first half of the year, the company took 89 shutdown weeks, reducing the 2009 production potential by nearly five million tonnes. Potash per-tonne cost of goods sold in the quarter was significantly higher quarter over quarter, primarily due to the allocation of fixed costs over greatly reduced volumes.

Phosphate

Second quarter phosphate gross margin of $20.5-million was 94 per cent lower than the $340.9-million generated in the same quarter last year, due mainly to considerably lower prices for fertilizer and feed products, plus weak volumes across all product categories. Strong margin performance from the industrial phosphate business -- where the company capitalizes on product diversification made possible by high-quality, lower-cost phosphate rock from the Aurora mine -- generated $41.0-million in gross margin and partially offset weakness in fertilizer and feed margins.

Realized prices for solid, liquid and feed phosphate products were below second quarter 2008 levels by 69 per cent, 64 per cent and 32 per cent, respectively. The company prices for premium industrial products, some of which are sold to customers under contracts containing cost-plus or market index provisions that lag current market conditions, rose 13 per cent over the same quarter last year.

The per-tonne cost of goods sold in phosphate declined as prices for sulphur, used in the production of phosphoric acid, were significantly lower than in second quarter 2008. The curtailment at the White Springs facility continued through the second quarter and was primarily responsible for a 26-per-cent decrease in total phosphate production.

Nitrogen

Lower realized prices across all nitrogen product categories resulted in second quarter gross margin of $43.9-million, down 79 per cent from the $210.0-million generated in the same period last year. The company's Trinidad operation, which benefits from long-term, lower-cost natural gas contracts, generated $22.9-million in quarterly gross margin. The company's United States operations contributed the remaining $21.0-million.

The company's average realized price for nitrogen products of $239 per tonne was 46 per cent lower than in the same quarter last year. Lower gas prices along with depressed industrial demand resulted in ammonia and urea prices falling 50 per cent and 48 per cent, respectively, quarter over quarter. Nitrogen solutions prices were down 52 per cent from the same quarter last year.

Total nitrogen sales volumes were 6 per cent lower than in the second quarter of 2008 as the United States operations ran at reduced rates, 80 to 90 per cent of capacity. The company's total average natural gas cost included in production, including the hedge, was $3.77 per million British thermal units, 51 per cent lower than in the same quarter last year.

Financial

As provided in the previous guidance, second quarter results reflect a $132.5-million cash settlement related to unauthorized investments made in certain auction-rate securities on the behalf, resulting in a $115.3-million gain from these previously impaired securities, recorded in other income.

In second quarter 2009, the company issued $500.0-million of senior notes bearing interest of 5.25 per cent due May 15, 2014, and $500.0-million of senior notes bearing interest of 6.50 per cent due May 15, 2019. The net proceeds of this offering were used to repay outstanding indebtedness under revolving credit facilities and for general corporate purposes.

Selling and administrative expenses were 33 per cent below the same period last year as a result of lower incentive accruals. Provincial mining tax accruals made earlier in the year based on higher annual sales volume estimates were reduced during the second quarter in conjunction with lower tonnage forecasts. In the second quarter the strengthening Canadian dollar resulted in the recognition of a foreign-exchange loss of $37.9-million, more than half of which was a translation loss.

The company continued to invest heavily in potash debottlenecking and expansion projects at five of the facilities, which made up the majority of the $399.6-million spent on additions to property, plant and equipment in the quarter. Potash Corp. believes the weak potash market environment of the past 10 months is unsustainable and temporary in nature. With the focus on the long-term need for more potash and the unique ability to deliver that growth, the commitment to these projects has not changed.

Outlook

Given the essential role fertilizer plays in food production, demand for potash and phosphate cannot be deferred indefinitely, as removing essential crop nutrients from the soil today means more must be applied tomorrow. With rising populations, fundamental shifts in dietary practices to more meat protein and fruits and vegetables, along with increasingly limited land and water availability, the company anticipates long-term pressure on the global food system. Potash Corp. believes that economic uncertainty has resulted in inadequate nutrient replacement to soils in all major agricultural regions, creating a void that must be filled. In some regions, nutrients resident in the soil and exceptional growing conditions can temporarily distract attention from this underlying issue, but unsustainable fertilizer practices cannot continue if the world's need for food is to be met.

The imminent need for improved soil fertility around the world is beginning to bring much-needed clarity to nutrient markets. Recently announced contracts between major potash suppliers and India's fertilizer buyers demonstrate customer understanding of the premium value and very different long-term supply/demand fundamentals for potash. In contrast to phosphate and nitrogen realized prices, which have reverted near 2006 levels, India's recent potash settlements equate to a level nearly triple the realized offshore prices of three years ago. While these prices are 26 per cent below the record contract prices of last year, historical and relative context is important: this is one of the worst economic downturns the company has ever seen, and the company has just exited a fertilizer year in which global potash shipments were more than 30 per cent lower than the previous year.

Potash Corp. believes a return to normal potash demand -- and demand growth -- will be driven not only by the need to replenish soil nutrients but also by renewed customer confidence in pricing. Fertilizer dealers make money by buying when they believe they can capture a positive margin, and many were shaken by the economic downturn and the rapid decline in phosphate and nitrogen pricing. Potash Corp. has seen India resume potash purchasing, which the company expects will be followed by significant interest from the large Brazilian market, and the company anticipates that customers worldwide will commit with confidence to new orders and initiate the lengthy process of refilling the potash pipeline.

Potash Corp. believes this situation could be similar to 2006, when extended contract negotiations pushed significant potash sales back to the latter half of the year and, more importantly, were the precursor to the strong demand rebound in 2007 and 2008. The current circumstances are even more dramatic because of the extent and duration of destocking that has occurred. With more than 14 million tonnes of global potash production curtailed so far this year, the company expects a strong rebound in 2010 potash sales volumes to tighten supply/demand fundamentals.

Potash Corp. anticipates global potash demand in 2010 to be in the range of 55 million to 60 million tonnes, depending on the pace of improvement in the world economy and related crop commodity prices. If economic recovery lags and consumers, including those buying grain and oil seeds, remain cautious, the need to replenish soil fertility could drive a rebound to the lower end of the range. If customer confidence and normal buying patterns return, grain markets could reflect both rising demand and global production shortfalls due to poor fertility practices during this recession. Higher crop prices could once again motivate farmers to maximize production and could drive potash sales volumes to the high end of that range next year. At this level, the company believes global producers would be near operational capacity.

Potash Corp. expects that the potash inventories built by producers during the downturn will supply immediate needs, but with low inventories in the broader supply chain, warehouses are expected to empty quickly as demand returns. Potash Corp. believes meeting longer-term demand growth will present a greater challenge. Building potash capacity requires considerable cost and a long time to execute, so sufficiently high potash margins are necessary to justify the investment. In the view, margins have not reached a level that justifies the cost of a greenfield mine. Recently settled contract prices have made this investment even more challenging.

Potash Corp. believes these issues further enhance the window of opportunity for the expansion projects in Saskatchewan and New Brunswick, which will be completed in a shorter time frame and at a significant discount to the estimated cost of a greenfield mine. These projects are expected to be completed on schedule, increasing the constructed capacity to 18 million tonnes by the end of 2012 with a steady ramp-up between now and the end of 2014.

Potash Corp. now expects 2009 potash sales volumes to be in the range of 4.5 million to 5.0 million tonnes. As the company has for the past two decades, the company will match the production to demand as it returns market by market through the second half of the year. With the current operational capacity of approximately 11.5 million tonnes, further production curtailments above the 4.7 million tonnes already announced this year will be required. Potash Corp. now anticipates potash gross margin for 2009 to be in the range of $1.2-billion to $1.5-billion.

With lower forecast potash volumes, the company now anticipates the 2009 annual effective tax rate will be in the range of 14 to 16 per cent, with the remaining quarters at approximately 23 to 25 per cent. Provincial mining and other taxes are now forecast within a range of 4 to 5 per cent of total potash gross margin as a result of lower volumes increasing the impact that the deductible potash capital expenditures are expected to have on the profit tax component of these taxes. Potash Corp. now anticipates other income to be slightly above 2008 levels.

PotashCorp is expecting third quarter net income per share to be in the range of 80 cents to $1.20. For the full year, the company anticipates earnings to be in the range of $4.00 to $5.00 per share.

Conclusion

"We have often said that the demand for the life-giving nutrients does not grow in a straight line, but we believe the upward trend is undeniable," said Mr. Doyle. "After almost a year of unprecedented global destocking, we are now beginning to experience the re-emergence of demand in the key markets. As farmers around the world respond to their noble calling of feeding the world, we expect this will trigger a multiyear process of nutrient replenishment, particularly potash. We will be ready to supply their growing needs and, at the same time, reward the shareholders."

   CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS 
      (millions of U.S. dollars except per-share amounts) 
  
                          Three months ended      Six months ended 
                                     June 30,              June 30, 
                             2009       2008       2009       2008 
  
 Sales                  $   856.0  $ 2,621.0  $ 1,778.5  $ 4,511.6 
                        ---------  ---------  ---------  --------- 
 Less 
 Freight                     38.9      103.4       76.5      205.8 
 Transportation and 
 distribution                37.7       33.3       64.7       65.6 
 Cost of goods sold         608.8    1,047.0    1,237.1    1,946.9 
                        ---------  ---------  ---------  --------- 
 Gross margin               170.6    1,437.3      400.2    2,293.3 
                        ---------  ---------  ---------  --------- 
 Selling and  
 administrative              53.4       79.7       96.8      126.9 
 Provincial  
 mining and 
 other taxes                (18.1)     163.0       14.9      262.4 
 Foreign exchange  
 loss (gain)                 37.9        1.9        7.7      (25.8) 
 Other income              (188.4)    (103.3)    (223.4)    (115.2) 
                        ---------  ---------  ---------  --------- 
                           (115.2)     141.3     (104.0)     248.3 
                        ---------  ---------  ---------  --------- 
 Operating income           285.8    1,296.0      504.2    2,045.0 
 Interest expense            26.5       15.7       49.7       26.9 
                        ---------  ---------  ---------  --------- 
 Income before  
 income taxes               259.3    1,280.3      454.5    2,018.1 
 Income taxes                72.2      375.2      (40.9)     547.0 
                        ---------  ---------  ---------  --------- 
 Net income             $   187.1  $   905.1      495.4    1,471.1 
                        =========  =========  =========  ========= 
 Retained earnings, 
 Beginning of period                            2,402.3    2,279.6 
 Repurchase of common shares                          -   (1,981.7) 
 Dividends                                        (59.2)     (62.8) 
                        ---------  ---------  ---------  --------- 
 Retained earnings, 
 End of period                                $ 2,838.5  $ 1,706.2 
                        =========  =========  =========  ========= 
 Net income per share  
 Basic                  $    0.63  $    2.91  $    1.68  $    4.70 
                        =========  =========  =========  ========= 
 Diluted                $    0.62  $    2.82  $    1.63  $    4.54 
                        =========  =========  =========  ========= 
 

We seek Safe Harbor.

[johnlw]

This is a family board Eddie

[Ed Monton]

Hummers are good.

[johnlw]

That is why AGU and POT are up today
API humming

[Ed Monton]

That would be a big deal.

[johnlw]

Vale mulls bid for potash producer Mosaic: paper

Brazilian newspaper says deal could be worth about $25-billion

*

TORONTO — Reuters Last updated on Thursday, Jul. 16, 2009 02:02PM EDT

Brazil's Vale (VALE-N17.72-0.35-1.94%) , the world's largest iron ore miner, may bid for fertilizer company Mosaic Co. (MOS-N49.605.0511.34%) , which is controlled by commodity giant Cargill and IMC Global, a a Brazilian newspaper said Thursday.

Mosaic, is one of the world's largest producers of concentrated phosphate and potash, two of the primary nutrients required to grow food grains and other crops.

Global interest in potash has risen sharply in the last couple of years, as a very small group of companies controls about 75 per cent of global supply, and the price has until recently remained stubbornly high.

The report on Vale's interest in Mosaic, sent shares of the fertilizer company up 11.5 per cent to $49.70 (U.S.) on the New York Stock Exchange. The Estado de S. Paulo newspaper in Brazil estimates the deal could be worth about $25-billion, or $56 per share.

Mosaic currently has roughly 444 million outstanding shares and a market capitalization of about $22-billion.

Analysts think the deal is easily feasible for the cash-rich Brazilian mining giant.

“From a big-picture perspective it fits with Brazil's stated strategy of becoming self-sufficient in fertilizer,” said Morningstar analyst Ben Johnson.

“Mosaic would be the best fit in terms of the assets that are out there, given that they have got substantial potash and phosphate assets and a distribution network that is already in place,” he added.

Earlier this year, Vale spent $850-million on the purchase of potash assets in Argentina and Canada.

Vale, after failing in its estimated $90-billion bid for mining rival Xstrata over a year ago, has changed its approach and is targeting smaller acquisitions with particular emphasis on the fertilizer sector.

Minnesota-based Mosaic Co, a joint venture between Cargill and agricultural firm IMC Global, has operations in several U.S. states and in the potash-rich western province of Saskatchewan in Canada.

Mosaic also controls 62 per cent of Brazilian fertilizer producer Fospar, which has a terminal at Paranagua port. It has a 42 per cent stake in the Cubatao Fertilizer Industry, which mixes and distributes fertilizers in Brazil, while it also has a nearly 20 per cent stake in local fertilizer heavyweight Fosfertil.

A number of other companies have been scouting for potash assets and earlier on Thursday Canada's Athabasca Potash Inc. (API-T5.501.4234.80%) said it is exploring a possible sale of all or part of the company.

Vale told Reuters its policy was not to comment on rumours when asked about the reported bid. A spokeswoman for Mosaic was not immediately available for comment, while Cargill declined to comment.

[johnlw]

Agreed kidl.
I have had to jump through major hoops to create a new title on a chunk of our farm...and the county planning official told me what I was trying to accomplish made sense.
Im my experience here in Alberta the county elected officials are rural guys and not the most forward thinking bunch. Maintain the status quo is their agenda. The regional planning commissions got abolished and with that went any hope of a more progressive agenda.
On the bright side here in town there are community garden plots that get used productively.
Local food production needs to be made more viable or at least better supported by the public.

[kidl]

Interesting idea but I doubt this could work in Canada given zoning restrictions