Grainswest - Fall 2022

Fall 2022 Grains West 40 “There are constraints to how fast you can do that.” Similarly, CF Industries in the U.S. is increasing liquid nitrogen exports on both coasts to help relieve sourcing issues globally. While supply is built up, there are few workarounds and certain countries had no choice recently but to conduct business with Vladimir Putin. After all, what’s Canada’s favourite Russian import? “It’s not vodka. It’s fertilizer,” said Karen Proud, CEO of Fertilizer Canada. “No matter how one feels about Russia, the reality is Canada relies on Soviet fertilizer, especially those Ontario-east.” This reality sunk in on March 3, 2022. That day Canada stripped both Russia and Belarus of Most Favoured Nation status, and subjected both countries to an eye-popping 35 per cent tariff on virtually all goods entering the country, joining a nefarious directory that had previously only included North Korea. To date, Canada is the only country to apply such tariffs on Russian and Belarussian goods. What truly stings, though, is farmers were hit with the 35 per cent tariff despite having already bought their fertilizer at a contracted price, some as far back as July 2021, well before the levy was announced. Research from the Grain Farmers of Ontario and RealAgristudies discovered farmers in Eastern Canada were collectively hit with more than $150 million in extra charges on fertilizer they already purchased. The timing is tight, too. Since Russian fertilizer comes up the St. Lawrence River after spring thaw, the window is limited and the 660,000 tonnes that came in last year and represent anywhere from 85 to 90 per cent of all fertilizer used in the East. Western Canadian farmers did not suffer the same detrimental effects of the tariffs, but they’ve still paid unheard-of prices. The price of urea was around $1,200 per tonne in early October. “Nobody thinks about fertilizer until you don’t have enough,” said Proud. “Well, this is the time where everybody is concerned, and rightly so.” When the government put forward the sanctions, there wasn’t a full appreciation of the impact on fertilizer. I don’t believe they really understood how much is used in Eastern Canada, the way it’s procured and the timing. It’s not like we’re sitting on top of all this extra reserve.” Proud noted Canada is doing “all that it can” when it comes to increasing production, but it’s not as easy as flipping a light switch. “Our facilities operate seven days a week, 24 hours a day. There’s not that extra capacity.” As the world’s No. 1 potash producer, Canada is in a unique, resource-rich position, to step into the gap left by Belarus and Russia. However, the difficulty lies with those in Ottawa recognizing the value of fertilizer. Proud said lately it feels as though the sector she represents is not being taken seriously. “I don’t think the government really sees the fertilizer industry as the huge success it is and the potential for this industry to grow and really thrive. I don’t know why that is,” she said. “It may be that people don’t think about fertilizer, it’s not top of mind. It’s not a politically sexy industry.” Proud and her team have met with representatives of many nations, including Japan, Italy, Brazil, all wanting a Canuck solution. “There’s huge demand out there and the answer is Canadian fertilizer.” To date, Fertilizer Canada members are simply trying to secure sufficient supply to avoid the headaches of last spring. Despite supporting the government’s actions to stop the situation in Ukraine from further escalation, Proud insists such taxation is not the answer. “We’ve always maintained that fertilizer is a humanitarian product to feed the world,” she said. “We feel that it should never be subject to sanctions.” Everyone can agree fertilizer is a non- negotiable product farmers require to produce food the world over. As everyone has witnessed, what happens in one country produces ripple effects well beyond its borders. Linville underscores the importance of patience and perspective by likening the supply chain to a mallard. “The farmer just sees a duck gliding effortlessly across the lake. They don’t see that duck underneath the water kicking like hell trying to get from point A to point B. What they don’t see underneath the surface is the trucking, the rail, the barge, the global vessel, the price risk. “Ultimately, something that happens with Russia–Ukraine matters here. We’re part of a world economy whether we want to believe it or not. The farmer is starting to get more educated and more aware of that, but it’s a long process. It’s a generational way of thinking that’s going to be changed and it’ll get there, it just takes time.” “No matter how one feels about Russia, the reality is Canada relies on Soviet fertilizer, especially those Ontario-east” —Karen Proud FEATURE