Struggling fertilizer makers search for next great crop product

Wed Dec 18, 2013 12:00pm EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Rod Nickel

WINNIPEG, Manitoba Dec 18 (Reuters) - Fertilizer makers are boosting output of branded niche products, drawing from the playbook of plastics producers, just as the volatile crop nutrient industry endures its worst slump since the recession.

The products from companies like Mosaic Co, Intrepid Inc and Agrium Inc may have relatively small markets, but their unique nature leaves them somewhat buffered from the volatility of widely produced commodity forms of potash, phosphate and nitrogen.

Chicago corn futures are trading at about half their record high of mid-2012, dragging down fertilizer values, and last summer's breakup of Belarusian Potash Co has upended the once tightly controlled potash trade.

But while conventional potash producers have cut back production, output of specialty products is on the rise.

Some generate larger profit margins than traditional products, while others benefit from tapping markets with limited or no competition.

It is a strategy long followed by makers of polyethylene, the most common plastic. These companies have increased their profits through innovation, by developing such now-commonplace products as garbage bags with drawstrings and packaging designed to keep mixed salads fresh.

"You win because you typically get somebody to pay more, and may be creating a market that didn't exist before," said Cowen Securities analyst Charles Neivert.

For fertilizer companies, such efforts are "totally critical," said John Malinowski, vice president of business development for private agribusiness J.R. Simplot.   Continued...