New Bunge unit not seen hitting fertilizer prices

(Resource News International) — Bunge’s decision to enter the North American fertilizer market is unlikely to have an impact on fertilizer prices in Western Canada, according to a Canadian farmers’ purchasing group.

Bunge North America, a branch of U.S.-based agricultural giant Bunge Ltd., announced Thursday that a new unit had been created to distribute and market fertilizer products in North America. The company intends to source the commodities both domestically and internationally for sale to domestic dealers and co-operatives.

Bunge Ltd. is currently a leader in the South American fertilizer industry.

However, introducing another player into the North American market will not necessarily mean more competition in Western Canada, according to Jason Mann, chief operating officer for Farmers of North America (FNA) in Saskatoon. Mann believes it is more likely Bunge will focus its attention mainly on the U.S.

“Western Canada is so land-locked that Bunge would have a more competitive footing going into the U.S. through New Orleans, or even into Eastern Canada, rather than trying to compete with domestic manufacturers out here such as Agrium,” he said.

Because Bunge makes its fertilizer in South America, its product will likely head to New Orleans for distribution through the southern U.S. river system, Mann explained.

Even if Bunge North America were to enter the western Canadian fertilizer market, there would still be just a handful of major players in the industry and Bunge hardly represents a break from the current situation, according to Mann.

“It is always nice to have another player in the market but they’re a big multi-national company just like anybody else. They ultimately answer to the shareholders, which means making as much money as they can. I don’t think this will make much of a difference for the end-users,” he said.

FNA, a producer co-operative, has in the past sought to introduce more competition into the Canadian fertilizer industry. The group made headlines in the fall of 2007 when a Russian vessel arrived at the Port of Churchill, Man., loaded with a shipment of fertilizer purchased by the producer group to be distributed among its members.

Since then, Mann said FNA has been quietly shipping in fertilizer throughout the year via different ports but declined to say how much they had purchased abroad to date.

“We’re nibbling away at the market,” he said.

As far as future shipments into the Port of Churchill go, Mann said FNA likes to support the northern Manitoban port but would like to see improvements made to the infrastructure there.

“There is no warehousing, no cranes, so it really needs everything. We want to help that port out but it still needs a lot of work.”

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