Glacier FarmMedia COVID-19 & the Farm

PotashCorp dials production back further

Potash Corporation of Saskatchewan plans to drop its 2009 potash production by another 1.5 million tonnes, bringing its total cutbacks for the year so far to 3.5 million tonnes.

“The extension of our potash curtailment reflects the continuing near-term draw-down of customer inventories as they work through stockpiles built prior to the global economic crisis,” the Saskatoon company said in a statement Monday.

The company said the move is “consistent with our strategy of matching potash production to market demand as we have over the past two decades.”

That said, all the “key” markets for PotashCorp’s products are expected to be “largely depleted” of inventories in the company’s second quarter, meaning “a strong rebound in potash demand in the second half of 2009 that should continue into 2010.”

When that time comes, the company said, “we will be well positioned to deliver more potash from newly-completed capacity expansion projects at our Lanigan and Patience Lake facilities (both in Saskatchewan).

“In addition, work will continue at our remaining expansion projects as we prepare for anticipated strong demand over at least the next five years.”

“Farmers, like other consumers, have been on a buying hiatus, but they cannot remain on the sidelines indefinitely,” PotashCorp CEO Bill Doyle said in the company’s statement.

“People need to eat; farmers need to grow and sell crops; and maintaining soil fertility is essential for those things to happen,” Doyle said. “It has been demonstrated in other fertilizer products that significantly lowering prices does not encourage additional volume and, in potash, would carry additional risks to capacity expansions that are necessary to ensure future supply.

“We operate with a long-term view and our goal is to be ready when more potash is needed — not only in the second half of 2009, but for the years ahead.”

But this form of readiness will also affect about 940 PotashCorp employees at Lanigan, Allan and Rocanville, Sask., according to the Reuters news service.

Of those 940, about a third will be recalled to handle maintenance work at the potash facilities, while the other two-thirds are temporarily laid off, Reuters quoted PotashCorp officials as saying.

Several of the workers in question had already been laid off the last eight weeks. The new layoffs at Rocanville will last for four weeks, while those at Allan and Lanigan will be in place for another eight weeks, the company told Reuters.

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