Tariff shouldn’t hinder fertilizer imports: FNA

(Resource News International) — New tariffs on Russian fertilizer exports are not expected to affect sales from that country to Prairie farmers through the Saskatoon-based purchasing group Farmers of North America (FNA).

The Russian government recently said nitrogen fertilizer exports will be subject to a tariff of 8.5 per cent of the customs value while potassium fertilizer will be subject to a five per cent tariff, according to a March 18 Reuters article. Russia also plans to raise its existing five per cent tariff on fertilizers containing nitrogen, phosphorus and potassium in any combination of the three in packages not exceeding 10 kg to 8.5 per cent.

According to press reports, the money raised as a result of the tariff will go towards the purchase of fertilizer for local farmers.

However, “this Russian export tariff doesn’t really affect us because we’re paying the international price,” said Jason Mann, FNA’s chief operating officer.

“It’s not like the Russian price is suddenly going to be 8.5 per cent higher than anybody else’s price. They just have to be more competitive and perhaps make less profit. They have to compete with the world market,” Mann said.

This past October, FNA purchased a load of 34-0-0 ammonium nitrate fertilizer from Russia and shipped it to Hudson Bay port of Churchill, Man. for distribution to farms across Western Canada. The move was widely publicized as it was the first-ever inbound shipment to arrive at the port after crossing the so-called “Arctic bridge” from Russia.

In an interview at the time, Mann said the purchase was made in order to lower input costs to Canadian farmers and to remind the fertilizer industry that there are alternatives for Canadian farmers.

More recently, the shipment was once again in the headlines after a Globe and Mail article quoted a representative from the Canadian Association of Agri-Retailers (CAAR) as saying that shipments of ammonium nitrate, if kept without proper security precautions, could set up the circumstances for an “al-Qaeda yard sale going on in Western Canada.”

Then, on March 19, Natural Resources Canada announced new regulations for the use, purchase and storage of a number of chemicals and minerals commonly found in fertilizer, including ammonium nitrate. According to the news release, the regulations will require that anyone who sells ammonium nitrate or any of eight other specified chemicals be registered with the department and comply with security measures for storage, record-keeping and customer identification. The new rules will also prohibit the resale of ammonium nitrate by customers. The regulations for ammonium nitrate take effect on June 1 this year, and for the other eight restricted chemicals on March 1, 2009.

Mann said FNA is undeterred by the recent developments and points out that the group was already in compliance with the new regulations. Mann reiterated his position that the complaints by CAAR are nothing more than an attempt to block competition from entering the Canadian fertilizer industry. While he agreed that ammonium nitrate requires regulation for safety purposes, he rejected the idea it is not safe for a producer to store the product on his farm or at his local dealership.

Asked if FNA intends to continue importing fertilizer, Mann replied, “We’ve got big plans. There is such a lack of competition in the fertilizer industry that we’re going to be looking at ways to bring more competition into the marketplace.”

Churchill would be considered for future shipments, he added. “It all depends on which route is most cost-efficient but we do like Churchill because it is the Prairie port and we have an affection for it.”