Farmers ante up for proposed producer-owned nitrogen fertilizer plant

Farmers of North America have raised more than $5 million in the past six weeks for a proposed farmer-owned nitrogen fertilizer plant in Western Canada.

The sale of more than 5,000 “risk capital units” (worth $1,000 each) shows there is “overwhelming” support for the project, said Bob Friesen, spokesman for the NFA’s Fertilizer Limited Partnership.

“In all my years of farm advocacy, I have never seen farmers embrace an issue as enthusiastically as this one,” said Friesen, former head of the Canadian Federation of Agriculture.

“They realize that input costs are a bigger impediment to profitability than market prices.”

His group has put on 60 public town hall meetings in Western Canada, Ontario and Quebec, and has also set up the website.

Farmers who fork over seed capital aimed at funding the project’s early planning stages are being offered a guarantee on 60 per cent of their investment up until the end of December, and those who “step up to the plate” will see their money converted into shares under preferential terms once the plan’s equity drive begins at some future point, said Friesen.

“If something were to happen and the project didn’t go ahead, 60 per cent will be returned to farmers in the form of FNA membership extension or money on account to use for other FNA programs,” Friesen said.

Farmers who buy seed capital units also commit to future purchases of the plant’s production. With participation so high, Friesen said it may soon come to a point where all the production volume has been spoken for.

Under the FLP proposal, farmer investors will be able to buy nitrogen fertilizer at wholesale prices, and also receive a year-end return in the form of investment dividends.

“The reasons farmers have given for this staunch support are that they’re looking for a more permanent solution in reducing fertilizer costs,” said Friesen.

Once a third-party investor with expertise in nitrogen fertilizer production is brought on board, a site will be chosen ahead of plant construction that may begin by late 2016. Friesen said the site will have to be strategically located near a supply of natural gas, water, and rail lines.

Canadian Federation of Agriculture president Ron Bonnett and Agricultural Producers Association of Saskatchewan president Norm Hall are both publicly supporting the project.

“The chance for farmers to participate as an owner in the manufacturing of one of their primary input costs makes a lot of sense,” said Bonnett.

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