Farmers fear market power of Agrium-PotashCorp merger

Farm groupsin both Canada and the United States are sounding warning notes over the possibility of higher prices and less competition from the pending merger ofPotash Corporationof Saskatchewan and Calgary-basedAgriumInc.

The $36-billion USdeal will create a massive player in the fertilizerindustry. National Bank Financial says the merged firm, if approved, would control almost two-thirds of potash capacity in North America, 30 per cent of phosphate production capability and 29 per cent ofnitrogen capacity.

• Union says potash merger 'surprisingly a good thing' for workers
• Potash andAgriumplan to merge and create $36B US agricultural colossus

The deal would also leave U.S. firmMosaic asthe only other major North American potash producer.

'Behemoths' forming

Saskatchewan farmer TerryBoehm, chair of the National Farmers Union's seed and trade committee, said it is unclear what the merger deal wouldmean for farmers, but pastagricultural industry consolidation has him wary.

"Our experience with mergers, whether it be in herbicide manufacturers, seed companies, etc., has always led to higher costs to the farmer as we have very little power to negotiate as individual farmers, or even as small collectives, ...with these behemoths that are being formed," Boehm told Peter Armstrong, host of CBC News Network's On The Money.

Boehmestimated that fertilizer accounts for about 25 per cent of the cost of running an average farm.

"Unfortunately, farmers are price takers," he said,adding they have no ability to pass on increase costs.

• Premier Brad Wall believes Sask. will benefit from PotashCorp/Agrium merger

The president of the Agricultural Producers Association of Saskatchewan said hisgroup has concerns about competition if theunion goes ahead.

"It's just one less competitor out there," said Norm Hall."We're seeing it across the board whether it's in the fertilizer business, the chemical business, the grain buyers... the consolidation continues. They call itthe greater good, but it's the greater good of the shareholders, not necessarilythe producers."

Hall said previously that if the merger went ahead, his group wouldraise those concerns with the federal Competition Bureau.

• Agrium-PotashCorp merger could signal 'next great frontier,' Calgary chamber president says

Roger Johnson, president of the National Farmers Union in the United States, said his group is also opposed to amerger.

"Family farmers, ranchers and consumers are the ones that lose out when wecripple competition, increase pricesand reduce innovation through industry megadeals," Johnson said in an email.

"We will keep close watch of these ongoing discussions and consider thepotential impacts a proposed Potash Corp./Agrium merger could have on U.S.farmers and ranchers."

Johnson has stated that his organization would request that U.S. antitrustregulators block the merge.

David Baskin, president wealth Management, said he expectsCanada'sCompetition Bureauwill come up with some "tweaks" to the deal,in which the companies areforced to sell some assets to get approval, adding hewould be surprised if thedeal gets killed off over competition concerns.

At a time when employment in Western Canada has been hurting,there will likely be jobs lost as a result of the merger deal, something that Baskinbelieves will raise government concerns.

"But I think, for Canadians, they should be happy that they're going to have a very viable champion in agricultural commodity exports," Baskin said.