FNA Fertilizer

[Hopperbin]

The best scenario in my books is that the price of fertilizer is not affected much at all and just enough to keep the farmers involved committed, the 50 percent profit then goes back to the investor. I would like that to play the part of investor and is not that the intention to make profit for us investors? , out and why would there not be enough interest from farmers to take higher stake of investment. BMO capital is running the show, word is land is purchased and Nateral gas is secured, but have my doubts as to that. FNA is only working on selling the seed stock shares, BMO capital will take over pretty soon, am I not correct? If the farmers don't want the investment profit I am sure someone else will take the opportunity. Farmer investors should try to stay in as investors only and not get too caught up in driving fertilizer prices down, and let the opperating partner run the show and to make the most profit for the investors should be the way it should be run. In my opinion.

[Hopperbin]

Think about it, for a cost of 1000 dollars per ton to build a million ton equivelent plant, total 1 billion. If one could have the opportunity to take a profit of 300 per 1000 dollar investment by keeping the price of 46 actually the same. In this case the N will still be 300 dollars less cause your making it on the investment side. Does that make any sense? If the price of N is driven down then all farmers share in the investment of a few. Not really what we should want to do here. Then as the major manufacturers scramble to keep their share prices up they may put on hold their own expansion plans as it may not be in their best interest to expand. Isn't there a similar N plant being planned in the USA to do the same thing?

[dave4441]

But is a profit from fertilizer production of $300/MT long term possible?? I think that if profit for fert production remained at that level everyone would build a plant.

[farmaholic]

I think they said something about not driving down the price of Fert because they would simply get crushed or squeezed out by the "Giants". The goal appeared to be providing fert at wholesale prices to those who bought in, not at cost of production but wholesale. Their profits would be the same whether they sold to a retailer or the Farmer. It was the retail level they are claiming to eliminate.

[Hopperbin]

Think about it the major manufacturers do not want to take a share price cut. By building it your joining not fighting.

[Rareearth]

Their are many design build companies to build a
plant, most of the planned projects will go with
this. The challenge is financing, do the farmers
really need other investors or is it a security
blanket? Depends how much is raised, control is
everything.
Any one can build a business, processing pant,
manufacturing facility. The real challenge is the
marketing and distribution. That is why
institutional investors are interested, captive and
committed market.
It's a perfect hedge for the farmers if they have
control, as they are the end users, in full control of
the value chain, with significant logistical
advantages. Who would be able to produce, and
distribute at a lower cost?
If market prices are high, the processing plant
makes money and pays dividends, if shit hits the
fan, plant breaks even all other plants go away,
and farmers have low cost N hopefully maintain a
cost of production(grain) that is competitive with
other unemcumbered grain producers.

Why wouldn't FNA just buy a operating plant in
Sask or Alberta vs build? A unconventional take
over or merger acquisition? This should be the
strategy. Some of the independant grain
terminals did this on the west coast, and very glad
they did