Top Fertilizer Maker Is Hoarding in Case Trade War Gets Worse

Top Fertilizer Maker Is Hoarding in Case Trade War Gets Worse

The stockpiles will act as a “buffer” and help the company avoid hiking the prices it charges to farmers, said Nutrien Ltd. CEO Chuck Magro.

The world’s largest crop-nutrient supplier has taken to hoarding key chemicals from China in case the trade war between Washington and Beijing gets even worse.

Nutrien Ltd. has built up a “strategic inventory” of the chemical ingredients it imports from China. The move comes in case the U.S. decides to increase a 10% tariff on the Asian goods to 25%, CEO Chuck Magro said.

Trade uncertainty is pressuring global crop prices, and the stockpiles will act as a “buffer” and help the company avoid hiking the prices it charges to farmers, he said.

“We have built some inventory on key crop chemistry that comes out of China,” Magro said in a telephone interview following the company’s fourth-quarter earnings. “That will hopefully take us through most of the spring season,” when farmers in North America will plant this year’s crops, he said.

Nutrien built its inventories in 2018, and now has ample supplies for the spring, especially after one of the wettest falls in U.S. history reduced fertilizer application last year, Magro said. While it doesn’t make sense for the company to add to its current stockpiles, farmers, retailers and suppliers may bear the brunt of increased costs later in the year if the trade dispute doesn’t get resolved, he said.

“We’re going to wait and see how things play out,” Magro said. “If there’s a trade settlement, that will be good news.”

By Jen Skerritt

 

TAGS: Supply Chain
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