TORONTO — Canada is poised to play a big role in global food production as climate change makes farming more difficult and the world’s food supply chain is rendered fragile by political and economic uncertainty, said Nutrien CEO Ken Seitz.
Seitz made the remarks in Toronto at an event hosted by the Economic Club of Canada.
He said climate change is redrawing the map of global food production and Canada has an opportunity to be a key player in addressing food insecurity.
The world faces a double-barrelled problem, said Seitz: “To feed a rapidly growing world, we’ll need to produce more food and we’ll need to do it sustainably.”
Nutrien is the world’s third-largest producer of nitrogen and the largest producer of potash, two key ingredients in commercial fertilizer.
The Saskatoon-based potash and fertilizer company has six potash mines in Saskatchewan with more than 20 million tonnes of capacity, as well as two large phosphate mines in the U.S.
In Canada and across the world, climate change is making farming, already an unpredictable business, even more volatile, Seitz said.
“Here at home in Canada, growers are experiencing wetter springs, hotter and drier summers, all of which constrains our irrigation and water and all those resources that we need to manage,” he said.
Seitz said farmers need support in the form of incentives so they can adopt technology and new practices in order to farm more sustainably. Risk is a major barrier for farmers, he said, who are dealing with increasing uncertainty and managing slim margins.
He said in an interview after the event that the U.S. Inflation Reduction Act, to which the Canadian government has been under pressure to respond, is a good example of the kind of incentives that can drive investment. Nutrien is looking at building a clean ammonia plant in Louisiana, and Seitz said the incentives provided by the Act helped give the company confidence to invest there.
"It's difficult to respond to something as powerful as the Inflation Reduction Act, but that's where probably the work needs to be done," said Seitz, calling the federal government's latest budget "a start."
In his speech, Seitz said he believes carbon capture is a key part of the climate solution.
In 2021, Nutrien began piloting a new project aimed at helping farmers reduce greenhouse gas emissions, trap and store carbon, and measure improvements as well as facilitating the purchase and sale of carbon credits.
The pilot is currently working on 750,000 acres across North America, Seitz said Wednesday.
In 2024, Nutrien will expand the program to Australia and Brazil, Seitz said after the speech.
Nutrien also has its own emissions goals with particular emphasis on its nitrogen portfolio, said Seitz, with about $50 million in investments to date in that area. He said the company is currently on track to reduce its greenhouse gas emissions in nitrogen production by one million tonnes by the end of this year.
The past year has been a tumultuous one for the agriculture business, and Nutrien has not been immune to the ups and downs.
Demand increased for Nutrien’s potash earlier in 2022 as a result of the war in Ukraine. Because of that boost, in March the company said it would ramp up production to meet the demand, with most of that additional volume expected to be produced in the second half of the year.
That ramp-up would mean more capital spending and more hiring at Nutrien’s Saskatchewan potash mines, the company said in May. However, as Nutrien saw sales slump in the latter half of its financial year, in February it announced it would delay increasing production.
Despite this, Nutrien’s earnings in 2022 doubled, which the company attributed mainly to higher selling prices resulting from global supply uncertainties as well as record retail performance.
And its production ramp-up, while pushed back, was far from scrapped. The company said while it had previously planned to increase annual potash production to 18 million tonnes by 2025, it would reach that milestone by 2026 instead.
Seitz said the promised hiring at Nutrien's Saskatchewan mines is being paced along with the other incremental changes across its supply chain that over time add production capacity.
"So we're carrying on expanding that production. But we have the ability to pace it as we watch the market."
Nutrien was created in 2018 as a result of a merger between PotashCorp of Saskatchewan and Calgary-based Agrium Inc.
— With files from Amanda Stephenson
This report by The Canadian Press was first published April 5, 2023.
Companies in this story: (TSX:NTR)
Rosa Saba, The Canadian Press