Concentration in the fertilizer market
Agribusiness giant Cargill and rival IMC Global recently combined their fertilizer production businesses to form the #2 fertilizer company in the world. The new company will be 66% owned by Cargill and 33% owned by IMC, so essentially controlled by Cargill. IMC's potash and phosphates business is added on to Cargill nitrogen products.
The #1 fertilizer company in the world is Yara, a division of Norsk Hydro (soon to be spun off). That company has sales of around $4.9 billion a year. The new Cargill-IMC company will have sales of around $4.1 billion. Number #3 is Potash Corp, of Saskatchewan, with sales of around $2.6 billion a year.
Both IMC and Cargill will retain their retail fertilizer businesses.
This comes, according to Chemical & Engineering News ("IMC, Cargill Merge Crop Nutrient Business", 2/2/2004), at a critical time.
For IMC, the merger means allying with a strong partner after years of losses caused by industry overcapacity and a farm recession. Executives say the fertilizer industry is poised for a recovery.
For Cargill, the largest U.S. privately held firm, the deal means enlarging its position in fertilizers at the expense of going public-the first time an operation of the secretive family-owned business will be open to public scrutiny.
Cargill goes form being #4 in the industry to being a part of #2, a critical difference. The new company will have production assets across the globe from Canada to China and from Louisiana to Brazil. It also makes it even harder for any farm operation to avoid dealing with Cagill in some form or other.
