In a bid to further “match supply to market demand,” PotashCorp plans a further cut of 400,000 tonnes in its 2009 potash production.
The latest “curtailment,” announced Wednesday, will bring the Saskatoon potash firm’s total reduction for the 2008-09 fertilizer year to 4.8 million tonnes, and its year-to-date reductions to 3.9 million tonnes.
“Farmers and fertilizer dealers in offshore and North American markets have opted to draw down nutrients in the soil and destock inventories,” the company said.
Though potash shipments are thus reduced in the short term, the situation creates “a large void in the potash supply chain that will soon need to be filled,” the company said.
“While short-term demand deferrals are uncomfortable, we always manage with a long-term view,” CEO Bill Doyle said in a company statement Wednesday.
“Demand will inevitably return and — regardless of when that happens — we will be patient and preserve our assets until they are needed.”
Ag industry observers have previously criticized the controlled-supply strategy of a firm that bills itself as the world’s largest fertilizer enterprise. Saskatoon ag columnist Kevin Hursh in March described the company as one that “has so much market clout that it can cut production and keep prices high.”
Noting that the Saskatchewan government was able to balance its budget partly on potash revenues, Hursh said “it’s ironic that Saskatchewan farmers are benefiting from PotashCorp’s ability to put the screws to farmers in countries that rely on potash fertilizer.”