Mooted fertiliser deal to shake market

It is understood a contract between Wesfarmers-owned CSBP and Elders Ltd to formalise a fertiliser agency agreement could be signed within a week.

Discussions between the two companies were initiated after Elders' rural products and services rival and former CSBP corporate sister Landmark announced in November it would buy and direct market fertiliser sourced from United States-based giant Koch.

For many decades Landmark, now owned by Canadian-based Agrium Incorporated but once also owned by Wesfarmers, had a similar agreement with CSBP where Landmark agents arranged fertiliser deliveries, and the finance to pay for them, for clients.

Landmark's stated intention to direct market its own fertiliser marked the first move into WA by Koch Fertiliser Australia Pty Ltd.

The Australian arm of one of the world's largest fertiliser producers and marketers started trading in Geelong, Victoria, in 2010 and has since opened terminals in Brisbane, Adelaide, Port Kembla and Portland.

The move also came as CBH Group was preparing to bring its first shipment of fertiliser into Geraldton and Kwinana, further increasing competition within the WA fertiliser market, estimated to be worth $800 million last year.

CSBP's share of that market was about 60 per cent.

It is not yet clear how a new agency arrangement with Elders will affect existing arrangements with Landmark.

Industry sources have claimed a termination notice has been sent to break the CSBP deal with Landmark but contractual obligations may mean the arrangement will continue to operate for some time.

On Monday Landmark's WA sales and operations manager Natalie Adams said it would be "business as usual for this season and next" as far as growers ordering fertiliser were concerned.

But Ms Adams conceded Landmark could be making a statement soon about marketing its own fertiliser.

CSBP has not commented on impending agency agreement changes with either Landmark or Elders.

However, in a response to questions from Farm Weekly last Friday, marketing support manager David Matthews acknowledged CSBP had concerns about Landmark selling its own fertiliser.

"In November 2015 Landmark informed CSBP that it intended to purchase fertiliser and directly sell fertiliser into the WA market under an arrangement with US supplier Koch," Mr Matthews said.

"CSBP has raised concerns around the commercial conflict of interest with Landmark selling its own fertiliser and acting as an agent for CSBP fertilisers.''

Mr Matthews said CSBP was "continuing to evolve" purchase options for its range of fertilisers and services.

"As more options become available, CSBP will keep their stakeholders informed,'' he said.

"If customers would like more information on their options, they can talk to their local CSBP area manager who can outline the range of options available."

CSBP, which is based in Kwinana where it has granular and liquid fertiliser, explosives and agricultural and industrial chemicals manufacturing plants, has fertiliser storage and despatch facilities in Geraldton, Bunbury, Albany and Esperance.

It also has five regional depots across the Wheatbelt and its own network of 35 authorised distributors in WA.

Elders' West Zone general manager James Cornish confirmed on Monday there had been discussions with CSBP on a potential agency agreement.

"Elders has been in discussions with CBSP for a period of time," Mr Cornish said.

"While we haven't finalised an agreement at this point, we are confident a successful conclusion to those discussions will be formalised."

It is also not yet clear what impact a CSBP agency agreement with Elders might have on Elders' existing arrangement with Summit Fertilizers.

When questioned Mr Cornish stated that Summit Fertilizers had been advised of the discussions between Elders and CSBP.

"We greatly value the relationship Elders currently has with Summit Fertilizers," Mr Cornish said.

"That relationship is very important to Elders and hopefully the association between our two companies will continue into the future."

On its website Summit lists 37 Elders agencies among its authorised agents.

Clarification was sought from Summit but had not been received by the time Farm Weekly went to press.

Kwinana-based Summit Rural WA Pty Ltd, which trades as Summit Fertilizers, is a wholly-owned subsidiary of Sumitomo Australia Pty Ltd, a local arm of the widely diversified global Sumitomo Corporation.

Based in Wichita, Kansas, Koch Fertilizer and its affiliates own or have interests in fertiliser plants in the US, Canada and Trinidad and Tobago with distribution terminals in the US, Canada, Mexico, Brazil, Australia, France and the United Kingdom.

Wesfarmers, one of Australia's largest companies, owned both CSBP and Landmark until 2003 when it sold Landmark to monopoly wheat exporter and marketer AWB Ltd for $825m.

Calvary-based Agrium picked up Landmark when it acquired AWB for $1.236 billion in 2010.