From: John Hester
Sent: Monday, March 16, 2009
To: Jack Eberspacker
Cc: ARA Executive Committee
Subject: Agrium/CF Deal

Dear Jack and Executive Committee,

          I am writing to voice my opposition to the continuing consolidation of North American fertilizer suppliers in general, and the hostile takeover attempt being made by Agrium with regard to CF Industries, in particular. It is my belief that the so called "synergies" that are projected to accrue as a result of the Agrium/CF merger will  largely come at the expense of the American farmer and his traditional retail supplier.

          Over the last ten years we have witnessed considerable consolidation amongst fertilizer manufacturers. The majority of these mergers were viewed as being necessary by the merging partners as well as their customers. However, we have now reached a point where further consolidation is no longer required to insure survival nor welcomed by those being swallowed up. Consolidation is now occurring to create an even more captive marketplace and further improve shareholder returns at the expense of the farmer and others in the supplier chain.

          Fertilizer manufacturers have already amassed unprecedented earnings and pricing power as a result of their earlier consolidation. While amassing this leverage they have simultaneously downloaded much of their former price risk to the supply chain and to farmers. Further consolidation will allow fertilizer manufactures more freedom to dictate the price and terms of fertilizer movement and will leave farmers and retailers exposed to increased risk while handling and using a commodity that cannot be easily hedged.

          Non-competitive manufacturers, retailers and farmers cannot be immune to failure. American agriculture depends upon our ability to compete in a global economy an no one's survival should be guaranteed. However, to insure the long term viability of American agriculture we must see to it that retailers and farmers are never forced into becoming captive customers.

          Jack, many ARA members feel the same as I do on this issue. Some are fearful that  the fertilizer companies could retaliate against them or that they may drop their membership if we object to further consolidation. I think we all need to remember that we are a RETAIL organization and that our efforts should be to the benefit of retailers 1st and then to the rest of the industry. Fertilizer manufactures have TFI to fight their battles and we have ARA. If we cannot show our disdain at some issue whether led by  farmer  groups or the manufacturers than why do we need a voice in D.C.

John F. Hester
 
Owner/Manager
Nichols Ag