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Grain prices spur memories of fertilizer gouging

A farmer in Illinois harvests his soybean crop. The U.S. Department of Agriculture has rated less than 50 per cent of corn crops in 'good' or 'excellent' condition, due to stressful growing conditions brought on by a heat wave.

Seth Perlman/Associated Press/Seth Perlman/Associated Press

Canadian farmers have reason to smile. Grain prices are at record highs and this year's harvest has the potential to be huge. But if history is a guide, there's a chance that agribusiness might spoil the party.

Companies selling fertilizer, bins, machinery, among other items could force farmers to pay up, thus benefiting their investors. It has happened before – but that's why one expert doesn't expect it to happen again.

Richard Phillips, executive director of the Grain Growers of Canada and a Saskatchewan farmer, explains that when grain prices spiked in 2007-08, fertilizer companies attempted to "take advantage and gouge farmers."

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However, he sees a different situation this time around. "I don't think we'll see that happen to the same degree," he said. "Nobody wants a regulatory body to step in and do something on price control."

"I think a lesson was learned by the fertilizer industry on how transparent some of that stuff is and how farmers are well aware of what's going on with prices."

But some farmers are buying fertilizer now, just in case. Fertilizer companies, however, would be justified to raise prices in North America if global prices rise on demand in places like India.

"If Canadian farmers don't want to pay a fair price for fertilizer, there are other places in the world that will," Mr. Phillips said. "You're not going to get too much of a discount."

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About the Author

Carrie Tait joined the Globe in January, 2011, mainly reporting on energy from the Calgary bureau. Previously, she spent six years working for the National Post in both Calgary and Toronto. She has a master’s degree in journalism from the University of Western Ontario and a bachelor’s degree in political studies from the University of Saskatchewan. More

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