Fertilizer fears
Agrium's potential closure has Alaska farmers nervous
Chris Rainwater takes a break from a project in Homer. Farming hay is critical to the beef cattle rancher's business, and Rainwater says if Agrium's North Kenai fertilizer plant closes, he will have to purchase more expensive fertilizer from Canada.
Photo by Benjamin Stuart/Homer N
Chris Rainwater needed to get back to his ranch on East End Road in Homer to check on one of his bulls earlier this month. But before he made the 20-mile trip from the Down East Saloon, some doctor work was needed on his truck's carburetor.
He didn't seem too concerned about when he got back to the ranch.
"People have a lot of excuses for being late these days," he said. "But we're on cowboy time."
Rainwater is one of about 10 commercial beef cattle ranchers in Homer and the previous night had completed his biannual cattle drive.
All that day he was placing calls and visiting some of his other cowboy friends to roust some help for the event. At 9 p.m., he was placing the final calls.
As he drove his cattle to graze late into the evening, he did it with the knowledge that he, along with the rest of Alaska's small agricultural industry, were probably going to have a financial hardship heaped upon them: the closure of Agrium's North Kenai fertilizer plant.
Urea — a solid form of fertilizer — is what many farmers put on their fields. And Agrium is the closest place for Alaska farmers to find it.
Alaska's only commercial producer of urea, the plant is the primary supplier of this product to Alaska farmers. If the plant closes, farmers are saying they will have to purchase their urea in Canada, which Rainwater estimates will raise freight costs by more than $100 per ton.
"It's a big deal," Rainwater said. "We've had access to that fertilizer plant ever since it went online."
Natural gas is a key ingredient in the production of Agrium's products — ammonia and urea — and Southcentral Alaska is running out.
Agrium is scheduled to close later this year unless it can secure additional natural gas at the right price to make its product. The company put out a request for proposal to Cook Inlet gas producers to purchase additional gas but has not yet announced the outcome.
Agrium produces about 1,500 tons of urea per day. Alaska farmers consume about 900 tons of that urea each year, according to company sources.
All of Agrium's ammonia, a form of fertilizer, is sold to foreign markets, according to Agrium spokesperson Lisa Parker.
Rainwater said access to urea is critical to his business.
Every spring, he has to drive his cattle from his ranch, where they spend the winter, to the grazing lease on the Fox River Flats at the head of Kachemak Bay. This clears the area for him to grow 100 acres of hay. In the fall, he drives his cattle back to the ranch where they eat the hay in the winter.
Rainwater was born and raised in Homer. His homesteading parents moved to the area to become ranchers, he said.
Sporting a dusty Kuparuk Oil Field baseball hat, a graying red beard and some old flannel shirts the day after the cattle drive, he said his life as a rancher and roots in Alaska have one thing that stays consistent: "All the crazy things we do, it certainly is an adventure."
Rainwater pointed out the industry has small profit margins. He said trying to make a living in Alaska's small agriculture industry is about keeping the bills down and maintaining the freedom that comes with working outside of an office.
With 610 farms in the state producing products such as hay, barley, oats and livestock, he is part of a small farming community in the state. The majority of the farming activity in Alaska takes place in the Matanuska Valley and the Tanana Valley near Delta Junction.
Statewide cash receipts for feed crops in 2003 were about $4 million, according to the U.S. Department of Agriculture's National Agriculture Statistics Service in Alaska. Cash receipts for meat animals were $1.7 million in the same year.
Although the industry is small, Rainwater said it is more important than some may realize.
"The ability of a population to feed itself is way more important than the world recognizes today," he said. "In Alaska, we certainly are isolated — just one road, airplanes and boats."
Wayne Brost is a dairy and hay farmer in Point MacKenzie and said he is growing 700 acres of hay this year and spread about 85 tons of urea on his fields.
"We're very concerned," he said. "I have to have nitrogen to grow a grass crop."
If Agrium closes the plant, he said he expects his urea prices could increase up to 40 percent.
"It's a narrow profit industry to begin with. It's going to make it more of a struggle for people," he said, adding that many may go out of business.
He said he is still in the process of finishing his farm and does not want anything that will make it harder to keep his business running.
Although Rainwater does not think Agrium's closure will run him out of business, he said he may have to raise the prices of his product.
"Without that source of nitrogen, the success of new ventures is much less likely," he said.
People in Delta Junction have Agrium on their mind, too.
The industry is reliant on each other's products and if the price of hay increases, for example, it may become too expensive for the ranchers and dairy farmers to purchase it, said Phil Kaspari, agriculture agent for the University of Alaska Fairbanks Extension Service in Delta Junction. If it becomes cheaper to purchase commodities from the Lower 48 than it is to purchase them locally, it could mean bad things for Alaska farmers, he said.
Kaspari said Agrium's plant has played a critical role in helping the agriculture industry grow in the state.
"I have heard some people say over the years that the plant is the best thing going for the agriculture industry," he said. "We depend on nitrogen."
Rainwater is just waiting to see what happens.
"The (high) price of natural gas has put some desperate people out there," he said.