| The primary driver for our business is the need for the worldæ¯ growers to continue to increase global food production. Global food demand continues to grow due to an increasing world population and an increasingly economically healthy global community that has spurred demand for high protein and high quality food. We are proud of our role in supplying the crop inputs, or ingredients, that help growers to meet the challenge of providing food for a growing world.
Global grain consumption rose by eight percent or about 160 million tonnes over the past six years, while grain production rose by about six percent or about 110 million tonnes. The ever-growing demand for grain has to be met from a land base that has little room from which to grow. This is one reason that fertilizer demand over the same period increased by over 10 percent or by almost 15 million nutrient tonnes. The trend toward lower global crop inventories and increasing fertilizer demand is expected to continue in 2006, although the rates may be slightly slower than recent levels.
There are numerous factors that affect our business. Local weather conditions and crop prices can impact demand for our products for both our Retail and Wholesale businesses. However, the primary determinant of prices for nutrients is the overall supply and demand balance for each nutrient, including changes in global capacity and operating rates. Raw material costs such as energy and sulphur can also have a significant impact on prices and margins. In addition, government policies and actions both in the domestic and international markets and global economic growth rates can impact the growth rate of industrial demand. They can also influence the rate of growth in global food consumption in the long-term, as they can impact the quality of diets, particularly in less developed regions of the world.
Agrium is committed to nourishing a growing world. Our agronomists and retail crop consultants provide sound advice and state-of-the-art technical services to growers, while promoting agronomic practices that maximize yield and protect the environment.
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