Declining Prices Spur Layoffs At PotashCorp

Potash Corp. of Saskatchewan, a leading producer of potassium, phosphate, and nitrogen fertilizers, says it will reduce its workforce by 18%, or approximately 1,045 employees. The firm is taking the action because of lower-than-anticipated fertilizer demand from the developing world.

The market’s softness is a change from 2012, when high prices for agricultural commodities boosted prices and earnings at fertilizer companies. More than half of PotashCorp’s employee cuts will come from operations in Saskatchewan and New Brunswick, where the company plans to reduce production of potash, a mined salt that is largely potassium chloride. Other layoffs will affect workers at phosphate and nitrogen fertilizer plants in Florida, North Carolina, and Trinidad.

Prices for potash have dropped by almost 23% compared with a year ago, according to a recent report from NPK Fertilizer Advisory Service. Analysts say the breakup in July of Belarus Potash Co., a cartel of producers in Belarus and Russia, was a factor in lower prices of the potassium fertilizer. Prices for phosphate and nitrogen have also declined because of slow sales in developing countries.

It is unclear when prices will recover, according to Steve Hansen, a stock analyst at investment firm Raymond James. “The ongoing Russian potash dispute has cast a dense layer of cloud and fog over the horizon,” he wrote in a report to investors. Two other major North American fertilizer firms, Mosaic and CF Industries, have also reported lower selling prices but have not announced mass layoffs. In November, Mosaic announced the closure of its potash mine in Hersey, Mich.