Green Markets July 5, 2019. Bloomberg. Volume 43. Issue 27.
Accessible from: https://fertilizerpricing.com/
Fertoz has been selling its fertilizer for only about a year and a half, with first-year North American sales exceeding 10,000 mt. Fertoz North American Executive Director Pat Avery told Green Markets that the excessive flooding inundating tens of thousands of acres in the U.S. Midwest has prevented the company from reaching its goal of selling 30,000 mt this year. Still, sales this year are expected to hit 20,000 mt, exceeding the first year by double, he noted.
“We have the ore supply and infrastructure to do well more than 100,000 mt/y a year,” said Avery, a former J.R. Simplot Co. and Intrepid Potash Inc. executive now based in Denver. He has been with Fertoz for three years, sitting on its board. “Our goal is to be cash positive … and sell several hundred thousand tons a year. We want to be the largest organic input supplier in North America … It’s a pretty ambitious goal,but we’re optimistic.”
Fertoz has established a network of brand name distributors – whole- salers and retailers – including Nutrien Ltd. and Scotts Miracle-Gro Co. (GM Nov. 30, 2018), as well as The Andersons Inc., Providence Grain Group, Limoges Seed Farms, and Seven Springs Farm. Fertoz recently booked Canadian firms Federated Co-operatives Ltd. to serve Western Canada, Blair Ag to serve Saskatchewan, and Thompsons Ltd. to serve Ontario and Eastern Canada.
The company is particularly eyeing areas with a large number of organic farmers or warm climates that allow more than one growing season As a result, it is targeting California and the South. It said it only has one distributor in California – Ag Unlimited, now a part of the GrowWest brand, a Lyman Ag company with three farm centers in the state.
Company-wide, Fertoz said it has distribution agreements covering 219 distributor branches across Australia, New Zealand, Canada, and the U.S.
Avery told shareholders in May that the company underestimated the lack of market awareness of organic inputs and the challenges of building a supply chain from scratch. One of its problems is that many organic farmers, according to the company, are not aware of Fertoz – or any other organic fertilizer suppliers, for that matter. Another factor is that organic farmers want a product that contains all three major nutrients.
As a result, Fertoz is working toward an NPK product, not just one that contains phosphate. The company is seeking to be a premium organic inputs company, building a suite of organic fertilizers and a logistics chain to service organic farmers. The company estimates that over 80 percent of organic growers are using little to no inputs, making the scope for growth with education significant.
Avery said one of Fertoz’s greatest accomplishments has been to get its mining, marketing, and distribution operations to mesh efficiently, building whole supply chains. It also is ensuring that the organic origins of products can be traced for retail customers like Whole Foods and Sprouts by using an innovative bar coding system. Orders can be taken from partners, labels made, and products directly shipped.
“This is a very big deal in organic foods, ensuring traceability on every load scooped out of the ground,” he said. “As a young company, we can put all those best practices in place.”
It is also looking to increase awareness in the cannabis market. Its recent connection with Scotts’ unit, The Hawthorne Group, moves it in that direction.
The company is also looking at co-locating processed fertilizer at distributor sites to ensure same-day or next-day delivery, which is critical due to weather events impacting planting. It has developed rail and truck logistic networks, storage facilities, and a full end-to-end supply chain operation servicing all major organic agricultural hubs.
“We’ve established a good network of low cost processors,” Avery said, mentioning that Fertoz has a sales force of about five professionals who have made thousands of contacts. Like him, they are considered independent contractors.
As for adding to its product portfolio, Fertoz recently signed an agreement with Pacific Recycling, Surrey, B.C., to supply its powdered and granulated gypsum. In late 2018, it inked a ten-year sales and supply agreement with Humic Growth Solutions (HGS) (GM Nov. 30, 2018), with the two looking to develop humate/phosphate fertilizers.
As a relatively small company operating for five years, Fertoz, a certified organic phosphate fertilizer company contracts out its mining, crushing, screening, and granulation projects to other businesses as it develops a low-cost marketing strategy throughout the U.S. and Canada.
In July 2017, Fertoz signed a marketing agreement with Solvay USA Inc. for up to 10,000 mt of rock phosphate from Solvay’s operation in Montana (GM July 14, 2017), giving Solvay responsibility for loading the ore and Fertoz responsibility for marketing it. The ore is mined and stockpiled above ground ready for distribution, giving Fertoz an advantage.
The Solvay ore allows Fertoz to access orders across North Americ that are not as easily accessible from its own phosphate production locations in Wapiti and Fernie in British Columbia. Fertoz said it has extensively tested the Solvay ore and has received organic registration. Both California and Washington State have given Fertoz organic input certification, in addition to USDA and Canadian officials.
Fertoz also has stockpiles in Monterrey, Mexico, where it can source productfrom a local mine and crushing/screening plant that has annual capacity of 50,000 mt/y. Fertoz’s mining criteria are high-quality phosphate low in metals, shallow resources, available infrastructure, and proximity to known organic markets, with a relatively quick pathway for permitting. Fertoz also has phosphate projects in B.C. (Fernie, Wapiti, Crow’s Nest, Barnes Lake, and Marten) and Coleman, Alberta.
In September 2016, Fertoz decided against developing the Dry Ridge Phosphate Project in the Caribou/Targhee National Forest in southeastern Idaho. Company officials said the property’s ore was not ideal for organic farming and permitting proved more difficult than expected. The company expects to begin mining Alberta and B.C, Marten leases this year.
In the meantime, the company’s FertAg product, which has been sold in Eastern Australia, this year has had its first sales in Western Australia and New Zealand. Distributors include E.E. Muirs & Sons, Ruralco, Norco Coop, and Vasili Gardens, as well as independent distributors.