Canada potash pinch bad for foreign farmers

There is worrisome news from Canada's potash mines, situated mostly in the prairie province of Saskatchewan. A labor dispute or technical problems in any one of nearly a dozen workings could spell immediate shortages of the vital fertilizer compound on the world markets. All the world over, apparently, demand for potash is rising and inventories in this, Canada's leading wheat-growing province as well as the No. 1 potash producer, are low.

Canadian and US farmers are preparing to sow extra acreage this year for a food-short world, and an adequate supply of potash, an important potassium fertilizer that assists with the root growth of cereal crops such as wheat and corn, is essential.

It also helps plants to retain water and aids photosynthesis. Canada supplies about 70 percent of the US potash market. Analysts here predict that already-low inventories will have to be trimmed further this year.

Canada's prairies, the breadbasket of much of the world, are experiencing their third consecutive below-average winter snowfalls, and the water content of the soil is low.

New federal programs aim at boosting domestic wheat and barley production. These will likely act as incentives to farmers to bring into production more of their lands, which were in the past year left fallow because of a combination of low prices and uncertain markets. All that extra farm activity will mean increased home demand for fertilizers of all kinds, including potash.

Canpotex Ltd., an industry-owned cooperative responsible for marketing Canadian potash outside North America, forecasts Us consumption this year at the equivalent of about 6.4 million metric tons of potassium oxide, a measure of actual potassium content, by the marketing year ending June 30, 1981. That would be up 3.9 percent from the previous year's figures, as recently issued by the US Department of Agriculture.

Potash producers are more bullish and predict a 6 percent jump in production this year.

But Rod heath, manager of Canpotex, says labor troubles could make potash supplies scarce when contacts for Saskatchewan potash workers expire later this year. Their union has already received votes in favor of strikes if necessary.

Strong demands is also anticipated for nitrogen and phosphate fertilizers. Phosphate fertilizer depends on the importation of phosphate rock, either from the United States or from overseas.

Canada's nitrogen fertilizer is manufactured from natural gas streams in Alberta, and supplies, including extra production from future plants in British Columbia, seem to be more than adequate to meet domestic requirements.

The increase in demand for fertilizers is also reflected in the consumption of one of its ingredients, sulfur. Large mounds of yellow sulfur -- extracted from "sour" natural gas -- had piled up in the Alberta countryside. Now this sulfur is being remelted to supplement the annual 6 million metric tons of production, which is falling about 1 million tons short of actual demand.

If Canada runs short of potash, it will be experiencing a new phenomenon of penury in the midst of plenty. Canada has abundant resources of high-grade potash, but the capital costs of new mines are steep.

Saskatchewan alone has about 40 percent of the world's known reserves of potash, enough to last about 3,000 years at today's rates of production.

The Canadian industry has been cautious about expanding because it has recent and bitter memories about its experience with overcapacity.

The Potash Corporation of Saskatchewan, owned by the provincial government, has scheduled a $2.5 billion (Can.) expansion program over the next decade. It predicts that domestic production will rise to the equivalent of 13.6 million metric tons of potassium oxide by 1990, compared with this year's production of about 7.8 million tons.

Other sources expect an even greater increase in Canadian capacity. The federal government, for instance, forecasts production of about 14.5 million tons at the end of the decade, while some industry experts are forecasting still higher annual totals of about 15.5 million tons by then. Soviet output last year had been expected to make greater inroads in world potash markets. But that production inexplicably dropped from 8.2 million to 6.6 million tons, industry sources here say. Soviet potash production is now expected to rebound this year to about 8 million tons, the same sources say.