Canadian News

A litany of dirt about fertilizer

Suzanne Zwarun February 5 1979
Canadian News

A litany of dirt about fertilizer

Suzanne Zwarun February 5 1979

A litany of dirt about fertilizer

Alberta

Winter is the slack season for those in the agriculture game, so an Airdrie, Alberta, farmer with time on his hands dropped into the basement hearing room of the Calgary Court House for a look at the fertilizer pricefixing trial that is slowly unwinding there. For two days, the farmer quietly watched the flock of black-robed lawyers examining and cross-examining witnesses, eyeballed the white plastic binders of documents overflowing tables, shelves and spare seats and concluded: “This is going to cost us all a fortune.” With that, he departed for his farm, leaving the courtroom almost empty of spectators.

The farmer’s assessment of the pricefixing trial of six Western Canadian fertilizer companies is dead on. It’s the largest trial of its kind ever held in that part of the country, one on a par with the sugar cartel marathon that last October convicted three sugar companies of price fixing.* But it will be months yet before the Alberta Supreme Court decides whether the alleged fertilizer conspiracy took place and whether it has already cost farmers money by lessening competition in the fertilizer business.

The sheer unwieldiness of the trial-

*After nine years of investigation, a four-year trial, an acquittal and a successful appeal, Atlantic Sugar Refineries, Redpath Industries and St. Lawrence Sugar were each fined $750,000 by a Quebec Superior Court.

in-progress is staggering. The pricefixing conspiracy is alleged to have gone on for 11 years, from Jan. 1,1965, to Jan. 16, 1976, in all the western provinces plus parts of Ontario and Quebec. The defendants are a Who’s Who of Canadian agriculture: along with the six fertilizer companies, there are a dozen

named but unindicted co-conspirators—pretty well everyone doing farm business on the Prairies. The fertilizer companies were sent to trial after a preliminary hearing that stretched over a year. And if the companies are convicted, each faces fines of up to $1 million and/or prison terms of up to five years for its principal officers.

The opening round in the battle goes back to Feb. 20, 1973, when combines investigation officers fanned out across Canada and seized documents from the six defendants: Comineo Ltd., Imperial Oil Ltd., Northwest Nitro-Chemicals Ltd., Sherritt Gordon Mines Ltd., Simplot Chemical Co. Ltd., and Western Co-operative Fertilizers Ltd. The raids produced 10,000 pieces of paper—one officer testified he spent three days searching and seizing in the Brandon, Manitoba, offices of Simplot alone. Some 2,000 documents were entered as evidence, a process that occupied the first few weeks of the trial, which began in November.

The Crown alleges that the defendants used a system of co-ordinated price setting involving the issuing and reissuing of price lists during the slow fertilizer sale seasons. Comineo, Sherritt Gordon and Western Co-operative Fertilizers are accused of suddenly changing their retail pricing system from one that allowed a wide disparity of prices to an identical zone system that allowed them easier comparison of each other’s prices. Then, it is charged, they worked at reducing the number of zones and limiting imports of lower priced fertilizer from the United States. A production overcapacity, a downturn in the market and potential competition from U.S. fertilizer prompted the changes, the Crown says, and led the companies to reward dealers who sold at the right prices and penalize those who tried any price cutting. In the end, the defendants are accused of succeeding in establishing a single price across the Prairies for almost every fertilizer product.

This month, a parade of farmer witnesses from all the Prairie provinces testified to a sudden and inexplicable disappearance of fertilizer at wholesale prices. Roy Atkinson, founding president of the National Farmers Union (NFU), who retired last month, told the court that the NFU was organized in 1969 in part to promote group bargaining in order to save money on largevolume purchases. In the early 1970s, the 22,000-member NFU had some success at collective price bargaining. But the Crown contends that the NFU’s success frightened the defendants into refusing to deal with the union on a collective basis.

Bill Chyz, formerly an area NFU chairman at Quill Lake, Saskatchewan, who has since put his farm up for sale and moved to Kelowna, B.C., to work in a factory, told the court that in 1971 he managed to buy fertilizer in large quantities at $20 a ton below the retail rate. But by the end of that year he couldn’t find fertilizer anywhere at less than the retail cost. James D. Mathison, a Hamiota, Man., farmer, said that he purchased nine carloads of fertilizer for 100 neighbors at wholesale prices in 1972 but six carloads never arrived. The order, given to National Feeds and Livestock Ltd. in Brandon, was cancelled by that company’s parent, the National Grain Co. in Winnipeg, which in turn bought the fertilizer from Northwest Nitro-Chemicals of Medicine Hat, Alta.

Ironically, some of the Crown witnesses testifying against the fertilizer firms are members or delegates of wheat pools partly owned by the charged companies. And one of the defendants is a co-operative that was originally formed by farmers to fight big business monopolies. Suzanne Zwarun