E very spring, many farmers suffer that pit-of-the-stomach worry that they won’t be able to buy enough nitrogen fertilizer to get their crops off to a running start. Logistics and product shortages usually get the blame. Coleridge, Neb., farmer Boyd Ebberson remembers a few years ago when he had problems securing nitrogen for his 5,000 acres of corn. “We’ve had shortages before, so when we heard CHS invested in CF Nitrogen, it was a relief to know that when we want [nitrogen], it will be there.” Putting a consistent, reliable supply of fertilizer in the hands of its owners has always been a goal of CHS. “That’s even more possible now since we invested in CF Nitrogen,” says Rick Dusek, CHS Agronomy vice president. “It makes our supply chain stronger than ever before.” This year, CHS and CF Industries Holdings, Inc., created a strategic venture through an equity investment and fertilizer supply agreement with CF Industries Nitrogen, LLC. Last February, CHS invested $2.8 billion in an ownership stake in nitrogen fertilizer manufacturing through CF Nitrogen. With annual sales of $4.7 billion, CF Industries, headquartered in Deerfield, Ill., is one of the world’s largest manufacturers and distributors of nitrogen fertilizer and the largest nitrogen producer in North America. After putting one crop season under its belt with this new business, Dusek explains why CHS made the investment and what it means to farmers and CHS member-owners. customers, plus strong sales and marketing capabilities. We now have a solid, fundamental investment in producing nitrogen that strengthens our supply chain and puts us in a better position to bring value to our owners. Q: Why are multiple nitrogen production facilities important? A: It spreads our risk and assures a more consistent supply of nitrogen for customers. We have urea coming from three plants and UAN is produced in five facilities. That lets us source product from multiple regions. It also gives us diverse transportation options. We can ship by rail, barge and truck, which is crucial in serving our owners and adding value to their businesses. Q: It’s early, but how has the investment worked out so far? A: Despite today’s low fertilizer prices, it has worked out well and we expect it to be a good investment for the long term. We get along well with CF and have ironed out the little bumps along the way. The relationship has been very good and our execution has been excellent. This investment also puts us Benefits for CHS Owners 1. Link to strong global nitrogen markets 2. Consistent supply management 3. Diverse transportation options, including barge, rail and truck Q: Why is this investment so important for producers? A: It puts CHS in the nitrogen production business and gives us reliable supply, which also means reliable supply for our owners. Part of the attractiveness of investing in CF Nitrogen rather than a single plant is geographic diversity of supply, since we can source from several plants, not just one. We will continue to import nitrogen, but it can take up to 75 days to arrive from overseas markets. With CF Nitrogen, our production is closer to our farmers, which eliminates some of the transportation and execution risk. In addition, CHS earnings from CF Nitrogen are included in the bulk fertilizer patronage pool paid on fertilizer purchases for eligible owners. Q: What does CHS bring to the table in this LLC arrangement? A: First and foremost, CHS contributes a strong retail customer base. We also provide a broad asset base to efficiently deliver urea and UAN to our in a completely different market environment where we should be able to create more value for our cooperative-owners and producers. Q: What’s ahead for 2017? A: Next year will be about continuing to build our strategy to run an efficient, diverse supply chain that will create optimal value for our customers. We’re constantly trying to figure out ways to improve. With more time, we’ll be able to fully leverage our capabilities. n The map below shows the CF Nitrogen production footprint, along with the CHS distribution system, designed to expand CHS ability to serve customers. CF NITROGEN NETWORK Medicine Hat, Alb. Post Falls Collins Grand Forks Groton Watertown St. Paul Green Bay Caledonia Ashtabula Port Neal, Iowa Loomis Cincinnati Woodward, Okla. CF Nitrogen Facilities CHS global headquarters Crop nutrients terminal, joint ventures CF Nitrogen production plants Not shown: more than 100 leased locations Friona Ensign Verdigris, Okla. Lake Providence Alexandria Galveston Memphis Greenville Yazoo City, Miss. Lettsworth Donaldsonville, La. Your CHS Connection 21