Management Context

It's not enough to simply present our performance figures without background context of how we achieved
them. We need to demonstrate that improvements are not just due to good fortune, but are a result of the
consistent implementation of programs and strong management systems.

We have adopted numerous governance and management practices to ensure continual improvement on
sustainability issues.

Governance

Agrium believes that strong corporate governance helps protect our shareholders' investment and stakeholders' interests. Our corporate governance practices are described in our: Corporate Governance Guidelines; Charters for the Board of Directors and the Committees of the Board; Terms of Reference for our Board Chair; Committee Chairs, Individual Directors and the Chief Executive Officer; Code of Business Conduct & Ethics; and are summarized in our most recent Management Proxy Circular.

Among other topics, these documents address:

• Agrium's governance structure, including committees of the Board;
• independence, responsibilities and qualifications of the directors and Chair;
• mechanisms for shareholders and employees to communicate with the independent directors and the Audit Committee;
• the linkage between Board and executive compensation, and Agrium's performance;
• processes to ensure conflicts of interest are avoided;
• processes for determining qualifications of Board members;
• Board role and procedures for overseeing sustainability issues; and
• procedures by which the performance and effectiveness of the Board, the Committees of the Board, the Board Chair, Committee Chairs, and Chief Executive Officer are evaluated.

Agrium is committed to the highest standards of corporate governance practices and procedures. We will continue to be vigilant and develop our corporate governance practices to ensure that we address the requirements and recommendations of regulatory authorities, institutional shareholders and interested stakeholders.

For more information on our governance and company-wide policies, please see our website: www.agrium.com/governance

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Management Approach

The strategic management of sustainability is shared among numerous corporate groups: Environment, Health and Safety (EH&S), Human Resources, Corporate Relations, Investor Relations and Legal, among others. These groups monitor best practices, develop policies and standards, and support business units. The daily management of sustainability commitments and implementation of programs is guided by business unit leaders. In 2006, we established a Corporate Social Responsibility Committee of the Senior Leadership Team that is setting priorities, monitoring performance and setting long-term targets.

Our approach incorporates management systems (e.g., EH&S Management System), regular audits, and corrective action tracking. In 2006, we employed external experts to assess our EH&S management approach and make recommendations on best management practices. Our company-wide risk management system provides a single location where identified risks can be stored, classified, prioritized, and responsibilities for mitigation assigned.

Policies

Recognizing that Agrium has distinct business units and operations in several countries, we empower our business units to set policies to address specific regional or cultural variations. However, we have designated 13 company-wide policies that address the following matters:

• Acceptable use of Computer Systems, Equipment, Infrastructure and Internet Systems;
• Anti-fraud;
• Approval Authority;
• Code of Business Conduct and Ethics;
• Compliance with Foreign Corrupt Practices Legislation;
• Disclosure;
• Diversity;
• Employee Privacy;
• Environment, Health and Safety;
• Harassment and Workplace Violence;
• Political Donations;
• Records Retention; and
• Securities Trading and Reporting.

The Code of Business Conduct and Ethics sets the standards for ethical behavior. Among other issues, it addresses: conflict of interest, fair dealings, gifts, legal compliance and confidentiality. We require our employees to annually acknowledge their compliance with the Code.

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Commitments

One of the ways we manage performance is to make commitments to ourselves, to our stakeholders and to society. Once we make these commitments, we develop plans to achieve them, and measure to ensure progress is made.

Our commitment to superior performance is supported by the strategic imperative of optimizing the base. This means focusing our attention on the little things that collectively make an enormous difference in the quality of our company over time.

We routinely set internal targets, for both financial performance and for sustainability issues. For example, to encourage strong safety performance we include EH&S performance in the calculation of compensation at middle and senior levels of the organization.

We have made commitments to all of our stakeholders in previous sustainability reports and through our policies. We plan to investigate and set additional sustainability targets by the time of our next report.

Through membership in industry associations such as The Fertilizer Institute (TFI), International Fertilizer Industry Association (IFA), International Plant Nutrition Institute (IPNI), and the Canadian Fertilizer Institute (CFI), we have made commitments to society to promote the safe and environmentally appropriate use of our products and services.

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Opportunities and Challenges

Our growth has led to numerous challenges. Can we continue to provide excellent customer service? Can we maintain high operational standards throughout our facilities? Can we provide timely services to all employees? Can we continue to make progress on becoming a more sustainable company?

Since 2005 we have become a much more global company, and that trend will continue with our venture in China. In the move to become more global it might be expedient to diminish our standards. But that isn't our style.

Our focus will increase on such global sustainability issues as human rights, corruption, and consistent standards for EH&S. To ensure that our international activities live up to Agrium's high standards we take multiple measures.

• We apply practices consistently across all operations through the implementation of 13 company-wide policies.
• We provide anti-corruption training for employees in high-risk areas.
• We conduct country risk assessments for new ventures.

Another major challenge resulting from our growth is our ability to reduce our greenhouse gas emissions. Although we are one of the most efficient nitrogen producers in the world, we continue to look for innovative ways to reduce emissions throughout the value chain-from production through to use.

How we are addressing these and other sustainability issues in the face of growth, is included in the following pages.

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