Global Issues for a Global Company

Increased agricultural yields start a chain reaction that translate into better income security, better nutrition, access to health facilities, and educational opportunities.

Many of the issues we address in subsequent sections of this report are of a local nature. But we also face several challenging issues of a global nature. As a global company we feel we are well situated to make significant contributions to a more sustainable world.

Food Security

Agrium plays an integral role in helping to provide healthy food to a growing world. Food is the one product that takes priority over all other commodities. Consumers can postpone buying a new television, automobile or appliance, but food sustains life and is an important component of economies in wealthy and developing countries alike. Food riots in Africa, Bangladesh and Haiti in 2008 are testament to the importance of meeting increasing demands for food.

To continue feeding our growing world, farmers are being asked to increase production on their land while minimizing environmental impacts. Agrium is supporting this effort by working with researchers to grow more food through the use of best management practices and new technologies like controlled-release fertilizers. Controlled release products time the release of nutrients to match the needs of the plant. These products limit the number of required applications to the crop, saving energy and time, minimizing loss to the environment, and boosting yields.

Nowhere is food security more tenuous than in Africa. We realize that food security can lead not only to improved nourishment, but more broadly, improved quality of life. In 2009, we entered into a partnership with the non-profit group Millennium Promise to address food security head on. Millennium Promise is dedicated to achieving the United Nations’ Millennium Development Goals—global targets for reducing extreme poverty and hunger by half while improving education, health, gender equity and environmental sustainability by 2015. Through the partnership, Agrium has agreed to invest significant funds and in-kind assistance such as bagging and shipping donated fertilizer. Pilot projects will run in 2010 in Nigeria and Kenya, where over 5,000 household farmers will have access to increased crop inputs, and where increased food production will improve food security for their households. Increased agricultural yields start a chain reaction that translate into better income security, better nutrition, access to health facilities, and educational opportunities. We are hopeful that the partnership will expand into additional countries in subsequent years.

The role our products play in sustainability— from food production to soil replenishment— is outlined in detail on our website.

Climate Change

Greenhouse gases are released through the production, distribution and use of our products. In the development of our climate change strategy, a variety of stakeholders have been engaged to identify internal and external opportunities to reduce emissions, enhance energy security and improve our industry’s competitiveness. Critical stakeholders in this engagement are governments and industry associations, with whom we work to help develop policies and regulations that are effective, efficient and fair.

Internally, Agrium’s climate change strategy focuses on the production stage of our business. Production is estimated to account for more than 95 percent of Agrium’s emissions. While considerable reductions have already been achieved through early action, we have committed to reduce our North American production emissions intensity overall (amount released per tonne of production) by 10 percent by 2020. This reduction is from a 2005 baseline and will be achieved through energy efficiency improvements, nitrous oxide (N₂O) emission reductions, and carbon dioxide (CO₂) capture for enhanced oil recovery (EOR). Please see the Production section of this report for more discussion of our internal greenhouse gas reduction efforts.

Some of our actions generate greenhouse gas reductions outside our own operations. Our efforts in this area include developing new products that reduce greenhouse gas emissions from farming activities, and our aggregation business that collects greenhouse gas offsets from growers for sale to large emitters. We also support grower efforts to reduce greenhouse gases through the development and implementation of best management practices. Although some of these actions do not directly benefit Agrium, we believe they are important in achieving societal and customer benefits. These efforts are outlined in the End Use section of this report.

Our response to the Carbon Disclosure Project includes comprehensive information on our greenhouse gas risks and opportunities, emissions, and governance, and will be posted on www.cdproject.net later in 2010.

Protecting Watersheds

Excessive nutrient application can eventually result in damage to water bodies and wildlife habitat. Through our agronomists and certified crop advisors we consistently communicate to customers the need to adopt best management practices that focus nutrient use on the 4Rs – applying the right form of product at the right rate, right time and right place. Following the Global 4R Nutrient Stewardship Framework minimizes nutrient releases into the environment. Visit our website for more information.

Wetlands play an integral role in intercepting nutrients and improving water quality. Accordingly, we are directing significant community investments to programs that protect wetlands. During 2008-2009 we contributed more than $400,000 toward habitat restoration and conservation in the Canadian prairie provinces. Visit our website for more information. These projects are particularly innovative. Our partner, Ducks Unlimited Canada, will use our funds to purchase degraded but strategic land, restore it to its rightful ecological function and at time of resale, place perpetual conservation easements or long-term agreements on all or most of the land. The net proceeds of the resale of the land will be reinvested in new conservation lands.

Our Caring for our Watersheds^TM program partners with communities to create focused solutions to local watershed issues and encourages environmental stewardship by students. Visit our website for more information. The program challenges students to think about their local watersheds and to spell out ways they can protect this essential asset. It encourages creativity, and financially rewards students and schools for the solutions they identify. Finalists who implement their ideas are eligible for additional funding. The program currently operates in Southern Alberta, Central Alberta, Saskatchewan, Manitoba and Colorado. The goal is to also offer the program in South America, China and Europe.

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