Great. All right, so let's do a fireside chat now with Ken Seitz, the CEO of Nutrien. Of course, Nutrien is the world's largest fertilizer producer, very influential potash and nitrogen businesses, also has the leading farm center retail network and a phosphate business. So Ken, thanks for coming back.
Pleasure, Joel. Good to see you.
Another BMO conference.
Yep.
Why don't you kick off for a few minutes? Well, sorry, if you want to participate in the conversation, please insert your question on the app, or I'll pause maybe halfway through the fireside to poll the room. Ken, why don't you kick off with a few minutes, maybe state of the union?
Yeah. You know, we just released our first quarter results, and we had a good first quarter, and that's owing to a few things. One is, you know, just seeing markets stabilize after the last few years of kind of extraordinary volatility on both ends of that volatility, and we all know the reasons why that happened, but, you know, here we are, and we see it right from the farm, right through our retail channel and obviously into our crop nutrient business, where more normal buying patterns... Obviously, while ag commodity prices have come off, so too have crop input prices, and so affordability is there. Farmers' balance sheets are in a strong position after a couple of the best years in the history of agriculture.
Land prices are still strong, which is a strong indicator of the balance sheet on the farm. And indeed, here we are in the spring season, and we have volumes flowing through our channel, and we have price stability among crop nutrition. And so put that all together, and our plants ran well in the first quarter. Our nitrogen plants had a really good quarter, and our potash plants were running as well, and then reliability even in phosphate was up. And so with some price stability, with volume moving, and with the plants running, and you know, that's obviously a formula for having a good quarter, and that was the case. If we look at you know, the balance of the year and beyond, we expect something similar.
In other words, demand levels returning to sort of pre-conflict, pre-war levels, and price stability throughout the year, and that's sort of how we're planning our movements for the rest of 2024.
Okay, how would you characterize current grower sentiment right now? And maybe if you want, you can distinguish between North America, South America, maybe Australia.
Yep. Yeah, so in North America, you know, we have been having a normal planting season, I'll call that, with inventories moving through the channel, and, like I say, while affordability or while on-farm incomes weren't what they were a few years ago, affordability is still intact. We do expect to see some acreage shift from corn over to soybeans and cotton, you know, moving from maybe 90 million tons of corn down to about 87 million tons, which has some implications for nitrogen, as you know. That said, we have been seeing higher application rates in North America, and that's really owing to a very strong crop in the last couple of years.
So in other words, pulling nutrients out of the soil and having to replenish those nutrients in the soil and with affordability still intact. So North America, you know, the North American farmer is in reasonably good shape. We're watching this planting season. Obviously, weather plays a role in our business in a pretty significant way, and we've had some patchy rains through the Corn Belt now, and could that further delay things? We'll have to wait and see. It's always the case in the spring here, but the next few weeks are actually quite critical in that regard.
If I go to Latin America, Brazil, where, you know, soybean crop was not as strong as it was in the previous few years, and of course, soybean prices having come off, and then the interest rate environment in that country has made it a more of a challenge for the Brazilian farmer. Those interest rates are still high, obviously, but we have seen some strengthening in corn and soybean prices as a result of some of these weather challenges in other parts of the world, and so we expect that, for the next soybean crop, it's... We'll likely have some normal buying patterns out of Brazil as well, and we, we've seen strengthening of the potash price in Brazil. We've seen it $30 over the last few months.
So, you know, the Brazilian farmer, again, it's not, it's not what it was a few years ago, but the Brazilian farmer will be looking forward to the next soybean crop, crop and getting inventories in place accordingly. And then over to Australia, it's been dry in Australia with El Niño now. You know, we're on the tail end of El Niño, and we have seen some rains, and that's going to have to continue for the next winter crop in Australia. You know, again, affordability there, but they need some rain in that part of the world.
Okay, and in North America, you talked about some of the things going on in the market. Is it too early to call if we're gonna lose some acres or some corn to soy or-
Yeah, it probably is. We're watching that very closely, but like I say, we're saying we're expecting that it, it's... You know, we'd started the season thinking maybe 90 million acres of corn, and now we're thinking maybe 87.
Which is a bit of a consensus view, because I think some of your peers, you know, are suggesting things will be even better than 90, right? So-
Yeah, we'll see. We have a sort of unique lens into the market because we're working and sitting with growers every day, 600,000 of them, and so, you know, it remains to be seen. Like I say, the weather over the next few weeks is gonna play a role here, but, yeah, that's what we're expecting.
Okay, and staying in kind of the retail lens, well, yourself, you're, you just said you're a very large basically retailer, the largest in North America. You also sell into retail. I mean, are you seeing any changes? So we've just come through a very big destock cycle or a big part of destocking in crop chems. Are you seeing any changes in farmer purchasing behavior right now, just like a reticence to take on any inventory?... you know, not and sorry, and yourself, how are you, you know?
Yeah, yeah. No, for sure.
Yeah.
You know, I wouldn't say so in North America, actually. We entered the season with sort of low inventories, and we restocked all of that. And we're expecting, as usual, to see the concrete on the bottom of our warehouse floors here by the end of the planting season. Again, you know, whether it's gonna play a role here, so whether that's actually entirely true remains to be seen. But no, thus far in North America, we've seen normal volumes, sort of historical volumes flowing through the channel. The one place where that still isn't true is in Brazil.
You know, we had been talking about the crop protection crop chemistry inventories in our own channel in Brazil, and that would take, you know, 2024 and maybe even a bit into 2025 for those volumes to clear, and that continues to be the case. We're still working through. You know, it's not just Nutrien, it's the industry is working through those crop protection inventories in Brazil. You know, as you know, Brazil's a much smaller component of our business.
Okay, a little more now midterm thinking. You know, I think this year you're gonna do, I think you've guided about $1.75 billion retail EBITDA on the midpoint.
Mm.
You talk about a midterm EBITDA range for retail between $190 and $210. Maybe talk about how you get to $190 and greater.
Yeah. Yeah, the midpoint's actually at 1.85. And so if we look at how margins have been normalizing over the last 18 months, and us having talked about, you know, them normalizing, and we just... When we see our crop input prices sort of skyrocket the way they did come back off, we know that we're going to experience margin compression with those high-priced inventories. We know that we're gonna experience expanded margins when they come off, but when things normalize, we sort of get back to normalized margins.
So that when we say 1.9-2.1, you know, the lower end of that just assumes that normalized margins, and that would have to be true for Brazil as well, as we work through this higher-priced crop protection inventory, and that pretty much gets us there. In fact, we're pretty much in terms of how we're guiding this year, again, we'll see, but midpoint is pretty much there. You know, to get to the higher end of that range, we continue to grow our proprietary products line. You know, we have over 2,000 products that we're under our Loveland Products brand. That includes adjuvants, surfactants, seed, and particularly plant nutritionals and biostimulants.
We've seen a 15% CAGR in that business over the last 5 years, you know, and contributing over $1 billion in gross margin, actually. So, we're continue to focus on growing that business. We continue to deploy capital towards proprietary products, and the higher end of that 1.9-2.1 would assume some growth in proprietary products. It would also assume a little bit of organic growth.
Do you think you can get to that level, let's say $2 billion in the middle there, at the current commodity prices?
Yeah. Yeah, we do. Like, again, you know, current commodity prices, normalizing, and we then, you know, pull our margin, in our retail business, and yes, we do.
You know, obviously, Agrium and then Nutrien has done so many retail acquisitions in the last 20 years, big acquisitions in different geographies, lots of retail tuck-ins. Talk about what the kind of retail footprint desire is going forward in terms of tuck-ins, larger deals, Brazil.
Yeah.
You announced that you're gonna look to divest the stores in Uruguay, Chile, and Argentina.
We did, yeah. Yeah, if we just look at that entire portfolio, I mean, there's geographies where, you know, we know and have a pretty strong inventory knowledge of when, you know, 10 or 12 storefronts might come up for sale, families retiring, looking to get out of the business, or even at times, some larger companies looking to get out of the business. And as you say, Joel, we have a track record of doing those tuck-ins, and we have a track record of doing them quite successfully. And, you know, that has been a source of growth for us, is just these smaller tuck-in acquisitions. I like them because from a CapEx point of view, I mean, they're quite granular. There's not an extraordinary amount of risk.
We can integrate them into our business, and, and even as we look across our network, you know, one of the big opportunities for us is consolidating and rationalizing our storefronts, where, you know, we might have four aging, older facilities in a certain geography, and we decommission those, and we put one new, modern, high-throughput facility. We're kind of geographically in the middle of those that can continue to service our customers in the region. Every time we do a tuck-in, we have that in mind as well because, again, those are really quite accretive product, projects for us. So tuck-ins will continue to be part of the, part of the focus in North America. We've talked about Brazil, where, you know, stabilizing our business, getting our cost structure right, getting our operating model right there, and, and hitting a pause on...
You know, we've done nine acquisitions there, hitting a pause until such time as this business of ours is running well, and we're then prepared to bring in or do additional, and I will call them tuck-ins in Brazil as well. Yes, we're divesting of. We're just going through a process now, Argentina, Chile, Uruguay. I mean, the margins in those businesses are stable, but, you know, particularly in Argentina, obviously, we have a real challenge repatriating our dollars without the haircut of the blue chip swap. You know, the currency controls in that country make it impossible to repatriate.
And so, that combined with, you know, it's a very small component of our retail business, 2% of EBITDA, combined with the amount of management time that it takes when we talk about simplifying and focusing, I mean, this is certainly part of that story.
So why not divest the stake in Profertil in Argentina as well?
... you know, we're always looking at what makes sense in our portfolio and what doesn't make sense. I mean, Profertil's been in the portfolio for a long time, but yeah, we'll always look at sort of what makes sense.
We use it one step at a time, see how the first thing goes, and then reassess?
Yes, we'll see.
Okay. And just why has Brazilian retail been so challenging? It was a business, I think it was $70 million-$100 million run rate. I think last year it lost money, this year maybe break even or better. That's part of your, I guess, your retail strategy to get, well, to get to your target should be to get Brazil up. What has proven so challenging in Brazil?
Yeah, I mean, when we talk about volatility in our business across certainly crop chemistry and crop nutrition, that volatility has been, you know, even more sort of dramatic in Brazil, and it has something to do with the infrastructure in the country. It has to do with the way retail works in Brazil, and so the highs were higher and the lows were lower. And as a result, when we talk about normalizing margins, that's just taken longer in Brazil to get through these higher-priced inventories, given the extreme volatility there. The other, I will say, is that if you're in a business that has working capital, maybe even high levels of working capital, financing that in a 14%-16% interest rate environment is a real challenge.
Of course, interest rates have come off a bit in Brazil, but the interest rate environment has made it very difficult for retailers as well. Of course, we talk about our business, but if you look at the retail sector in Brazil, we are definitely not alone. The entire sector is working through this, obviously, everyone's getting their arms around working capital, minimizing that to the extent that we can, and getting the operating model right and working through these higher-priced inventories.
Okay, let's talk about potash. You do that, right?
We do.
So, despite everything going on in potash, it always seems like there's lots of drama, your sales volume has been pretty stable-
Huh
... throughout the years. What's the outlook for potash right now? I mean, you know, Southeast Asia, you talk about Brazil prices being stronger, Southeast Asia is weaker. We're waiting for these benchmark contracts from maybe India and then maybe China. What's your view on potash right now?
Yeah, you know, we are saying 68-71 million tonnes of demand for this year, which that's not on trend level demand yet. That's still just demand recovering in different pockets of the world. You mentioned Southeast Asia. We do think Southeast Asia will be part of that story this year. We've seen good engagement in the first couple of months out of Southeast Asia, and that's, you know, we have 4,000 MYR palm oil, and we have strong rice prices, and so the incentives are there for Malaysians, Indonesians, the Vietnamese, and the Thai to lay down appropriate crop nutrition, certainly appropriate levels of potash. And again, we're seeing that here at the start of 2024. Yeah, so 68-71 million tonnes. We can talk about what's happening in Brazil. We continue to see Brazilian demand growing.
You know, North America's a mature market at kind of that 10 million tonnes. We expect to be in and around that level this year. China and India, I mean, India is a, it's a fascinating story, really. We've seen a step change in Chinese consumption, up to 17 million tonnes last year, and we expect similar to growing levels this year, actually. And so that when we look at port inventories and the strategic reserve that we all talk about in China, it is partly, we believe, because they're holding, you know, greater inventories as a result of greater demand and greater consumption. And so China is certainly part of the story, and then India as well. We expect India to be back in the market.
In fact, we're expecting probably India to step in first to settle, you know, their annual contract before the Chinese. So you put it all together, 68-71 million tonnes. We, we continue to see demand growth in our business, and we, we've talked about that 2.5% average annual growth rates and that we've seen that over the last 20 years. We expect that to continue as we get back on to trend level demand, you know, having worked through a couple of years of, you know, extraordinary shocks to the system.
I mean, some of your peers have been a little more aggressive, calling out the day when the Indian contract was settled.
Ah.
You haven't done that, so-
No
... good for you. But there is a big fertilizer conference, global fertilizer conference-
Ah
... IFA next week. That sometimes things get signed at big conferences like that, right?
Yeah, sometimes they do, but sometimes they don't. So, so no, I, I, you know, we'll see. You know, the way we think about it is that just looking at inventory levels, looking at the trajectory of price, looking at local, regional consumption demand, and we put that all together and try and make sense of when this might take place. But, but, these are, you know, government-run processes, and I think as a result of all those things, it makes it very, very difficult to predict. As we sit here today, when I say we, we think the Indians are likely to settle first, it is because of those things. It's because inventory levels are low, it's because they need volumes in their channel, and they have been underutilizing potash.
So, you know, in contrast to the Chinese, yes, we've seen port inventories come down from 3.5-3 million tonnes, so we do see product moving inland. Yes, consumption is up, but both those markets trying to assess what, what's happening with price. If prices is stable, well, they may hold on in hopes that it's gonna soften. If prices are going up, you'll likely see them step in and settle earlier. We're in a stable market at the moment, so it makes it very difficult to try and pinpoint a day.
Interesting question, which is, Chinese potash consumption keeps improving. Indian potash consumption always seems to never reach the academic levels. I'll give you some context ... I'm old in this business now, and I can go back to several predecessors, mostly PotashCorp CEOs, and some of them on their exit interviews, if you wanna call it that, they'd say, "Oh, the one thing I got wrong was-
Yeah.
I always thought India-
Yep
... would, you know, consume more potash.
Mm.
What do you think is the reason why India just doesn't?
Yeah, so I hope we have learned our lesson as it relates to India, because the agronomic formula equation would say that they should be consuming 8 million tonnes or even beyond that now. And of course, it's less than half of that. And that's sort of how we think of it, and the reason that we think of it that way is just the extraordinary amount of government involvement in setting a subsidy that encourages, you know, there's a very strong nitrogen lobby in that country, encourages nitrogen use, and that's often at the expense of the... and more often than not, of the potash subsidy and using balanced fertilization and potash. I mean, it's not good for anyone.
It's not good for the farmer, it's not good for soil health in India, but that sort of government intervention piece makes it unpredictable, and until such time as the incentives are in place to achieve balanced fertilization, we don't have them going to the 8 million tons of agronomically appropriate application rates.
So when we talk about the supply side and trying to put together supply and demand, I mean, you've got a lot of excess tons. You could run, you've got maybe another 1 million or so you could run with your current labor. We've seen more tons out of Laos this year, although they've had some recent issues maybe you want to expand upon. We've seen more tons out of Belarus as they've recovered their business through Russia. Demand's caught up, but not all the way to trend. I mean, how do you think about the market, and if you could deploy some of your excess tons and how that would happen?
Yeah, you know, so there's obviously always puts and takes in this market. Producing potash is not easy. You're seeing that in Laos right now. You know, and it continues to be the case that the Belarusians are challenged to get all of their volumes out. I mean, it's different for the Belarusians, right? Because they, they are sanctioned. And so we have seen the majority, the absolute majority of those tons come back out on the market. But I will also say that they are... Those tons are coming out through new channels that have a higher cost to serve. And so we look at that, that marginal delivered ton, it very well could be that it's Belarus through Murmansk or Belarus, certainly into China.
So those shifting trade flows have increased the cost to serve, and again, it might be informative for how the Belarusians are thinking about transacting at certain levels in certain markets. And indeed, again, we're seeing some of those tonnes still locked in Belarus and still, you know, production throttled in that country. You know, they're working on their Murmansk port, which is delayed, but we think that's still an additional $40 to get to Murmansk over the port in Lithuania. So that's the Belarusians. The Laotians, yes, we. You know, we've got a group of potash geologists that look at all the prolific basins on the planet and where we might see additional tonnes, and Laos has been on our radar. We, I would like to say, understand that geology.
It's a water-bearing geology, and I think everyone's understood that, but I think that it could be that we haven't really understood the implications of the water challenges at, for the Laotians and what that means for ultimate production rates, or sort of a ceiling as to where you get, might get in production rates. And yes, we've had them adding a few million tonnes over the next few years, but we have been watching Laotian operations. In fact, we look at satellite imagery of their evaporation ponds, and the evaporation ponds are full and overflowing, and indeed, they just announced the week before last that they're gonna be bringing down their production forecast for the year by 1 million tonnes. So what did I say there? I said, you know, there's puts and takes. There's a lot of moving parts.
There always are on the production side. You know, with demand, trend level demand returning, we see our ability to do all the puts and takes, our ability just to continue to grow with the market at that 2.5% average annual growth rates. We have the tons, we have the capacity. We can pace our capital along with that growth, and it's granular. You know, it's not $100 million or $200 million at the time. It's less than that. It's some mining machines and belting, and we'll just pace that as the market continues to grow and we grow along with it. We're about 19%-20% of the market, and we expect to continue to stay there.
How do you think about your role as the company that kind of balances the market, is disciplined? You know, Nutrien or PotashCorp, Nutrien made room for Uralkali, made room for Bethune in Saskatchewan, has made some room for Laos, and I guess may have to make room for Jansen in 3-8 years. You know, you've got all these tons that are paid for, not staffed up. How do you think about that as your role?
Yeah, I wouldn't say that we think of it that way, Joel, and I don't know if you know, it's been thought of that way in the past. But what I would say is we've been selling potash to over 40 countries around the world for, you know, almost 60 years, and so we have built our channel to our customers. We have the supply chains that go right from, you know, the jungle in Indonesia, all the way back to the Moosomin in Saskatchewan, the Rocanville mine. So we built that channel. Those are our customers, and we continue... And those customers have been with us, many of them, for that period of time, and they continue to grow. They, these are the big, high-quality customers that we're very, very proud to be working with.
And so we have been growing with our customers. We'll continue to focus on them. You know, as we look at, again, all of the evolution of supply and demand in the market, we say, with all those puts and takes, and you mentioned several of them, that we will be able to grow with the market and maintain our market share, which we have. We've been growing at 18, 19, 20%. We've been in that range for a long time now, growing our volumes, and we expect to continue to do that. You know, as other volumes come into the market, they play a role in meeting that growing demand line as well, but so will we.
The questions get easier to answer if potash demand steps back up the trend and just goes back to its 2%-3% growth rate, right? I mean, then a lot of these puts and takes are become less dramatic, if that makes sense.
That's right.
Just wanna pause in the room if any questions in the audience. Don't wanna wait for a microphone. Okay, let's talk about nitrogen also now. So what's the view on nitrogen right now? We're seeing some dynamic things in the market, and gas, gas spreads are pretty good, so it's been a good time to be a North American producer.
Mm.
We saw a surprise in the market a few weeks ago with India taking a lot less urea on one tender, but then now the concern is maybe they have more production and maybe won't be buying as much going forward. That could change the market a bit. Maybe some views on nitrogen?
Yeah. Yeah, so the spread that you described there, you know, whatever it is, $7 or so, you know, that, that continues to be the case, making our North American assets really quite advantaged. And so, and, you know, we expect that that will probably continue for a bit yet, even as LNG facilities get built out in Europe and volumes flow into the country, we think the delta will still exist. You know, it is true that industrial demand has been a bit muted in that part of the world for obvious reasons, so that is a bit of an offset, but, but nevertheless, our advantaged North American assets. And, you know, we're heading through the spring season here. We've seen stable ammonia prices and stable demand through our channel.
Yeah, you've mentioned urea, Joel, and what's happening with both Indian demand, and, yeah, that tender was probably a bit disappointing for most. Does that point to increased Indian capacity over time here, and that India plays less of a role in the internationally traded market? I guess that's possible. The other piece, of course, we're watching is Chinese urea export-
Mm
... restrictions, and we expect those to persist in 2024 as an offset to what we see happening in India. And again, you know, that's as usual, the Indian, the Chinese looking to keep domestic prices at a certain level, favoring domestic supply and obviously, food security. We see that happening in potash with increased potash consumption. So what did I say there? I said that, you know, stable, stability, we don't believe that we're a kind of a trend historical trend-level pricing. We're probably a little bit below that, so there's room to strengthen. We'll get through the planting season, and we'll see the likely see the seasonal lull here, and certainly in urea after the planting season.
But as we think about the mid-cycle, and we think about all those supply/demand trends, you know, relatively balanced market at the moment. And, you know, and in our North American... advantaged North American assets, we continue to place our tons into the market.
Is there a potential link here between in India? So if they have been able to get more gas to these plants and to produce more nitrogen, more urea, then they're going to reduce their very large, you know, urea import, or the urea import part of the subsidy. So either, hey, bank those savings, or maybe there's some more now subsidy available to, you know, push a little more on potash. Is there any link there or too early to tell?
I don't know that, Joel. I think trying to predict all of those moving parts in India is probably really challenged. I can tell you that when we think about on potash our own supply and demand stacks over the next 10 years, we don't have some dramatic shift in Indian subsidy policy leading to greater potash demand.
Upside surprise.
Indeed.
Yeah. And then let's talk about you've done a lot of work to push your nitrogen capacity higher, some brownfield work. Maybe talk about that.
Yeah. So we have opportunities across our network, actually, and we're just closing out a few projects now where, you know, last year we produced about 10.5 million tons. This year, we're saying 10.9 million. Part of that is certainly the investments we've made in brownfield, debottlenecking and reliability challenges. Particularly on the reliability side, it's been in our larger facility and at Trinidad. We've changed our operating philosophy in Trinidad, where, you know, we have four plants there, and we always have enough gas, or typically, I should say, have enough gas to run three.
So, you know, we changed our operating model so that we maintain one, run three, and then bring one down, maintain it, run the other three, so that when we do have the gas, you know, gas utilization is somewhere close to 100%. That we enjoyed the benefits of that in the first quarter, and I could talk about debottlenecking it in brownfield projects at all of our facilities. But when you put it all together, 10.5 million tons last year, 10.9 million tons this year, and we think we can add, you know, another maybe 0.5 million tons just in the debottlenecking projects that we have underway today, so sort of maybe about 11.5 million tons.
And then if we get to full gas supply in Trinidad, that would be another half a million tons over and above that. And as you know, the, there's gas fields being developed in the region, and the National Gas Company in Trinidad telling us that we should be expecting full gas supplies for 2026, 2027. We'll see about that.... but in the meantime, yeah, 10.9, we can, we'll add about another half a million tons over the next few years to get to 11.5, and then with full gas supply, we would get to 12.
You have a contract up in Trinidad for gas, it's end of the year?
Yeah.
They're telling you, "Don't worry, you have gas," so it's part of the negotiations, I guess, now?
Well, that's... I won't comment too publicly too much about and a live negotiation on gas supply, but no, you know, we're not expecting sort of this year or next, and it's gonna depend on the term of the agreement that we put in place. But yes, we're in the midst of having those discussions today.
I have a question that came in on the app.
Mm.
It's basically saying, "How do you anticipate nitrogen demand being affected by kind of the broader focus on improved sustainable farming?
Yeah, we get that question from time to time, and you know, the... And we have seen certain jurisdictions, Europe, and maybe even an experience with it in Canada, where people are suggesting that we should use less nitrogen in the name of sustainability. And we and our government relations people rush into the capital cities of these places going, "You know, that would be a bad idea. That would be a bad idea from a food security point of view, because you need nitrogen to grow food." And we have 1 billion food-insecure people on the planet today, and the idea that we're going to use sort of nitrogen mandates in the name of sustainability to increase that number, and it would. It would. We don't think that's a good idea.
What we do think is a good idea is mobilizing some best practices on the farm, and even something like a slow-release nitrogen fertilizer. We have our own, it's called ESN. It's a polymer-coated granule that when you put it down, it receives some moisture, it slowly releases the nitrogen into the plant root system and uptake into the plant, as opposed to volatilization in the atmosphere. We're showing that that works. That, that works. We've proven that works. And, and we are of the view that we can achieve those sustainability outcomes. We have our, our carbon pilot, which 1 million acres under management today, we're showing that we can, both insets and offsets, capture what for us is Scope 3, capture carbon in the soil, certainly avoid release of carbon to the atmosphere with some, with some modern farming practices, and generate high-quality carbon credits.
We're doing those on the acre that includes best practices on nitrogen, where we don't need to sacrifice yield or food production for the planet because of some blanket sort of non-scientific nitrogen mandate that really makes no sense. So we believe that we can do both. We can achieve our sustainability outcomes and increase yields, and we're showing that that's possible.
Okay, let's try to spend the last 6, 7 minutes we have left trying to pull this all together.
Yes.
Talking about your strategy going forward. So you have a lot of excess capacity and potash you can deploy if the market's there. Hopefully, it's there. It goes up over time. You're doing some work in nitrogen. You talked on the earnings call last week about maybe trying to make earnings. Did you say higher quality? What was-
Yeah.
Was that your expression?
We did.
That was your word, higher quality?
Yeah.
Okay. So, you know, what is sort of the strategy going forward here?
Yeah.
And-
Yeah, so when we get up in the morning, Joel, we think about farming. We think about the farmer. So like I say, we're on 150 million acres with our 600,000 grower accounts. We are, you know, the largest ag retailer on the planet. Seed, chemistry, plant nutrition, our own proprietary products line, digitally enabled capabilities, the largest soil sampling capability in North America, the largest custom application fleet in North America. It's this offering to the grower that is like no other.
You know, as we've increased that offering, which now includes Nutrien Financial, that's part of our growth story, and we have been growing at a rate, you know, far greater than our competition in our retail business, owing to that offering, and that's greater share of wallet and stickiness with the grower, the grower accounts when we have, when we grow that offering. Indeed, you know, we're, we have 4,000 agronomists, crop consultants on the farm every day, walking the fields with the growers, understanding what it is that they need. And part of what they need also is, is crop nutrition and reliability of supply. And so that our retail network, our grower-facing activities are backed by the footprint, the largest footprint of crop nutrition, fertilizer production in the world.
And the channel that's been built right through, whether it's our grower-facing geographies or the other 40 countries around the world with distribution, we've built that channel. And the quality of the Canadian product, combined with the reliability of supply, puts us in a very competitive and unique spot in the market, and that's something that we're proud of. You know, so going forward, as we think about our strategy, it's continue to exploit the, all of, those synapses along that value chain. It's continue to meet the needs of our customers. It's continue to grow our grower-facing activities, supported by low-cost production in our potash business and, you know, staying top quartile there. Supported by our, yes, the advantaged geography of our nitrogen business, but increasing our reliability of our clients. And again, we saw that in the first quarter.
When we say simplify and focus on quality of earnings, it really is about the ratability. You know, it's about just quarter-over-quarter, simplifying on what it is we do, that's focusing on the farmer, and using our time for activities that generate cash. You know, and so that we have cash to do all the things that we always talk about, as part of Argentina and Chile and Uruguay is, you know, there's an example of some changes we're making. We're gonna make some more changes as well. We're gonna pull some cost out.
When we do all those things, it allows us to focus, simplify, improve the quality of earnings, the ratability of those earnings, and our ability to convert to cash so that we can do, you know, the cash available to do all the things we like to do.
So obviously, you're getting ready for your capital markets day, June, middle of June. Getting ready, you know, you're thinking about all these things, obviously.
Yeah
... as you're putting together everything.
Mm-hmm.
It sounds like you're describing more of an evolutionary nutrient. No big splashes, get retail earnings, you know, more optimal, proprietary products, get Brazil earnings recovered-
That's right
... maximize potash, make nitrogen more reliable. Does that make sense?
Well put, Joel. Yeah, no, that's-
Yesterday's over. We're good?
Indeed, thank you.
Good.
Yeah, no, that's right. That's exactly what we intend to discuss, is, you know, something that our shareholders can understand. It's understandable, that story, and just the focus that we're putting on what we're good at, at the expense of the things that we're not good at. And there are things that we're not good at, and we've shown that. And we're gonna stop doing those things. And, and yes, evolutionary as opposed to revolutionary, I think is a good way to describe it.
That's gonna be my comment title, by the way. Sorry. The proprietary products, the seeds and chems business, Dyna-Gro, Loveland-
Yeah
... really good things over the last many years. Where are areas you can kind of push where maybe you're untapped?
Yeah, no, you know, we've always put those products on our own shelves, and it's always-
In the nutrient stores, yeah.
Yeah, that's right. Yeah, thank you. And so we, you know, we ask ourselves, and have asked ourselves for a long time, are there other parts of the world, other shelves, where those products could sit and move off other shelves? And so it's that kind of thing that we're looking at, Joel. These are just excellent products. They are niche, so they're not necessarily... You know, we're obviously the largest customer of all the big crop chemistry companies on the planet, like, by some measure, their largest customer. And we get that question. I mean, are these products competing with your suppliers? And they're niche products, so the answer is not really. I mean, you look at, again, biostimulation, a place like Europe, where we have a presence, we have a distribution presence there.
And so we started thinking about, well, okay, are there opportunities to, like I say, put these products on other shelves because they are such high quality, they're so efficacious, and you know, other parts of the world that could be using them. So that's one example of growing our proprietary products. We continue to grow our offering, our product line, and we do see opportunities even for additional penetration on our own shelves in our own geographies. So it's all of the above.
In the minute we have left, I mean, if it's a bit of more evolutionary development, which is great, you know, you haven't bought back stock in about a year. We talked about this at our mining conference a few months ago, maybe waiting till the spring to reassess. You're, you're getting to that point now. You know, what do you think buyback capacity is like in the second half of the year under your new plan? Will buybacks then be maybe a big part of it?
Yeah, I mean, if you look at what we're sort of guiding to for volume and retail EBITDA, and then sort of sources and uses, we've got about $2.2 billion-$2.3 billion in capital. We've got about $400 million-$500 million in leases. There's $1 billion for a dividend. So you add it all up, it's about $3.7 billion that we have line of sight to today in terms of uses. As the year unfolds, we continue to look at opportunities to acquire, to do those tuck-in acquisitions, and always maintaining some flexibility to do that. We look at the balance sheet, and we think the balance sheet's in pretty good shape. And then, you know, when the dust clears from all that, yeah, we look at our ability to buy back stock.
We have bought back 23% of the company since it was formed, and we have distributed about 50% of our cash, redistributed either via the dividend or buybacks. We'll continue to sort of think of it that way.
Thanks, Ken. Appreciate it. Thank you.
Thanks, Joel. Yeah.
Thanks a lot. Thank you.