Stephen G. Dyer - Chief Financial Officer and Executive Vice President
Agrium Inc. (AGU) Goldman Sachs 17th Annual Agribusiness Conference February 26, 2013 10:30 AM ET
Perfect. Okay, great. So we're going to try to stay on schedule here and continue. Next up, we have Agrium. We're happy to have their CFO, Stephen Dyer, presenting this morning. And Stephen's going to go through a -- some prepared remarks then we're going to go into Q&A. Stephen?
Stephen G. Dyer
Thanks, thanks, yes. What I thought I would do is just walk through a little bit on the fundamentals of the business since we're heading into the spring season pretty quickly here, spend a little time talking about our strategy and then move into each of our business units to give you a little update where we're going with our strategy and how we're moving forward there. And then we'll finish up with what that all means for us.
So first slide, you can read that at your leisure in terms of our forward-looking statements. But as you're -- most of you are probably aware that we are the only integrated agricultural inputs company out there across the -- across that value chain. We have a -- 9 million tonnes of production capacity within our Wholesale business. We lost our slides.
There we go. We are the largest ag retailer with around 1,250 locations in several countries around the world, and we are the leader in advanced technologies -- through our Advanced Technologies with coated products as well.
So taking a look at -- spending a little time just on our -- on the fundamentals out there, we continue to see very strong fundamentals for the grower out there. So we continue to see very strong cash margins. And moving into this spring season, the farmer is in very good shape.
One of the measures that I use or take a look at within our Retail business is the amount of prepay that we're receiving from our customers. And last year, we had a record $1.3 billion that we brought in. This year, we're sitting at $1.6 billion of prepay again from the farmer into the -- into our Retail business. And we've actually seen prepay down in the southern parts of the U.S., which is pretty much unheard of historically. So we've got -- I usually use that as a little measure of the sentiment of the farmer out there.
So again, we see very strong fundamentals there. The grower is going to continue to be motivated to use the best seed hybrids, to use the best chemistry and as well as the optimal amount of fertilizer moving forward. And again, we're well positioned to participate in all those areas.
Just moving into a little bit about our strategy, talk about our integrated strategy. And we really see several aspects that provide advantage for us across that value chain. On the potash side, on our production side, we have about $750 million of value that we quantify in terms of being able to run at higher production rates because of the integration we have between our Wholesale and our Retail. We also have -- or are very well positioned from market intelligence and gaining market intelligence across the value chain, which brings a lot of value. We have a tremendous financial capacity, that being across the value chain, having that countercyclical cash flow brings us advantage there. We figure we have about close to $1 billion of debt capacity of being together versus being separate as an organization being across that value chain as well. So we have several advantages out there that we see. And the other one that's been very huge for us is the acquisition opportunities, everything from Royster-Clark to the UAP acquisition to the most recent Viterra acquisition. Being across that value chain has allowed us to take those opportunities, take those assets, some of them being wholesale and some of them being retail, and bring them into our organization and really optimize those assets.
And what has that done for us? If you look at the growth that we've had since 2005, we've -- almost 4x in terms of EBITDA, in terms of growth. If you take a look at our growth of our Retail business, it's bigger than the whole organization back in 2005 from an EBITDA standpoint.
Moving into our business units, talking a little bit about our Wholesale. We obviously have a very strong production presence as well as distribution presence right through North America and down to South America and Argentina with our joint venture, and then in Europe with significant distribution infrastructure now and in support of our MOPCO production facility.
And if you look at our Wholesale business, we have several strengths within that business. If you look at the performance this past year, we had our second best ever performance from an EBITDA standpoint and -- with $5.5 billion in revenue. And if you take a look at the advantage that we have, we have a significant gas advantage being in North America and particularly in Alberta with a significant portion of our nitrogen; we have local market advantage with our nitrogen and our phosphates being close to those local markets, not having that distribution cost significant of importing product into the U.S.; and we -- on our phosphate, we have very good sulfur and integrated ammonia advantage as well as well as integrated rock in our Conda facility, and I'll talk about a little later we'll be moving to imported rock for our Redwater facility. And then you look at our potash, we have our 1 million-tonne expansion and a low-cost, high-quality production facility in Saskatchewan with our potash production.
So overall, several great strengths there that really have drived [ph] us forward to create opportunity -- growth opportunities for us, which I'll talk a little more detail a bit later on in terms of our brownfield and greenfield opportunities that we're at early stages but are developing.
So talking a little bit about some of these advantages in more detail. First, switching to gas. This is just not all of the production out there, but we -- what we've shown is the North American production on the left-hand side, the first 2 bars, and then what we've shown is some of the higher-cost production out there. So we're showing China, some of the Ukraine production as well as the Western Europe production. And you can see that there's a very good advantage in North America today. And it's one of the reasons why a lot of people are looking at production within North America. And -- but it's also creating a fairly good floor for pricing as well, down around that $300 to $350 level. There's a significant amount of production at that level that would have to come out before you start reducing that floor as well. So we see a very good advantage there going forward.
On the potash side, this was -- I alluded to it a little earlier in terms of our production rates. What we've shown here is the green is our production capacity as a percentage of our nameplate versus the other Saskatchewan producers, and you can see that we've consistently run above the other Saskatchewan producers. And this is again because of that integration that we have between the Wholesale and Retail, we're able to run at a higher production rate when the market does go a little long. We also, as I mentioned, have our expansion. It's on -- still on target, on schedule and on budget for mid-2014 for 1 million tonnes of capacity. And again, that's where -- as we introduce that product into the market in the second half of 2014, that's again where our Retail will come into play, is helping introduce that product into the marketplace.
On the phosphate side, and I talked a little bit about the advantages we have on the sulfur, a very good sulfur supply for both our Redwater facility in Alberta as well as our Conda facility in Idaho and as well as integrated ammonia supply for those facilities as well.
As I mentioned, our Redwater facility in Alberta will be moving in the second half of this year to imported rock from OCP. We signed a medium-term or blanket agreement there going out to -- it takes it out to about 2020 for rock supply. Redwater historically has run on imported rock for many decades, so it's not an uncommon thing for our Redwater facility to run off of imported rock. It's a very good agreement for you. What we've shown in this graph is that if you take the first 9 months of this year and ran that under the OCP contract, yes, our margins will be a little lower but would still be higher than the peer group out there as well. So it's a very good contract. It is basically a floor price with a sharing arrangement on the profits from that facility.
Now moving to -- our next business unit is our Advanced Technologies. And I just have one slide to talk here around our ESN. Again, it's been a fantastic product for us, continues to grow. It now represents about 7% of the urea used within the U.S. And we have expanded our production at our New Madrid facility this year to double the production there. So we're up to close to 0.5 million tonnes of production now of ESN and continues to sell that product out, and it provides great agronomic and environmental advantages to growers out there.
Now let's switch gears and move into our Retail business unit. And they -- again, we have a little map up here that shows our network within our Retail within North America. We don't have the Viterra dots on here yet, and I'll talk a little bit later on an update on our Viterra business, our Australia Landmark business and as well as our Argentina business and some of the surrounding countries around Argentina that we have grown.
And again, another fantastic year for our Retail business. Over $950 million of EBITDA from that business. Remember last year or 2011, we did $769 million. So great growth in that business. We continue to optimize that business as we move forward, continue to leverage our seed growth, leverage our proprietary and private-label products. Both have been growing at a tremendous rate, and I'll talk a little bit more about that as well. And again, great growth opportunities there from a tuck-in standpoint, which I'll talk a little bit about as well. We continue to see a very good pipeline of tuck-ins moving forward.
So just a little update on the Viterra transaction. We see this as a fantastic transaction for us. And again, it's a great example of being across that value chain. When this transaction came forward when the Canadian Government made the decision to disband the Wheat Board, basically every grain company was looking at Viterra as an opportunity for them. And they all came to Agrium because we're across that value chain to look at that acquisition, and they didn't go to any of -- any other of our competitors out there.
Again, we ended up on selling that plant, the 1/3 of the Medicine Hat plant to CF. We think that's a great deal, hoping to have that part closed in the next 30 days or so. And in terms of closing on the Viterra deal, probably 60 to 90 days or probably in that middle of the second quarter, end of the second quarter, we expect closing of that deal as well. We do have our competition filing in the with the Canadian Government. So that's working through its process as well.
Before synergies, we're looking at that deal right now at being around a 6x. And again, that's before synergies. Again, we haven't got the competition approval, so we haven't been completely under the hood to quantify our synergies. But there will be some significant synergies there as well going forward.
And if you look at it, that business was generating about $100 million of EBITDA. Again, we're acquiring about 90% of that. So we've got about $90 million of EBITDA contribution plus our synergies. And we will do -- have some integration costs in the first couple of years of that acquisition as well.
And just as a reminder that we do get the proceeds both from the sale of the Medicine Hat plant as well as up until we close the Retail business that comes to Agrium's account as well.
So [indiscernible] view is just spend a few minutes just touching on some of the highlights. About 3 weeks ago, we did a deep dive into our Retail business at our Analyst Day and thought that we'd just touch on some of the highlights. And we spent a lot of time focusing on some of the continuous improvement we've done in our Retail business.
So what I've shown here is some of the -- a few of the key slides from there. The first 2 on the top there are just our average revenue and average EBITDA per facility. And you can see we've had tremendous growth over the time period when we started the acquisitions, starting with the Royster-Clark acquisition back in the 2005 time frame. And tremendous growth both on the top line and the bottom line as we've gone over time here, really leveraging the growth of that business.
And then you can see on the bottom, you can see that we have there the -- basically our operating cost ratio, which is our operating cost to our gross profit. And again, we've had tremendous improvement there as we've moved forward over time. And today, we're -- been aligned with the other -- with various other distribution companies out there, about in line. As we continue to grow, continue to optimize, you will see that continue to trend down. And again, you've seen we set a target there out in the 2015 time frame of 67%. Again, that's our operating cost to our gross profit.
The next couple of slides are just talking about the growth that I alluded to before in our seed and our private label. Our seed business has been growing at 38% per year, tremendous growth there. And we see that continuing on as we move forward here. And again, this is really about selling seed to our existing customers that we already sell chemistry and fertilizer to.
And then the bottom one is our Loveland Products, again growing at 28% per year. This actually came across from the UAP acquisition. It has been a great addition, and we've been able to really leverage that through our entire network and it's become a significant part of our offering, both on the chemistry side as well as the nutritional side from a fertilizer standpoint. And again, we see that continuing to grow. We're already introducing some of these products into Australia, is where one of the synergies are coming from, from an Australia standpoint. And with some of our previous growths over the last couple of years in Canada, we've started registration in Canada as well in terms of expanding the presence of these products in these new geographies going forward.
This is a very interesting one. This is about safety. And not often you've had an investor conference to talk about safety, but this is a great example of continuous improvement. If you want to look at a company and really understand are they about continuous improvement, their safety performance is a great metric to look at.
In the blue bar shows you our safety. These are our TRIs, so total recordable incidents, which is a common industry measure for accident rates within your industry. And you can see us trend down greatly. But then you see those lines there. Those are the acquisitions you -- we've done. You see the starting point, which is much higher, and where we brought down different companies as we have acquired them. So the Royster-Clarks, the UAPs, the Viterras or the Landmarks over time here. So again, this is a great measures to take a look at any company if you want to say, hey, are they about continuous improvement and taking things to the next level?
And then what does this all mean? So these 2 slides here show our EBITDA margins as a percentage of revenue. And you can see we continue to have growth in our EBITDA margins. And if you look at we are industry leading, we are about 50% higher than our competitors out there and some of our historically publicly traded competitors as well. And you -- but we don't stop there. We set a target of looking at growing that to 10% by that 2015 target time frame.
And then you can see as well is our return on capital. We have done some significant acquisitions that has brought down our return on capital. And you see it now trending back up, and we have a target of 13% by 2015 for our return on capital as well within our Retail business. And you can see that North America is a little higher than our overall as well, moving back in the history, but we see those converging over time here.
So when you bring this all together, our Wholesale, our AAT and our Retail, we've set a new target for our Retail of $1.3 billion in EBITDA by 2015. So that's up $350 million over this past year. And again, we see great line of sight in terms of getting to that growth through continued tuck-ins, through continued improvement in our Landmark business, through the growth of our seed and proprietary products and through the Viterra acquisition. And you can see that, that Viterra acquisition, the organic growth, as we call it, and the tuck-ins are about 1/3, 1/3, 1/3 of that growth and then a small part from continuous improvement in the Landmark business.
And then moving over to the Wholesale side, we have some great growth opportunities in front of us. We have 2 brownfield expansion projects of about 800,000 tonnes of urea, and we're also looking at a greenfield project, very early stages on the greenfield, which would be a major contributor as well. But if you take a look at just the brownfield expansions and the Vanscoy expansions, it would contribute almost $800 million of EBITDA in that 2015-2016 time frame. So we have a great line of sight to over $1 billion of EBITDA growth within our business moving forward. And again, we continue to grow our AAT business as well as we move forward with our ESN.
So if you take a look at Agrium, again we're across that value chain, great fundamentals out there, well positioned to leverage those fundamentals. We have a fantastic board today, an independent board that provides us direction moving forward as an organization. Financially, we're very strong, well positioned for growth in terms of our balance sheet and cash generation. And as I've already talked to, we have a great pipeline of growth projects moving forward within our Retail business, within our Wholesale business and within our Advanced Technologies to really leverage on the strengths that we see within the agricultural sector over the next couple of years.
With that, we can turn over to questions.
Okay, great. Thanks, Stephen. Maybe I'll start it off then I'll open up to the audience. And maybe first, just staying in Retail and it's really maybe the whole business, I'm thinking a lot of concern lately about what happens when -- if we actually get trend line yield in the U.S. and thinking out beyond the current planting season if you have a big correction in corn. Maybe walking through the Retail and the Wholesale business, how to think about the impacts of lower grain prices on the portfolio and specific things that you have under your control to mitigate that impact.
Stephen G. Dyer
Sure. In terms of the -- if we have a downturn. Right now, again, yes, we do have very strong crop prices. You have corn at the $7 level and so forth. We see the demand still being strong there with the growers even down at that $5 level. Again, there's still a very good cash margins in place, very good incentive for that grower to still optimize his yields. And again, you'll see the percentage of some of these inputs of their total cost structure has come down over time here with -- as well. So there -- again, there's still very good incentive there for the grower. So that's kind of #1 point. From our standpoint, the diversity that we have brings a lot of value. We talked a lot about corn and soybeans. Yes, there's a driver, especially corn from a global fertilizer price. But we do have a lot of diversity, both from a geographic standpoint and a crop standpoint, particularly within our Retail business. There's the fruits and the nuts and the vegetables, there's the cotton, there's the wheat, there's a lot of diversity that we have that gives us some advantage. So where one area may be weak just like weather -- some areas have good weather, some areas you have poor weather -- same with crops. You may have some crops are strong, some are weaker. So the diversity in our portfolio in our Retail business provides a lot of dampening of any impacts that may happen as well.
From a Wholesale perspective, if you look at -- it's quite interesting looking at the demand curves. And I was actually looking back at them over the last few days, is nitrogen is very steady. You have to put nitrogen down. Even in the '08-'09 time frame, we saw a little bit of a dip in demand, but it came back very quickly. So the real question is -- really comes down to P and K. And we did see a big dip there back in '08-'09 time frame. And so you do see a bit of demand destruction. And so if you did have short-term crop prices go down, could you have some demand destruction there again? You could. But we do see that recovering. Today, the story is around India in terms of the potash story because they're still down about half the level they were historically from our standpoint. So we see that dynamic as well. But from -- so just quickly on the 3 nutrients, we see nitrogen continuing to be very robust. You've got a good floor in place with the higher-cost producers that I showed in the slide earlier. You've got North America in a great position relative to other parts of the world. You have demand consistent at about 3 million tonnes. So we see nitrogen in fairly good balance. And again, you have to put nitrogen down.
Potash, we think most of the downside is built into it now. Probably fairly flat through this year. But we see coming in 2014 again it'll be an India story, whether they step back into the market. And then on phosphate, we -- in the short term, we see -- with Ma'aden getting up to higher production rates and disturbance in the market there and we see inventories a little high, they need to come down as well. But overall, again, even at a $4.55 corn price, we see still strong demand out there. And you would have to have 2 probably bumper crops to get back to kind of historic trend lines in terms of stocks out there as well. So those are some of the elements that I see.
Okay. And maybe digging more into the nitrogen side, obviously contemplating 2 brownfield expansions, looking at a greenfield expansion, there's been a lot of talk in the industry about what could happen given the structural cost advantage that North America has, about how much capacity is ultimately going to get built here. Where do you ultimately see the industry shaking out, particularly as many of these new greenfields are contemplated by new players and the impact that has on the historical pricing premium that North America has carried relative to the rest of the world?
Stephen G. Dyer
Right, yes. There's a couple of key factors here. One is North America is an importer, imports around 14 million tonnes of the 3 nutrients. So a good chunk of that does go into upgrade [ph] for ammonia for MAP and DAP. But it is a significant importer today.
#2, you've seen a fundamental shift. If you look at beyond 2015, you really see no new projects being named to come on in the Middle East. The Middle East was where all the projects have been built in the last 10 years. So that shift has moved from the Middle East to North America where the interest is. And I talked a little earlier the other key point is we see the market growing at about 3 million tonnes per year. That's about 3 world-class -- world-scale facilities out there that are required to keep up with the demand growth. So we see very good fundamentals there. So it really comes down to will we be overbuilt in North America in terms of new capacity coming on. Again, we see good room in North America. There is a lot of projects being looked at. I use a little bit of the analogy, go back to 5 years ago in potash. Everybody was looking at building in Saskatchewan, and we saw the rationalization. I think once people understand the cost of these projects and the scale of these projects, that the number of interested parties will come down to some of the key players. Yes, a significant production will be built in North America, but the global demand needs that production to be built going forward as well. And so again, we're at early stages in terms of our greenfield. We're looking at a couple of sites. We're starting looking at the permitting process. And again, this new production for any new greenfield is probably about 5 years out. When we look at it, it's probably about 18 months to 2 years for a permitting process and about 3 years to build a plant. So the way I look at it, it's probably 2 production turns, it's probably 10 years out before you would even look at North America getting into a parity position. And again, that graph I showed earlier, we do have a lot of production at that $300-plus level that's providing a good floor that would have to be backed out over and beyond meeting just that 3 million-tonne demand growth as well. Okay?
$300 would still be $150 or so below where spot prices are today, right? There's -- I mean, there's an element of the floor is well below kind of where current prices are?
Stephen G. Dyer
Yes, yes, yes. No, that is true. But we do see good supply-demand balance with support pricing where it is today.
Okay. Maybe open it up to the audience for some questions. Right here.
Just along the same lines there. With, I guess, some 40% of domestic demand in the nitrogen-based fertilizers satisfied by imports and presumably the high-cost price setter, on a price basis it seems like despite the fact that we might get new capacity in the United States, the high-cost imports will still keep the price propped up. Do you think that's a fair statement?
Stephen G. Dyer
Yes, that's absolutely fair. Now that gets to the point about if you look at that graph I showed earlier, if you look at especially the Ukraine as an exporter and even China where their costs are, yes, China did export a significant amount, about 7 million tonnes this past year, but the market needed it. And the reason China did it is because there was an opportunity to get a return. And so, you're absolutely correct in terms of there is that good floor there because of that high-cost production. And that's a lot of production has to come out before you can start bringing that floor down, absolutely.
Just a second quick one. In terms of the Retail business, a lot of people do the forward integration strategy because when one business wins, the other one loses and they tend to negate each other over time, the diversification effect. But it seems like the whole chain benefited from the shale play. Margins expand across-the-board. So what is the Retail reason? Is it because of the diversification? Or is it because you get better access to the farmer because you're retail? I mean, what's the thesis between -- for holding a retail operation?
Stephen G. Dyer
There's several reasons that goes back to the strategy on our integrated strategy. And yes, we're -- we have a very strong farm fundamentals out there which has benefited both the Wholesale and the Retail. But it goes back to optimizing our production. Talked about our potash, being able to, when the market goes long, have an ability to move some product into our retail chain. Again, they do run independent of each other, arm's length of each other. And we don't burden our retail with if, for example, we move production into that. A good example is we consume about 1.1 million tonnes of potash within our Retail organization. It's what they need to supply the farmers. We, on average, have moved about 400,000 tonnes from our Wholesale. That has been anywhere from 0 to 700,000 tonnes depending on the demand -- the dynamics out there. Again, they take the product. They take it on consignment. They pay for it at the price of when they would have normally bought it. So having that distribution chain allows us to -- being across the value chain allows us to optimize that. And for example, if we build a greenfield, it will be right in the heart of the Corn Belt. A major customer would be our Retail business as well. We have that countercyclical cash flow. We haven't had necessarily that issue over the last couple of years, but '08-'09 is a great example where prices went screaming down and our Retail released about $1 billion of cash as it liquidated inventory, bought back in a lower value. So it provided good stability and cash flow, and that moves into having that higher credit capacity. The rating agencies really appreciate that. So we have those advantages.
So along those lines, what percent of the stuff you sell out of retail is your own product?
Stephen G. Dyer
Today, it's around 15% to 18% that comes at Wholesale, supplies Retail the full needs. And as we grow, that number will probably continue to creep up.
Other questions. Right here.
Can you please remind us where you are regarding capital allocation and when we might have additional announcements regarding what you do with the capital?
Stephen G. Dyer
On our capital allocation priorities? Yes, we -- I kind of break it into 3 buckets. First is what I call sustainability. So that's sustaining our investment-grade rating. It's -- we actually see that as a capital asset for us. Sustaining our base assets, so ensuring we have the right amount of sustaining capital. And then sustaining our current dividend. You never want to be, as a CFO, having to touch your dividend.
Second priority is growth, and there's 2 components of that. One is as we grow the business through our growth opportunities, our expansions and our seed business, our Loveland Products, we will continue to grow our dividend in concert with that. So, for example, we have set a target of $1.3 billion for our Retail business. As we approach -- move towards that target, we'll increase our dividend as well as we grow our Wholesale business. We've actually seen more stability in our Wholesale business going forward as well with nitrogen. Nitrogen has been reset in North America. We don't have that gas input volatility that we had historically.
And then the third bucket is really other forms of returning capital. And that's where we look at share buybacks. And so when we have -- don't have good growth opportunities out there that are going to bring good value to our shareholders, we will look at returning capital through share buybacks. And the Medicine Hat deal was a good example of that. We had an injection of $900 million. We felt it's the best way to return. That was through the SIB [ph].
Right. So you recently did the Dutch offer, right?
Stephen G. Dyer
And when might we see additional news regarding potential additional buyback? How often do you evaluate that?
Stephen G. Dyer
We're constantly evaluating it. It's -- anyway, it's an integral part of the evaluation of any project that we do. For example, the greenfield is a great example. That's a massive investment over a 5-year period. We look at that competing against "If I took that money and that spend and bought back shares, how does that compete against the greenfield?" So we're constantly looking at that. We're constantly -- basically, every project in every quarter, we're reviewing a share buyback as well as our dividend level as well.
Right. Just a quick one on the nitrogen side. You mentioned sort of the longer term, that there's a lot of capacity at that $300, whatever, $325 or whatever the range was. I assume that's New Orleans. What's it in the shorter term with -- you mentioned sort of the, I think on one of those scraps you had, $300 and then you had stuff further off to the right, Ukraine and sort of Eastern European contract cast [ph]. Where do you think it is sort of in the closer term as far as the swing cost producer on urea delivered to your markets?
Stephen G. Dyer
Sorry, what our long-term view on urea?
Well, you said long term, you sort of had this floor where there was lots of capacity. But then it seemed that near term, 2013-'14, there's guys further out on the cost curve higher: Ukraine, Eastern Europe and whatnot. Where does that sort of level translate to on a North American basis of their sort of cost of production for them to deliver product to New Orleans to compete with you guys?
Stephen G. Dyer
Yes. Well, again, you look at -- that cost curve started around $300 and went up to the $400 range. And again, there's a significant amount of production there. Sorry, there's nothing specifically if you're starting to import -- exporting of ...
Yes, the sort of thing. If we ended up in a completely supply-driven market.
Stephen G. Dyer
Yes. So basically, you would compete against that marginal producer out there. So really, that would be largely the Ukraine because they're the largest chunk of, I'll say, steady global trade. Then you've got China as the other chunk, large chunk out there that has been kind of opportunistic. They had significant exports in 2010, dropped off for a couple of years, and then again in this past year. So really, that would be your main production you're competing against. Those 2 components last year represented about 12% of global trade.
And you think those are in the 400s context in New Orleans? And how does that translate into -- obviously, you're selling at a transportation advantage basis to the Gulf. How does that work out sort of where you sell?
Stephen G. Dyer
Again, where you have that floor around that $300 to $350 basis. So if the market did go long -- again, we see that's where the floor could go to from an NOLA standpoint.
Right. I guess I was trying to figure out what's the amount you get above NOLA from being in the Corn Belt.
Stephen G. Dyer
Okay, sorry. Yes.
Yes, that's right.
Stephen G. Dyer
Yes, so the market premium. So in the Corn Belt, you're probably talking somewhere around $50 to $60 premium and pricing. And then we've always shown -- we've -- we don't have in the slide deck, but we've always shown what it is in Western Canada, and we've always said that's closer to $90 to $100 in Western Canada, again coming from NOLA up. So -- and basically, it's distribution costs. So as your distribution costs go farther away from the import points, your price premium goes up.
We have time for one more question from the audience if there is one. Okay. Maybe we'll -- I think we'll just stop it there then.
Stephen G. Dyer
Okay, great. Thank you very much.
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