CF Industries was founded in 1946 by a group of farm cooperatives with a need for a reliable source of fertilizer. Initially, the new company acted as a purchasing agent, leveraging its size to obtain the best possible prices—and assured fertilizer supplies—for its members. Later, it grew into one of North America’s largest manufacturers and distributors of nitrogen and phosphate fertilizer, distributing its products in North America and other leading agricultural regions.
The Central Farmers Years
CF Industries was originally known as Central Farmers Fertilizer Company, headquartered in Chicago. It purchased nitrogen and phosphate fertilizer from the Tennessee Valley Authority, which during the 1940s had begun promoting the use of high-quality fertilizers by American farmers. Eventually, though, the young company recognized that producing its own fertilizers was the best way to serve its member owners.
During the early 1950s, Central Farmers acquired ownership interests in nitrogen plants in Lawrence, Kansas and St. Paul, Minnesota. The company also built a phosphate complex in Idaho. In 1958, it added the third nutrient—potash—to its product line, signing an agreement with New Mexico’s National Potash Company to distribute most of the product from that company’s Carlsbad, New Mexico mine and plant.
Operational problems at the Idaho phosphate complex (it was eventually shut down in 1963) created financial problems during the early 1960s, but the company’s owners were committed to manufacturing and distributing fertilizer. In 1965, for example, they contracted to market the product from, and eventually acquired, a new phosphate fertilizer plant in Plant City, Florida. They also began building what would eventually become North America’s largest nitrogen complex in Donaldsonville, Louisiana and invested in a second potash venture, this one in Saskatchewan, Canada. Central Farmers purchased a second phosphate complex in Florida, began developing its own phosphate rock mine in Florida, and expanded its distribution capabilities, building a network of terminals and warehouses throughout the Midwest.
Expansion, Growth, and Then Uncertainty
The 1970s brought major challenges to the U.S. economy, including an extended recession and several global oil crises. By contrast, the farm economy was relatively strong during the decade. To capitalize, the company—which changed its name from Central Farmers to CF Industries in 1970—expanded its nitrogen complex in Donaldsonville; built a joint venture nitrogen complex in Medicine Hat, Alberta; and continued to expand its distribution capabilities.
In 1980, the company’s outlook changed, as trade patterns for grain and oilseed significantly reduced demand for U.S. agricultural products. A government embargo on grain exports to the Soviet Union added to the problem. Customers cut their fertilizer purchases dramatically in 1981, leaving the company with large unsold inventories and financial losses. The company cut employment, shut down its smaller nitrogen complexes, and exited the potash manufacturing business, preparing for an eventual recovery.
The cyclical fertilizer industry began to rebound by the early 1990s. CF Industries responded by again expanding capacity at the Donaldsonville Nitrogen Complex, adding phosphate rock mining capacity in Central Florida, and investing to improve operational efficiency throughout the organization.
New Global Capacity Brings Excess Supply
Globally, the fertilizer industry—especially nitrogen producers—overreacted to the early ‘90s improved market demand, adding significantly more new capacity than customers needed. The inevitable result: yet another industry downturn, with CF Industries and other North American producers suffering financial losses from 1999 through 2003.
For CF Industries, this latest cyclical downturn led the company to reassess its business model. A cooperative for all of its history, the company’s mission had been to provide an assured supply of fertilizer for its member owners, with economic performance a secondary consideration. However, the increasing globalization of fertilizer manufacturing, with significant new capacity coming into operation in low-production-cost regions, led CF Industries to develop a new business model. Under the new approach, the company would diversify its customer base by focusing more of its marketing efforts on non-member customers. In addition, the new model established financial performance, rather than assured supply to owners, as its primary objective.
Next Step: Public Company
The new business model proved successful, improving financial performance while still effectively meeting owners’ fertilizer needs. In light of that, the cooperative owners decided to take the new business model to its logical conclusion: taking CF Industries public. And so, on August 11, 2005, the common stock of CF Industries Holdings, Inc. (NYSE: CF) began trading on the New York Stock Exchange.
In its years since then as a public company, CF Industries has delivered strong returns to its shareholders while continuing to invest to grow the company. In 2007, for example, it acquired a 50 percent interest in KEYTRADE AG, a leading global fertilizer trading company headquartered in Switzerland. It also proposed developing a world-scale nitrogen fertilizer complex in Perú, to expand its international presence and serve the growing Latin American market.
Creating a Global Leader
In 2010, CF Industries acquired Terra Industries Inc. This acquisition positioned CF Industries as a nitrogen bellwether and an even stronger player in the global fertilizer industry. CF Industries will leverage its enhanced scale to seek additional opportunities for growth in the global marketplace while serving its agribusiness customers effectively and profitably.