Resilient Fertoz looks forward to cannabis growers boosting phosphate demand

Fertoz ASX FTZ organic phosphate cannabis
Fertoz's farm trials at Mackenzie Applied Research Station, Alberta, Canada.

Organic phosphate producer and agri-business company Fertoz (ASX: FTZ) has provided an operations update with several factors boosting investor sentiment.

Fertoz said it had achieved yield efficiencies, improved sales and overcame challenging weather conditions in maintaining its resilient performance.

Late Spring rains in southern Alberta, southwestern Saskatchewan and substantial flooding in Montana, have delayed processing and ore distribution – but despite the strong rains, Fertoz says it expects to make up some of the lost time over the coming weeks.

Fertoz said it has “solved a number of logistics issues”, allowing fast, inexpensive and easy movement of containers, super-sacks, trucks and loads of Fertoz organic rock phosphate and phosphate blends, adding that further trials are on-going in relation to granulation, polymer coating, humate blends and other client requests.

Its industry-leading improvements could soon see Canadian farmers turning towards organic farming given the strong efficiencies achieved.

Combined with the numerous trials underway across Canada and USA by its customers, Fertoz said it is “amassing a significant amount of field data that farmers require in order to switch to organic farming.”

Cannabis-powered phosphate wonderland

Possibly the most commercially-relevant news that is likely to buoy long-term sentiment within the phosphate industry in Canada is the likely improvement in phosphate sales as a result of the booming cannabis industry in Canada, projected to grow at double-digit rates due to the upcoming legalisation of cannabis growing across Canada.

A key nutrient for cannabis growth is phosphate, whether applied on land, through fertigation or via drip systems in greenhouses, and Fertoz is actively seeking out suppliers to the industry to enable trials of Fertoz phosphate blends.

According to Fertoz, two suppliers have already ordered product and one has already completed successful tests and ordered more product for commercial sales.

“The team has identified a significant opportunity to provide organic fertiliser for cannabis growers in Canada. With the impending legalisation of the C$6.5 billion per annum cannabis industry in Canada, we have positioned the Company as an experienced supplier of organic rock phosphate,” said Pat Avery, executive chairman of Fertoz.

As a possible early indicator of future commercial traction, Mr Fertoz went on to say that, “already, two of the larger suppliers to the cannabis industry have ordered product for trials, and with phosphate a major nutrient required for cannabis development, we expect further market penetration in the near future.”

Improved metrics

In addition to highlighting the future blue-sky potential in relation to cannabis farmers, Fertoz also said that it has made further recent sales to new customers including large agricultural groups.

Its products have been directed to as far away as Ontario and Virginia with the company saying that customer feedback has been positive, including trials showing “increased yields.”

“Customers are already starting to place orders for August delivery. With a calendar based financial year in Canada, growers will pre-purchase fertilisers if they have a good year in order to offset profits,” the company said.

With parts of Canada and the US experiencing good growing seasons and undergoing unusually warm weather, the slow realisation of organic farming offering better profit margins is gradually being realised.

“We were delighted to be invited to present a paper at the annual BMO Farm to Market conference, held in New York in May. It was obvious from listening to the other presentations, that conventional fertiliser groups are simply looking for ways to differentiate their products or commercial terms in order to win market share away from competitors, whereas, in the organic sector, there are new acres being added each year, and the margins are superior,” said Mr Avery.

“Our presentation was well-received by a number of groups and has resulted in follow-up meetings with potential customers and investors,” Mr Avery added.

Fertoz shares rose by 17% in this morning’s trading session, to as high as A$0.21 per share.

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