Agrium looks to seed to grow retail sales

WINNIPEG, Manitoba, June 12 (Reuters) - Agrium Inc (AGU.TO: Quote, Profile, Research, Stock Buzz) wants to grow its retail business by cutting into seed sales from traditional farmer-dealers in the U.S. corn belt, the largest U.S. retailer of fertilizer and chemicals said on Thursday.

The growing popularity of seed with "stacked" genetic traits will drive more farmers to buy from retail outlets, said officials from Agrium, which sells seed made by Monsanto Co (MON.N: Quote, Profile, Research, Stock Buzz), Syngenta AG (SYNN.VX: Quote, Profile, Research, Stock Buzz), and its own private brands.

"With the introduction of the new hybrids and all the trait options that a grower has to date, the decision-making process is much greater and it requires much more agronomic experience than it did just five years ago," said Jeff Tarsi, vice-president in charge of Agrium's retail strategy.

Agrium, one of the largest distributors for Monsanto seed varieties, has 1,500 agronomists on staff, Tarsi told an investor conference in Montreal.

The company wants to double its 15 percent share of the U.S. retail market, and plans to target large farmers who want a "one-stop shop" for fertilizer, chemicals and seed, as well as application services for the inputs.

Agrium currently has a six percent share of the U.S. retail seed market, Tarsi said. But he said that share will grow as seed developers bring out varieties with as many as nine genetically modified traits built in to resist insects and diseases and withstand herbicides.

Seed sales in the U.S Midwest have traditionally been dominated by farmer-dealers, with DuPont Co's (DD.N: Quote, Profile, Research, Stock Buzz) Pioneer Hi-Bred division the leading marketer through that network, said Tom Warner, an Agrium retail vice-president.

"Seed very vividly is on our radar screen," Warner said.

Agrium continues to look to expand its network through acquisitions, Tarsi said.

Calgary, Alberta-based Agrium, the world's third-largest nitrogen fertilizer producer, boosted its profit outlook beyond market expectations on Wednesday, noting half of the increase was due to brisk sales of fertilizer, seed and chemicals.

Its Toronto-listed stock was down 6 Canadian cents on Thursday to C$101.94 after reaching a record high of C$103.66 on Wednesday.

Retail margins were 90 percent higher for the first five months of 2008 than in the year-earlier period, said Warner, which more than made up for a late start to spring sales because of cold, wet weather in the U.S. Midwest.

The late spring, which helped boost U.S. spot corn futures to a record high of $7.25-1/2 per bushel on Thursday, could also mean farmers need to use more chemicals to ward off pests and diseases from weakened crops, Warner said.

Farmers are focused on doing what it takes to maximize yields because of skyrocketing prices that have them "giddy" with prospects for strong returns, he said.

"The farmers this year are swinging for the fences," he said. ($1=$1.03 Canadian) (Reporting by Roberta Rampton; Editing by Scott Anderson)