The booming fertilizer business.

Name: Mike Bennett

Title: President/CEO, Terra Industries, Sioux City, IA

Career: Began his career with Terra as an Operations Technician in its Port Neal, IA, plant. He has worked his way up through the organization in variety of jobs, becoming CEO in April, 2001.

AM: Please provide an overview of Terra and its activities in North America.

MB: Terra owns and operates six nitrogen product manufacturing facilities in North America. They are located in Courtright, ON; Port Neal, IA; Woodward and Verdigris, OK; Yazoo City, MS and Donaldsonville, LA. Our Donaldsonville facility has been idle since late 2004, but we're planning to restart it in the third quarter of 2008.

Our annual manufacturing capacity at these facilities including Donaldsonville is about 3.3 million tons of ammonia, most of which we upgrade into higher margins products, including UAN, AN and urea. Terra's U.S. facilities are in the Corn Belt, so are well situated to serve agricultural customers, which account for the bulk of our sales. Our nitrogen products are also sold into industrial markets as feedstocks for other chemical processes, and as reagents to reduce harmful emissions at power plants and other utilities.

We also have a deep-water terminal in Donaldsonville, through which we can import and distribute ammonia and UAN; and have 50% interest in the Houston Ammonia Terminal (HAT) near Pasadena, TX, which provides additional ammonia import and storage capabilities.

AM: Why have plant nutrient stock values risen over the past year?

MB: Plant nutrient values have risen over the past year as the supply/ demand balance for the three major nutrients has tightened substantially and the cost of producing these nutrients has jumped.

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The main driver has been increased demand. Global grain inventories declined significantly over the first six years of this decade to the lowest levels in many years, as global grain consumption has steadily increased due to a growing world population, improving diets in developing countries and the advent of biofuels.

At the same time, grain prices remained depressed, not providing adequate incentive for growers to increase output. Grain prices have responded to these low inventory levels and growers are reacting with increased production, which requires an overall increase in plant nutrients. But we can't just turn on a dime and ramp up production of these nutrients--new capacity requires significant lead times and substantial capital investment.

AM: What are the current major challenges/opportunities for the industry?

MB: The main challenge--and opportunity--the industry faces is figuring out how to help growers produce more grain than has ever been produced on this planet, simply to meet annual demand, let alone rebuild low grain inventories.

AM: How has the industry changed?

MB: In the past three years, we've witnessed continued consolidation in the industry, driven in part by financial stress created by previous years of low utilization of industry assets.

We have also seen significant changes driven by escalating costs. For example, the U.S. was self-sufficient in nitrogen fertilizers a decade ago, but now must import at least half its supply. More and more of the world's nutrient capacity is provided by countries with the most abundant natural resources to produce these products. In the case of nitrogen fertilizers, it is natural gas advantaged countries such as those in the Middle East that are supplying a growing percentage of overall supply.

AM: What role does communication play in your marketing activities?

MB: We have to communicate well to achieve our marketing ambitions. Because our sales are primarily in agricultural commodity markets, it's difficult to make a case that our products are superior to those of our competitors.

We can, however, communicate some benefits of doing business with Terra. We serve our customers well through efficient supply chain management, excellent supply reliability and consistent product quality. We also recognize that when our customers and their customers do better, we do better. We provide these groups with our view of the nitrogen products markets environment through written communications, phone contact, e-mail and in person visits.

AM: What is your outlook for ag?

MB: 2008 is shaping up to be a strong year for North American agriculture. As the most efficient producers of grain on the planet, North American growers are responding to the global need for more grain.

The continued growth of ethanol production is adding to the demand for corn. Grain prices across the board are at the highest levels in many years, with a relatively weak dollar boosting exports.

These factors should shape a strong foundation for the agricultural economy in 2008 and beyond.