EXHIBIT 99.2
 AGRIUM INC.
 2010
 MANAGEMENTS DISCUSSION & ANALYSIS OF
OPERATIONS AND FINANCIAL CONDITION




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Inside the MD&AForward-Looking Statements
    
    
    8Executive Summary
    
    
    10Retail Business Unit
    
    
    12Wholesale Business Unit
    
    
    20Advanced Technologies Business Unit
    
    
    33Other Business Unit
    
    
    36Outlook
    
    
    37Key Business Sensitivities
    
    
    40Consolidated Performance
    
    
    41Financial Condition
    
    
    46Liquidity and Capital Resources
    
    
    48Outstanding Share Data
    
    
    55Off Balance Sheet Arrangements
    
    
    55Financial Instruments
    
    
    562010 Fourth Quarter Managements Discussion
and Analysis
    
    
    59Risk Management
    
    
    70Environmental Protection Requirements
    
    
    79Controls and Procedures
    
    
    82Key Assumptions and Risks in Respect of Forward-Looking Statements
    
    
    83
      
 Forward-Looking Statements
  8
    Agrium
    2010 ANNUAL REPORT




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##### 



¤
    
    General economic, market, business and weather conditions, including global agricultural
supply/demand factors and crop price levels; global and regional supply/ demand factors
impacting the crop input application season and the price of crop nutrients and raw materials/
feedstock; global economic and market conditions affecting availability of credit and access to
capital markets; build-up of inventories in distribution channels; changes to foreign exchange
rates; tightening of the labor market; and availability of labor supply;¤
    
    Changes in government policies and legislation and regulation, or the interpretation,
administration and enforcement thereof, in the jurisdictions in which we operate, regarding
agriculture and crop input prices, safety, production processes, environment, greenhouse gas and
others;¤
    
    Actions by competitors and others that include changes to industry capacity, utilization rates
and product pricing; performance by customers, suppliers and counterparties to financial
instruments; potential for expansion plans to be delayed; and ability to transport or deliver
production to markets, including potential changes to anti-trust laws, or interpretations
thereof, that could negatively impact our international marketing operations through Canpotex,
the offshore marketing agency for potash produced in the Province of Saskatchewan, wholly- owned
by us and the two other major potash producers in Canada;¤
    
    Changes in margins and/or levels of supplier rebates for major crop inputs such as crop protection
products, nutrients and seed, as well as crop input prices declining below cost of inventory
between the time of purchase and sales;¤
    
    General operating risks associated with investment in foreign jurisdictions; the level and
effectiveness of future capital expenditures; reliability of performance of existing capital
assets; and fluctuations in foreign exchange and tax rates in the jurisdictions in which we
operate;¤
    
    Future operating rates, production costs and sustaining capital of our facilities; unexpected
costs from present and discontinued mining operations and/or labor disruptions; changes to timing,
construction cost and performance of other parties; and political risks associated with our
interest in the Egyptian Misr Fertilizers Production Company S.A.E. (MOPCO), Argentine Profertil
nitrogen facilities, and South American and Australian retail operations;¤
    
    Environmental, health and safety and security risks typical of those found throughout the
agriculture, mining and chemical manufacturing sectors and the fertilizer supply chain, including
risk of injury to employees and contractors, possible environmental contamination, risks
associated with the storage and use of chemicals and the security of our facilities and personnel;¤
    
    Strategic risks including our ability to effectively implement our business strategy and our risk
mitigation strategies, including hedging and insurance; our ability to close pending and proposed
acquisitions and dispositions (including the pending sale of the AWB Commodity Management
business) as anticipated and to integrate and achieve synergies from any assets we may acquire
within the time or performance expected of those assets (including in respect of our acquisition
of AWB); and the introduction of technologies in the agricultural industry that may be disruptive
to our business;¤
    
    Integration risks that might cause anticipated synergies from our acquisition of AWB to be less
than expected, including: AWBs actual results being different than those upon which we based our
expectations; the potential inability to integrate the business of AWB with our existing business
as planned or within the times predicted; the fact that AWB has not been subject to U.S. and
Canadian internal control and compliance standards; our inability to consummate the announced
divestiture of the majority of the AWBs Commodity Management business; the potential inability to
implement changes in time for the 2010/2011 growing season in Australia; the potential loss of key
personnel; and other industry factors which may affect our and AWBs businesses generally and
thereby impact the demand from growers for crop inputs; and
 2010 ANNUAL REPORT
    Agrium
    9




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¤
    
    Other factors described in this MD&A, including those identified under the headings Key
Business Sensitivities, Business Risks, and Key Assumptions in Respect of Certain
Forward-Looking Statements.
   ¤
    
    Grain and nutrient benchmark prices in 2011 are expected to remain above historic levels;¤
    
    High operating rates are expected for the majority of our facilities in 2011, with the exception
of routinely scheduled turnarounds at several plants;¤
    
    Our ability to successfully integrate, and realize the anticipated benefits of our acquisitions,
including capturing the anticipated cost reduction and margin improvement synergies within the
expected timelines for the AWB acquisition; and¤
    
    Our ability to successfully complete the disposition of the majority of AWBs Commodity
Management business on the timelines, and for the consideration, currently expected.
  Non-GAAP financial measures
  
 
 
 Executive Summary >> Sustaining a Growing World
 
 2010 In Review
  2010 >> Consolidated Financial Performance
  10
    Agrium
    2010 ANNUAL REPORT




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Agrium Acquisition Activity in 2010
 (1)
   Strategic Business Units Summary Results
 Retail business unit Wholesale business unit Advanced Technologies (AAT) business unit ® Other business unit
 Net sales and gross profit by Business Unit and product
 Year ended December 312010
    
    
    2009(millions of U.S. dollars)
    
    Net Sales
    
    
    Gross Profit
    
    
    Net Sales
    
    
    Gross ProfitRetailCrop nutrients
    
    
    3,001
    
    
    
    541
    
    
    
    2,522
    
    
    
    212Crop protection products
    
    
    2,703
    
    
    
    633
    
    
    
    2,638
    
    
    
    648Seed
    
    
    877
    
    
    
    171
    
    
    
    731
    
    
    
    152Services and other
    
    
    388
    
    
    
    206
    
    
    
    273
    
    
    
    170Total Retail
    
    
    6,969
    
    
    
    1,551
    
    
    
    6,164
    
    
    
    1,182WholesaleNitrogen
    
    
    1,343
    
    
    
    452
    
    
    
    1,247
    
    
    
    412Potash
    
    
    646
    
    
    
    371
    
    
    
    333
    
    
    
    174Phosphate
    
    
    548
    
    
    
    106
    
    
    
    436
    
    
    
    38Other
    
    
    201
    
    
    
    34
    
    
    
    187
    
    
    
    55Product purchased for resale
    
    
    993
    
    
    
    48
    
    
    
    816
    
    
    
    (37
    )Total Wholesale
    
    
    3,731
    
    
    
    1,011
    
    
    
    3,019
    
    
    
    642Advanced Technologies
    
    
    390
    
    
    
    85
    
    
    
    304
    
    
    
    54Other (inter-segment eliminations)
    
    
    (570
    )
    
    
    4
    
    
    
    (358
    )
    
    
    65TOTAL
    
    
    10,520
    
    
    
    2,651
    
    
    
    9,129
    
    
    
    1,943
 (1) See disclosure under the heading Forward-Looking Statements on page 83 of this MD&A
    2010 ANNUAL REPORT
    Agrium
    11




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Agrium Retail strives to provide growers with a one-stop shop for crop input products and services
needed to optimize their crop yields and to maximize their financial returns. In 2010, our Retail
unit had net sales of $7.0-billion and EBITDA of $525-million, which was Retails second best year
in our history. We are the largest agricultural retailer in the U.S. with over 750 retail branches
across the country. With recent acquisitions, we are also now one of the largest agriculture
retailers in Australia and Argentina, and have ongoing operations in Uruguay and Chile. We entered
the Western Canadian agricultural retail business in late 2009 and continued to grow this business
by acquiring an additional 40 retail branches in 2010. Retail works with growers to identify the
best management practices for their specific farm, taking into account soil and climate conditions
as well as their crop choices. To accomplish this, we offer our farm customers the latest
technologies, products and experience with a commitment to environmental responsibility. We also
apply a substantial portion of the products we sell to growers fields using the latest equipment,
standards and technology. Through these actions, Agrium Retail helps our farm customers meet the
growing need for increased food production in a sustainable manner producing healthy, affordable
food and fiber products.
 Retail >> Strategy
  Retail >> Key Developments
  12
    Agrium
    2010 ANNUAL REPORT




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AWB agriculture retail acquisition
  The AWB acquisition provides several benefits to stakeholders including:¤
    
    The acquisition is expected to be accretive to earnings in 2011 and beyond. (1)¤
    
    We anticipate total annual synergies of AUD$17-million and integration costs of AUD$5-million in
2011 and annual ongoing synergies of AUD$40-million or more to be realized in 2012. (1)¤
    
    We believe Landmark customers will benefit from access to a broader suite of products and services
and that the business will benefit from Agriums strength in product procurement.¤
    
    The acquisition is also expected to provide Agrium with an established base from which to grow in
the important Southeast Asia region.
 (1) See disclosure under the heading Forward-Looking Statements on page 83 of this MD&A
    2010 ANNUAL REPORT
    Agrium
    13




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(1)
 Additional agriculture retail acquisitions in 2010
 ¤
    
    January to March, 2010:Crop Production Services (Canada) acquired 14 retail branches in
Western Canada. All of the facilities are located in Alberta. Crop Production Services (CPS)
acquired five retail branches across various states.¤
    
    June, 2010:Agroservicios Pampeanos purchased 24 retail farm centers and one crop protection
formulation facility from DuPont in Argentina that raised the number of retail farm centers in
South America to 51 facilities.¤
    
    July to September, 2010:Crop Production Services (Canada) purchased another 26 retail branches in
Western Canada, most of which are located in Saskatchewan. CPS acquired four retail branches in
Texas and Kansas.¤
    
    November, 2010:CPS acquired 19 retail branches and three terminals from Kentucky-based Miles
Farm Supply.
 
  Retail >> Financial Results
  Diversity in retail earnings    2010 annual gross profit (millions of U.S. dollars)
 
  
 14
    Agrium
    2010 ANNUAL REPORT




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Retail >> Expenses
  Retail performance
 Year ended December 31(millions of U.S. dollars, except as noted)
    
    2010
    
    
    2009
    
    
    2008Net sales
    
    
    6,969
    
    
    
    6,164
    
    
    
    5,516Cost of product sold
    
    
    5,418
    
    
    
    4,982
    
    
    
    4,090Gross profit
    
    
    1,551
    
    
    
    1,182
    
    
    
    1,426Selling
    
    
    988
    
    
    
    882
    
    
    
    788General and administrative
    
    
    58
    
    
    
    61
    
    
    
    59Depreciation and amortization
    
    
    109
    
    
    
    103
    
    
    
    80Other (income) expenses
    
    
    (14
    )
    
    
    (27
    )
    
    
    19EBIT
    
    
    410
    
    
    
    163
    
    
    
    480EBITDA
    
    
    525
    
    
    
    266
    
    
    
    560EBITDA as a percent of net sales (%)
    
    
    8
    
    
    
    4
    
    
    
    10
 Crop nutrients: Products and services
   Crop nutrient net sales  (millions of U.S. dollars)
 
  2010 ANNUAL REPORT
    Agrium
    15




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Crop nutrients: Financial results
    Year ended December 31(millions of U.S. dollars, except as noted)
    
    2010
    
    
    2009
    
    
    2008Crop nutrientsNet sales
    
    
    3,001
    
    
    
    2,522
    
    
    
    2,718Cost of product sold
    
    
    2,460
    
    
    
    2,310
    
    
    
    2,091Gross profit
    
    
    541
    
    
    
    212
    
    
    
    627Gross profit (%)
    
    
    18.0
    
    
    
    8.4
    
    
    
    23.1Crop protection productsNet sales
    
    
    2,703
    
    
    
    2,638
    
    
    
    2,115Cost of product sold
    
    
    2,070
    
    
    
    1,990
    
    
    
    1,539Gross profit
    
    
    633
    
    
    
    648
    
    
    
    576Gross profit (%)
    
    
    23.4
    
    
    
    24.6
    
    
    
    27.2SeedNet sales
    
    
    877
    
    
    
    731
    
    
    
    432Cost of product sold
    
    
    706
    
    
    
    579
    
    
    
    361Gross profit
    
    
    171
    
    
    
    152
    
    
    
    71Gross profit (%)
    
    
    19.5
    
    
    
    20.8
    
    
    
    16.4Services and otherNet sales
    
    
    388
    
    
    
    273
    
    
    
    251Cost of product sold
    
    
    182
    
    
    
    103
    
    
    
    99Gross profit
    
    
    206
    
    
    
    170
    
    
    
    152Gross profit (%)
    
    
    53.1
    
    
    
    62.3
    
    
    
    60.6Total net sales(a)
    
    
    6,969
    
    
    
    6,164
    
    
    
    5,516Total cost of product sold
    
    
    5,418
    
    
    
    4,982
    
    
    
    4,090Total gross profit
    
    
    1,551
    
    
    
    1,182
    
    
    
    1,426
 
 (a)
    
    International Retail net sales (including AWB since December 4, 2010) were $435-million (2009
 $196-million; 2008  $331-million) and gross profit was $85-million (2009  $25-million; 2008
 $72-million) 
 16
    Agrium
    2010 ANNUAL REPORT




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Crop protection products: Products and services
   Crop protection net sales  (millions of U.S. dollars)
 
  Crop protection products: Financial results
     
 Seed: Products and services
  2010 ANNUAL REPORT
    Agrium
    17




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Seed: Financial results
  Services and Other: Products and services
    Services and Other: Financial results
  18
    Agrium
    2010 ANNUAL REPORT




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Retail >> Quarterly Results
  Retail quarterly performance
 2010
    
    
    2009
    
    
    2008(millions of U.S. dollars, except as noted)
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1Net sales  domestic
    
    
    1,082
    
    
    
    1,138
    
    
    
    3,281
    
    
    
    1,033
    
    
    
    662
    
    
    
    1,157
    
    
    
    3,118
    
    
    
    1,031
    
    
    
    916
    
    
    
    1,482
    
    
    
    2,422
    
    
    
    365Net sales  international
    
    
    243
    
    
    
    106
    
    
    
    59
    
    
    
    27
    
    
    
    76
    
    
    
    70
    
    
    
    30
    
    
    
    20
    
    
    
    106
    
    
    
    112
    
    
    
    84
    
    
    
    29Total net sales
    
    
    1,325
    
    
    
    1,244
    
    
    
    3,340
    
    
    
    1,060
    
    
    
    738
    
    
    
    1,227
    
    
    
    3,148
    
    
    
    1,051
    
    
    
    1,022
    
    
    
    1,594
    
    
    
    2,506
    
    
    
    394Cost of product sold
    
    
    974
    
    
    
    925
    
    
    
    2,621
    
    
    
    898
    
    
    
    549
    
    
    
    973
    
    
    
    2,551
    
    
    
    909
    
    
    
    794
    
    
    
    1,178
    
    
    
    1,839
    
    
    
    279Gross profit
    
    
    351
    
    
    
    319
    
    
    
    719
    
    
    
    162
    
    
    
    189
    
    
    
    254
    
    
    
    597
    
    
    
    142
    
    
    
    228
    
    
    
    416
    
    
    
    667
    
    
    
    115Gross profit (%)
    
    
    26
    
    
    
    26
    
    
    
    22
    
    
    
    15
    
    
    
    26
    
    
    
    21
    
    
    
    19
    
    
    
    14
    
    
    
    22
    
    
    
    26
    
    
    
    27
    
    
    
    29Gross profit by productCrop nutrients
    
    
    140
    
    
    
    86
    
    
    
    252
    
    
    
    63
    
    
    
    46
    
    
    
    31
    
    
    
    117
    
    
    
    18
    
    
    
    60
    
    
    
    160
    
    
    
    335
    
    
    
    72Crop protection products
    
    
    118
    
    
    
    172
    
    
    
    274
    
    
    
    69
    
    
    
    98
    
    
    
    169
    
    
    
    304
    
    
    
    77
    
    
    
    133
    
    
    
    191
    
    
    
    223
    
    
    
    29Seed
    
    
    26
    
    
    
    24
    
    
    
    106
    
    
    
    15
    
    
    
    15
    
    
    
    8
    
    
    
    104
    
    
    
    25
    
    
    
    7
    
    
    
    14
    
    
    
    48
    
    
    
    2Services and other
    
    
    67
    
    
    
    37
    
    
    
    87
    
    
    
    15
    
    
    
    30
    
    
    
    46
    
    
    
    72
    
    
    
    22
    
    
    
    28
    
    
    
    51
    
    
    
    61
    
    
    
    12EBIT
    
    
    47
    
    
    
    75
    
    
    
    360
    
    
    
    (72
    )
    
    
    (57
    )
    
    
    31
    
    
    
    283
    
    
    
    (94
    )
    
    
    (54
    )
    
    
    121
    
    
    
    409
    
    
    
    4EBITDA
    
    
    80
    
    
    
    103
    
    
    
    387
    
    
    
    (45
    )
    
    
    (30
    )
    
    
    57
    
    
    
    307
    
    
    
    (68
    )
    
    
    (32
    )
    
    
    148
    
    
    
    431
    
    
    
    13
 
 *
    
    Table includes Landmark results from December 4, 2010 onward. 
 2010 ANNUAL REPORT
    Agrium
    19




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Agrium Wholesale is a major global producer and distributor of all the major crop nutrient
products, with facilities and distribution assets strategically located around the world to serve
our extensive customer base. Our balanced portfolio of products and geographies ensures our
performance is not reliant on any one market.
 
 20
    Agrium
    2010 ANNUAL REPORT




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2010 Wholesale capacity, production and sales
 (thousands of product tonnes)
    
    Capacity
    
    
    Production
    
    
    Sales (d)Nitrogen volumesNorth AmericaCanada
    
    
    3,480
    
    
    
    2,650
    
    
    
    1,401U.S.
    
    
    1,273
    
    
    
    946
    
    
    
    2,077International (a)
    
    
    635
    
    
    
    466
    
    
    
    440Total Nitrogen
    
    
    5,388
    
    
    
    4,062
    
    
    
    3,918Potash volumesNorth AmericaCanada
    
    
    2,050
    
    
    
    1,784
    
    
    
    159U.S.
    
    
    
    
    
    
    
    
    
    
    960International
    
    
    
    
    
    
    
    
    
    
    749Total Potash
    
    
    2,050
    
    
    
    1,784
    
    
    
    1,868Phosphate volumesNorth AmericaCanada
    
    
    660
    (b)
    
    
    552
    
    
    
    536U.S.
    
    
    460
    (b)
    
    
    467
    
    
    
    505Total Phosphate
    
    
    1,120
    (b)
    
    
    1,019
    
    
    
    1,041Other volumesNorth AmericaCanada
    
    
    350
    
    
    
    322
    
    
    
    198U.S.
    
    
    265
    
    
    
    231
    
    
    
    444International
    
    
    
    
    
    
    
    
    
    
    49Total Other
    
    
    615
    
    
    
    553
    
    
    
    691Purchase for Resale volumes(c)North AmericaU.S.
    
    
    
    
    
    
    
    
    
    
    811International
    
    
    
    
    
    
    
    
    
    
    2,189Total Purchase for Resale
    
    
    
    
    
    
    
    
    
    
    3,000Total Wholesale
    
    
    9,173
    
    
    
    7,418
    
    
    
    10,518
 
 (a)
    
    50 percent of Profertils capacity.(b)
    
    Superphosphoric Acid (SPA) and Merchant Grade Phosphoric Acid (MGA) are reported in cargo
weight.(c)
    
    Purchase for resale is a combination of nitrogen, phosphate, and potash sales.(d)
    
    Sales represent country of sales destination, not country of production. 
 
 2010 ANNUAL REPORT
    Agrium
    21




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Wholesale >> Strategy
  
 Wholesale >> Key Developments
 (1)
 (1)
  (1) (1)
 Wholesale >> Financial Results
  
 2010 Wholesale gross profit by nutrient
 
  
 2010 Wholesale gross profit:
diversified markets by geography and end-user
 
  22
    Agrium
    2010 ANNUAL REPORT
    (1) See disclosure under the heading Forward-Looking Statements on page 83 of this MD&A




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Wholesale >> Expenses
  Wholesale performance
 Year ended December 31(millions of U.S. dollars, except as noted)
    
    2010
    
    
    2009
    
    
    2008NitrogenNet sales
    
    
    1,343
    
    
    
    1,247
    
    
    
    1,815Gross profit
    
    
    452
    
    
    
    412
    
    
    
    712PotashNet sales
    
    
    646
    
    
    
    333
    
    
    
    816Gross profit
    
    
    371
    
    
    
    174
    
    
    
    632PhosphateNet sales
    
    
    548
    
    
    
    436
    
    
    
    847Gross profit
    
    
    106
    
    
    
    38
    
    
    
    421OtherNet sales
    
    
    201
    
    
    
    187
    
    
    
    237Gross profit
    
    
    34
    
    
    
    55
    
    
    
    68Product purchased for resaleNet sales
    
    
    993
    
    
    
    816
    
    
    
    971Gross profit
    
    
    48
    
    
    
    (37
    )
    
    
    (42
    )Total net sales
    
    
    3,731
    
    
    
    3,019
    
    
    
    4,686Total gross profit
    
    
    1,011
    
    
    
    642
    
    
    
    1,791Selling
    
    
    36
    
    
    
    34
    
    
    
    29General and administrative
    
    
    31
    
    
    
    30
    
    
    
    24Depreciation and amortization
    
    
    5
    
    
    
    5
    
    
    
    4Potash profit and capital taxes
    
    
    27
    
    
    
    4
    
    
    
    162Earnings from equity investees
    
    
    (21
    )
    
    
    (22
    )
    
    
    Other expenses
    
    
    67
    
    
    
    97
    
    
    
    124866
    
    
    
    494
    
    
    
    1,448Non-controlling interests
    
    
    
    
    
    
    (1
    )
    
    
    (30
    )EBIT
    
    
    866
    
    
    
    495
    
    
    
    1,478EBITDA
    
    
    1,058
    
    
    
    607
    
    
    
    1,670EBITDA as a percent of net sales (%)
    
    
    28
    
    
    
    20
    
    
    
    36
 
 2010 ANNUAL REPORT
    Agrium
    23




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##### 



Nitrogen [ N ] Products
      Nitrogen >> Financial Results
 Nitrogen gross profit
  
 Nitrogen net sales  (millions of U.S. dollars)
 
  
 
 
  24
    Agrium
    2010 ANNUAL REPORT




---



##### 



Nitrogen prices
  Nitrogen performance
 Year ended December 31(millions of U.S. dollars, except as noted)
    
    2010
    
    
    2009
    
    
    2008Nitrogen DomesticNet sales
    
    
    1,180
    
    
    
    1,079
    
    
    
    1,662Cost of product sold
    
    
    801
    
    
    
    744
    
    
    
    1,025Gross profit
    
    
    379
    
    
    
    335
    
    
    
    637Tonnes sold (000)Ammonia
    
    
    1,125
    
    
    
    1,070
    
    
    
    1,016Urea
    
    
    1,401
    
    
    
    1,445
    
    
    
    1,308Other
    
    
    952
    
    
    
    709
    
    
    
    865Total domestic tonnes sold (000)
    
    
    3,478
    
    
    
    3,224
    
    
    
    3,189Selling price per tonneAmmonia
    
    
    399
    
    
    
    408
    
    
    
    595Urea
    
    
    355
    
    
    
    326
    
    
    
    557Other
    
    
    246
    
    
    
    242
    
    
    
    379Domestic selling price per tonne
    
    
    339
    
    
    
    335
    
    
    
    521Margin per tonne
    
    
    109
    
    
    
    104
    
    
    
    200Nitrogen InternationalNet sales
    
    
    163
    
    
    
    168
    
    
    
    153Cost of product sold
    
    
    90
    
    
    
    91
    
    
    
    78Gross profit
    
    
    73
    
    
    
    77
    
    
    
    75Tonnes sold (000)
    
    
    440
    
    
    
    542
    
    
    
    362International selling price per tonne
    
    
    371
    
    
    
    310
    
    
    
    424Margin per tonne
    
    
    166
    
    
    
    142
    
    
    
    207Total NitrogenNet sales
    
    
    1,343
    
    
    
    1,247
    
    
    
    1,815Cost of product sold
    
    
    891
    
    
    
    835
    
    
    
    1,103Gross profit
    
    
    452
    
    
    
    412
    
    
    
    712Tonnes sold (000)
    
    
    3,918
    
    
    
    3,766
    
    
    
    3,551Selling price per tonne
    
    
    343
    
    
    
    331
    
    
    
    511Cost of product sold per tonne
    
    
    228
    
    
    
    222
    
    
    
    310Margin per tonne
    
    
    115
    
    
    
    109
    
    
    
    201
 Nitrogen product and gas cost
   
 Nitrogen gross margins  ($/Tonne)
 
   2010 ANNUAL REPORT
    Agrium
    25




---



##### 



Natural gas prices:North American indices and Agrium prices
 (U.S. dollars per MMBtu)
    
    2010
    
    
    2009
    
    
    2008NYMEX
    
    
    4.42
    
    
    
    4.03
    
    
    
    8.94AECO
    
    
    3.99
    
    
    
    3.58
    
    
    
    7.80Basis
    
    
    0.43
    
    
    
    0.45
    
    
    
    1.14WholesaleOverall gas cost excluding realized hedging losses
    
    
    4.08
    
    
    
    3.66
    
    
    
    7.32Realized hedging losses
    
    
    0.39
    
    
    
    1.09
    
    
    
    0.12Overall gas cost (a)
    
    
    4.47
    
    
    
    4.75
    
    
    
    7.44
 
 (a)
    
    Weighted average gas price of all gas purchases, including our 50 percent share of the
Profertil facility. Natural gas use (BCF)
 Western
    
    
    U.S.
    
    
    International
    
    
    PotashCanada
    
    
    (Borger, TX)
    
    
    (Profertil)
    
    
    and Other
    
    
    Total2010
    
    
    71
    
    
    
    18
    
    
    
    12
    
    
    
    3
    
    
    
    1042009
    
    
    69
    
    
    
    15
    
    
    
    14
    
    
    
    3
    
    
    
    1012008
    
    
    73
    
    
    
    16
    
    
    
    12
    
    
    
    4
    
    
    
    105
 Sales volumes and operating rates
   
 
 
  26
    Agrium
    2010 ANNUAL REPORT




---



##### 



Potash [ K ] Products
   Potash >> Financial Results
 Potash gross profit
  
 
 Potash net sales  (millions of U.S. dollars)
 
  
 Potash performance
 Year ended December 31(millions of U.S. dollars, except as noted)
    
    2010
    
    
    2009
    
    
    2008Potash DomesticNet sales
    
    
    441
    
    
    
    213
    
    
    
    476Cost of product sold
    
    
    185
    
    
    
    112
    
    
    
    112Gross profit
    
    
    256
    
    
    
    101
    
    
    
    364Tonnes sold (000)
    
    
    1,119
    
    
    
    467
    
    
    
    907Selling price per tonne
    
    
    394
    
    
    
    457
    
    
    
    525Margin per tonne
    
    
    229
    
    
    
    217
    
    
    
    401Potash InternationalNet sales
    
    
    205
    
    
    
    120
    
    
    
    340Cost of product sold
    
    
    90
    
    
    
    47
    
    
    
    72Gross profit
    
    
    115
    
    
    
    73
    
    
    
    268Tonnes sold (000)
    
    
    749
    
    
    
    296
    
    
    
    779Selling price per tonne
    
    
    273
    
    
    
    404
    
    
    
    437Margin per tonne
    
    
    154
    
    
    
    247
    
    
    
    345Total PotashNet sales
    
    
    646
    
    
    
    333
    
    
    
    816Cost of product sold
    
    
    275
    
    
    
    159
    
    
    
    184Gross profit
    
    
    371
    
    
    
    174
    
    
    
    632Tonnes sold (000)
    
    
    1,868
    
    
    
    763
    
    
    
    1,686Selling price per tonne
    
    
    346
    
    
    
    436
    
    
    
    484Cost of product sold per tonne
    
    
    148
    
    
    
    208
    
    
    
    109Margin per tonne
    
    
    198
    
    
    
    228
    
    
    
    375
  2010 ANNUAL REPORT
    Agrium
    27




---



##### 



Potash prices
  Potash product cost
  Sales volumes and operating rates
  (a)
 
 Potash gross margins  ($/Tonne)
 
  
 
 
 (a)
    
    For a full description of the assumptions and parameters applied in estimating the potash
reserves and resources, refer to Mineral Resource and Mineral Reserve Estimates  Key Assumptions
and Parameters in the Vanscoy Technical Report by A. Dave MacKintosh, P. Geo., of ADM Consulting
Limited, dated November 6, 2009, available on www.sedar.com and www.sec.gov/edgar. shtml. We use
the term mineral resources and its subcategories measured, indicated and inferred mineral
resources. Readers are advised that while such terms are recognized and required by Canadian
regulations, SEC Industry Guide 7 does not recognize them. U.S. readers are cautioned not to assume
that any part or all of the mineral resources in these categories will ever be converted into
reserves. Inferred mineral resources have a great amount of uncertainty as to their existence,
and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or
any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian
rules, issuers must not make any disclosure of results of an economic evaluation that includes
inferred mineral resources, except in rare cases. U.S. readers are cautioned not to assume that
part or all of an inferred mineral resource exists, or is, or will be economically or legally
mineable.
  28
    Agrium
    2010 ANNUAL REPORT




---



##### 



Phosphate [ P ] Products
   (1)
  Phosphate >> Financial Results
 Phosphate gross profit
  
 Phosphate net sales  (millions of U.S. dollars)
 
  
 Phosphate performance
 Year ended December 31(millions of U.S. dollars, except as noted)
    
    2010
    
    
    2009
    
    
    2008PhosphateNet sales
    
    
    548
    
    
    
    436
    
    
    
    847Cost of product sold
    
    
    442
    
    
    
    398
    
    
    
    426Gross profit
    
    
    106
    
    
    
    38
    
    
    
    421Tonnes sold (000)
    
    
    1,041
    
    
    
    1,004
    
    
    
    906Selling price per tonne
    
    
    527
    
    
    
    434
    
    
    
    935Cost of product sold per tonne
    
    
    425
    
    
    
    396
    
    
    
    470Margin per tonne
    
    
    102
    
    
    
    38
    
    
    
    465
 
 
  (1) See disclosure under the heading Forward-Looking Statements on page 83 of this MD&A    2010 ANNUAL REPORT
    Agrium
    29




---



##### 



Phosphate prices
  Phosphate product cost
  (1) (1)
 
 Phosphate gross margins  ($/Tonne)
 
  
 Sales volumes and operating rates
  
 Other Wholesale Products
 ®
  Other Wholesale >> Financial Results
   30
    Agrium
    2010 ANNUAL REPORT
    (1) See disclosure under the heading Forward-Looking Statements on page 83 of this MD&A




---



##### 



Product Purchased for Resale products
    Distribution and storage
  Egyptian nitrogen facility: MOPCO
 (1)
 
  (1) See disclosure under the heading Forward-Looking Statements on page 83 of this MD&A    2010 ANNUAL REPORT
    Agrium
    31




---



##### 



Wholesale >> Quarterly Results
  Wholesale quarterly results
 2010
    
    
    2009
    
    
    2008(millions of U.S. dollars, except as noted)
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1Net sales  external
    
    
    955
    
    
    
    688
    
    
    
    908
    
    
    
    690
    
    
    
    621
    
    
    
    562
    
    
    
    872
    
    
    
    653
    
    
    
    857
    
    
    
    1,445
    
    
    
    1,279
    
    
    
    646Net sales  inter-segment
    
    
    146
    
    
    
    111
    
    
    
    134
    
    
    
    99
    
    
    
    95
    
    
    
    96
    
    
    
    78
    
    
    
    42
    
    
    
    125
    
    
    
    154
    
    
    
    118
    
    
    
    62Total net sales
    
    
    1,101
    
    
    
    799
    
    
    
    1,042
    
    
    
    789
    
    
    
    716
    
    
    
    658
    
    
    
    950
    
    
    
    695
    
    
    
    982
    
    
    
    1,599
    
    
    
    1,397
    
    
    
    708Cost of product sold
    
    
    760
    
    
    
    620
    
    
    
    768
    
    
    
    572
    
    
    
    536
    
    
    
    525
    
    
    
    738
    
    
    
    578
    
    
    
    699
    
    
    
    946
    
    
    
    815
    
    
    
    435Gross profit
    
    
    341
    
    
    
    179
    
    
    
    274
    
    
    
    217
    
    
    
    180
    
    
    
    133
    
    
    
    212
    
    
    
    117
    
    
    
    283
    
    
    
    653
    
    
    
    582
    
    
    
    273Gross profit (%)
    
    
    31
    
    
    
    22
    
    
    
    26
    
    
    
    28
    
    
    
    25
    
    
    
    20
    
    
    
    22
    
    
    
    17
    
    
    
    29
    
    
    
    41
    
    
    
    42
    
    
    
    39NitrogenNet sales
    
    
    370
    
    
    
    290
    
    
    
    444
    
    
    
    239
    
    
    
    294
    
    
    
    260
    
    
    
    464
    
    
    
    229
    
    
    
    355
    
    
    
    498
    
    
    
    635
    
    
    
    327Cost of product sold
    
    
    210
    
    
    
    210
    
    
    
    304
    
    
    
    167
    
    
    
    199
    
    
    
    180
    
    
    
    282
    
    
    
    174
    
    
    
    219
    
    
    
    294
    
    
    
    389
    
    
    
    201Gross profit
    
    
    160
    
    
    
    80
    
    
    
    140
    
    
    
    72
    
    
    
    95
    
    
    
    80
    
    
    
    182
    
    
    
    55
    
    
    
    136
    
    
    
    204
    
    
    
    246
    
    
    
    126Tonnes sold (000)
    
    
    980
    
    
    
    950
    
    
    
    1,256
    
    
    
    732
    
    
    
    930
    
    
    
    919
    
    
    
    1,244
    
    
    
    673
    
    
    
    691
    
    
    
    838
    
    
    
    1,254
    
    
    
    768Selling price (per tonne)
    
    
    378
    
    
    
    305
    
    
    
    354
    
    
    
    327
    
    
    
    316
    
    
    
    283
    
    
    
    373
    
    
    
    340
    
    
    
    514
    
    
    
    594
    
    
    
    506
    
    
    
    426Margin (per tonne)
    
    
    163
    
    
    
    84
    
    
    
    111
    
    
    
    98
    
    
    
    102
    
    
    
    87
    
    
    
    146
    
    
    
    82
    
    
    
    197
    
    
    
    243
    
    
    
    196
    
    
    
    164PotashNet sales
    
    
    150
    
    
    
    127
    
    
    
    188
    
    
    
    181
    
    
    
    135
    
    
    
    109
    
    
    
    47
    
    
    
    42
    
    
    
    192
    
    
    
    249
    
    
    
    244
    
    
    
    131Cost of product sold
    
    
    54
    
    
    
    68
    
    
    
    78
    
    
    
    75
    
    
    
    61
    
    
    
    53
    
    
    
    24
    
    
    
    21
    
    
    
    33
    
    
    
    47
    
    
    
    60
    
    
    
    44Gross profit
    
    
    96
    
    
    
    59
    
    
    
    110
    
    
    
    106
    
    
    
    74
    
    
    
    56
    
    
    
    23
    
    
    
    21
    
    
    
    159
    
    
    
    202
    
    
    
    184
    
    
    
    87Tonnes sold (000)
    
    
    418
    
    
    
    388
    
    
    
    529
    
    
    
    534
    
    
    
    353
    
    
    
    273
    
    
    
    61
    
    
    
    76
    
    
    
    283
    
    
    
    380
    
    
    
    574
    
    
    
    449Selling price (per tonne)
    
    
    360
    
    
    
    327
    
    
    
    355
    
    
    
    339
    
    
    
    382
    
    
    
    399
    
    
    
    770
    
    
    
    553
    
    
    
    678
    
    
    
    655
    
    
    
    425
    
    
    
    292Margin (per tonne)
    
    
    228
    
    
    
    152
    
    
    
    208
    
    
    
    199
    
    
    
    210
    
    
    
    205
    
    
    
    377
    
    
    
    276
    
    
    
    562
    
    
    
    532
    
    
    
    321
    
    
    
    194PhosphateNet sales
    
    
    153
    
    
    
    156
    
    
    
    124
    
    
    
    115
    
    
    
    91
    
    
    
    114
    
    
    
    118
    
    
    
    113
    
    
    
    153
    
    
    
    317
    
    
    
    235
    
    
    
    142Cost of product sold
    
    
    99
    
    
    
    132
    
    
    
    114
    
    
    
    97
    
    
    
    90
    
    
    
    115
    
    
    
    106
    
    
    
    87
    
    
    
    67
    
    
    
    122
    
    
    
    139
    
    
    
    98Gross profit
    
    
    54
    
    
    
    24
    
    
    
    10
    
    
    
    18
    
    
    
    1
    
    
    
    (1
    )
    
    
    12
    
    
    
    26
    
    
    
    86
    
    
    
    195
    
    
    
    96
    
    
    
    44Tonnes sold (000)
    
    
    246
    
    
    
    302
    
    
    
    243
    
    
    
    250
    
    
    
    232
    
    
    
    310
    
    
    
    260
    
    
    
    202
    
    
    
    137
    
    
    
    240
    
    
    
    297
    
    
    
    232Selling price (per tonne)
    
    
    624
    
    
    
    517
    
    
    
    510
    
    
    
    460
    
    
    
    392
    
    
    
    368
    
    
    
    454
    
    
    
    559
    
    
    
    1,117
    
    
    
    1,321
    
    
    
    791
    
    
    
    612Margin (per tonne)
    
    
    218
    
    
    
    79
    
    
    
    41
    
    
    
    72
    
    
    
    4
    
    
    
    (3
    )
    
    
    46
    
    
    
    129
    
    
    
    628
    
    
    
    813
    
    
    
    323
    
    
    
    190OtherNet sales
    
    
    50
    
    
    
    32
    
    
    
    70
    
    
    
    49
    
    
    
    35
    
    
    
    26
    
    
    
    81
    
    
    
    45
    
    
    
    31
    
    
    
    67
    
    
    
    82
    
    
    
    57Cost of product sold
    
    
    42
    
    
    
    25
    
    
    
    60
    
    
    
    40
    
    
    
    27
    
    
    
    15
    
    
    
    58
    
    
    
    32
    
    
    
    21
    
    
    
    46
    
    
    
    55
    
    
    
    47Gross profit
    
    
    8
    
    
    
    7
    
    
    
    10
    
    
    
    9
    
    
    
    8
    
    
    
    11
    
    
    
    23
    
    
    
    13
    
    
    
    10
    
    
    
    21
    
    
    
    27
    
    
    
    10Tonnes sold (000)
    
    
    161
    
    
    
    132
    
    
    
    223
    
    
    
    174
    
    
    
    146
    
    
    
    100
    
    
    
    176
    
    
    
    145
    
    
    
    69
    
    
    
    144
    
    
    
    202
    
    
    
    168Product purchased
for resaleNet sales
    
    
    378
    
    
    
    194
    
    
    
    216
    
    
    
    205
    
    
    
    161
    
    
    
    149
    
    
    
    240
    
    
    
    266
    
    
    
    251
    
    
    
    468
    
    
    
    201
    
    
    
    51Cost of product sold
    
    
    355
    
    
    
    185
    
    
    
    212
    
    
    
    193
    
    
    
    159
    
    
    
    162
    
    
    
    268
    
    
    
    264
    
    
    
    359
    
    
    
    437
    
    
    
    172
    
    
    
    45Gross profit
    
    
    23
    
    
    
    9
    
    
    
    4
    
    
    
    12
    
    
    
    2
    
    
    
    (13
    )
    
    
    (28
    )
    
    
    2
    
    
    
    (108
    )
    
    
    31
    
    
    
    29
    
    
    
    6Tonnes sold (000)
    
    
    944
    
    
    
    620
    
    
    
    759
    
    
    
    677
    
    
    
    598
    
    
    
    510
    
    
    
    681
    
    
    
    883
    
    
    
    388
    
    
    
    905
    
    
    
    376
    
    
    
    112Selling price (per tonne)
    
    
    400
    
    
    
    313
    
    
    
    285
    
    
    
    303
    
    
    
    269
    
    
    
    292
    
    
    
    352
    
    
    
    301
    
    
    
    647
    
    
    
    517
    
    
    
    535
    
    
    
    455Margin (per tonne)
    
    
    25
    
    
    
    15
    
    
    
    5
    
    
    
    18
    
    
    
    3
    
    
    
    (25
    )
    
    
    (41
    )
    
    
    2
    
    
    
    (278
    )
    
    
    34
    
    
    
    77
    
    
    
    54EBIT
    
    
    306
    
    
    
    135
    
    
    
    285
    
    
    
    140
    
    
    
    140
    
    
    
    83
    
    
    
    215
    
    
    
    57
    
    
    
    106
    
    
    
    412
    
    
    
    647
    
    
    
    313EBITDA
    
    
    345
    
    
    
    190
    
    
    
    348
    
    
    
    175
    
    
    
    169
    
    
    
    115
    
    
    
    244
    
    
    
    79
    
    
    
    214
    
    
    
    439
    
    
    
    682
    
    
    
    335
  32
    Agrium
    2010 ANNUAL REPORT




---



##### 



Strategic Business Unit: ADVANCED TECHNOLOGIES
 
 Agrium Advanced Technologies (AAT) has become a global leader in slow and controlled-release
plant nutrition by offering products that provide customers with both economic and environmental
advantages. We have an extensive breadth of products to satisfy customer demand for a broad range
of markets including: agriculture, specialty agriculture, professional turf, horticulture, and
consumer lawn and garden markets.
 Advanced Technologies >> Strategy and Key Developments
 (1)
 ®
 
 
 ESN growth in sales volumes and capacity  Tonnes (000)
 
 
 *
    
    New production capacity of 109,000 MT from New Madrid facility commissioned in March 2010   (1) See disclosure under the heading Forward-Looking Statements on page 83 of this MD&A    2010 ANNUAL REPORT
    Agrium
    33




---



##### 



Advanced Technologies >> Products and Services
      o
    
    Agriculture>>A polymer-coated, environmentally sensitive, controlled-release fertilizer that provides both
environmental and economic benefits for broad acre crops (ESN®). AAT also produces and markets
UltraYield® Micronutrients;o
    
    Specialty Agriculture>>Products designed specifically for high-value crops such as strawberries and other food crops
(Smart Nutrition, Polyon®, Duration®, and ESN®);o
    
    Professional Turf>>Branded specialty fertilizer products with slow-release or controlled-release technologies suitable
for golf course turf, lawn care and sport field applications (XCU®, Polyon®, Duration®, Nutralene®,
Nitroform®, AMP) and associated branded professional products (ProTurf®, Nu-Gro®, Nu-Spec®) in
Canada. AAT also markets Precise® controlled release plant protection for turf;o
    
    Horticulture>>Products and blends designed specifically for the nursery market (Polyon®, Duration®, Nitroform®);
ando
    
    Consumer Lawn and Garden>>(Polyon®, Duration®, Nutralene®, XCU®).
  
  34
    Agrium
    2010 ANNUAL REPORT




---



##### 



Advanced Technologies >> Financial Results
    Advanced Technologies >> Expenses
  Growth in AAT net sales and gross profit  (millions of U.S. dollars)
 
  Advanced Technologies financial results
 Year ended December 31(millions of U.S. dollars, except as noted)
    
    2010
    
    
    2009
    
    
    2008Turf and OrnamentalNet sales
    
    
    271
    
    
    
    222
    
    
    
    239Cost of product sold
    
    
    215
    
    
    
    188
    
    
    
    196Gross profit
    
    
    56
    
    
    
    34
    
    
    
    43AgricultureNet sales
    
    
    119
    
    
    
    82
    
    
    
    113Cost of product sold
    
    
    90
    
    
    
    62
    
    
    
    77Gross profit
    
    
    29
    
    
    
    20
    
    
    
    36Total net sales
    
    
    390
    
    
    
    304
    
    
    
    352Total cost of product sold
    
    
    305
    
    
    
    250
    
    
    
    273Total gross profit
    
    
    85
    
    
    
    54
    
    
    
    79Selling expenses
    
    
    30
    
    
    
    13
    
    
    
    6General and administrative
    
    
    39
    
    
    
    36
    
    
    
    31Depreciation and amortization
    
    
    7
    
    
    
    8
    
    
    
    10Earnings from equity investees
    
    
    (4
    )
    
    
    (5
    )
    
    
    (4
    )Other expenses (income)
    
    
    1
    
    
    
    (1
    )
    
    
    3EBIT
    
    
    12
    
    
    
    3
    
    
    
    33EBITDA
    
    
    31
    
    
    
    22
    
    
    
    50EBITDA as a percent of net sales (%)
    
    
    8
    
    
    
    7
    
    
    
    14
  2010 ANNUAL REPORT
    Agrium
    35




---



##### 



Advanced Technologies >> Quarterly Earnings
  Advanced Technologies quarterly results
 2010
    
    
    2009
    
    
    2008(millions of U.S. dollars, except as noted)
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1Net sales  external
    
    
    82
    
    
    
    80
    
    
    
    123
    
    
    
    53
    
    
    
    85
    
    
    
    55
    
    
    
    71
    
    
    
    50
    
    
    
    63
    
    
    
    75
    
    
    
    87
    
    
    
    68Net sales  inter-segment
    
    
    15
    
    
    
    12
    
    
    
    15
    
    
    
    10
    
    
    
    10
    
    
    
    5
    
    
    
    11
    
    
    
    17
    
    
    
    13
    
    
    
    15
    
    
    
    20
    
    
    
    11Total net sales
    
    
    97
    
    
    
    92
    
    
    
    138
    
    
    
    63
    
    
    
    95
    
    
    
    60
    
    
    
    82
    
    
    
    67
    
    
    
    76
    
    
    
    90
    
    
    
    107
    
    
    
    79Cost of product sold
    
    
    73
    
    
    
    77
    
    
    
    107
    
    
    
    48
    
    
    
    79
    
    
    
    49
    
    
    
    65
    
    
    
    57
    
    
    
    59
    
    
    
    65
    
    
    
    87
    
    
    
    62Gross profit
    
    
    24
    
    
    
    15
    
    
    
    31
    
    
    
    15
    
    
    
    16
    
    
    
    11
    
    
    
    17
    
    
    
    10
    
    
    
    17
    
    
    
    25
    
    
    
    20
    
    
    
    17Gross profit (%)
    
    
    25
    
    
    
    16
    
    
    
    22
    
    
    
    24
    
    
    
    17
    
    
    
    18
    
    
    
    21
    
    
    
    15
    
    
    
    22
    
    
    
    28
    
    
    
    19
    
    
    
    22EBIT
    
    
    2
    
    
    
    (4
    )
    
    
    15
    
    
    
    (1
    )
    
    
    (6
    )
    
    
    
    
    
    
    8
    
    
    
    1
    
    
    
    6
    
    
    
    10
    
    
    
    11
    
    
    
    6EBITDA
    
    
    7
    
    
    
    1
    
    
    
    20
    
    
    
    3
    
    
    
    
    
    
    
    4
    
    
    
    12
    
    
    
    6
    
    
    
    8
    
    
    
    17
    
    
    
    15
    
    
    
    10
 
 
 Other Business Unit
      36
    Agrium
    2010 ANNUAL REPORT




---



##### 



Crop Input Situation and 2011 Outlook
 
 Continued solid growth in global demand for crops, coupled with a decline in global crop production
in 2010, has resulted in a significant tightening in the global crop supply and demand balance and
created an excellent outlook for the crop input market. Many global crops are trading at
historically high levels as of early 2011.
 o
    
    Global stock-to-use ratios for most major crops are very low as a result of strong grain demand and
below trend crop yields. Global grain production was impacted in 2010 by a drought in Russia and
below trend U.S. corn yields.o
    
    U.S. corn stocks-to-use ratio is projected to reach record low levels in 2010/11.o
    
    U.S. grower cash margins for the 2010/11 marketing year are at all-time highs for corn, cotton
and soybeans as of February, 2011 which is expected to provide underlying support for all crop
inputs.o
    
    The USDA projects that as many as 10 million more acres could be planted in the U.S. alone in
the spring of 2011.
 
 Grain production, consumption and stocks/use ratio
 
  Significant upward trend in major crop prices  Change in crop price index (Base year: 2005-2007 average)
 
   2010 ANNUAL REPORT
    Agrium
    37




---



##### 



Crop Protection Products and Seed Products
  o
    
    Glyphosate product prices in 2009/10 were impacted by an excess supply of product which took
place in China in 2009. Prices appear to have stabilized in North America and Chinese glyphosate
prices started to rise in late 2010.o
    
    We believe the very strong crop prices should support demand for fungicides and other crop
protection products in 2011.o
    
    The ongoing trend toward more crops showing resistance to glyphosate should continue to
support increased demand for other crop protection products as they are added to tank mixes for
optimal weed control.
 Crop Nutrients
  Variance in global nutrient demand
 
  Nitrogen
 o
    
    Global nitrogen demand is estimated to have increased by two percent in 2010 and industry
analysts expect a further 1.5 percent increase in 2011, well above the long term average of about
one percent.o
    
    Global nitrogen markets were tight in 2010 and in early 2011, as global urea prices remained
above the high cost producers production costs. Ukrainian nitrogen producers are believed to be
paying $9/MMBtu as of the end of 2010, which would translate to an export break even cost/price of
$300 per tonne.o
    
    North American nitrogen demand is expected to increase by at least three percent in 2011.o
    
    North American nitrogen producers are expected to continue to benefit from low-cost natural
gas supplies due to continued development of shale gas reserves.o
    
    There are a number of new nitrogen facilities scheduled to come on stream globally in the second
half of 2011, however this may be at least partly offset by the potential for reduced Chinese urea
exports in 2011 given the recent changes in the government export tax policies and continued market
growth.
 Phosphate
 o
    
    Global phosphate demand is estimated to have increased by eight percent in 2010 and industry
analysts expect a further five percent increase in 2011.o
    
    North American domestic phosphate demand is estimated to have increased by 15 percent in 2010
as application rates rebounded from low levels in 2009. Demand last fall was particularly strong
due to the extended post-harvest application season and high crop prices.o
    
    The strong application season for phosphates and potash in the U.S. this fall may impact
demand this spring, however the extent this may occur will ultimately depend on the size of total
crop acreage, the crop mix in the spring of 2011 and total application rates for the 2010/11
fertilizer year.o
    
    The phosphate market showed considerable tightness in 2010, with North American inventories
well below the five-year average.o
    
    Indian phosphate imports were very strong in 2010, accounting for over 35 percent of global
DAP/MAP imports in 2010.o
    
    China exported record phosphate volumes in 2010 but ended the year with low inventories.
Similar to urea, the Chinese government narrowed the window through which exports are available at
the lower export tax rate.o
    
    The new Maaden Phosphate Project in Saudi Arabia was originally expected to begin exporting DAP in
the first half of 2010, but most analysts now expect commercial supplies to be available in early
2012.
  38
    Agrium
    2010 ANNUAL REPORT




---



##### 



Potash
 o
    
    The global potash market also showed a dramatic rebound in demand in 2010 as global potash
deliveries are estimated to have risen 60 percent to reach 50 million tonnes.o
    
    Global potash deliveries are projected to continue to increase to approximately 55 million
tonnes in 2011.o
    
    North American potash demand is estimated to have increased 20 percent in 2010/11 and industry
analysts expect a further seven percent increase in 2011, even with the strong application rates
experienced in the fall of 2010.o
    
    India contracted for potash early in 2010 and changes in their fertilizer policy were
supportive to domestic demand.o
    
    Chinese potash imports increased significantly in 2010 from the low levels in 2009, but remained
below average.
 
 Agriums Key Business Drivers
   1
    
    Macro economic factorso
    
    A rising global Gross Domestic Product (GDP) will result in improved diets, particularly
among the rapidly growing Asian middle-class. Growth in the global population is supported by these
developing countries. This supports demand for increased grain production and increased demand for
crop inputs (crop protection products, nutrients, seed and related services) to optimize yields on
the worlds limited arable land base.o
    
    The rate of global GDP growth can also have an impact on demand for Wholesales industrial
products and the rate of domestic economic growth can influence AATs controlled-release products
for the turf and ornamental business.2
    
    Agricultural supply and demand balanceo
    
    Rising demand for food, biofuel, and fiber supports crop prices and increased seeded acreage,
which benefit all of Agriums business units.o
    
    Weather and pest pressure can impact crop input demand on a short-term and regional basis.o
    
    New capacity, facility closures or significant changes in regional/global operating rates can
influence production and prices for each crop input. Significant changes in the cost of production
can influence the price and availability of crop inputs or the required raw materials.3
    
    Government policies,actions and exchange rateso
    
    Changes in agricultural policies, trade policy, tax structure, regulatory bodies,
environmental compliance, and other interventions can impact demand/supply of crop inputs and the
cost of doing business in a given region of the world.o
    
    A change in the value of the Canadian dollar relative to the U.S. dollar can impact our costs
which are reported in U.S. dollars. This is because it increases our fixed costs at our Canadian
operations, particularly at our Vanscoy potash facility and Redwater phosphate plant.o
    
    A change in the value of the Australian dollar relative to the U.S. dollar can impact our
Retail earnings which are reported in U.S. dollars.4
    
    Consumer preference and technological changeo
    
    Increased global emphasis and demand by stakeholders for environmentally, socially and
economically sustainable products have the potential to impact demand for various products and
practices and influences the development of new products, and services.
 
  2010 ANNUAL REPORT
    Agrium
    39




---



##### 



Key Business Sensitivities
  ConsolidatedChange
    
    
    Consolidated
    
    
    Net Earnings(millions of U.S. dollars, except as noted)
    
    in Factor
    
    
    EBIT Impact
    
    
    Impact(f)Wholesale Margins(a)(b)Nitrogen (c)
    
    
    1.00
    %
    
    
    7
    
    
    
    5Potash (d)
    
    
    1.00
    %
    
    
    5
    
    
    
    4Phosphate
    
    
    1.00
    %
    
    
    2
    
    
    
    1Product purchased for resale
    
    
    1.00
    %
    
    
    1
    
    
    
    Retail Margins(e)Crop Nutrients
    
    
    1.00
    %
    
    
    30
    
    
    
    21Crop Protection Products
    
    
    1.00
    %
    
    
    30
    
    
    
    21Seed
    
    
    1.00
    %
    
    
    10
    
    
    
    7Exchange Rate from CAD to USD
    
    $
    0.01
    
    
    
    15
    
    
    
    11$1.00 changeStock-based compensation expense
    
    in share price
    
    
    
    3
    
    
    
    2
 (a)
    
    Change in factor is per metric tonne.(b)
    
    The sensitivity for natural gas price is excluded from this table as changes in gas price may
be offset by nitrogen pricing. However, without any offset in pricing, the sensitivity to earnings
for a $0.50/MMBtu change in NYMEX gas prices is $43-million in EBIT and $30-million in net
earnings. The sensitivity assumes no change to the price spread between U.S. and Alberta gas or
nitrogen prices and is before the impact of natural gas economic hedge activity.(c)
    
    The sensitivity to nitrogen margins is exclusive of the natural gas sensitivity described in
footnote (b) above.(d)
    
    Potash sensitivity does not include potash profit and capital tax.(e)
    
    Change in factor is gross profit as a percentage of net sales.(f)
    
    To convert impact to a fully diluted EPS basis, divide the net earnings impact by the
weighted-average number of outstanding shares (158 million shares as of December 31, 2010).
 Margins
 Wholesale
  Retail
  Advanced Technologies
   40
    Agrium
    2010 ANNUAL REPORT




---



##### 



Foreign Exchange
  
 Consolidated Performance
 Consolidated Results of Operations
 (millions of U.S. dollars, except per share amounts)
    
    2010
    
    
    2009
    
    
    2008Net sales
    
    
    10,520
    
    
    
    9,129
    
    
    
    10,031Cost of product sold
    
    
    7,869
    
    
    
    7,186
    
    
    
    6,808Gross profit
    
    
    2,651
    
    
    
    1,943
    
    
    
    3,223ExpensesSelling
    
    
    1,038
    
    
    
    918
    
    
    
    815General and administrative
    
    
    236
    
    
    
    202
    
    
    
    192Depreciation and amortization
    
    
    129
    
    
    
    124
    
    
    
    110Potash profit and capital tax
    
    
    27
    
    
    
    4
    
    
    
    162Earnings from equity investees
    
    
    (25
    )
    
    
    (27
    )
    
    
    (4
    )Other expenses (income)
    
    
    143
    
    
    
    142
    
    
    
    (38
    )Earnings before interest, income taxes
and non-controlling interests
    
    
    1,103
    
    
    
    580
    
    
    
    1,986Interest on long-term debt
    
    
    88
    
    
    
    91
    
    
    
    82Other interest
    
    
    19
    
    
    
    19
    
    
    
    23Earnings before income taxes
and non-controlling interests
    
    
    996
    
    
    
    470
    
    
    
    1,881Income taxes
    
    
    265
    
    
    
    105
    
    
    
    589Non-controlling interests
    
    
    
    
    
    
    (1
    )
    
    
    (30
    )Net earnings from continued operations
    
    
    731
    
    
    
    366
    
    
    
    1,322Net loss from discontinued operations
    
    
    (17
    )
    
    
    
    
    
    
    Net earnings
    
    
    714
    
    
    
    366
    
    
    
    1,322Earnings per shareBasic
    
    
    4.53
    
    
    
    2.33
    
    
    
    8.39Diluted
    
    
    4.52
    
    
    
    2.33
    
    
    
    8.34
  Gross profit
  o
    
    Higher crop nutrients margin driven by an increase in sales volume and a much higher drop in cost
of products sold than realized selling price;o
    
    Higher potash gross profit driven by increase in both domestic and international sales volumes as
pricing stabilized; ando
    
    Higher phosphate and purchase for resale margins mainly driven by increased prices, consistent with
the change in benchmark pricing.
  o
    
    Lower selling prices for most products;o
    
    Significantly lower potash sales volumes; ando
    
    Increase in Retails cost of fertilizer resulting from higher priced inventories purchased at the
end of 2008 being sold into a declining price environment in the first half of 2009.
  2010 ANNUAL REPORT
    Agrium
    41




---



##### 



Selling expenses
  General and administrative expenses
  Depreciation and amortization
  Potash profit and capital tax
  Earnings from equity investees
  Other expenses (income)
 2010
    
    
    2009
    
    
    2008Stock-based compensation
    
    
    110
    
    
    
    73
    
    
    
    (25
    )Realized loss (gain) on derivative
financial instruments
    
    
    39
    
    
    
    123
    
    
    
    (77
    )Unrealized loss (gain) on derivative
financial instruments
    
    
    42
    
    
    
    (39
    )
    
    
    77Acquisition costs
    
    
    45
    
    
    
    
    
    
    
    Gain on disposal of marketable securities
    
    
    (52
    )
    
    
    
    
    
    
    Environmental remediation and accretion
of asset retirement obligations
    
    
    14
    
    
    
    9
    
    
    
    15Interest income
    
    
    (50
    )
    
    
    (56
    )
    
    
    (57
    )Foreign exchange (gain) loss
    
    
    (40
    )
    
    
    17
    
    
    
    (119
    )Bad debt expense
    
    
    31
    
    
    
    33
    
    
    
    23Other
    
    
    4
    
    
    
    (18
    )
    
    
    125143
    
    
    
    142
    
    
    
    (38
    )
   42
    Agrium
    2010 ANNUAL REPORT




---



##### 



Interest on long-term debt
  Income taxes
   Non-controlling interests
  Net loss from discontinued operations
    2010 ANNUAL REPORT
    Agrium
    43




---



##### 



Quarterly Results of Operations
  (Loss) Earnings(millions of
    
    
    
    
    
    Net (Loss)
    
    
    
    
    
    
    Per ShareU.S. dollars,
    
    
    
    
    
    Earnings
    
    
    
    
    
    
    from
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash
    
    
    
    
    
    
    Long-except
    
    
    
    
    
    from
    
    
    Net
    
    
    continuing
    
    
    (Loss) Earnings
    
    
    
    
    
    
    and
    
    
    
    
    
    
    termper share
    
    Net
    
    
    continuing
    
    
    (Loss)
    
    
    operations
    
    
    Per Share
    
    
    Total
    
    
    Cash
    
    
    Dividends
    
    
    Financialamounts)
    
    Sales
    
    
    operations
    
    
    Earnings
    
    
    Basic
    
    
    Diluted
    
    
    Basic
    
    
    Diluted
    
    
    Assets
    
    
    Equivalents
    
    
    Declared
    
    
    Liabilities2010Q1
    
    
    1,798
    
    
    
    (7
    )
    
    
    (7
    )
    
    
    (0.04
    )
    
    
    (0.04
    )
    
    
    (0.04
    )
    
    
    (0.04
    )
    
    
    10,401
    
    
    
    907
    
    
    
    
    
    
    
    1,972Q2
    
    
    4,367
    
    
    
    506
    
    
    
    506
    
    
    
    3.21
    
    
    
    3.20
    
    
    
    3.21
    
    
    
    3.20
    
    
    
    9,795
    
    
    
    805
    
    
    
    9
    
    
    
    1,918Q3
    
    
    2,009
    
    
    
    57
    
    
    
    57
    
    
    
    0.37
    
    
    
    0.37
    
    
    
    0.37
    
    
    
    0.37
    
    
    
    9,778
    
    
    
    897
    
    
    
    
    
    
    
    2,013Q4
    
    
    2,346
    
    
    
    175
    
    
    
    158
    
    
    
    1.10
    
    
    
    1.10
    
    
    
    1.00
    
    
    
    1.00
    
    
    
    12,717
    
    
    
    540
    
    
    
    8
    
    
    
    2,526Year
    
    
    10,520
    
    
    
    731
    
    
    
    714
    
    
    
    4.64
    
    
    
    4.63
    
    
    
    4.53
    
    
    
    4.52
    
    
    
    12,717
    
    
    
    540
    
    
    
    17
    
    
    
    2,5262009Q1
    
    
    1,753
    
    
    
    (60
    )
    
    
    (60
    )
    
    
    (0.38
    )
    
    
    (0.38
    )
    
    
    (0.38
    )
    
    
    (0.38
    )
    
    
    10,301
    
    
    
    86
    
    
    
    
    
    
    
    1,961Q2
    
    
    4,090
    
    
    
    370
    
    
    
    370
    
    
    
    2.36
    
    
    
    2.35
    
    
    
    2.36
    
    
    
    2.35
    
    
    
    9,688
    
    
    
    251
    
    
    
    9
    
    
    
    1,976Q3
    
    
    1,844
    
    
    
    26
    
    
    
    26
    
    
    
    0.16
    
    
    
    0.16
    
    
    
    0.16
    
    
    
    0.16
    
    
    
    9,023
    
    
    
    225
    
    
    
    
    
    
    
    2,020Q4
    
    
    1,442
    
    
    
    30
    
    
    
    30
    
    
    
    0.19
    
    
    
    0.19
    
    
    
    0.19
    
    
    
    0.19
    
    
    
    9,785
    
    
    
    933
    
    
    
    8
    
    
    
    2,080Year
    
    
    9,129
    
    
    
    366
    
    
    
    366
    
    
    
    2.33
    
    
    
    2.33
    
    
    
    2.33
    
    
    
    2.33
    
    
    
    9,785
    
    
    
    933
    
    
    
    17
    
    
    
    2,0802008Q1
    
    
    1,107
    
    
    
    195
    
    
    
    195
    
    
    
    1.24
    
    
    
    1.23
    
    
    
    1.24
    
    
    
    1.23
    
    
    
    6,689
    
    
    
    1,762
    
    
    
    
    
    
    
    1,213Q2
    
    
    3,870
    
    
    
    636
    
    
    
    636
    
    
    
    4.03
    
    
    
    4.00
    
    
    
    4.03
    
    
    
    4.00
    
    
    
    9,939
    
    
    
    178
    
    
    
    9
    
    
    
    1,964Q3
    
    
    3,113
    
    
    
    367
    
    
    
    367
    
    
    
    2.32
    
    
    
    2.31
    
    
    
    2.32
    
    
    
    2.31
    
    
    
    10,355
    
    
    
    208
    
    
    
    
    
    
    
    1,995Q4
    
    
    1,941
    
    
    
    124
    
    
    
    124
    
    
    
    0.79
    
    
    
    0.79
    
    
    
    0.79
    
    
    
    0.79
    
    
    
    9,837
    
    
    
    374
    
    
    
    8
    
    
    
    1,950Year
    
    
    10,031
    
    
    
    1,322
    
    
    
    1,322
    
    
    
    8.39
    
    
    
    8.34
    
    
    
    8.39
    
    
    
    8.34
    
    
    
    9,837
    
    
    
    374
    
    
    
    17
    
    
    
    1,950
  2010
 o
    
    We had losses on derivative financial instruments of $68-million and $31-million in the first and
fourth quarter, respectively, and gains of $8-million and $10-million in the second and third
quarter, respectively;o
    
    While our share price increased by almost half over 2010, our share price dipped in the second
quarter of 2010. Our 2010 stock-based compensation expense increased quarter over quarter by
$23-million, $60-million, and $15-million in the first, third, and fourth quarter, respectively,
and decreased quarter over quarter by $61-million in the second quarter;o
    
    Our selling expenses for 2010 increased by $120-million versus 2009, with the bulk of the
increase occurring in the second and fourth quarter, driven by increased costs partly associated
with new hires and acquisitions and increased fuel costs for Retail. Retails selling expenses as a
percentage of net sales for 2010 remained the same as 2009 at 14 percent; ando
    
    Our general and administrative expenses increased by $34-million in the fourth quarter of 2010
compared to the same period of 2009, primarily due to the AWB acquisition.
 2009
 o
    
    We had losses on derivative financial instruments of $69-million and $35-million in the first and
fourth quarter, respectively, and gains of $15-million and $5-million in the second and third
quarter, respectively;o
    
    Due to the increase in our share price in the first half of 2008 and significant decline in the
second half of 2008, in 2009 stock-based compensation expense decreased quarter over quarter by
$111-million in the second quarter, increased $124-million in the third quarter, and increased
$69-million in the fourth quarter;
  44
    Agrium
    2010 ANNUAL REPORT




---



##### 



o
    
    We had quarter-over-quarter increases of $99-million and $61-million in Retails selling expenses
in the first and second quarter, respectively, primarily as a result of the inclusion of the UAP
business for the full year; ando
    
    We had write-downs of $18-million, $32-million, $9-million, and $2-million to wholesale inventory
in the first, second, third and fourth quarter, respectively.
 2008
 o
    
    The UAP acquisition contributed $257-million, $191-million, and $57-million to our gross profit
in the second, third, and fourth quarter, respectively;o
    
    We had quarter-over-quarter increases of $93-million, $132-million, and $115-million in Retails
selling expenses in the second, third, and fourth quarter, respectively, primarily as a result of
the addition of the UAP business in the second quarter of 2008;o
    
    We had write-downs of $216-million to Wholesale inventory and Retail inventory and purchase
commitments in the fourth quarter;o
    
    We recorded a $45-million impairment charge net of non-controlling interests to our $295-million
EAgrium investment in the fourth quarter of 2008 as a result of adjusting the carrying value of
Agriums Egypt operations to fair value;o
    
    Given the significant changes in our share price throughout 2008, stock-based compensation
expense increased quarter over quarter by $103-million in the second quarter, and decreased quarter
over quarter by $34-million, $122-million and $86-million in the first, third, and fourth quarter,
respectively;o
    
    We had gains on derivative financial instruments of $67-million and $191-million in the first and
second quarter, respectively, and losses of $171-million and $87-million in the third and fourth
quarter, respectively;o
    
    We had quarter-over-quarter increases in potash profit and capital tax of $44-million,
$51-million and $28-million in the second, third and fourth quarter, respectively, driven by
increased potash profit margins; ando
    
    As a result of the weakening of the Canadian dollar during the fourth quarter, we experienced
significant foreign exchange gains of $98-million.
 Non-GAAP Disclosure
    2010 ANNUAL REPORT
    Agrium
    45




---



##### 



Advanced(millions of U.S. dollars, except per share amounts)
    
    Retail
    
    
    Wholesale
    
    
    Technologies
    
    
    Other
    
    
    Consolidated2010EBITDA
    
    
    525
    
    
    
    1,058
    
    
    
    31
    
    
    
    (177
    )
    
    
    1,437Depreciation and amortization
    
    
    115
    
    
    
    192
    
    
    
    19
    
    
    
    8
    
    
    
    334EBIT
    
    
    410
    
    
    
    866
    
    
    
    12
    
    
    
    (185
    )
    
    
    1,103Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (107
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (265
    )Net earnings from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    731Diluted earnings per share
from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.632009EBITDA
    
    
    266
    
    
    
    607
    
    
    
    22
    
    
    
    (72
    )
    
    
    823Depreciation and amortization
    
    
    103
    
    
    
    112
    
    
    
    19
    
    
    
    8
    
    
    
    242EBIT
    
    
    163
    
    
    
    495
    
    
    
    3
    
    
    
    (80
    )
    
    
    581Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (110
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (105
    )Net earnings from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    366Diluted earnings per share from
continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.332008EBITDA
    
    
    560
    
    
    
    1,670
    
    
    
    50
    
    
    
    41
    
    
    
    2,321Depreciation and amortization
    
    
    80
    
    
    
    105
    
    
    
    17
    
    
    
    16
    
    
    
    218Asset impairment
    
    
    
    
    
    
    87
    
    
    
    
    
    
    
    
    
    
    
    87EBIT
    
    
    480
    
    
    
    1,478
    
    
    
    33
    
    
    
    25
    
    
    
    2,016Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (105
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (589
    )Net earnings from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,322Diluted earnings per share from
continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.34
 
 Financial Condition
 2010(millions of U.S. dollars)
    
    2010
    
    
    2009
    
    
    vs. 2009Assets
    
    
    12,717
    
    
    
    9,785
    
    
    
    2,932Liabilities
    
    
    7,370
    
    
    
    5,193
    
    
    
    2,177Shareholders equity
    
    
    5,347
    
    
    
    4,592
    
    
    
    755
 Assets
  $349-million,
     46
    Agrium
    2010 ANNUAL REPORT




---



##### 



$626-million
      Liabilities
  $366-million
      Working Capital
  (millions of U.S. dollars)
    
    2010
    
    
    2009Current assets excluding current assets
of discontinued operations
    
    
    5,674
    
    
    
    5,120Current liabilities excluding current
liabilities of discontinued operations
    
    
    3,265
    
    
    
    2,581Working capital from continuing operations
    
    
    2,409
    
    
    
    2,539
  2010 ANNUAL REPORT
    Agrium
    47




---



##### 



Shareholders Equity
  
 Liquidity and Capital Resources
   Sources and Uses of Cash
 (millions of U.S. dollars)
    
    2010
    
    
    2009
    
    
    2008Cash provided by operating activities
    
    
    575
    
    
    
    1,399
    
    
    
    1,058Cash used in investing activities
    
    
    (1,546
    )
    
    
    (513
    )
    
    
    (3,375
    )Cash provided by (used in)
financing activities
    
    
    518
    
    
    
    (315
    )
    
    
    1,196Effect of exchange rate changes on cash
    
    
    15
    
    
    
    5
    
    
    
    (14
    )(Decrease) increase in cash and cash
equivalents from continuing operations
    
    
    (438
    )
    
    
    576
    
    
    
    (1,135
    )
 Cash provided by operating activities
   Non-cash working capital
   Cash used in investing activities
  Business acquisitions
   48
    Agrium
    2010 ANNUAL REPORT




---



##### 



Capital expenditures
 (millions of U.S. dollars)
    
    2010
    
    
    2009
    
    
    2008Sustaining capital
    
    
    229
    
    
    
    162
    
    
    
    145Investment capital
    
    
    212
    
    
    
    151
    
    
    
    361Total
    
    
    441
    
    
    
    313
    
    
    
    506
   Cash (used in) provided by financing activities
  Common shares
   Bank indebtedness
  Long-term debt
   Dividends
  Non-controlling interests
   2010 ANNUAL REPORT
    Agrium
    49




---



##### 



Cash and cash equivalents provided by discontinued operations
  Cash position
  Business acquisition: CF Industries Holdings, Inc.
  Business acquisition: AWB Limited
    Discontinued operations: AWBs Commodity Management business
   50
    Agrium
    2010 ANNUAL REPORT




---



##### 



Condensed information of discontinued operations
    
    2010Operating informationNet sales (a)
    
    
    313Net loss from discontinued operations (net of income taxes of $3-million)
    
    
    (17
    )Cash (used in) provided byOperating activities
    
    
    (252
    )Investing activities
    
    
    (1
    )Financing activities
    
    
    29845Balance sheet informationAccounts receivable (b)
    
    
    743Inventories (c)
    
    
    551Prepaid expenses and deposits
    
    
    14Other current assets
    
    
    12Current assets
    
    
    1,320Property, plant and equipment
    
    
    81Other assets
    
    
    2Future income tax assets
    
    
    9Long-term assets
    
    
    921,412Bank indebtedness (d)
    
    
    471Accounts payable (e)
    
    
    549Current liabilities
    
    
    1,020Future income tax liabilities
    
    
    2Long-term liabilities
    
    
    21,022
 (a)
    
    Includes revenue from related parties (Pools) of
$59-million.(b)
    
    Includes receivables from Pools of $157-million.(c)
    
    Commodity inventories measured at fair value less costs to sell; primarily wheat ($355-million)
and oilseeds ($122-million).(d)
    
    Demand facilities with a weighted average rate of approximately 3 percent, including
$143-million secured by Pool inventories.(e)
    
    Includes accounts payable to Pools of $91-million.
 Fair valueBalance sheet information  wheat, oilseeds and other commodity
    
    Notional
    
    
    
    
    
    
    assetsderivative financial instruments outstanding
    
    (thousands, tonnes)
    
    
    Maturities
    
    
    (liabilities)Forward physical sales
    
    
    1,890
    
    
    
    2011
    
    
    
    (46
    )Forward physical purchases
    
    
    1,674
    
    
    
    2011-2012
    
    
    
    41Commodity derivatives
    
    
    1,508
    
    
    
    2011-2012
    
    
    
    2823Accounts receivable
    
    
    
    
    
    
    
    
    
    
    159Accounts payable
    
    
    
    
    
    
    
    
    
    
    (136
    )23
  2010 ANNUAL REPORT
    Agrium
    51




---



##### 



Fair valueBalance sheet information  foreign exchange
    
    Notional
    
    
    
    
    
    
    assetsderivative financial instruments outstanding
    
    (millions, buy currency)
    
    
    Maturities
    
    
    (liabilities)USD/AUD forwards
    
    AUD 600
    
    
    2011
    
    
    
    23Other
    
    
    
    
    
    
    2011
    
    
    
    629Accounts receivable
    
    
    
    
    
    
    
    
    
    
    40Accounts payable
    
    
    
    
    
    
    
    
    
    
    (11
    )29
 Debt Instruments, Capital Management and Ratings
 Debt instruments
 2010
    
    
    
    
    
    
    2009Total
    
    
    Unutilized
    
    
    Utilized
    
    
    UtilizedBank indebtednessNorth American revolving credit facilities
expiring 2012 (a)
    
    
    775
    
    
    
    775
    
    
    
    
    
    
    
    European credit facilities expiring 2011 (b)
    
    
    190
    
    
    
    48
    
    
    
    142
    
    
    
    74South American credit facilities expiring 2011 (c)
    
    
    114
    
    
    
    59
    
    
    
    55
    
    
    
    32Australian credit facilities expiring 2011 (d)
    
    
    157
    
    
    
    57
    
    
    
    100
    
    
    
    Total bank indebtedness
    
    
    1,236
    
    
    
    939
    
    
    
    297
    
    
    
    106
 Current portion of long-term debt
    
    2010
    
    
    20098.25% debentures due February 15, 2011 (f)
    
    
    125
    
    
    
    
 Long-term debt
    
    2010
    
    
    2009Floating rate bank loans due May 5, 2013 (e)
    
    
    460
    
    
    
    460Fixed and floating rate bank loans due April
and May 2012
    
    
    14
    
    
    
    266.125% debentures due January 15, 2041 (f)
    
    
    500
    
    
    
    6.75% debentures due January 15, 2019 (f)
    
    
    500
    
    
    
    5007.125% debentures due May 23, 2036 (f)
    
    
    300
    
    
    
    3007.8% debentures due February 1, 2027 (f)
    
    
    125
    
    
    
    1257.7% debentures due February 1, 2017 (f)
    
    
    100
    
    
    
    1008.25% debentures due February 15, 2011 (f)
    
    
    
    
    
    
    125Other (g)
    
    
    141
    
    
    
    732,140
    
    
    
    1,709Unamortized transaction costs
    
    
    (22
    )
    
    
    (10
    )2,118
    
    
    
    1,699
 (a)
    
    We had issued letters of credit under our revolving credit facilities. Outstanding letters of
credit issued as at December 31, 2010 were $81-million, reducing credit available under the
facilities to $694-million.(b)
    
    Of the total, $1-million is secured at December 31, 2010. Accounts receivable and inventories
with a total carrying value of $4-million are pledged as security for the utilized balance. The
utilized balance includes Euro-denominated debt of $93-million. In December 2009, we entered into a
multi-currency revolving facility for Euro-denominated debt of $172-million to replace existing
credit facilities. The facility expires in December 2011.(c)
    
    For the facilities utilized, $5-million is denominated in Argentine peso at December 31, 2010.
Of the total, $38-million is uncommitted and $5-million of the uncommitted portion has been
utilized.(d)
    
    Of the total, $14-million is secured by certain assets located in Australia. The utilized
balance includes AUD-denominated debt of $88-million and NZD-denominated debt of $11-million.(e)
    
    Pursuant to the UAP acquisition, we borrowed $1.0-billion in 2008. We repaid $497-million on
September 11, 2008. Cash of $58-million was paid in October 2008. The remaining balance of
$460-million is repayable on May 5, 2013. On September 8, 2008, we issued $500-million of 6.75%
debentures due January 15, 2019.(f)
    
    Debentures contain various provisions that allow us to redeem debt prior to maturity, at
our option, at specified prices.(g)
    
    Includes South American facilities of $115-million repayable in 2012.
  52
    Agrium
    2010 ANNUAL REPORT




---



##### 



Capital management
   2010
    
    
    2009
    
    
    2008Net debt to net debt plus equity (%)
    
    
    27
    
    
    
    16
    
    
    
    31EBITDA interest coverage (multiple)
    
    
    13.4
    
    
    
    7.5
    
    
    
    22.1
   Debt ratings
  DBRS Limited (DBRS)
  Moodys Investors Service (Moodys)
  Standard & Poors Rating Services (S&P)
   2010 ANNUAL REPORT
    Agrium
    53




---



##### 



Future Cash Requirements
 Contractual obligations and other commitments before discontinued operations
  (millions of U.S. dollars)
    
    Payment due by periodLess than
    
    
    One to
    
    
    Four to
    
    
    Afterone year
    
    
    three years
    
    
    five years
    
    
    five years
    
    
    TotalLong-term debt (a)
    
    
    239
    
    
    
    681
    
    
    
    212
    
    
    
    2,956
    
    
    
    4,088Operating leases
    
    
    189
    
    
    
    184
    
    
    
    138
    
    
    
    74
    
    
    
    585Purchase obligations
    
    
    488
    
    
    
    233
    
    
    
    217
    
    
    
    222
    
    
    
    1,160Asset retirement obligations
    
    
    16
    
    
    
    11
    
    
    
    16
    
    
    
    203
    (b)
    
    
    246Environmental remediation liabilities
    
    
    28
    
    
    
    37
    
    
    
    13
    
    
    
    73
    
    
    
    151Total
    
    
    960
    
    
    
    1,146
    
    
    
    596
    
    
    
    3,528
    
    
    
    6,230
 (a)
    
    Figures include interest payments.(b)
    
    This figure does not include estimated asset retirement obligations related to our potash
operations. See discussion below on Asset Retirement Obligations.
 Long-term debt
  Operating leases
  Purchase obligations
   Asset retirement obligations
  Environmental remediation liabilities
   54
    Agrium
    2010 ANNUAL REPORT




---



##### 



Future Capital Expenditures
 (1) basis.(1)
 o
    
    Spending at our Wholesale plant sites in order to ensure efficient, reliable and safe operations
of facilities, including building replacement and maintenance at various Wholesale operations;o
    
    Projects at our Vanscoy potash facility, including construction of a new brine pond, equipment
replacement and site upgrade; ando
    
    Spending for North American and South American Retail operations.
  o
    
    Projects to develop and increase capacity at our Vanscoy potash facility;o
    
    Development of terminal to import phosphate rock;o
    
    Spending for Retail expansion opportunities; ando
    
    Additional investment in Advanced Technologies.
 (1)
 
 Outstanding Share Data
  Number
    
    
    Marketof Shares
    
    
    ValueCommon shares
    
    158 million
    
    $15.0-billion
  
 Off Balance Sheet Arrangements
 Sale of accounts receivable
    (1) See disclosure under the heading Forward-Looking Statements on page 83 of this MD&A
    2010 ANNUAL REPORT
    Agrium
    55




---



##### 



Guarantees
  
 Financial Instruments
 Risk Management
   Derivative financial instruments
    
    RisksCommodityCurrency
    
    
    price
    
    
    Credit
    
    
    LiquidityForeign currency forward and option contracts
    
    
    X
    
    
    
    
    
    
    
    X
    
    
    
    XNatural gas forward, swap and option contracts,
nutrient swap contracts and heat rate swap contracts
    
    
    
    
    
    
    X
    
    
    
    X
    
    
    
    X
 Currency risk
  Foreign exchange derivative financial instruments outstanding2010
    
    
    2009Notional
    
    
    
    
    
    
    Fair value
    
    
    Notional
    
    
    
    
    
    
    Fair value(millions
    ,
    
    
    
    
    
    assets
    
    
    (millions
    ,
    
    
    
    
    
    assetsSell/Buy
    
    buy currency
    )
    
    Maturities
    
    
    (liabilities
    )
    
    buy currency
    )
    
    Maturities
    
    
    (liabilities
    )USD/CAD forwards
    
    CAD 40
    
    
    
    2011
    
    
    
    3
    
    
    CAD 46
    
    
    
    2010
    
    
    
    1CAD/USD forwards
    
    USD 370
    
    
    
    2011
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    AUD/USD forwards
    
    USD 381
    
    
    
    2011
    
    
    
    (24
    )
    
    
    
    
    
    
    
    
    
    
    EUR/USD forwards
    
    
    
    
    
    
    
    
    
    
    
    
    
    USD 9
    
    
    
    2010
    
    
    
    GBP/USD forwards
    
    
    
    
    
    
    
    
    
    
    
    
    
    USD 2
    
    
    
    2010
    
    
    
    (28
    )
    
    
    
    
    
    
    
    
    
    
    1
   56
    Agrium
    2010 ANNUAL REPORT




---



##### 



Commodity price risk
   Natural gas, power and nutrient derivative financial instruments outstanding2010
    
    
    2009Fair value
    
    
    
    
    
    
    
    
    
    
    Fair valueassets
    
    
    
    
    
    
    
    
    
    
    assetsNotional
    
    
    Maturities
    
    
    (liabilities)
    
    
    Notional
    
    
    Maturities
    
    
    (liabilities)Natural gas (BCF)NYMEX contractsSwaps
    
    
    33
    
    
    
    2011
    
    
    
    (50
    )
    
    
    67
    
    
    
    2010
    
    
    
    (35
    )to 2013
    
    
    
    
    
    
    
    
    
    
    to 2013Collars (swap with options)
    
    
    12
    
    
    
    2011
    
    
    
    (1
    )
    
    
    23
    
    
    
    2010
    
    
    
    5to 2012
    
    
    
    
    
    
    
    
    
    
    to 2012El Paso swaps
    
    
    2
    
    
    
    2011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AECO contractsSwaps
    
    
    7
    
    
    
    2011
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    54
    
    
    
    
    
    
    
    (53
    )
    
    
    90
    
    
    
    
    
    
    
    (30
    )Power  Swaps (GWh)
    
    
    412
    
    
    
    2011
    
    
    
    4
    
    
    
    552
    
    
    
    2010
    
    
    
    (2
    )to 2013
    
    
    
    
    
    
    
    
    
    
    to 2013Nutrient  Urea swaps (short tons)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,500
    
    
    
    2010
    
    
    
    1(49
    )
    
    
    
    
    
    
    
    
    
    
    (31
    )
 Interest rate risk
   Credit risk
   Liquidity risk
    2010 ANNUAL REPORT
    Agrium
    57




---



##### 



Fair Value
  Long-term debt including current portion
    
    2010
    
    
    2009Fair value
    
    
    2,465
    
    
    
    1,805Carrying value
    
    
    2,265
    
    
    
    1,709Weighted-average effective interest rate
on long-term debt (%)
    
    
    6
    
    
    
    6
 Fair value of financial instruments2010
    
    
    2009Cash and cash equivalents
    
    
    540
    
    
    
    933Accounts receivableForeign exchange derivative
financial instruments
    
    
    3
    
    
    
    1Gas, power and nutrient derivative
financial instruments
    
    
    1
    
    
    
    5Marketable securitiesInvestment in CF (available for sale)
    
    
    
    
    
    
    113Other (held for trading)
    
    
    3
    
    
    
    1Other assetsGas, power and nutrient derivative
financial instruments
    
    
    3
    
    
    
    3Other (available for sale)
    
    
    2
    
    
    
    25552
    
    
    
    1,081Accounts payableForeign exchange derivative
financial instruments
    
    
    (31
    )
    
    
    Gas, power and nutrient derivative
financial instruments
    
    
    (20
    )
    
    
    (14
    )Other liabilitiesGas, power and nutrient derivative
financial instruments
    
    
    (33
    )
    
    
    (25
    )(84
    )
    
    
    (39
    )
  58
    Agrium
    2010 ANNUAL REPORT




---



##### 



2010 Fourth Quarter Managements Discussion and Analysis
 Net Earnings
  Financial overview
 (millions of U.S. dollars, except per share amounts and effective tax rate)
    
    Three months ended December 31,2010
    
    
    2009
    
    
    ChangeNet sales
    
    
    2,346
    
    
    
    1,442
    
    
    
    904Gross profit
    
    
    727
    
    
    
    383
    
    
    
    344Expenses
    
    
    439
    
    
    
    353
    
    
    
    86Net earnings from continuing operations
before interest expense and
income taxes (EBIT) (1)
    
    
    289
    
    
    
    31
    
    
    
    258Net earnings from continuing
operations (2)
    
    
    175
    
    
    
    30
    
    
    
    145Net earnings
    
    
    158
    
    
    
    30
    
    
    
    128Earnings per share from continuing
operations  diluted
    
    
    1.10
    
    
    
    0.19
    
    
    
    0.91Earnings per share  diluted
    
    
    1.00
    
    
    
    0.19
    
    
    
    0.81Effective tax rate
    
    
    33
    %
    
    
    N/A
    (3)
    
    
    N/A
    (3)
 (1)
    
    A reconciliation of EBIT to net earnings is provided in the section
Non-GAAP measures.(2)
    
    See Discontinued Operations below for a discussion of our discontinued
operations.(3)
    
    Effective tax rate of (625)% in the fourth quarter of 2009 is not comparable due to the loss
in the fourth quarter of 2009.
   (millions of U.S. dollars)
    
    Three months ended December 31,2010
    
    
    2009Stock-based compensation
    
    
    49
    
    
    
    34Realized loss on derivative
financial instruments
    
    
    5
    
    
    
    18Unrealized loss on derivative
financial instruments
    
    
    26
    
    
    
    17Environmental remediation and
accretion of asset retirement obligations
    
    
    6
    
    
    
    3Interest income
    
    
    (14
    )
    
    
    (11
    )Foreign exchange gain
    
    
    (45
    )
    
    
    Bad debt expense
    
    
    2
    
    
    
    8Other
    
    
    7
    
    
    
    (13
    )36
    
    
    
    56
   2010 ANNUAL REPORT
    Agrium
    59




---



##### 



Business Segment Performance
 Retail
       (1)
 Wholesale
   60
    Agrium
    2010 ANNUAL REPORT
    (1) See disclosure under the heading Forward-Looking Statements on page 83 of this MD&A




---



##### 



Advanced Technologies
     2010 ANNUAL REPORT
    Agrium
    61




---



##### 



Other
  o
    
    a net loss of $36-million primarily from foreign exchange derivatives entered into in anticipation
of the AWB acquisition and sale of the Commodity Management business to Cargill;o
    
    a $23-million increase in general and administrative expense largely due to one-time closing costs
relating to the AWB acquisition; ando
    
    a $13-million increase in stock-based compensation expense from a larger increase in share price
during the fourth quarter of 2010 versus the same period last year.
  Discontinued operations
   Liquidity and capital resources
  (millions of U.S. dollars)
    
    Three months ended December 31,2010
    
    
    2009
    
    
    ChangeCash provided by operating activities
    
    
    563
    
    
    
    905
    
    
    
    (342
    )Cash used in investing activities
    
    
    (1,374
    )
    
    
    (172
    )
    
    
    (1,202
    )Cash provided by (used in) financing activities
    
    
    400
    
    
    
    (24
    )
    
    
    424Effect of exchange rate changes on cash
    
    
    9
    
    
    
    (1
    )
    
    
    10(Decrease) increase in cash and cash equivalents from continuing operations
    
    
    (402
    )
    
    
    708
    
    
    
    (1,110
    )
  Cash provided by operating activities  Drivers behind the $342-million decrease in source of cashSource of cash
    
    o   $145-million resulting from increase in net earnings from continuing operations
adjusted for changes in non-cash items, primarily associated with a $106-million increase from
future income taxes.Use of cash
    
    o   $620-million increase in non-cash working capital. The increase in non-cash working
capital was primarily driven by higher inventory and prepaid expenses and deposits in the fourth
quarter of 2010 compared to the fourth quarter of 2009. These were partially offset by higher
accounts payable in the fourth quarter of 2010 versus the fourth quarter of 2009.Cash used in investing activities  Drivers behind the $1.2-billion increase in use of cashUse of cash
    
    o   $1.2-billion used for the acquisition of AWB in the fourth quarter of 2010. For
discussion on AWB, see section Business acquisition: AWB Limited.Cash provided by financing activities  Drivers behind the $424-million increase in source of cashSource of cash
    
    o   $500-million aggregate principal amount of debentures were issued in the fourth
quarter of 2010, net proceeds from which were used to pay down credit facilities drawn in
connection with the AWB acquisition and will be used to repay a $125-million aggregate principal
amount of debentures due February 15, 2011.
 
 
 62
    Agrium
    2010 ANNUAL REPORT




---



##### 



Non-GAAP measures
  (millions
of U.S. dollars)
    
    Three months ended December 31,2010
    
    
    2009Advanced
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AdvancedRetail
    
    
    Wholesale
    
    
    Technologies
    
    
    Other
    
    
    Consolidated
    
    
    Retail
    
    
    Wholesale
    
    
    Technologies
    
    
    Other
    
    
    ConsolidatedEBITDA
    
    
    80
    
    
    
    345
    
    
    
    7
    
    
    
    (65
    )
    
    
    367
    
    
    
    (30
    )
    
    
    169
    
    
    
    
    
    
    
    (44
    )
    
    
    95Depreciation and
amortization
    
    
    33
    
    
    
    39
    
    
    
    5
    
    
    
    1
    
    
    
    78
    
    
    
    27
    
    
    
    29
    
    
    
    6
    
    
    
    2
    
    
    
    64EBIT
    
    
    47
    
    
    
    306
    
    
    
    2
    
    
    
    (66
    )
    
    
    289
    
    
    
    (57
    )
    
    
    140
    
    
    
    (6
    )
    
    
    (46
    )
    
    
    31Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (84
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25Net earnings from
continuing
operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    175
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30
 Accounting Estimates and New Accounting Standards
   Critical Accounting Estimates
  o
    
    It requires significant assumptions about matters that are inherently highly uncertain at the
time the accounting estimate is made; ando
    
    Different estimates that we could have used in the current period, or changes in accounting
estimates that are reasonably likely to occur from period to period, would have a material impact
on our financial condition or consolidated results of operations.
   Collectibility of accounts receivable
  Inventory valuation
  2010 ANNUAL REPORT
    Agrium
    63




---



##### 



Property, plant and equipment
   Depreciation expense
  Intangibles
  Impairment of long-lived assets
  Fair value of financial assets and liabilities
  64
    Agrium
    2010 ANNUAL REPORT




---



##### 



Goodwill
   Environmental remediation liabilities and asset retirement obligations
   Employee future benefits
  Stock-based compensation
  Rebates
   2010 ANNUAL REPORT
    Agrium
    65




---



##### 



Income and other taxes
   New Accounting Standards
  66
    Agrium
    2010 ANNUAL REPORT




---



##### 



Accounting Standards and Policy Changes Not Yet Implemented
 International Financial Reporting Standards (IFRS)
  Status of Key Elements of Agriums IFRS Project Plan.
 Key Element
    
    StatusAccounting policieso   Analyze accounting policy differences
    
    o   Provided our Audit Committee with:o   Select IFRS accounting policies and determine
IFRS 1 elections
    
    n   Draft IFRS financial statement format including
note disclosureso   Develop IFRS financial statement format with
appropriate disclosures
    
    n   IFRS opening balance sheet
n   Summarized quantified transitional impactso   Quantify IFRS impacts on transition
    
    o   Estimated adjustments to shareholders equity
on
adoption of IFRS quantified (see table below)Information systemso   Analyze changes necessary to enable recording/tracking/reporting
of financial information required
for parallel reporting year(s)
    
    o   Data capture testing complete
o   Continuing IFRS data capture in the
financial systemso   Finalize information technology plan for post
transition (2011)
    
    o   Parallel GAAP consolidated reporting process
testing completeo   Develop and implement solutionsControl environmento   Where there are changes to accounting policies/procedures,
assess both the internal controls
over financial reporting, the disclosure controls
and procedures for design and effectiveness and
implement appropriate changes
    
    o   Changes to internal process
documentation complete
o   Testing of 2010 comparative information will be
complete by March 31, 2011Business impactso   Analysis of business activities that may be impacted
by GAAP measures, such as debt covenants and
compensation and identification of solutions
where necessary
o   Analysis of tax impacts on transition to IFRS
    
    o   Completed analysis of business activities; no
material impact on debt covenants or compensation
arrangements indicated
o   Completed analysis of income tax impacts
on transitionTraining requirementso   Communicate accounting policy changes and
resulting impacts across organization
o   Communicate transition project plan progress both
internally and externally
o   Develop strategic training plan for all levels and
departments of the organization
o   Deliver targeted training to key employees where
roles are impacted by IFRS transition
    
    o   Provided the following:
n   Impact workshops communicating impact
of transition to our Business Units
n   IFRS training to Directors and Officers
n   Targeted training to key finance, accounting
and operational employees affected
by transition
o   Communicated quarterly to external stakeholders
throughout 2010 via Managements Discussion
and Analysis
 2010 ANNUAL REPORT
    Agrium
    67




---



##### 



First-time adoption of IFRS
   IFRS Exemption Options
    
    Summary of Policy SelectionBusiness CombinationsAgrium may elect, on transition to IFRS, to either restate
all past business combinations in accordance with IFRS 3
Business Combinations or to apply an elective exemption
from applying IFRS 3 to business combination completed
before the transition date.
    
    Elect, on transition to IFRS, to apply the exemption such that
transactions entered into prior to the transition date will not
be restated. Because Agrium did not adopt CICA Handbook
section 1582 in 2010, we will restate business combinations
completed in 2010.Share-Based PaymentsAgrium may elect not to apply IFRS 2, Share-Based Payments,
to equity instruments granted on or before November 7, 2002,
or which vested before Agriums transition date. Agrium may
also elect not to apply IFRS 2 to liabilities arising from
share-based payment transactions that settled before the
transition date.
    
    Elect not to apply IFRS 2 to equity instruments granted on or
before November 7, 2002, or which vested before Agriums
transition date. Agrium will also elect not to apply IFRS 2 to
liabilities arising from share-based payment transactions that
settled before the transition date.Employee BenefitsAgrium may elect to recognize all cumulative actuarial
gains and losses through opening retained earnings at
the transition date. Actuarial gains and losses would have
to be recalculated under IFRS from the inception of each
of our defined benefit plans to separate recognized and
unrecognized cumulative actuarial gains and losses if the
exemption is not taken.
    
    Elect to recognize all cumulative actuarial gains and losses at
the date of transition as an adjustment to retained earnings.Foreign ExchangeOn transition, cumulative translation gains or losses in
accumulated other comprehensive income can be reclassified
to retained earnings at Agriums election. If not elected, all
cumulative translation differences must be recalculated under
IFRS from inception.
    
    Elect the exemption and reclassify the balance of cumulative
foreign exchange translation gains or losses from other
comprehensive income to retained earnings at the transition
date, with no resulting change to total shareholders equity.Decommissioning LiabilitiesIFRS requires changes in obligations to dismantle, remove
and restore items of property, plant and equipment to be
added to or deducted from the cost of the asset. The adjusted
depreciable amount of the asset is then depreciated over its
remaining useful life. Rather than recalculating the effect of
all such changes throughout the life of the obligation, Agrium
may elect to measure the liability and the related depreciation
effects at the transition date.
    
    Elect the exemption from full retrospective application at the
transition date.
 
  68
    Agrium
    2010 ANNUAL REPORT




---



##### 



Significant Differences Between IFRSand Canadian GAAP
    
    Estimated ImpactEmployee BenefitsIFRS permits the recognition of actuarial gains and losses
immediately in equity, immediately to earnings, or on a
deferred basis to earnings. Canadian GAAP does not permit
immediate recognition in equity. Further, IFRS requires
expensing of vested past service costs immediately while
unvested costs are amortized on a straight-line basis over the
vesting period. Canadian GAAP requires amortization of past
service costs over the expected average remaining service
life of active employees and amortization of costs over the
average life expectancy of former employees.
    
    Transition date impact:noneFuture impact:greater variability in shareholders equity
within accumulated other comprehensive incomeShare-based PaymentsIFRS requires measurement of cash-settled, share-based
awards at fair value, while Canadian GAAP allows
measurement of these awards at intrinsic value. In addition,
Agrium currently uses straight-line depreciation to recognize
graded vesting stock based instruments, while IFRS requires
accounting for each installment as a separate arrangement.
    
    Transition date impact:reduction in shareholders equity and
an increase in liabilitiesFuture impact:a continued measurement difference between
the intrinsic value and the fair value of cash-settled share
based awardsIncome TaxesClassification of future income tax under IFRS is non-current
whereas Canadian GAAP splits future income taxes between
current and non-current components. 


IFRS requires recognition of the deferred tax impact for
temporary differences arising on translation of certain foreign
denominated non-monetary assets or liabilities. Canadian
GAAP does not allow similar treatment.
    
    Transition date impact:reclassifying all future income taxes
to non-current is expected to result in a decrease in current
assets and a decrease in non-current income tax liabilities
and assetsEstimated future impact:remains a classification differenceTransition date impact:increase in deferred tax liabilities and
a corresponding decrease in retained earningsFuture impact:continued recognition of the deferred tax
impact with respect to the translation of foreign denominated
non-monetary assets or liabilitiesProvisionsIFRS requires discounting of provisions where the effect of
the discounting is material. Provisions are not discounted
under Canadian GAAP unless specifically required or when a
provision is required to be measured at fair value.




The specific provisions for asset retirement obligations under
IFRS are measured based on managements best estimate. The
discount rate used in calculating the present value of the cash
flow estimates is to be based on risks specific to the liability
unless these risks have been incorporated into the cash
flow estimates. Canadian GAAP measures asset retirement
obligations at fair value incorporating market assumptions.
The discount rate used is a credit-adjusted risk-free rate.
    
    Transition date impact:decrease in environmental liabilities
and a corresponding increase to retained earningsFuture impact:each period there will be a charge to earnings
for accretion of the discountTransition date impact:increase to asset retirement
obligations and a corresponding decrease to retained earningsFuture impact:decrease in charge to earnings each period for
accretion of discountImpairment of AssetsUnder IFRS, the impairment of assets, excluding financial
assets, is tested and measured by comparing the carrying
value of an asset or cash generating unit to its recoverable
amount. Recoverable amount is measured as the higher of
fair value less cost to sell or value-in-use (discounted future
cash flows). IFRS permits impairment reversals for assets
(excluding goodwill). The IFRS approach has the potential to
increase income statement volatility due to the potential for
increased write-downs and reversals of write-downs.
    
    Transition date impact:increased potential for impairment
losses and reversal of previously recorded lossesFuture impact:increased potential for impairment losses and
reversal of previously recorded losses
 2010 ANNUAL REPORT
    Agrium
    69




---



##### 



Significant Differences Between IFRSand Canadian GAAP
    
    Estimated ImpactBusiness CombinationsIFRS does not include acquisition-related costs within
consideration transferred in a business combination whereas
the cost of acquisition does include direct, incremental
acquisition-related costs under Canadian GAAP.
    
    Transition date impact:decrease in shareholders equityFuture impact:potential increase in charges to
earnings in the amount of acquisition-related costs for
business combinationsNon-Controlling InterestIFRS requires non-controlling interest to be presented
as a component of shareholders equity separate from
the parents equity while Canadian GAAP presents non-controlling interest as a separate component between
liabilities and equity.
    
    Transition date impact:increase in shareholders equityFuture impact:non-controlling interest will continue to be
presented within shareholders equity
  Reconciliation of Equity as Reported Under Canadian GAAP to IFRS
 (unaudited, millions of U.S. dollars)
    
    As at January 1, 2010Total shareholders equity as reported under Canadian GAAP
    
    
    4,592Adjustments to increase (decrease) reported total shareholders equity:Recognition of cumulative actuarial gains and losses in equity
    
    
    (45
    )Acquisition-related costs
    
    
    (45
    )Provisions for asset retirement and environmental liabilities
    
    
    1Provisions for share-based payments
    
    
    (37
    )Deferred tax liability adjustment
    
    
    (42
    )Income tax effect of transitional adjustments
    
    
    30Reclassification of non-controlling interests
    
    
    11Total shareholders equity as reported under IFRS
    
    
    4,465
 
 Risk Management
 We Manage Risks to our Enterprise
  Risk Methodology
   Risk Ranking Matrix
  o
    
    We assess consequence based on the potential aggregate impact of a risk event to the following
three areas: (a) company reputation; (b) our financial health; and, (c) the environment and the
health and safety of our employees and external parties; ando
    
    Frequency represents how often a consequence related to a risk is expected to occur  it is akin
to probability of loss from the risk.
 70
    Agrium
    2010 ANNUAL REPORT




---



##### 



Agriums Risk Matrix
 
 Risk Governance Structure
  Board of Directors
 o
    
    Oversees risk management directly and through its committees;o
    
    Responsible for understanding the material risks of the business and the related mitigation
strategies, and taking reasonable steps to ensure that management has an effective risk management
process in place;o
    
    Individual Committees of the Board oversee specific risks relevant to their areas; ando
    
    For example, the audit committee monitors the risk management process for financial risks; the
environment, health, safety and security committee monitors the process for managing EHS&S risks;
and the compensation committee assesses compensation programs.
 Management
 o
    
    Risks that are unique to our separate strategic business units are managed by the Presidents
of those business units and their teams; ando
    
    Functional risks are managed by the Corporate Functional Heads and their teams.
 Chief Risk Officer
 o
    
    Agrium has appointed a Chief Risk Officer (CRO). The CRO is responsible for maintaining an
effective Enterprise Risk Management Process (ERM Process). The CRO monitors current developments
in risk management practices, drives improvements in Agriums Risk Management philosophy, program
and policies, and champions development of a best practice risk management culture;
 o
    
    The CRO reports quarterly to the Board and senior management on all significant risks including new
or increased risks resulting from changes in operations or external factors; and
 o
    
    The CRO also formally reports to the Board of Directors on the ERM Process and material risks
annually.
 Governance functions
 o
    
    Agrium maintains several risk governance functions which contribute to our overall control
environment, including Internal Audit, Corporate EHS, and the Internal Control and Disclosure
Compliance team.
 2010 ANNUAL REPORT
    Agrium
    71




---



##### 



Key Business Risks
  Unplanned plant downtime
   o
    
    Production Excellence program, including: operational standards that govern our manufacturing
processes; engineering standards for manufacturing processes and capital projects; and, programs
aimed at continuous improvement in our production processes, such as root cause analysis for
incidents;
 o
    
    Equipment integrity programs, including regular equipment inspections and a five-year planned
capital and maintenance program;
 o
    
    Environment, Health, Safety & Security (EHS&S) Excellence program, including: well-established
process safety standards, policies and programs; defined expectations and policy for managing
process change in facilities; structured EHS&S risk management program under which we analyze our
manufacturing processes for process hazards and recommend and implement improvements as warranted;
and, structured environmental management and security standards, policies, and programs;
 o
    
    Mandatory training programs for Operations, Maintenance, and Technical personnel to ensure
appropriate skills and training are in place to maintain and operate the facilities;
 o
    
    Audit programs for EHS&S, operational standards, risk management, and process reliability programs.
The audit programs assess compliance with our established policies and procedures, and also seek to
identify opportunities for continuous improvement; and
 o
    
    Sound project management processes to help ensure capital projects are executed to the appropriate
design standards and completed on schedule and budget.
 Product price and margin
       o
    
    The broad product diversity of our Wholesale business (nitrogen, potash, and phosphate)
reduces the impact of poor supply and demand fundamentals that can be experienced by a particular
product category;
 o
    
    The geographic diversity of our Wholesale customer base (North America, South America, and
International) reduces the impact of poor economic, crop or weather conditions in any one region;
 o
    
    Our extensive distribution and storage capability can help reduce Wholesale variability that may
arise from a downturn in demand in a localized area;
 o
    
    We monitor inventory exposure risk and adhere to inventory position limits within our Wholesale
Purchase for Resale business;
 o
    
    Our commitment to operational excellence helps ensure rigorous management of operational risks that
could compromise production efficiencies or increase operating costs. This provides us with a
relatively stable and predictable production/ supply base that helps to mitigate Wholesale earnings
volatility;
 72
    Agrium
    2010 ANNUAL REPORT




---



##### 



o
    
    Our Wholesale customers have diverse end uses for our products (agricultural and industrial),
with some of our industrial sales prices based on a gas-indexed cost plus margin basis;o
    
    Within the Wholesale business, we make prepaid forward sales, and we may lock in nitrogen
margins on manufactured product using forward gas price derivative financial instruments; ando
    
    Within our Retail business, we have further mitigating factors including:
 n
    
    product and service diversity (fertilizer, chemical, seed and application services); andn
    
    geographic diversity that helps spread risk associated with regional weather and crops (broad
regional U.S. and South American markets).
 Raw materials
     o
    
    The Profertil nitrogen facility has gas contracts that are not tied to North American gas
prices;
 o
    
    We use derivative financial instruments and other contractual arrangements to manage the risk
of gas price volatility;
 o
    
    We use a variety of tools in an effort to mitigate our risk and stabilize our earnings, including
derivative financial instruments, swaps, forward sales, prepayments, 90 day rolling forecast, and
rigorous market analysis;
 o
    
    Raw materials and energy are procured on a competitive basis employing a mix of long-term,
short-term and spot contracts with a variety of suppliers, consistent with the Corporate
Procurement Policy and Practices;
 o
    
    Our practice of adjusting our production rates and sourcing supply for purchased product when
conditions dictate reduces our exposure to high natural gas costs;
 o
    
    The majority of our nitrogen sold in North America is produced in Western Canada, which has
lower-cost gas than the average cost for most of our competitors who produce and sell elsewhere in
North America;
 o
    
    In the long-term, our goal is to increase our nitrogen capacity in areas where long-term supplies
of lower-cost natural gas are available;
 o
    
    For mining, we have medium-term highly competitive contracts in place with contractors and maintain
high mining standards, employing the latest technologies and techniques; and
 o
    
    As sulfur is a primary raw material used in manufacturing of phosphate fertilizers, the use of
contract pricing based on less volatile market indexes has been implemented to mitigate the market
volatility. From time to time, we also utilize long-term supply contracts.
 Foreign exchange
   2010 ANNUAL REPORT
    Agrium
    73




---



##### 



o
    
    We monitor foreign exchange exposure through detailed risk modeling and stress
testing; and
 o
    
    Exposure to currency fluctuations is partially offset through our currency hedging
programs.
 Transportation
   o
    
    We develop detailed forecasts of product movement needs for each facility and mode of
transport;
 o
    
    We have a strategic plan, with specific options, to help mitigate the potential for increased
cost or the reduced deliverability of ammonia and other products over the medium-term, and continue
to work with industry associations to address these issues;
 o
    
    We continually develop and maintain mutually beneficial long-term relationships with major
carriers;
 o
    
    Most of our production facilities are serviced through multiple carriers and modes of
transportation, providing us with important shipping options; and
 o
    
    We maintain multiple supply points through our extensive distribution network.
 Human resources
   o
    
    We have a structured annual succession planning process focused on actively accelerating the
development of leaders through targeted developmental opportunities;
 o
    
    We have developed a company-wide Leadership Development Framework and tools to enhance leadership
capabilities;
 o
    
    We conduct a continuous review and analysis of our total compensation program to ensure our
offering to employees is competitive in the markets in which we compete for talent;
 o
    
    We track and monitor key workforce metrics to identify high risk areas. Examples include voluntary
resignation, key employee segments with higher attrition, workforce demographics to forecast
retirements and employee exit trends; and
 o
    
    We benchmark our human resources programs, policies and practices externally to align with our
business strategies and ensure competitiveness.
 Country
   o
    
    We seek to partner with reputable firms with experience or significant presence in foreign
countries in which we operate or intend to operate;
 o
    
    We hire personnel located in the foreign country or who have operating experience in the foreign
country;
 o
    
    We obtain non-recourse project financing with consortiums of international banks where appropriate;
 o
    
    We maintain excess cash related to international operations in U.S. dollars to the extent
practicable; and
 o
    
    We increase our required investment return to reflect our perceived risk of conducting business in
specific countries.
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    2010 ANNUAL REPORT




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Business acquisitions and expansions
    o
    
    We have developed a detailed and systematic project review process to analyze the rewards and
risks of all significant investment projects, including acquisitions and development expansions.
Each major investment project must pass a gate process where it is reviewed by the Investment
Strategy Committee to ensure it passes key criteria such as strategic fit, our hurdle rate and
various competitive factors. As important is that all material risks are identified. For each risk,
mitigants are reviewed to ensure that all risks are appropriately managed;
 o
    
    As part of this process, we assign specific areas of responsibility to our key personnel with
experience in those areas who are then held accountable for results;
 o
    
    We conduct due diligence reviews and financial modeling analyses; and
 o
    
    We complete periodic assessments of previous acquisitions to update and enhance current and future
strategies in the spirit of continuous improvement and to ensure we remain a disciplined investor.
 Risks associated with our acquisition of AWB
 We may fail to realize anticipated benefits of our acquisition of AWB, and our efforts to integrate
AWBs business into our existing business could result in the disruption of our ongoing business
  AWBs internal controls and compliance standards and procedures may not be in line with Canadian
and U.S. standards
  We may face unexpected costs or liabilities related to the existing business of AWB
  2010 ANNUAL REPORT
    Agrium
    75




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##### 



Our consolidated indebtedness has materially increased as a result of our acquisition of AWB, which
increases our interest charges and our financial risk
  o
    
    it may limit our ability to obtain additional financing for working capital, capital expenditures,
debt service requirements, acquisitions and general corporate or other purposes;o
    
    it may limit our ability to pay interest or any other amounts required to be paid on our
outstanding indebtedness;o
    
    certain of our borrowings are at variable rates of interest and expose us to the risk of increased
interest rates;o
    
    it may limit our ability to adjust to changing market conditions and place us at a competitive
disadvantage compared to our competitors that have less debt;o
    
    we may be vulnerable in a downturn in general economic conditions; ando
    
    we may be unable to make capital expenditures that are important to our growth and strategies.
  Change of control provisions in AWBs agreements triggered upon completion of the AWB Acquisition
may lead to adverse consequences
  AWB could be negatively impacted by a loss of accreditation in Australia
  AWB has been named in litigation commenced by the Iraqi Government relating to the United Nations
Oil-For-Food Programme
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Risks associated with the proposed disposition of AWBs commodity management business
  Legislative risk
   o
    
    We work closely with industry associations and government agencies and officials to seek to
understand and influence legislative trends in a positive way. Ongoing, close working relationships
with industry associations, government agencies and law enforcement ensure best practices and
that new regulations are known, understood and met in a timely fashion; and
 o
    
    We maintain contact with a broad network of local and international advisors to ensure we are aware
of legislative trends and in compliance with current requirements.
 Litigation risk
   o
    
    Adherence to Code of Conduct and Ethics policies, including annual Code of Conduct
Certification process;
 o
    
    Development of standardized contracts and policies for deviation from use of the standard
contracts;
 o
    
    Preventive practices and seminars and training programs (including anti-bribery, disclosure,
insider trading, competition law, privacy, etc.);
 o
    
    Compliance with material contractual obligations through notification system; and
 o
    
    Corporate Compliance Hotline, including procedures for follow-up on complaints.
 Weather
  2010 ANNUAL REPORT
    Agrium
    77




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##### 



o
    
    Our extensive distribution and storage system allows us to move products to locations where
demand is strongest. However, our ability to react is limited by the shortness of the peak selling
season, and margins on these sales in markets further from our production facilities will be lower
due to higher transport costs and potentially lower sales prices;
 o
    
    Geographic diversity of our Wholesale markets and our Retail facilities affords some protection
against regional weather patterns;
 o
    
    We also mitigate our exposure to weather-related risk through our sales to industrial customers,
which are not dependent on regional weather factors. Industrial sales represent approximately 15
percent of our Wholesale net sales; and
 o
    
    Agronomic advances in agricultural products and/or equipment can mitigate the risk of
weather-related demand reduction by shortening the time required for application of product, or
widening the window in which product can be applied.
 Credit and liquidity
    Counterparty
   o
    
    We have established credit procedures that include assessment of a counterpartys
credit-worthiness and adherence to credit limits;
 o
    
    For derivative financial instruments, we have established counterparty trading limits and netting
agreements, and a policy of entering into derivative contracts with counterparties that have
investment grade or higher credit ratings; and
 o
    
    In our Retail business unit, we service customers in diverse geographic markets, reducing the
impact of poor economic or crop conditions in any particular region.
 Environment, health, safety, & security
   o
    
    Agrium has well-defined EHS&S programs and processes, committed leadership, and a responsible
workforce. In addition to an overall corporate EHS&S group, it has established an EHS&S
organization in each business unit with clear lines of reporting and accountability. This has
enabled Agrium to focus on both oversight and governance as well as increasing management
involvement in its operations and activities;
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    2010 ANNUAL REPORT




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o
    
    Agrium stewards to an integrated EHS&S management system which includes a policy and system
documenting EHS&S management and performance expectations applicable to Agriums facilities.
Agriums business units and, where appropriate, individual facilities augment these requirements
with system controls necessary to manage the risks unique to those operations;
 o
    
    Continuous improvement and performance monitoring of Agriums operations are effected in part
through five technical committees, two management committees and the Board EHS&S Committee and in
part through various business unit initiatives. These committees meet quarterly to monitor
performance against annual and longer term performance goals, to discuss plans and strategies
relating to our processes and to evaluate opportunities for improving our systems;
 o
    
    Technical support and compliance assurances for Agriums operations are managed at three
levels within the organization: the facilities level, business unit level and overall corporate
level. Self-audits are performed annually at wholly-owned Agrium facilities and reported to
business unit EHS&S departments. At the business unit level, business unit personnel regularly
conduct separate compliance and systems audits of facility locations. At the corporate level,
corporate EHS&S staff is responsible for maintaining integrated systems, performance monitoring and
conducting business unit EHS&S assessments on an annual basis;
 o
    
    Agrium has ongoing, close working relationships with industry associations, government
agencies and regulatory enforcement. This helps Agrium ensure risk management strategies are
developed and new regulations are known, understood and met in a timely fashion;
 o
    
    Annually, we review our EHS&S Policy for relevance and modify it as appropriate; and
 o
    
    Agrium has an increasingly well-defined set of EHS&S Key Performance Indicators, annual goals
and systems that are cascaded from the Chief Executive Officer throughout the organization.
 
 Environmental Protection Requirements
     Contingent Environmental Liabilities
 United States Environmental Protection Agency Phosphate Industry Initiative
   2010 ANNUAL REPORT
    Agrium
    79




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##### 



Legacy environmental remediation activities: Idaho Mining Properties
     Legacy environmental remediation activities: Manitoba Mining Properties
     Vanscoy potash operations
  80
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    2010 ANNUAL REPORT




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Climate change and greenhouse gas issues
  2
 2 2
        o
    
    Agrium tracks our annual air emissions and have proactively undertaken projects designed to
improve plant energy efficiencies and reduce emissions; and
 o
    
    Agrium will continue to take a leadership role in the fertilizer industrys negotiations with
governments on fair and equitable air emission reduction targets with a goal towards a pragmatic
and realistic compliance system that preserves the global competitiveness of the industry.
 2010 ANNUAL REPORT
    Agrium
    81




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##### 



2
 2 2
 2 2 2
  
 Controls and Procedures
        82
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    2010 ANNUAL REPORT




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##### 



Key
Assumptions and Risks in Respect of Forward-Looking Statements
   Forward-lookingstatements
    
    Key assumptions
    
    Most relevant risk factorsSynergies to be
achieved on the UAP
acquisition1
    
    ¤     Retail business conditions are assumed to be within normal parameters with respect to
prices, margins, product availability, and supplier agreements for our major products.Synergies to be
achieved on the AWB
acquisition2
    
    ¤     Agriums ability to successfully integrate the business of Landmark as planned within
expected time frames and costs.¤     Agriums ability to achieve enhanced purchasing efficiencies, expansion in product offerings
and a reduction in overhead expenses. These could be affected by industry factors impacting Agriums and Landmarks businesses,
generally, and the demand from growers for crop inputs and related products.Retails EBITDA
to reach
$1-billion by 2015
    
    ¤     Retail business
conditions are assumed to be within normal parameters with
respect to prices, margins, product availability, and
supplier agreements for our major products.
    
    ¤     Retail business conditions
are assumed to be within normal parameters with respect to
prices, margins, product availability, and supplier
agreements for our major products.¤     Agriums ability to
identify suitable candidates for acquisitions and negotiate
acceptable terms.
    
    ¤     Agriums ability to
integrate acquisitions, including its ability to achieve
efficiencies as planned.¤     Agriums ability to
implement its standards, controls, procedures and policies
at the acquired business to realize the expected synergies.Construction of
MOPCOs additional urea
trains in 2012
    
    ¤     The two new plants will
be commissioned in 2012.
    
    ¤     Delay in the commission of
the project due to significant construction delays.Brownfield
expansion at our
Vanscoy, Saskatchewan
potash mine, including
estimated capacity
increase
    
    ¤     The expansion will
proceed as planned.
    
    ¤     Potash prices fall to a
point where the expansion is uneconomic/base business
profitability falls such that we cannot fund the cost of the
expansion from operating cash flow.Ability to
sustain projected
potash production with
existing reserves
    
    ¤     Potash reserves are
accessible and of sufficient quality to provide the required
ore for long-term production.
    
    ¤     Potash  flooding and/or
poor ground conditions limit access to major sections of the
ore body or results in poor ore quality.¤     Crop prices remain at
current levels.
    
    ¤     Major drop in grower demand
or fertilizer prices drop from current levels.
 2010 ANNUAL REPORT
    Agrium
    83




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##### 



Contract to source
phosphate rock for
Redwater
    
    ¤     A
contract will be secured to source phosphate
rock.
    
    ¤     Securing an economic contract with an
acceptable supplier, terms and conditions.AATs construction
of a new ESN facility at
New Madrid,MO and
ability to expand the
facilitys capacity
    
    ¤     AAT
will be able to purchase urea at or below NOLA
prices.
    
    ¤     Introduction of new technology into the
market.¤     Location in
the Corn Belt will provide logistical
benefits.
    
    ¤     Impact of weather conditions on
demand.¤     The
increased yields and environmental benefits of
ESN will justify premium purchase price over
other nitrogen sources.

    
    ¤     Managing the commodity cycle of
urea.AATs EBITDA to surpass $100-million by 2015
    
    ¤     Farmers
will continue to adopt ESN in North America and
abroad.
    
    ¤     Our competitors develop a better product
for farmers (highly unlikely).¤     The
U.S. economy will recover strengthening the T&O
markets.
    
    ¤     The U.S. economy stagnates.¤     T&O
products will continue to be adopted
internationally.

    
    ¤     International competitors aggressively
market their branded products.Carbon capture
and storage project
progressing as planned
    
    ¤     Design
completed by end of 2010.
    
    ¤     Carbon capture and storage funding not
received from Alberta Government.¤     Startup
by end of 2012.¤     Upgrader projects (specifically
NorthWest Upgrader) cancelled or delayed.¤     Issues with Engineering/Procurement or
Construction of facility or the pipeline.2011 capital spending
program3
    
    ¤     We believe we will have sufficient financial resources to fund our expected capital program.¤     The level of sustaining and investment capital may vary significantly depending on corporate priorities as the year progresses and
based on changes in the rate of inflation or engineering costs.Ability to finance
announced projects
    
    ¤     We will
be able to utilize our available credit
facilities or access capital markets for
additional sources of financing.
    
    ¤     There can be no assurance that we will
be able to utilize our credit facilities or access capital markets.
 
 1.
    
    The purpose of this particular financial outlook is to communicate our current expectation
of the impact that the UAP acquisition may have on future results of operations. Readers are
cautioned that it may not be appropriate for other purposes.2.
    
    The purpose of this particular financial outlook is to communicate our current
expectation of the impact that the AWB acquisition may have on future results of operations.
Readers are cautioned that it may not be appropriate for other purposes.3.
    
    The purpose of this particular financial outlook is to assist readers in assessing our
liquidity and capital resources. Readers are cautioned that it may not be appropriate for
other purposes.  ¤
    
    Grain and nutrient benchmark prices in 2011 are expected to remain above
historic levels; and¤
    
    High operating rates are expected for the majority of our facilities in 2011, with the
exception of routinely scheduled turnarounds at several plants.¤
    
    Our ability to successfully integrate, and realize the anticipated benefits of our
acquisitions, including capturing the anticipated cost reduction and margin improvement synergies
within the expected timelines for the AWB acquisition; and¤
    
    Our ability to successfully complete
the disposition of the majority of AWBs Commodity Management business on the timelines, and for
the consideration, currently expected.
  ¤
    
    General economic, market, business and weather conditions, including global agricultural
supply/demand factors and crop price levels; global and regional supply/demand factors impacting
the crop input application season and the price of crop nutrients and raw materials/feedstock;
global economic and market conditions affecting availability of credit and access to capital
markets; build-up of inventories in distribution channels;
changes to foreign exchange rates; tightening of the labor market; and availability of labor
supply;¤
    
    Changes in government policies and legislation and regulation, or the interpretation,
administration and enforcement thereof, in the jurisdictions in which we operate, regarding
agriculture and crop input prices, safety, production processes, environment, greenhouse gas and
others;
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    2010 ANNUAL REPORT




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##### 



¤
    
    Actions by competitors and others that include changes to industry capacity, utilization rates
and product pricing; performance by customers, suppliers and counterparties to financial
instruments; potential for expansion plans to be delayed; and ability to transport or deliver
production to markets, including potential changes to anti-trust laws, or interpretations thereof,
that could negatively impact our international marketing operations through Canpotex, the offshore
marketing agency for potash produced in the Province of Saskatchewan, wholly-owned by us and the
two other major potash producers in Canada;¤
    
    Changes in margins and/or levels of supplier rebates for major crop inputs such as crop protection
products, nutrients and seed, as well as crop input prices declining below cost of inventory
between the time of purchase and sales;¤
    
    General operating risks associated with investment in foreign jurisdictions; the level and
effectiveness of future capital expenditures; reliability of performance of existing capital
assets; and fluctuations in foreign exchange and tax rates in the jurisdictions in which we
operate;¤
    
    Future operating rates, production costs and sustaining capital of our facilities; unexpected
costs from present and discontinued mining operations and/or labor disruptions; changes to timing,
construction cost and performance of other parties; and political risks associated with our
interest in the Egyptian Misr Fertilizers Production Company S.A.E. (MOPCO), Argentine Profertil
nitrogen facilities, and South American and Australian retail operations;¤
    
    Environmental, health and safety and security risks typical of those found throughout the
agriculture, mining and chemical manufacturing sectors and the fertilizer supply chain, including
risk of injury to employees and contractors, possible environmental contamination, risks associated
with the storage and use of chemicals and the security of our facilities and personnel;¤
    
    Strategic risks including our ability to effectively implement our business strategy and our
risk mitigation strategies, including hedging and insurance; our ability to close pending and
proposed acquisitions and dispositions (including the pending sale of the AWB commodity management
business) as anticipated and to integrate and achieve synergies from any assets we may acquire
within the time or performance expected of those assets (including in respect of our acquisition of
AWB); and the introduction of technologies in the agricultural industry that may be disruptive to
our business;¤
    
    Integration risks that might cause anticipated synergies from our acquisition of AWB to be
less than expected, including: AWBs actual results being different than those upon which we based
our expectations; the potential inability to integrate the business of AWB with our existing
business as planned or within the times predicted; the fact that AWB has not been subject to U.S.
and Canadian internal control and compliance standards; our inability to consummate the announced
divestiture of the majority of the AWBs Commodity Management business; the potential inability to
implement changes in time for the 2010/2011 growing season in Australia; the potential loss of key
personnel; and other industry factors which may affect our and AWBs businesses generally and
thereby impact the demand from growers for crop inputs; and¤
    
    Other factors described in this MD&A, including those identified under the headings Key Business
Sensitivities and Business Risks.
 2010 ANNUAL REPORT
    Agrium
    85