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AGRIUM INC.

ANNUAL INFORMATION FORM

Year Ended December 31, 2002

March 25, 2003





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AGRIUM INC.
ANNUAL INFORMATION FORM
Year Ended December 31, 2002

TABLE OF CONTENTS

|       |  |                                                           |  |  |    |      |  | 
|------ |  | --------------------------------------------------------- |  |  | -- | ---- |  | 
|       |  |                                                           |  |  |    | Page
|       |  |                                                           |  |  |    |     
|ITEM 1 |  | Incorporation                                             |  |  | 3  |     
|ITEM 2 |  | General Development of Business                           |  |  | 3  |     
|ITEM 3 |  | Narrative Description of Business                         |  |  | 4  |     
|ITEM 4 |  | Selected Consolidated Financial and Operating Information |  |  | 16 |     
|ITEM 5 |  | Management's Discussion and Analysis                      |  |  | 17 |     
|ITEM 6 |  | Market for Securities                                     |  |  | 17 |     
|ITEM 7 |  | Directors and Officers                                    |  |  | 18 |     
|ITEM 8 |  | Additional Information                                    |  |  | 20 |     

Interpretation

In this Annual Information Form, unless the context otherwise indicates,
Agrium refers to Agrium Inc., its subsidiaries and any partnership of which
Agrium and its subsidiaries are the partners to, and Corporation refers to
the corporate entity, Agrium Inc. References to dollars, $, and U.S.$
are to United States dollars, and references to C$ are to Canadian dollars.
The exchange rate between the Canadian dollar and the United States dollar used
in this Annual Information Form varies depending on the date and context of the
information contained herein.

Forward looking statements

Except for statements of historical fact, the statements in, or incorporated by
reference in, this Annual Information Form constitute forward-looking
statements under applicable securities legislation. These forward-looking
statements include, but are not limited to, references to:



| |  | the amount and type of future capital expenditures;                                        
|- |  | -------------------------------------------------------------------------------------------
| 
| |  | business strategies and plans for implementing them;                                       
| 
| |  | competitive strengths, goals, expansion and growth of Agriums business and operations; and
| 
| |  | plans and references to Agriums future results.                                           

These forward-looking statements are based on certain assumptions and analyses
made by Agrium in light of experience and perception of historical trends,
current conditions and expected future developments as well as other factors
believed appropriate in the circumstances. However, whether actual results and
developments will conform with Agriums expectations and predictions is subject
to a number of risks and uncertainties, including, but not limited to:



| |  | General economic, market and business conditions, including:
|- |  | ------------------------------------------------------------



| |  |  | supply and demand for grain and other agricultural crops;                                                                                                       
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | changes in government agricultural, safety, environmental and other legislation and policies;                                                                   
|
| |  |  | fluctuations in foreign exchange rates, commodity,
feedstock and nutrient prices or other input costs that cannot be
recovered through nutrient price increases;
|
| |  |  | actions by competitors and others in market areas,
including changes to industry capacity and utilization and
product pricing;                                  
|
| |  |  | performance by customers, suppliers, personnel and counter-parties to financial instruments.                                                                    



| |  | Weather conditions and seasonal patterns.
|- |  | -----------------------------------------

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| |  | The outcome of Agriums dispute with Unocal.
|- |  | --------------------------------------------
| 
| |  | General operating risks associated with:    



| |  |  | the efficiency of Agriums production facilities
including currency convertibility and transferability
restrictions; 
| | - |  | ---------------------------------------------------------------------------------------------------------------------
|
| |  |  | the level and effectiveness of future capital
expenditures and reliability of performance of existing capital
assets;
|
| |  |  | ability to transport or deliver production to markets;                                                               
|
| |  |  | present and discontinued mining operations;                                                                          
|
| |  |  | investment in foreign jurisdictions;                                                                                 
|
| |  |  | labour disruptions.                                                                                                  



| |  | Strategic risks including:
|- |  | --------------------------



| |  |  | the Corporations ability to implement its business strategy;                                        
| | - |  | -----------------------------------------------------------------------------------------------------
|
| |  |  | results of the Corporations risk mitigation strategies, including hedging and insurance;            
|
| |  |  | uncertainty as to the feedstock reserves owned or otherwise available to the Corporation;            
|
| |  |  | the Corporations ability to integrate any assets acquired or the performance of those assets;       
|
| |  |  | the opportunities, or lack of opportunities, that may
be presented to and pursued by the Corporation;

and other factors, many of which are beyond the Corporations control.
Consequently, all of the forward-looking statements made in or incorporated by
reference in this Annual Information Form are qualified by these cautionary
statements, and there can be no assurance that the actual results or
developments anticipated by us will be realized or, even if substantially
realized, that they will have the expected consequences to, or effects on, the
Corporation.

The Corporation does not undertake any obligation to update forward-looking
statements even if circumstances or managements estimates or opinions should
change. Investors should not place undue reliance on forward-looking
statements.

Summary of Principal Fertilizer Products

|                            |  |                     |  |                                                                                                                                                                                                             
|--------------------------- |  | ------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                            |  | Nutrient Grade(1)   |  |                                                                                                                                                                                                             
|Product                     |  | N-P-K-S             |  | Description(2)                                                                                                                                                                                              
|                            |  |                     |  |                                                                                                                                                                                                             
|Ammonia                     |  | 82-0-0-0            |  | Anhydrous ammonia (NH3)
containing 82.3%
nitrogen, transported
and stored as a
low-boiling liquid,
injected in the soil as
a gas.                                                                           
|                            |  |                     |  |                                                                                                                                                                                                             
|Ammonium nitrate            |  | 34-0-0-0            |  | Dry granules or prills
produced by reacting
nitric acid with
ammonia. Typically 0.21
tonnes of ammonia are
used to produce one
tonne of ammonium
nitrate.                                                   
|                            |  |                     |  |                                                                                                                                                                                                             
|Ammonium phosphate          |  | 18-46-0-0
16-48-0-0 |  | Dry granules containing
di-ammonium phosphate,
commonly referred to as
DAP.                                                                                                                                 
|                            |  |                     |  |                                                                                                                                                                                                             
|                            |  | 12-51-0-0
11-52-0-0 |  | Dry granules containing
mono-ammonium phosphate,
commonly referred to as
MAP.                                                                                                                               
|                            |  |                     |  |                                                                                                                                                                                                             
|Ammonium sulphate           |  | 21-0-0-24           |  | Dry crystals or granules
produced by
crystallization of
by-product ammonium
sulphate solutions or by
reacting ammonia with
sulphuric acid.
Dry granules containing
ammonium sulphate and
ammonium phosphate,
|                            |  |                     |  |                                                                                                                                                                                                             
|Ammonium phosphate
sulphate |  | 16-20-0-14          |  | commonly referred to as
APS.                                                                                                                                                                                
|                            |  |                     |  |                                                                                                                                                                                                             
|Merchant grade acid         |  | 0-52-0-0            |  | Clarified and evaporated
phosphoric acid,
commonly referred to as
MGA, used to produce
ammonium polyphosphate
solution.                                                                                     

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|                      |  |                   |  |                                                                                                                                                                 
|--------------------- |  | ----------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|                      |  | Nutrient Grade(1) |  |                                                                                                                                                                 
|Product               |  | N-P-K-S           |  | Description(2)                                                                                                                                                  
|                      |  |                   |  |                                                                                                                                                                 
|Potash                |  | 0-0-60-0          |  | Dry granules or crystals
containing potassium
chloride (KCl);
principal size grades
are granular, coarse and
standard.                                          
|                      |  |                   |  |                                                                                                                                                                 
|Super phosphoric acid |  | 0-70-0-0          |  | Clarified and evaporated
phosphoric acid,
commonly referred to as
SPA, used to produce
ammonium polyphosphate
solution.                                         
|                      |  |                   |  |                                                                                                                                                                 
|UAN                   |  | 32-0-0-0
28-0-0-0 |  | Urea ammonium nitrate
solution produced by
combining urea with
ammonium nitrate and
water.                                                                      
|                      |  |                   |  |                                                                                                                                                                 
|Urea                  |  | 46-0-0-0          |  | Dry granules or prills
formed by reacting
ammonia with carbon
dioxide at high
pressure. Typically
0.575 tonnes of ammonia
are used to produce one
tonne of urea.



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|(1) |  | Nutrient Grade: The nutrient content of fertilizers is normally
expressed in the form of N-P-K-S where N is the % of elemental nitrogen; P
is the % of phosphorous expressed as equivalent P2O5; K is the % of
potassium expressed as equivalent K2O; and S is the % of sulphur.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | See glossary of technical terms on page 21.                                                                                                                                                                                                                                     

ITEM 1: INCORPORATION

1.1 Incorporation

Agrium Inc. was incorporated by Articles of Incorporation under the Canada
Business Corporations Act on December 21, 1992. The Corporations head office
and principal place of business is located at 13131 Lake Fraser Drive S.E.,
Calgary, Alberta, T2J 7E8.

1.2 Principal Subsidiaries, Associated Companies and Partnerships

|                               |  |                               |  |           |        |   |  | 
|------------------------------ |  | ----------------------------- |  | --------- | ------ | - |  | 
|                               |  | Jurisdiction of Incorporation |  |           |        |  
|                               |  | or Organization               |  | Ownership
|                               |  |                               |  |          
|Agrium Partnership             |  | Alberta                       |  |           | 100    | %
|Agrium U.S. Inc.               |  | Colorado                      |  |           | 100    | %
|Agrium Nitrogen Company        |  | Colorado                      |  |           | 100    | %
|Crop Production Services, Inc. |  | Delaware                      |  |           | 100    | %
|Western Farm Service, Inc.     |  | Delaware                      |  |           | 100    | %
|Agroservicios Pampeanos S.A.   |  | Argentina                     |  |           | 100    | %
|Nu-West Industries, Inc.       |  | Delaware                      |  |           | 100    | %
|Viridian Inc.                  |  | Canada                        |  |           | 100    | %
|Viridian Fertilizers Limited   |  | Canada                        |  |           | 100    | %
|Profertil S.A.                 |  | Argentina                     |  |           | 50     | %
|Canpotex Limited               |  | Canada                        |  |           | 33 1/3 | %

ITEM 2: GENERAL DEVELOPMENT OF BUSINESS

2.1 History

Agrium was formed to facilitate the reorganization of the fertilizer division
of Cominco Ltd. and the acquisition of the fertilizer assets of Alberta Energy
Company Ltd. in 1993.

From 1993 to 1996, Agrium expanded its fertilizer activities by acquiring Crop
Production Services, Inc. (CPS) and Western Farm Service, Inc. (WFS), both
of which serve the U.S. retail agricultural industry in the northwest,
northeast, midwest and California markets. Agrium also acquired Nu-West
Industries, Inc. (Nu-West), which produces phosphate-based fertilizer
products from a plant located in Idaho.

In late 1995, Agrium began establishing retail sales outlets in the major
agricultural areas of Argentina, which offer fertilizer, agricultural chemicals
and related services. Agrium and Repsol-YPF S.A. (a subsidiary of Repsol S.A.)
(YPF) each have a 50% interest in a company, Profertil S.A. (Profertil),
which has constructed a world-scale ammonia and urea production facility in
Argentina. The ammonia facility commenced production in late 2000,

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and the urea
facility in early 2001. The facility achieved commercial production levels in
2001 and on November 30, 2001 Profertil obtained the release of completion
guarantees on the facility resulting in the long term project financing
becoming non-recourse to the Corporation.

In December 1996, Agrium merged with Viridian Inc (Viridian), which operated
nitrogen and phosphate-based fertilizer plants at Fort Saskatchewan and
Redwater, Alberta. In late 1997, Agrium acquired a phosphate rock mine located
close to its phosphate producing plant in Idaho. In 1998, Agrium commenced
development of a phosphate rock mine and mill in Kapuskasing, Ontario which
commenced operation in 1999. Full production levels were achieved in the second
half of 2001. In September 2000, Agrium acquired the Alaskan nitrogen facility
and related U.S. West Coast assets.

ITEM 3: NARRATIVE DESCRIPTION OF BUSINESS

3.1 The Fertilizer Industry

3.1.1 Overview

Nitrogen, phosphorous and potassium are the three major nutrients essential to
the growth of all plants. The growing of crops depletes the soil of these
essential nutrients. The application of fertilizer replaces depleted nutrients
and balances their proportions to optimize the economic yield of crops under
cultivation. Farmers determine the types, quantities and proportions of
fertilizer to apply depending on the crop, soil and weather conditions,
regional farming practices and fertilizer and crop prices.

There are four primary forms of nitrogen fertilizer  ammonia, urea, ammonium
nitrate and nitrogen solutions. The basic building block of each form is
ammonia which is manufactured by heating natural gas to high temperatures and
reacting the resulting hydrogen with nitrogen.

The following table summarizes certain statistics for the North American
nitrogen, phosphate and potash industries for the last five years:

|          |  |                          |  |  |     |                                                            |  |      |     |      |  |      |     |      |  |  |     |  |  |  |     |  |  | 
|--------- |  | ------------------------ |  |  | --- | ---------------------------------------------------------- |  | ---- | --- | ---- |  | ---- | --- | ---- |  |  | --- |  |  |  | --- |  |  | 
|          |  |                          |  |  |     | Years ended December 31                                   
|          |  |                          |  |  |     |                                                           
|          |  |                          |  |  |     | 2002                                                       |  | 2001 |     | 2000 |  | 1999 |     | 1998
|          |  |                          |  |  |     |                                                            |  |      |     |      |  |      |     |     
|          |  |                          |  |  |     | (millions of tonnes except operating rates and price data)
|Nitrogen  |  | Capacity(1)(2)           |  |  | 17  |                                                            |  |      | 17  |      |  |      | 16  |      |  |  | 18  |  |  |  | 18  | 
|          |  | Production(1)(2)         |  |  | 14  |                                                            |  |      | 12  |      |  |      | 14  |      |  |  | 15  |  |  |  | 16  | 
|          |  | Operating rate (%)       |  |  | 83  |                                                            |  |      | 72  |      |  |      | 88  |      |  |  | 87  |  |  |  | 91  | 
|          |  | Net imports(3)           |  |  | 6   |                                                            |  |      | 5   |      |  |      | 4   |      |  |  | 4   |  |  |  | 4   | 
|          |  | Net exports(3)           |  |  | 2   |                                                            |  |      | 2   |      |  |      | 3   |      |  |  | 3   |  |  |  | 3   | 
|          |  | Ammonia Price (U.S.$)(4) |  |  | 210 |                                                            |  |      | 289 |      |  |      | 229 |      |  |  | 160 |  |  |  | 179 | 
|          |  | Urea Price (U.S.$)(4)    |  |  | 151 |                                                            |  |      | 185 |      |  |      | 175 |      |  |  | 127 |  |  |  | 153 | 
|Potash    |  | Capacity(5)              |  |  | 23  |                                                            |  |      | 22  |      |  |      | 23  |      |  |  | 22  |  |  |  | 22  | 
|          |  | Production(5)            |  |  | 16  |                                                            |  |      | 15  |      |  |      | 17  |      |  |  | 15  |  |  |  | 17  | 
|          |  | Operating rate (%)       |  |  | 67  |                                                            |  |      | 66  |      |  |      | 73  |      |  |  | 67  |  |  |  | 75  | 
|          |  | Price (U.S.$)(4)         |  |  | 127 |                                                            |  |      | 129 |      |  |      | 129 |      |  |  | 131 |  |  |  | 132 | 
|Phosphate |  | Capacity(1)(2)           |  |  | 13  |                                                            |  |      | 12  |      |  |      | 12  |      |  |  | 12  |  |  |  | 12  | 
|          |  | Production(1)(2)         |  |  | 11  |                                                            |  |      | 9   |      |  |      | 10  |      |  |  | 11  |  |  |  | 11  | 
|          |  | Operating rate (%)       |  |  | 86  |                                                            |  |      | 80  |      |  |      | 84  |      |  |  | 93  |  |  |  | 96  | 
|          |  | Price (U.S.$)(4)         |  |  | 193 |                                                            |  |      | 184 |      |  |      | 188 |      |  |  | 214 |  |  |  | 227 | 

for the last five years:



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|(1) |  | As provided in The Fertilizer Institutes (TFI) semi-annual production
survey report.
|--- |  | ---------------------------------------------------------------------------------------

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|(2) |  | Million tonnes of nutrient (N, P2O5).                                                                                     
|--- |  | --------------------------------------------------------------------------------------------------------------------------
|   
|(3) |  | Million tonnes of nitrogen (N). Data provided by the US Department of
Commerce (USDC) through Blue Johnson & Associates.
|   
|(4) |  | Average U.S. Corn Belt price per tonne for domestic delivery compiled by
Blue Johnson & Associates.                       
|   
|(5) |  | Million tonnes of KCL assuming a 60.5% K2O equivalent.                                                                    

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3.1.2 Demand

Markets for fertilizer products in North and South America are seasonal with
sales volumes typically highest in the spring with a secondary peak in the
fall. Fertilizer production facilities operate throughout the year. Through
fall and winter, fertilizer producers are required to build up inventories in
advance of the spring planting season.

In the long term, world fertilizer demand is driven primarily by population
growth and by rising living standards that increase both the quantity of food
consumed per capita and the quality (protein content) of food consumed.
Production of higher protein foods such as meat and dairy products require
larger amounts of grain and hence more fertilizer.

In the medium-term, growth and profitability in the fertilizer industry are
more influenced by world economic growth rates and factors creating temporary
imbalances in fertilizer supply and demand. These factors include weather
patterns, crop prices, new production capacity, energy prices, and temporary
disruptions in fertilizer trade from government intervention such as changes in
the buying patterns of China or India.

Current agricultural demand depends on factors such as total planted acreage,
crop mix, input application rates and farm income. These factors are affected
by current and projected grain and oilseed prices and inventories, government
agricultural policies (including subsidy and acreage set-aside programs),
improvements in production methods and application efficiency. Extreme weather
conditions can have an effect on fertilizer consumption in a specific
geographic area, but Agriums broad geographic production and distribution
capability helps to mitigate the potential impact of such variations in
consumption.

In recent years, fertilizer demand in North America has been relatively stable
and has been primarily satisfied by domestic production. World fertilizer
consumption is forecast by the International Fertilizer Association (IFA) to
grow at rates of 2.0% to 3.6% per annum over the next four years. Most of the
future increases in fertilizer demand are expected to be generated by less
developed countries, particularly countries in Southeast Asia and South
America, where the agricultural industry does not yet use fertilizer in
sufficient amounts to optimize production and where growth rates of population
and gross domestic product are expected to continue to increase.

In certain agricultural markets, local and federal laws have sought to restrict
the amount of ground-water contamination and nutrient run-off into rivers and
oceans which may affect the demand for fertilizer in those markets. This
legislation is usually enacted in areas where nutrient additions exceed
nutrient loss from crop removal and where soil leaching conditions prevail. In
Western Canada and the Western United States, these conditions typically do not
exist because nutrient loss from crop removal exceeds nutrient additions and
soil and environmental conditions result in low leaching potential.

Ammonia, urea and ammonium nitrate have a wide variety of non-agricultural
uses. Ammonia is used in the manufacture of synthetic fibers, as a bleaching
agent, as an effluent treatment agent for the pulp and paper industry, and as a
refrigerant. Urea is sold to industrial customers to be used in the
manufacture of adhesives, resins and as an animal feed ingredient.

Competition in agricultural input markets takes place largely on the basis of
reliability of supply, price, delivery time and quality of service. Feedstock
availability to production facilities and the cost and efficiency of
production, transportation and storage facilities are also important
competitive factors. Government intervention in international trade can also
distort the competitive environment.

3.1.3 Supply

Supply is largely affected by changes to production capability and changes in
the world fertilizer operating rates. Construction of new facilities and mines
and upgrades to existing facilities increase supply while closures of older
and less economic facilities reduce supply. Fluctuations in input costs
(natural gas) relative to realized prices, transportation problems, and
political difficulties in key producing areas like Venezuela and Iran also
impact world supply. According to data compiled by the TFI and the
International Fertilizer Development Center (IFDC), the operating rate for
the North American nitrogen industry has declined over the past five years and
over this time was volatile. Furthermore, a number of permanent nitrogen plant
closures have taken place over this period within the U.S. The lower average
operating rate has been partially a result of high North American natural gas
prices. The overall average North American nitrogen-operating rate was 83% for
2002. Approximately 7% of North American consumed nitrogen is exported in the
form of phosphate fertilizers. Such production is balanced by imports of
ammonia and urea. Potential suppliers of nitrogen fertilizers to North America
are located in the Middle East and

-6-



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other parts of Asia, the former Soviet Union
countries (FSU) and Latin America. The supply of nitrogen fertilizer
from imports may occasionally be limited by political or economic events as
well as feedstock and transportation costs.

The major world sources of potash production are Canada, the FSU, Germany and
the Middle East. Canpotex Limited (Canpotex), jointly owned by three
Saskatchewan potash producers including Agrium, markets Saskatchewan produced
potash outside of North America. According to the IFA, North America is a
significant net exporter of potash with approximately 41% of North American
potash production normally sold offshore.

According to the IFA, North America is a large net exporter of processed
phosphate fertilizers. The principal areas of phosphate fertilizer production
in North America are Florida, Louisiana, North Carolina, Idaho, Utah, Wyoming
and Alberta.

Competitors in the North American nitrogen and phosphate fertilizer markets
include other North American and offshore producers. Sales are made through
independent retailers, resellers, farmer co-operatives affiliated dealer
organizations and brokers. Some North American producers are subsidiaries or
divisions of energy or chemical companies while others are owned by farmer
co-operatives. Agriums principal potash competitors include two producers in
Saskatchewan, small producers elsewhere in North America and a consortium of
potash producers from the FSU.

3.1.4 Pricing

The price of fertilizers sold into the agricultural market is generally
determined by negotiation at the time of sale depending on supply and demand
for each nutrient and for the particular forms of product. Prices vary from
region to region based largely on transportation costs. Prices in regional
areas are also affected by localized conditions such as weather and the level
of product inventories in the region available for delivery during the
application period. Most of the products produced by Agrium are sold as
fertilizers in the agricultural market, although some of the production is sold
into the industrial market. Industrial sales are usually priced under one year
or longer term contracts where pricing may be fixed, related to a benchmark
price plus transportation costs or related to gas costs.

3.2 Agrium

3.2.1 General

Agrium is a leading global producer and marketer of agricultural nutrients and
industrial products and a major retail supplier of agriculture products and
services in both North America and Argentina. Agrium is one of the top two
nitrogen producers in the world with approximately 3 percent of the nitrogen
market.

Agrium produces a full range of fertilizers. Nitrogen-based fertilizers are
produced in Alberta, Canada at four plants located at Carseland, Fort
Saskatchewan, Joffre and Redwater. Sulphur and phosphate-based fertilizers are
also produced at the Redwater plant which utilizes phosphate ore from Agriums
phosphate mine located at Kapuskasing, Ontario. Additionally, Agrium owns and
operates a potash mine and production facility at Vanscoy, Saskatchewan. In the
United States, Agrium owns and operates nitrogen-based fertilizer production
plants at Beatrice, Nebraska, Borger, Texas, Kenai, Alaska, Kennewick,
Washington and West Sacramento, California and a phosphate-based fertilizer
production facility near Soda Springs, Idaho. Agrium is also a 50% participant
in the Profertil joint venture that owns and operates a world scale
nitrogen-based fertilizer plant in Bahia Blanca, Argentina.

Agrium has an extensive storage and wholesale distribution network serving
Western Canada, the Pacific Northwest, California, the Midwest Cornbelt and the
Great Plains regions of the United States. It operates retail farm centres
principally in the Western and Midwestern United States and in Argentina.

Agrium has two phosphate rock mines, which supply plants at Redwater, Alberta
and Conda, Idaho. These mines result in enhanced security of supply.

Agriums North America Retail Division is one of the largest and most
geographically diverse farm retailers in the United States. With 225 retail
facilities in the United States as of December 31, 2002, Agrium provides
fertilizers, crop protection products, seeds and services to growers in 22
states, principally in the U.S. Northwest, Northeast, Midwest and California.
Agrium also owns and operates 18 retail farm centres in Argentina.

-7-



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3.2.2 Argentina

In January 2002, the Government of Argentina passed legislation eliminating the
fixed one Peso to one dollar exchange rate which after a number of further
legislative changes created a free floating system. The Government also passed
legislation referred to as the contract index law, which converts all U.S.
dollar denominated debt amounts, including working capital items, at a rate of
one Peso for one U.S. dollar. The legislation mandated conversion at a below
market rate, which effectively resulted in an expropriation of a portion of the
value of U.S. dollar based assets. The Peso continued to weakened through out
the first half of 2002 and reached a low of 3.8 Pesos to one U.S. dollar. In
the last half of the year the Peso stabilized and ended the year at 3.37 Pesos
to one U.S. dollar.

3.2.3 Dispute with Unocal

Agriums dispute with Unocal over their gas supply and delivery obligations,
environmental liabilities and the Earnout arrangement described below is
ongoing. Unocal has curtailed supply to the Alaska nitrogen facility since July
of 2002. Agrium has been able to offset some of these curtailments by
obtaining natural gas from other oil and gas companies under interruptible
contracts late in 2002. Agrium has initiated legal proceedings against Unocal
in respect of these matters and has asserted in the litigation that Unocal has
breached its warranty obligations with respect to gas supply.

As a result of these interruptions, the Kenai facility operated at an average
of 76 percent of capacity in the second half of the year. While Agrium expects
the Kenai facility to maintain current production rates of approximately 75
percent of capacity over the next 12 months, there is a risk that available gas
from Unocal and other suppliers may not be sufficient to maintain those rates,
particularly during the winter months. Unocal continues to advise us of
downward revisions to reserves. Because of the uncertainty relating to the
reserves, no assurance can be given as to the long-term gas supply for this
facility. Should the requirements of the facility not be met by Unocal or from
existing supply sources from other producers, development of new natural gas
reserves will be required to return the facility to full production. This
would be expected to take 18 to 36 months from the commencement of development.

Operations at the Kenai facility at current levels, will depend on third party
supply for volumes above those actually delivered by Unocal. If Agrium is
economically unable to offset that reduction from other sources, Agrium may be
subject to increased expenses or the plants competitive position and carrying
value may be impacted.

The agreement for the purchase of the Kenai assets contains an Earnout
arrangement entitling Unocal to certain payments based on the capacity of the
plant and forecast prices specified in the agreement for a period ending in
2006. Agrium continues to dispute any liability for an Earnout payment but
have accrued the potential liability arising from the date of acquisition to
December 31, 2002. In the event the courts ultimately determine Agrium is
liable, additional Earnout payments may be become due in respect of subsequent
years.

3.2.4 Production Facilities

Agrium produces fertilizer at the following plants and facilities. All
facilities are owned by Agrium, except the potash and phosphate reserves that
are located, in part, on leased lands and the Profertil facility in which
Agrium has a 50% share.

|                  |  |                   |  |         |  |         |         |                    |  |                     |         |  |  |  |         | 
|----------------- |  | ----------------- |  | ------- |  | ------- | ------- | ------------------ |  | ------------------- | ------- |  |  |  | ------- | 
|                  |  |                   |  |         |  |         |         |                    |  | Production Capacity
|                  |  |                   |  |         |  |         |         |                    |  |                    
|Production Plants |  |                   |  |         |  | Product |         | Gross (1)          |  | Net (1)            
|                  |  |                   |  |         |  |         |         |                    |  |                    
|                  |  |                   |  |         |  |         |         |                    |  | (tonnes per year)  
|Nitrogen         
|Canada            |  | Redwater, Alberta |  | Ammonia |  |         | 960,000 |                    |  |                     | 250,000 | 
|                  |  |                   |  |         |  |         |         | Urea               |  |                     |         |  |  |  | 720,000 | 
|                  |  |                   |  |         |  |         |         | Ammonium Nitrate   |  |                     |         |  |  |  | 215,000 | 
|                  |  |                   |  |         |  |         |         | Ammonium Sulphate  |  |                     |         |  |  |  | 300,000 | 
|                  |  |                   |  |         |  |         |         | Nitrogen Solutions |  |                     |         |  |  |  | 180,000 | 

-8-



---



##### 



|                  |  |                            |  |                                  |  |                                       |           |                                          |         |                     |           |  |           |  |           | 
|----------------- |  | -------------------------- |  | -------------------------------- |  | ------------------------------------- | --------- | ---------------------------------------- | ------- | ------------------- | --------- |  | --------- |  | --------- | 
|                  |  |                            |  |                                  |  |                                       |           |                                          |         | Production Capacity
|                  |  |                            |  |                                  |  |                                       |           |                                          |         |                    
|Production Plants |  |                            |  |                                  |  | Product                               |           | Gross (1)                                |         | Net (1)            
|                  |  |                            |  |                                  |  |                                       |           |                                          |         |                    
|                  |  |                            |  |                                  |  |                                       |           |                                          |         | (tonnes per year)  
|                  |  |                            |  | Carseland, Alberta               |  | Ammonia                               |           |                                          | 535,000 |                     |           |  | 110,000   | 
|                  |  |                            |  |                                  |  |                                       |           | Urea                                     |         |                     |           |  |           |  | 750,000   | 
|                  |  |                            |  | Joffre, Alberta                  |  | Ammonia                               |           |                                          |         |                     |           |  | 480,000   | 
|                  |  |                            |  | Fort Saskatchewan, Alberta       |  | Ammonia                               |           |                                          | 465,000 |                     |           |  | 220,000   | 
|                  |  |                            |  |                                  |  |                                       |           | Urea                                     |         |                     |           |  |           |  | 430,000   | 
|                  |  |                            |  | Other Alberta Plants             |  | Nitrogen Solutions                    |           |                                          |         |                     |           |  | 120,000   | 
|United States     |  | Kenai, Alaska              |  | Ammonia                          |  |                                       | 1,285,000 |                                          |         |                     | 650,000   | 
|                  |  |                            |  |                                  |  |                                       |           | Urea                                     |         |                     |           |  |           |  | 1,090,000 | 
|                  |  |                            |  | Borger, Texas                    |  | Ammonia(2)                            |           |                                          | 490,000 |                     |           |  | 343,000   | 
|                  |  |                            |  |                                  |  |                                       |           | Urea                                     |         |                     |           |  |           |  | 99,000    | 
|                  |  |                            |  | Beatrice, Nebraska               |  | Ammonium Nitrate                      |           |                                          |         |                     |           |  | 190,000   | 
|                  |  |                            |  | Kennewick, Washington            |  | Ammonium Nitrate                      |           |                                          |         |                     |           |  | 225,000   | 
|                  |  |                            |  |                                  |  |                                       |           | Nitrogen Solutions and Other Products    |         |                     |           |  |           |  | 320,000   | 
|                  |  |                            |  | West Sacramento, California      |  | Nitrogen Solutions and Other Products |           |                                          |         |                     |           |  | 185,000   | 
|Argentina         |  | Profertil, Bahia Blanca(3) |  | Ammonia                          |  |                                       | 355,000   |                                          |         |                     | 35,000    | 
|                  |  |                            |  |                                  |  |                                       |           | Urea                                     |         |                     |           |  |           |  | 550,000   | 
|                  |  |                            |  |                                  |  |                                       |           |                                          |         |                     |           |  |           |  |           | 
|Total             |  |                            |  |                                  |  |                                       |           |                                          |         |                     |           |  | 7,462,000 | 
|                  |  |                            |  |                                  |  |                                       |           |                                          |         |                     |           |  |           |  |           | 
|Phosphate        
|                  |  |                            |  |                                  |  |                                       |           | Mono-Ammonium Phosphate (Product
tonnes) |         |                     |           |  |           |  |           | 
|Canada            |  | Redwater, Alberta          |  | (P2O5 equivalent 345,000 tonnes) |  |                                       |           |                                          |         |                     | 680,000   | 
|United States     |  | Conda, Idaho               |  | Phosphates (Product tonnes)      |  |                                       |           |                                          |         |                     | 620,000   | 
|                  |  |                            |  |                                  |  |                                       |           | (P2O5 equivalent 375,000 tonnes)         |         |                     |           |  |           |  |           | 
|                  |  |                            |  |                                  |  |                                       |           |                                          |         |                     |           |  |           |  |           | 
|Total             |  |                            |  |                                  |  |                                       |           |                                          |         |                     |           |  | 1,300,000 | 
|                  |  |                            |  |                                  |  |                                       |           |                                          |         |                     |           |  |           |  |           | 
|Potash           
|Canada            |  | Vanscoy, Saskatchewan      |  | Potash (KCL)                     |  |                                       |           |                                          |         |                     | 1,790,000 | 
|                  |  |                            |  |                                  |  |                                       |           |                                          |         |                     |           |  |           |  |           | 



---

|(1) |  | Gross means total plant ammonia production capacity. Net means
gross production capacity less ammonia used in upgrading to other
products.                                   
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The net ammonia production capacity for Borger is based on the assumption
that the Beatrice ammonium nitrate plant operates at full capacity using
ammonia from the Borger plant.
|   
|(3) |  | Production capacity shown represents Agriums 50% share only.                                                                                                                    

3.2.5 Production Volumes

|         |  |         |  |      |                                        |  |                                    |        |      |  |      |        |      |  |      |        |   |  |  |        |   |  |  |        |  
|-------- |  | ------- |  | ---- | -------------------------------------- |  | ---------------------------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | - |  |  | ------ | - |  |  | ------ | -
|         |  |         |  |      |                                        |  | Years ended December 31           
|         |  |         |  |      |                                        |  |                                   
|         |  |         |  |      |                                        |  | 2002                               |        | 2001 |  | 2000 |        | 1999 |  | 1998
|         |  |         |  |      |                                        |  |                                    |        |      |  |      |        |      |  |     
|         |  |         |  |      |                                        |  | (thousands of tonnes except grade)
|Nitrogen |  | Ammonia |  |      |                                        |  |                                    |        |      |  |      |        |      |  |      |        |   |  |  |        |   | 
|         |  |         |  |      | Redwater I                             |  |                                    |       |      |  |      | 67     |      |  |      | 168    |   |  |  | 167    |   |  |  | 221    |  
|         |  |         |  |      | Redwater II                            |  |                                    | 656    |      |  |      | 654    |      |  |      | 603    |   |  |  | 660    |   |  |  | 663    |  
|         |  |         |  |      | Carseland                              |  |                                    | 524    |      |  |      | 420    |      |  |      | 501    |   |  |  | 462    |   |  |  | 520    |  
|         |  |         |  |      | Joffre                                 |  |                                    | 358    |      |  |      | 324    |      |  |      | 444    |   |  |  | 412    |   |  |  | 350    |  
|         |  |         |  |      | Fort Saskatchewan                      |  |                                    | 291    |      |  |      | 286    |      |  |      | 462    |   |  |  | 457    |   |  |  | 360    |  
|         |  |         |  |      | Kenai(1)                               |  |                                    | 1,011  |      |  |      | 1,178  |      |  |      | 210    |   |  |  |       |   |  |  |       |  
|         |  |         |  |      | Borger                                 |  |                                    | 412    |      |  |      | 333    |      |  |      | 465    |   |  |  | 490    |   |  |  | 454    |  
|         |  |         |  |      | Profertil(2)                           |  |                                    | 317    |      |  |      | 307    |      |  |      |       |   |  |  |       |   |  |  |       |  
|         |  |         |  |      |                                        |  |                                    |        |      |  |      |        |      |  |      |        |   |  |  |        |   |  |  |       
|         |  |         |  |      | Total                                  |  |                                    | 3,569  |      |  |      | 3,569  |      |  |      | 2,853  |   |  |  | 2,648  |   |  |  | 2,568  |  
|         |  |         |  |      | Used in urea and nitrate production(3) |  |                                    | (1,966 | )    |  |      | (1,727 | )    |  |      | (1,383 | ) |  |  | (1,387 | ) |  |  | (1,452 | )
|         |  |         |  |      |                                        |  |                                    |        |      |  |      |        |      |  |      |        |   |  |  |        |   |  |  |       
|         |  |         |  |      | Net available for sale                 |  |                                    | 1,603  |      |  |      | 1,842  |      |  |      | 1,470  |   |  |  | 1,261  |   |  |  | 1,116  |  
|         |  |         |  |      |                                        |  |                                    |        |      |  |      |        |      |  |      |        |   |  |  |        |   |  |  |       
|         |  |         |  | Urea |                                        |  |                                    |        |      |  |      |        |      |  |      |        |   |  |  |        |   |  |  |       
|         |  |         |  |      | Redwater                               |  |                                    | 663    |      |  |      | 580    |      |  |      | 603    |   |  |  | 619    |   |  |  | 648    |  
|         |  |         |  |      | Carseland                              |  |                                    | 682    |      |  |      | 528    |      |  |      | 738    |   |  |  | 673    |   |  |  | 763    |  

-9-



---



##### 



|          |  |  |                      |                                       |                    |       |                                    |       |      |       |      |       |      |       |      |       |     |       |     |       |     |       |     |       | 
|--------- |  |  | -------------------- | ------------------------------------- | ------------------ | ----- | ---------------------------------- | ----- | ---- | ----- | ---- | ----- | ---- | ----- | ---- | ----- | --- | ----- | --- | ----- | --- | ----- | --- | ----- | 
|          |  |  |                      |                                       |                    |       | Years ended December 31           
|          |  |  |                      |                                       |                    |       |                                   
|          |  |  |                      |                                       |                    |       | 2002                               |       | 2001 |       | 2000 |       | 1999 |       | 1998
|          |  |  |                      |                                       |                    |       |                                    |       |      |       |      |       |      |       |     
|          |  |  |                      |                                       |                    |       | (thousands of tonnes except grade)
|          |  |  |                      |                                       | Fort Saskatchewan  |       |                                    | 80    |      |       |      | 173   |      |       |      | 433   |     |       |     | 430   |     |       |     | 325   | 
|          |  |  |                      |                                       | Kenai(1)           |       |                                    | 922   |      |       |      | 878   |      |       |      | 119   |     |       |     |      |     |       |     |      | 
|          |  |  |                      |                                       | Borger             |       |                                    | 97    |      |       |      | 87    |      |       |      | 100   |     |       |     | 99    |     |       |     | 95    | 
|          |  |  |                      |                                       | Profertil(2)       |       |                                    | 463   |      |       |      | 378   |      |       |      |      |     |       |     |      |     |       |     |      | 
|          |  |  |                      |                                       |                    |       |                                    |       |      |       |      |       |      |       |      |       |     |       |     |       |     |       |     |      
|          |  |  |                      |                                       | Total              |       |                                    | 2,907 |      |       |      | 2,624 |      |       |      | 1,993 |     |       |     | 1,821 |     |       |     | 1,831 | 
|          |  |  |                      |                                       |                    |       |                                    |       |      |       |      |       |      |       |      |       |     |       |     |       |     |       |     |      
|          |  |  |                      | Ammonium Nitrate                      |                    |       |                                    |       |      |       |      |       |      |       |      |       |     |       |     |       |     |       |     |      
|          |  |  |                      |                                       | Redwater           |       |                                    | 133   |      |       |      | 140   |      |       |      | 125   |     |       |     | 133   |     |       |     | 126   | 
|          |  |  |                      |                                       | Homestead          |       |                                    | 102   |      |       |      | 135   |      |       |      | 114   |     |       |     | 142   |     |       |     | 161   | 
|          |  |  |                      |                                       | Kennewick(1)       |       |                                    | 771   |      |       |      | 736   |      |       |      | 285   |     |       |     |      |     |       |     |      | 
|          |  |  |                      |                                       | West Sacramento(1) |       |                                    | 102   |      |       |      | 101   |      |       |      | 27    |     |       |     |      |     |       |     |      | 
|          |  |  |                      |                                       |                    |       |                                    |       |      |       |      |       |      |       |      |       |     |       |     |       |     |       |     |      
|          |  |  |                      |                                       | Total              |       |                                    | 1,108 |      |       |      | 1,112 |      |       |      | 551   |     |       |     | 275   |     |       |     | 287   | 
|          |  |  |                      |                                       | Less transfers     |       |                                    | (676  | )    |       |      | (449  | )    |       |      |      |     |       |     |      |     |       |     |      | 
|          |  |  |                      |                                       |                    |       |                                    |       |      |       |      |       |      |       |      |       |     |       |     |       |     |       |     |      
|          |  |  |                      | Net available for sale                |                    |       | 432                                |       |      |       | 663  |       |      |       | 551  |       |     |       | 275 |       |     |       | 287 |      
|          |  |  |                      |                                       |                    |       |                                    |       |      |       |      |       |      |       |      |       |     |       |     |       |     |       |     |      
|          |  |  |                      | Nitrogen Solutions and Other Products |                    |       |                                    |       |      |       |      |       |      |       |      |       |     |       |     |       |     |       |     |      
|          |  |  |                      |                                       | Redwater           |       |                                    | 120   |      |       |      | 88    |      |       |      | 125   |     |       |     | 131   |     |       |     | 140   | 
|          |  |  |                      |                                       | Standard & Granum  |       |                                    | 70    |      |       |      | 41    |      |       |      | 87    |     |       |     | 65    |     |       |     | 77    | 
|          |  |  |                      |                                       | Kennewick(1)       |       |                                    | 170   |      |       |      | 179   |      |       |      | 59    |     |       |     |      |     |       |     |      | 
|          |  |  |                      |                                       | West Sacramento(1) |       |                                    | 178   |      |       |      | 147   |      |       |      | 49    |     |       |     |      |     |       |     |      | 
|          |  |  |                      |                                       |                    |       |                                    |       |      |       |      |       |      |       |      |       |     |       |     |       |     |       |     |      
|          |  |  |                      |                                       | Total              |       |                                    | 538   |      |       |      | 455   |      |       |      | 320   |     |       |     | 196   |     |       |     | 217   | 
|          |  |  |                      |                                       |                    |       |                                    |       |      |       |      |       |      |       |      |       |     |       |     |       |     |       |     |      
|          |  |  |                      |                                       | Total Nitrogen     |       |                                    | 5,480 |      |       |      | 5,584 |      |       |      | 4,334 |     |       |     | 3,553 |     |       |     | 3,451 | 
|          |  |  |                      |                                       |                    |       |                                    |       |      |       |      |       |      |       |      |       |     |       |     |       |     |       |     |      
|Phosphate
|          |  |  |                      | Redwater                              |                    |       |                                    |       |      |       |      |       |      |       |      |       |     |       |     |       |     |       |     |      
|          |  |  |                      |                                       | MAP(4)             |       |                                    | 631   |      |       |      | 531   |      |       |      | 493   |     |       |     | 534   |     |       |     | 702   | 
|          |  |  |                      | Conda                                 |                    |       |                                    |       |      |       |      |       |      |       |      |       |     |       |     |       |     |       |     |      
|          |  |  |                      |                                       | SPA                |       |                                    | 127   |      |       |      | 111   |      |       |      | 95    |     |       |     | 133   |     |       |     | 143   | 
|          |  |  |                      |                                       | MGA                |       |                                    | 9     |      |       |      | 8     |      |       |      | 6     |     |       |     | 9     |     |       |     | 8     | 
|          |  |  |                      |                                       | MAP(4)             |       |                                    | 194   |      |       |      | 179   |      |       |      | 222   |     |       |     | 252   |     |       |     | 215   | 
|          |  |  |                      |                                       | APS (16-20-0)(4)   |       |                                    | 82    |      |       |      | 61    |      |       |      | 47    |     |       |     | 58    |     |       |     | 56    | 
|          |  |  |                      |                                       | DAP(4)             |       |                                    |      |      |       |      |      |      |       |      | 14    |     |       |     | 30    |     |       |     | 26    | 
|          |  |  |                      |                                       | PPA(5)             |       |                                    | 28    |      |       |      | 6     |      |       |      |      |     |       |     |      |     |       |     |      | 
|          |  |  |                      |                                       |                    |       |                                    |       |      |       |      |       |      |       |      |       |     |       |     |       |     |       |     |      
|          |  |  |                      |                                       | Total Phosphate    |       |                                    | 1,071 |      |       |      | 896   |      |       |      | 877   |     |       |     | 1,016 |     |       |     | 1,150 | 
|          |  |  |                      |                                       |                    |       |                                    |       |      |       |      |       |      |       |      |       |     |       |     |       |     |       |     |      
|Potash    |  |  | Standard and Premium |                                       |                    | 1,530 |                                    |       |      | 1,420 |      |       |      | 1,516 |      |       |     | 1,487 |     |       |     | 1,581 |    
|          |  |  |                      |                                       |                    |       |                                    |       |      |       |      |       |      |       |      |       |     |       |     |       |     |       |     |      
|Sulphate  |  |  |                      |                                       | 322                |       |                                    |       | 286  |       |      |       | 270  |       |      |       | 299 |       |     |       | 245 |      
|          |  |  |                      |                                       |                    |       |                                    |       |      |       |      |       |      |       |      |       |     |       |     |       |     |       |     |      



---

|(1) |  | Includes production from date of acquisition (October 1, 2000) only.
West Sacramento includes the Fresno nitrate facility.
|--- |  | --------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Production represents Agriums 50% share                                                                                  
|   
|(3) |  | Ammonia is a feedstock for urea, ammonium sulphate and ammonium nitrate
production.                                       
|   
|(4) |  | Cargo weight.                                                                                                             
|   
|(5) |  | P2O5 equivalent.                                                                                                          

3.2.6 Raw Materials

Natural gas is the primary raw material used in the production of
nitrogen-based fertilizer and accounts for the majority of cost in the
production of ammonia. Total annual natural gas consumption by Agriums North
and South American fertilizer operations operating at full capacity is
approximately 180 billion cubic feet. The ammonia operations are well located
with respect to gas supplies and deliverability.

Agriums natural gas requirements for its nitrogen facilities in Kenai, Alaska
and the Profertil facility in Argentina are supplied under, fixed base-price
contracts subject to adjustments. The Kenai gas contract is subject to dispute
(see 3.2.3 Dispute with Unocal). The remainder of Agriums natural gas
requirements are purchased from a

-10-



---



##### 



number of suppliers under contracts that
contain mostly one year terms, with some longer term contracts in place with
its major suppliers. Natural gas prices under these contracts are generally
market indexed with hedging employed to reduce the impact of the volatility of
gas prices. Small amounts of spot market gas are used to meet peak
requirements. At Joffre, Alberta, hydrogen and nitrogen feedstocks, which are
by-products recovered from nearby petrochemical plants, are purchased under
cost-based supply agreements that expire in 2015.

Phosphate rock, sulphuric acid, ammonia and sulphur are the principal raw
materials and account for the major cost elements in the manufacture of
phosphate.

The Kapuskasing phosphate rock mine and mill came on stream in 1999 and
provides a long-term supply of the phosphate rock required by the Redwater
plant with a capacity of approximately 1.1 million tonnes annually and has an
estimated reserve life of 17 years. Phosphate rock for the Conda, Idaho plant
is supplied by a nearby mine which was acquired by Agrium in late 1997. It is
expected that this mine will continue to satisfy the plants phosphate rock
requirements for approximately 8 more years based on current capacity. In
addition, Agrium currently has access to additional reserves of phosphate rock,
which are located on lands leased primarily from federal and state governments
under long-term leases. Agriums potash mine in Saskatchewan has sufficient
ore reserves to maintain current production levels in excess of 100 years.

3.2.7 Transportation, Storage and Distribution

A significant portion of delivered costs of fertilizer products to certain
customers is attributable to transportation. Agrium has entered into various
rail, pipeline and other transportation agreements to provide reliable and
competitive transportation services. Agrium leases approximately 3,000 rail
tank and hopper cars, some of which are specially designed to transport
fertilizer products. This fleet is supplemented by railroad-supplied cars as
needed to meet peak season transportation requirements. Agrium owns atmospheric
and pressurized anhydrous ammonia storage facilities at locations in Western
Canada, the Pacific Northwest, California, the Midwest Cornbelt and the Great
Plains regions of the United States. These facilities, when combined with
Agriums dry storage capacity throughout its market areas and at its production
facilities, provide a network of field and production site storage capacity
sufficient to meet its requirements.

3.2.8 North America Wholesale (NAW) Sales

Agrium sells fertilizers from its NAW operations in North America and
internationally. North American regions include Western Canada, the Midwestern
United States and the Western United States, and international sales include
China and Korea. Agrium has an extensive distribution network throughout North
America. In 2002, approximately 31 percent of Agriums potash production was
sold to export markets outside North America through Canpotex.

Canpotex serves as the unified marketing operation for potash production
outside of Canada and the United States for all Saskatchewan potash production.
Canpotex, together with a group of producers in the FSU, supply approximately
70 percent of world potash requirements. Both groups have the ability to
absorb normal increases in demand for the foreseeable future.

In general, Canpotex sales are allocated among the three producers based on
production capacity in Saskatchewan. Agriums current entitlement is
approximately 9 percent of Canpotex sales based on current sales and expected
capacity of the other two members.

-11-



---



##### 



3.2.8.1 NAW Sales Volume

The following table summarizes Agriums NAW sales volumes in tonnes for the
periods indicated:

|            |  |             |  |                    |  |        |       |               |     |       |                         |  |      |       |       |  |      |       |       |  |     |       |       |  |     |       |       |  | 
|----------- |  | ----------- |  | ------------------ |  | ------ | ----- | ------------- | --- | ----- | ----------------------- |  | ---- | ----- | ----- |  | ---- | ----- | ----- |  | --- | ----- | ----- |  | --- | ----- | ----- |  | 
|            |  |             |  |                    |  |        |       |               |     |       | Years ended December 31
|            |  |             |  |                    |  |        |       |               |     |       |                        
|            |  |             |  |                    |  |        |       |               |     |       | 2002                    |  | 2001 |       | 2000  |  | 1999 |       | 1998 
|            |  |             |  |                    |  |        |       |               |     |       |                         |  |      |       |       |  |      |       |      
|            |  |             |  |                    |  |        |       |               |     |       | (thousands of tonnes)  
|Sales(1)    |  | Nitrogen(2) |  | Canada             |  |        | 1,460 |               |     |       | 1,229                   |  |      |       | 1,750 |  |      |       | 1,461 |  |     |       | 1,939 | 
|            |  |             |  |                    |  |        |       | United States |     |       | 2,326                   |  |      |       | 2,066 |  |      |       | 1,995 |  |     |       | 1,727 |  |     |       | 1,676 | 
|            |  |             |  |                    |  |        |       | Offshore(3)   |     |       | 1,373                   |  |      |       | 1,355 |  |      |       | 481   |  |     |       | 291   |  |     |       | 37    | 
|            |  |             |  |                    |  |        |       |               |     |       |                         |  |      |       |       |  |      |       |       |  |     |       |       |  |     |       |       |  | 
|            |  |             |  |                    |  |        |       | Total         |     |       | 5,159                   |  |      |       | 4,650 |  |      |       | 4,226 |  |     |       | 3,479 |  |     |       | 3,652 | 
|            |  |             |  |                    |  |        |       |               |     |       |                         |  |      |       |       |  |      |       |       |  |     |       |       |  |     |       |       |  | 
|            |  |             |  | Phosphate(4)       |  | Canada |       |               | 708 |       |                         |  | 506  |       |       |  | 620  |       |       |  | 673 |       |       |  | 693 |      
|            |  |             |  |                    |  |        |       | United States |     |       | 421                     |  |      |       | 364   |  |      |       | 289   |  |     |       | 410   |  |     |       | 369   | 
|            |  |             |  |                    |  |        |       |               |     |       |                         |  |      |       |       |  |      |       |       |  |     |       |       |  |     |       |       |  | 
|            |  |             |  |                    |  |        |       | Total         |     |       | 1,129                   |  |      |       | 870   |  |      |       | 909   |  |     |       | 1,083 |  |     |       | 1,062 | 
|            |  |             |  |                    |  |        |       |               |     |       |                         |  |      |       |       |  |      |       |       |  |     |       |       |  |     |       |       |  | 
|            |  |             |  | Potash (KCl)       |  | Canada |       |               | 136 |       |                         |  | 112  |       |       |  | 118  |       |       |  | 153 |       |       |  | 255 |      
|            |  |             |  |                    |  |        |       | United States |     |       | 974                     |  |      |       | 775   |  |      |       | 824   |  |     |       | 783   |  |     |       | 814   | 
|            |  |             |  |                    |  |        |       | Offshore      |     |       | 488                     |  |      |       | 470   |  |      |       | 556   |  |     |       | 497   |  |     |       | 435   | 
|            |  |             |  |                    |  |        |       |               |     |       |                         |  |      |       |       |  |      |       |       |  |     |       |       |  |     |       |       |  | 
|            |  |             |  |                    |  |        |       | Total         |     |       | 1,598                   |  |      |       | 1,357 |  |      |       | 1,498 |  |     |       | 1,433 |  |     |       | 1,504 | 
|            |  |             |  |                    |  |        |       |               |     |       |                         |  |      |       |       |  |      |       |       |  |     |       |       |  |     |       |       |  | 
|            |  |             |  | Sulphate and Other |  | Canada |       |               | 195 |       |                         |  | 226  |       |       |  | 247  |       |       |  | 299 |       |       |  | 232 |      
|            |  |             |  |                    |  |        |       | United States |     |       | 122                     |  |      |       | 132   |  |      |       | 114   |  |     |       | 65    |  |     |       | 73    | 
|            |  |             |  |                    |  |        |       | Offshore      |     |       | 80                      |  |      |       | 69    |  |      |       | 65    |  |     |       | 37    |  |     |       | 12    | 
|            |  |             |  |                    |  |        |       |               |     |       |                         |  |      |       |       |  |      |       |       |  |     |       |       |  |     |       |       |  | 
|            |  |             |  |                    |  |        |       | Total         |     |       | 397                     |  |      |       | 428   |  |      |       | 426   |  |     |       | 401   |  |     |       | 317   | 
|            |  |             |  |                    |  |        |       |               |     |       |                         |  |      |       |       |  |      |       |       |  |     |       |       |  |     |       |       |  | 
|Total Sales |  |             |  |                    |  |        |       |               |     | 8,283 |                         |  |      | 7,304 |       |  |      | 7,059 |       |  |     | 6,396 |       |  |     | 6,535 |      
|            |  |             |  |                    |  |        |       |               |     |       |                         |  |      |       |       |  |      |       |       |  |     |       |       |  |     |       |       |  | 



---

|(1) |  | Includes intercompany sales which are eliminated in Agriums
consolidated financial statements; includes both produced products as well
as purchased from other producers for resale. Excludes all retail and
South America sales.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Includes nitrogen solutions stated on a cargo weight basis.                                                                                                                                                                       
|   
|(3) |  | Includes sales from the Kenai, Alaska facility acquired October 1, 2000.                                                                                                                                                          
|   
|(4) |  | P2O5 equivalent for SPA and MGA; cargo weight for the remaining phosphate
products.                                                                                                                                               

3.2.8.2 NAW Net Sales Revenue

The following table summarizes Agriums NAW net sales revenues for the periods
indicated:

|          |  |                         |       |      |  |                       |       |      |  |      |       |  |  |   |     |  |  |   |     | 
|--------- |  | ----------------------- | ----- | ---- |  | --------------------- | ----- | ---- |  | ---- | ----- |  |  | - | --- |  |  | - | --- | 
|          |  | Years ended December 31
|          |  |                        
|          |  | 2002                    |       | 2001 |  | 2000                  |       | 1999 |  | 1998
|          |  |                         |       |      |  |                       |       |      |  |     
|          |  |                         |       |      |  | (millions of dollars) |       |      |  |      |       |  |  |  
|Nitrogen  |  | $                       | 712   |      |  | $                     | 777   |      |  | $    | 637   |  |  | $ | 422 |  |  | $ | 501 | 
|Phosphate |  |                         | 239   |      |  |                       | 179   |      |  |      | 196   |  |  |   | 255 |  |  |   | 262 | 
|Potash    |  |                         | 158   |      |  |                       | 138   |      |  |      | 151   |  |  |   | 145 |  |  |   | 160 | 
|Other     |  |                         | 63    |      |  |                       | 66    |      |  |      | 61    |  |  |   | 65  |  |  |   | 70  | 
|          |  |                         |       |      |  |                       |       |      |  |      |       |  |  |   |     |  |  |   |     | 
|Total     |  | $                       | 1,172 |      |  | $                     | 1,160 |      |  | $    | 1,045 |  |  | $ | 887 |  |  | $ | 993 | 
|          |  |                         |       |      |  |                       |       |      |  |      |       |  |  |   |     |  |  |   |     | 

Includes intercompany sales which are eliminated in the consolidated financial
statements of Agrium. Excludes all retail and South American sales.

3.2.9 North America Retail (NAR) Sales and Service

Agrium conducts its retail sales and services operations in the United States
through two wholly-owned subsidiaries, CPS and WFS. These subsidiaries provide
a full range of agricultural inputs including fertilizers, chemicals, seed,

-12-



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##### 



custom application and agronomic consulting through 225 owned and operated farm
centres throughout the U.S. agricultural areas in the northwest, northeast,
midwest and California.

The following table summarizes Agriums NAR net sales revenues for the periods
indicated:

|                            |  |                         |     |      |  |      |     |      |  |      |     |  |  |   |     |  |  |   |     | 
|--------------------------- |  | ----------------------- | --- | ---- |  | ---- | --- | ---- |  | ---- | --- |  |  | - | --- |  |  | - | --- | 
|                            |  | Years ended December 31
|                            |  |                        
|                            |  | 2002                    |     | 2001 |  | 2000 |     | 1999 |  | 1998
|                            |  |                         |     |      |  |      |     |      |  |     
|Fertilizers                 |  | $                       | 366 |      |  | $    | 386 |      |  | $    | 352 |  |  | $ | 357 |  |  | $ | 377 | 
|Chemicals                   |  |                         | 361 |      |  |      | 336 |      |  |      | 358 |  |  |   | 345 |  |  |   | 361 | 
|Other products and services |  |                         | 122 |      |  |      | 109 |      |  |      | 105 |  |  |   | 92  |  |  |   | 83  | 
|                            |  |                         |     |      |  |      |     |      |  |      |     |  |  |   |     |  |  |   |     | 
|Total                       |  | $                       | 849 |      |  | $    | 831 |      |  | $    | 815 |  |  | $ | 794 |  |  | $ | 821 | 
|                            |  |                         |     |      |  |      |     |      |  |      |     |  |  |   |     |  |  |   |     | 

3.2.10 South America Retail (SAR)

Agrium conducts retail operations in Argentina through its wholly-owned
subsidiary, Agroservicios Pampeanos S.A., which owns and operates 18 farm
centres. The following table summarizes Agriums SAR net sales revenues for
the periods indicated:

|                            |  |                         |    |      |  |      |    |      |  |      |    |  |  |   |    |  |  |   |    | 
|--------------------------- |  | ----------------------- | -- | ---- |  | ---- | -- | ---- |  | ---- | -- |  |  | - | -- |  |  | - | -- | 
|                            |  | Years ended December 31
|                            |  |                        
|                            |  | 2002                    |    | 2001 |  | 2000 |    | 1999 |  | 1998
|                            |  |                         |    |      |  |      |    |      |  |     
|Fertilizers                 |  | $                       | 53 |      |  | $    | 57 |      |  | $    | 47 |  |  | $ | 46 |  |  | $ | 33 | 
|Other products and services |  |                         | 27 |      |  |      | 26 |      |  |      | 22 |  |  |   | 14 |  |  |   | 17 | 
|                            |  |                         |    |      |  |      |    |      |  |      |    |  |  |   |    |  |  |   |    | 
|Total                       |  | $                       | 80 |      |  | $    | 83 |      |  | $    | 69 |  |  | $ | 60 |  |  | $ | 50 | 
|                            |  |                         |    |      |  |      |    |      |  |      |    |  |  |   |    |  |  |   |    | 

3.2.11 South America Wholesale (SAW)

Agrium conducts its SAW operations in South America through its 50% interest in
Profertil. Prior to September 30, 1999 wholesale activity consisted only of
distribution of imported product and was conducted through a wholly owned
subsidiary.

The following table summarizes SAW net revenues for the periods indicated:

|                            |  |                            |    |      |  |      |    |      |  |      |    |  |  |   |    |  |  |   |   | 
|--------------------------- |  | -------------------------- | -- | ---- |  | ---- | -- | ---- |  | ---- | -- |  |  | - | -- |  |  | - | - | 
|                            |  | Years ended December 31(1)
|                            |  |                           
|                            |  | 2002                       |    | 2001 |  | 2000 |    | 1999 |  | 1998
|                            |  |                            |    |      |  |      |    |      |  |     
|Nitrogen                    |  | $                          | 61 |      |  | $    | 68 |      |  | $    |   |  |  | $ |   |  |  | $ |  | 
|Other products and services |  |                            | 3  |      |  |      | 3  |      |  |      | 12 |  |  |   | 34 |  |  |   |  | 
|                            |  |                            |    |      |  |      |    |      |  |      |    |  |  |   |    |  |  |   |   | 
|Total                       |  | $                          | 64 |      |  | $    | 71 |      |  | $    | 12 |  |  | $ | 34 |  |  | $ |  | 
|                            |  |                            |    |      |  |      |    |      |  |      |    |  |  |   |    |  |  |   |   | 



---

|(1) |  | Effective September 30 1999, wholesales operations were sold to Profertil
in order to consolidate all wholesale activity under Profertil.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------

3.3 Risk Factors

The following are certain risk factors relating to the business of the
Corporation.

3.3.1 Seasonality and Volatility

The agricultural products business is seasonal and is based upon the planting,
growing and harvesting cycles. Fertilizer inventories must be accumulated in
the months prior to the spring and fall planting seasons, requiring significant
storage capacity. Inventory accumulations are financed by short-term
borrowings, which are retired with the proceeds of the sales of such inventory.

The agricultural products business can also be volatile as a result of a number
of other factors, the most important of which are weather patterns and field
conditions (particularly during periods of traditionally high fertilizer
consumption), quantities of fertilizers imported to and exported from North
America and projected grain inventories and prices, which are heavily
influenced by North American exports and world-wide grain markets. Canadian and
United States governmental policies may directly or indirectly influence the
amount of crops planted and crop prices. These factors, along with variables
that are outside of Agriums control, including the production capacity of
competitors, can cause the price of fertilizers to fluctuate unpredictably.

-13-



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##### 



3.3.2 Credit Rating

The Company currently is rated Baa2 with Moodys Investor Services (Moodys)
and BBB with Standard and Poors (S&P) and Dominion Bond Rating Services
(DBRS). Moodys and S&P both have a negative outlook on Agriums credit
rating. The Companys access to capital and cost is affected by its credit
rating. No assurance can be given that a change in Agriums rating will not
occur.

3.3.3 Possible Labour Disputes

Collective agreements that govern certain employees at Agriums Vanscoy,
Saskatchewan and Beatrice, Nebraska expire in 2003. While management believes
it has good relations with its unions, there can be no assurance that this will
remain unchanged.

3.3.4 Dependence on Natural Gas

Natural gas is the principal raw material used to produce nitrogen-based
fertilizers. The cost of natural gas, including transportation and forward
pricing activities, comprises approximately 70-85% of the total direct
manufacturing costs associated with production of nitrogen-based fertilizers.
Agriums natural gas requirements are purchased from a number of suppliers
under contracts that contain mostly one year terms with some longer term
contracts in place with its major suppliers. Natural gas prices under these
contracts are fixed or market indexed with hedging employed to reduce the
impact of volatility of gas price. There can be no assurance that increased
manufacturing costs resulting from increased natural gas prices can be
recovered in sale price increases to Agriums customers. A significant increase
in the price of natural gas that is not hedged and could not be recovered
through an increase in nitrogen-based fertilizer prices could have a material
adverse effect on Agrium.

With respect to Unocals gas supply and deliverability obligations to Agriums
Kenai facilities, if Unocal is unable to supply natural gas to Agrium under the
natural gas supply contract between Agrium and Unocal, Agrium may have to
purchase natural gas from other suppliers in the Cook Inlet area of Alaska to
supply the facility. There can be no assurance that natural gas purchased from
suppliers other than Unocal, or Unocal under a renegotiated natural gas supply
agreement, would be available to Agrium in sufficient quantities to operate the
plant at capacity or at a price less than or equal to the price for natural gas
under the current contract with Unocal. (See 3.2.3  Dispute with Unocal.)

3.3.5 Competition

The market for Agriums nitrogen, phosphate and potash fertilizers is highly
competitive. Agriums competitors include other large integrated fertilizer
producers, cooperatives, divisions of agribusiness companies, regional
distributors and independent dealers.

Nitrogen-based fertilizer is a global commodity, and customers, including
end-users, dealers and other fertilizer producers and distributors, base their
purchasing decisions principally on the delivered price and availability of the
product. The relative cost of, and availability of transportation for, raw
materials and finished products to manufacturing facilities are also important
competitive factors. Agrium competes with a number of producers in North
America and other countries, including state-owned and government-subsidized
entities.

Competition in the phosphate and potash fertilizers market is based largely on
price, reliability and deliverability. The relative cost and availability of
mines and the efficiency of production facilities are also important
competitive factors. Domestic competitors for phosphate and potash include a
number of large producers. In addition, the production and trade of phosphate
and potash have become increasingly global and a number of foreign competitors
produce phosphate and potash primarily for the export market.

3.3.6 Environmental Regulation

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##### 



Agrium is subject to numerous environmental laws and regulations in the United
States, Canada and internationally that regulate certain activities and
operations of Agrium and impose liability for the cleanup of environmental
contamination. Applicable environmental legislation regulates health, safety,
environment and land use. Permits, authorizations or licenses are generally
required for the development and operation of facilities. Environmental
legislation also provides for standards, restrictions and prohibitions on the
handling of certain types of substances
and for releases, spills or emissions into the environment of substances. In
addition, legislation may require an assessment of the environmental impact of
a facility prior to its development and may also require that certain facility
sites be abandoned and reclaimed to the satisfaction of regulatory authorities.
A breach of such legislation may result in possible suspension or revocation of
necessary licenses, permits or authorizations, civil liability and the
imposition of fines and penalties. Agrium has incurred and will continue to
incur capital expenditures and operating costs due to these laws and
regulations. Agrium cannot predict the operational or financial impact of new
or amended laws or regulations, in particular, increasingly stringent
regulations that might restrict the use of fertilizers in the future.

Agrium is in the process of cleaning up historic contamination at various
properties including mining operations of predecessor corporations. Agrium
believes that it has undertaken and continues to pursue all appropriate
investigative and remedial actions at these sites and has recorded appropriate
liabilities for these cleanup activities. However, there can be no assurance
that material costs or liabilities in excess of the liability will not be
incurred in connection with such cleanup activities or related proceedings,
claims or compliance requests in the future for currently unknown environmental
liabilities.

3.3.7 International Operations

Agriums operations in Argentina are subject to a number of risks, including
fluctuations in foreign currency exchange rates, limitation on foreign exchange
convertibility and transferability, credit, expropriations; and other economic,
political and regulatory policies of government.

Argentinas foreign currency convertibility and transferability regulations
currently allow dividend repatriation of audited profits and payment of
interest on foreign third party debt without requiring permission of the
central Bank of Argentina. However, there is no assurance the Government of
Argentina will not establish additional foreign exchange convertibility and
transferability restrictions in the future which could negatively affect the
economic viability of our operations in Argentina.

3.3.8 Trade Regulation

Agrium is subject to the trade laws and policies of the United States and other
countries in which it sells its products, including anti-dumping regulations.
There have been a number of anti-dumping proceedings in the United States and
Mexico to which various importers of fertilizer products, including Agrium,
have been subject. The Mexican proceedings have resulted in an order assessing
anti-dumping duties on imports from the United States at prices below certain
specified levels. That order is under appeal. At current selling prices into
Mexico, Agrium would be exempt from such anti-dumping duties. While Agrium
believes that its products are sold at fair prices, there can be no assurance
that it will not be the subject of anti-dumping proceedings in the future. If
Agrium is named in any such proceedings, any adverse determination could have a
material adverse effect on its results of operations.

3.3.9 Damage to Facilities; Natural Hazards

Agriums business is generally subject to a number of risks and hazards,
including environmental hazards, industrial accidents, labor disputes, unusual
or unexpected weather conditions, changes in the regulatory environment and
natural phenomena such as floods and earthquakes. Such occurrences could result
in significant interruption of operations, damage to, or destruction of
production facilities, personal injury or death, environmental damage, delays
in production, monetary losses and possible legal liability. Agrium maintains
insurance against risks that are typical in the industry (including business
interruption insurance), but such insurance may not provide adequate coverage
in certain unforeseen circumstances. However, insurance against certain risks
(including certain liabilities for environmental pollution, earthquakes and
terrorist acts) is not generally available to companies within the industry
and, if available, may not be available at acceptable premiums. Although Agrium
maintains liability insurance in an amount which it considers adequate,
liabilities might exceed policy limits or Agrium might elect not

-15-



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##### 



to insure
itself against such liabilities due to high premium costs or other reasons, in
which event Agrium could incur significant costs that could have a material
adverse effect upon results of operations.

3.4 Employees

As of December 31, 2002 Agrium employed 4,829 people  3,158 in the United
States 1,416 in Canada and 255 in Argentina. In total, 2,104 people are
employed in NAW, 2,202 in NAR, 256 in South America and 267 in Corporate
Administration.

Hourly employees at the following plants are represented by labor unions with
the contract expiration date for each plant shown in parenthesis: Fort
Saskatchewan, Alberta (January 1, 2006); Kenai, Alaska (April 1, 2005);
Vanscoy, Saskatchewan (April 30, 2003); Beatrice, Nebraska (November 17, 2003).

Management believes that it has good relations with both its unionized and
non-unionized employees.

ITEM 4: SELECTED CONSOLIDATED FINANCIAL AND OPERATING INFORMATION

The selected financial information set forth below has been derived from, and
should be read in conjunction with Agriums consolidated financial statements.

Selected annual information:

|                   |                                                   |                                                         |   |                                                |     |      |   |       |     |      |   |       |     |  |   |       |     |  |   |       |     | 
|------------------ | ------------------------------------------------- | ------------------------------------------------------- | - | ---------------------------------------------- | --- | ---- | - | ----- | --- | ---- | - | ----- | --- |  | - | ----- | --- |  | - | ----- | --- | 
|                   |                                                   |                                                         |   | Year ended December 31(1)                     
|                   |                                                   |                                                         |   |                                               
|                   |                                                   |                                                         |   | 2002                                           |     | 2001 |   | 2000  |     | 1999 |   | 1998 
|                   |                                                   |                                                         |   |                                                |     |      |   |       |     |      |   |      
|                   |                                                   |                                                         |   | (millions of dollars except per share amounts)
|Operating Results: |                                                   |                                                         |   |                                                |     |      |   |       |     |      |   |       |     |  |   |       |     |  |   |      
|                   | Net sales                                         |                                                         | $ | 2,083                                          |     |      | $ | 2,063 |     |      | $ | 1,873 |     |  | $ | 1,716 |     |  | $ | 1,805 |    
|                   | Net earnings (loss)                               |                                                         | $ |                                               |     |      | $ | (45   | )   |      | $ | 82    |     |  | $ | 62    |     |  | $ | 119   |    
|                   | Basic earnings (loss) per share (in dollars)      |                                                         | $ | (0.08                                          | )   |      | $ | (0.49 | )   |      | $ | 0.65  |     |  | $ | 0.47  |     |  | $ | 0.94  |    
|                   |                                                   | Average outstanding basic common shares (in millions)   |   |                                                | 123 |      |   |       | 115 |      |   |       | 112 |  |   |       | 113 |  |   |       | 120 | 
|                   | Diluted earnings (loss) per share (in dollars)(2) |                                                         | $ | (0.08                                          | )   |      | $ | (0.49 | )   |      | $ | 0.62  |     |  | $ | 0.46  |     |  | $ | 0.87  |    
|                   |                                                   | Average outstanding diluted common shares (in millions) |   |                                                | 123 |      |   |       | 115 |      |   |       | 132 |  |   |       | 133 |  |   |       | 136 | 

|                                 |                |  |                       |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 
|-------------------------------- | -------------- |  | --------------------- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- |  |  | - | ----- |  |  | - | ----- | 
|                                 |                |  | As at December 31(1) 
|                                 |                |  |                      
|                                 |                |  | 2002                  |       | 2001 |  | 2000 |       | 1999 |  | 1998
|                                 |                |  |                       |       |      |  |      |       |      |  |     
|                                 |                |  | (millions of dollars)
|Consolidated Balance Sheet Data: |                |  |                       |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |      
|                                 | Total assets   |  | $                     | 2,169 |      |  | $    | 2,374 |      |  | $    | 2,371 |  |  | $ | 1,959 |  |  | $ | 1,783 | 
|                                 | Long-term debt |  | $                     | 736   |      |  | $    | 762   |      |  | $    | 507   |  |  | $ | 497   |  |  | $ | 482   | 



---

|(1) |  | In the table, certain prior year financial data has been reclassified to conform with current presentation.                                                                                                                                                            
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | In 2001, the Corporation retroactively adopted the Canadian Institute of Chartered Accountants section 3500 Earnings per share with
restatement of all previous periods. This resulted in a change from fully diluted earnings per share to diluted earnings per share.

-16-



---



##### 



Selected quarterly information:

|                                                     |                                                  |   |                                                |     |         |   |         |     |         |   |        |     |  |   |        |     |  |   |        |     | 
|---------------------------------------------------- | ------------------------------------------------ | - | ---------------------------------------------- | --- | ------- | - | ------- | --- | ------- | - | ------ | --- |  | - | ------ | --- |  | - | ------ | --- | 
|                                                     |                                                  |   | For the period ended                          
|                                                     |                                                  |   |                                               
|                                                     |                                                  |   | (millions of dollars except per share amounts)
|                                                     |                                                  |   | First                                          |     | Second  |   | Third   |     | Fourth  |   |        |     | 
|                                                     |                                                  |   | Quarter                                        |     | Quarter |   | Quarter |     | Quarter |   | Year  
|                                                     |                                                  |   |                                                |     |         |   |         |     |         |   |       
|2002                                                 |                                                  |   |                                                |     |         |   |         |     |         |   |        |     |  |   |        |     |  |   |        |    
|Net sales                                            |                                                  | $ | 318                                            |     |         | $ | 792     |     |         | $ | 466    |     |  | $ | 507    |     |  | $ | 2,083  |    
|Net earnings                                         |                                                  |   | (36                                            | )   |         |   | 23      |     |         |   | 1      |     |  |   | 12     |     |  |   |       |    
|Basic earnings per common share (in dollars)         |                                                  |   | ($0.33                                         | )   |         | $ | 0.16    |     |         |   | ($0.01 | )   |  | $ | 0.07   |     |  |   | ($0.08 | )  
|                                                     | Average outstanding common shares (in millions)  |   |                                                | 117 |         |   |         | 126 |         |   |        | 126 |  |   |        | 126 |  |   |        | 123 | 
|Fully diluted earnings per common share (in dollars) |                                                  |   | ($0.33                                         | )   |         | $ | 0.15    |     |         |   | ($0.01 | )   |  | $ | 0.07   |     |  |   | ($0.08 | )  
|                                                     | Average outstanding diluted shares (in millions) |   |                                                | 117 |         |   |         | 149 |         |   |        | 126 |  |   |        | 127 |  |   |        | 123 | 
|2001                                                 |                                                  |   |                                                |     |         |   |         |     |         |   |        |     |  |   |        |     |  |   |        |    
|Net sales                                            |                                                  | $ | 381                                            |     |         | $ | 803     |     |         | $ | 410    |     |  | $ | 469    |     |  | $ | 2,063  |    
|Net earnings                                         |                                                  |   | 7                                              |     |         |   | 45      |     |         |   | (17    | )   |  |   | (80    | )   |  |   | (45    | )  
|Basic earnings per common share (in dollars)         |                                                  | $ | 0.04                                           |     |         | $ | 0.37    |     |         |   | ($0.17 | )   |  |   | ($0.72 | )   |  |   | ($0.49 | )  
|                                                     | Average outstanding common shares (in millions)  |   |                                                | 115 |         |   |         | 115 |         |   |        | 115 |  |   |        | 115 |  |   |        | 115 | 
|Diluted earnings per common share (in dollars)       |                                                  | $ | 0.03                                           |     |         | $ | 0.33    |     |         |   | ($0.17 | )   |  |   | ($0.72 | )   |  |   | ($0.49 | )  
|                                                     | Average outstanding diluted shares (in millions) |   |                                                | 116 |         |   |         | 135 |         |   |        | 115 |  |   |        | 115 |  |   |        | 115 | 

4.1 Dividends and Securities Charges

The Corporations present intention is to pay regular dividends on its common
shares. A semi-annual cash dividend of U.S.$0.055 per share has been paid
since January 1998. The declaration, amount and date of payment of dividends
will be decided by the Board of Directors from time to time and will be subject
to earnings and financial requirements, and other conditions prevailing at that
time.

The Corporation has the option to defer payment of securities charges on its 8%
and 6% junior subordinated debentures for up to 20 consecutive periods, subject
to certain restrictions. Its present intention is to pay these securities
charges when they are due and payable. Since issuing the subordinated
debentures, all charges have been paid when due.

ITEM 5: MANAGEMENTS DISCUSSION AND ANALYSIS

Managements Discussion and Analysis of results for the 3-year period ended
December 31, 2002 as included in Agriums Annual Report for the year ended
December 31, 2002 is hereby incorporated by reference.

ITEM 6: MARKET FOR SECURITIES

The Common Shares of the Corporation are listed for quotation and trading on
the Toronto Stock Exchange and the New York Stock Exchange under the symbol:
AGU. The Corporations $175 million principal amount of 8% junior
subordinated debentures are listed on the New York Stock Exchange under the
symbol: AGU Pr.

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##### 



ITEM 7: DIRECTORS AND OFFICERS

Information is given below with respect to each of the current Directors,
including all current positions held with Agrium, present principal occupation
and principal occupations during the last five years. The term of office of
each Director expires at the end of the 2003 Annual General Meeting.

|                                                    |  |                   |      |                                            |  |                                                                                                                             
|--------------------------------------------------- |  | ----------------- | ---- | ------------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------
|                                                    |  | Year first became |      |                                           
|Name and                                            |  | Director of the   |      |                                           
|Municipality of Residence                           |  | Corporation       |      | Present principal occupation or employment
|                                                    |  |                   |      |                                           
|Frank W. Proto, Chairman(2)(4)
Regina, Saskatchewan |  |                   | 1993 |                                            |  | Chairman of the Board, Corporate Director.                                                                                  
|                                                    |  |                   |      |                                            |  |                                                                                                                             
|John M. Van Brunt
Calgary, Alberta                  |  |                   | 1993 |                                            |  | Vice Chairman of the Board & Chief Executive
Officer, Agrium Inc.                                                           
|                                                    |  |                   |      |                                            |  |                                                                                                                             
|Neil Carragher(2)(3)
Toronto, Ontario               |  |                   | 1996 |                                            |  | President, The Corporate Partnership Ltd.
(a mergers and acquisitions company)                                              
|                                                    |  |                   |      |                                            |  |                                                                                                                             
|Ralph S. Cunningham(2)(4)
Montgomery, Texas         |  |                   | 1996 |                                            |  | Corporate Director.                                                                                                         
|                                                    |  |                   |      |                                            |  |                                                                                                                             
|D. Grant Devine(3)(4)
Regina, Saskatchewan          |  |                   | 1993 |                                            |  | Farmer and rancher.                                                                                                         
|Susan
A. Henry(1)(4)
Ithaca, New York               |  |                   | 2001 |                                            |  | Ronald P. Lynch Dean, College of
Agriculture and Life Sciences and
Professor, Cornell University, Ithaca, New York.         
|                                                    |  |                   |      |                                            |  |                                                                                                                             
|Frank W. King(3)(4)
Calgary, Alberta                |  |                   | 1996 |                                            |  | President & Chief Executive Officer,
Metropolitan Investment Corporation (a
private venture capital and management company).
|                                                    |  |                   |      |                                            |  |                                                                                                                             
|G. Woody MacLaren(1)(2)
Dornoch, Scotland           |  |                   | 1993 |                                            |  | Chairman, Macluan Capital Corporation
(private international investment
company).                                           
|                                                    |  |                   |      |                                            |  |                                                                                                                             
|Harry G. Schaefer, FCA(1)(3)
Calgary, Alberta       |  |                   | 1998 |                                            |  | Corporate Director and Business Advisor.                                                                                    
|                                                    |  |                   |      |                                            |  |                                                                                                                             
|T. Don Stacy(2)(3)
Houston, Texas                   |  |                   | 1995 |                                            |  | Corporate Director.                                                                                                         
|                                                    |  |                   |      |                                            |  |                                                                                                                             
|Thomas M. Taylor(1)(2)
Fort Worth, Texas            |  |                   | 1998 |                                            |  | General Partner of TMT Partners LP (an
investment consulting firm).                                                         
|                                                    |  |                   |      |                                            |  |                                                                                                                             
|Victor J. Zaleschuk, CA(1)
Calgary, Alberta         |  |                   | 2002 |                                            |  | Corporate Director.                                                                                                         



---

|(1) |  | Member of the Audit Committee.                         
|--- |  | -------------------------------------------------------
|   
|(2) |  | Member of the Human Resources & Compensation Committee.
|   
|(3) |  | Member of Corporate Governance & Nominating Committee. 
|   
|(4) |  | Member of the Environment, Health & Safety Committee.  

All directors have held the office and principal occupation identified above
for not less than five years except as follows: prior to July 2000, Dr. Henry
was Dean of Science at Carnegie Mellon University and prior to June, 2001, Mr.
Zaleschuk was President & Chief Executive Officer of Nexen Inc. (a natural
resource company).

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##### 



Officers

|                                          |  |                                                         
|----------------------------------------- |  | --------------------------------------------------------
|Name and Municipality                     |  | Position with the Corporation                           
|of Residence                              |  | and Principal Occupation                                
|                                          |  |                                                         
|Frank W. Proto,
Regina, Saskatchewan      |  | Chairman of the Board of Directors                      
|                                          |  |                                                         
|John M. Van Brunt
Calgary, Alberta        |  | Vice Chairman of the Board & Chief Executive Officer    
|                                          |  |                                                         
|Garnet K. Amundson
Calgary, Alberta       |  | Vice President & Controller                             
|                                          |  |                                                         
|Dorothy E.A. Bower
Calgary, Alberta       |  | Vice President, Strategic Development & Planning        
|                                          |  |                                                         
|Patrick J. Freeman
Calgary, Alberta       |  | Vice President & Treasurer                              
|                                          |  |                                                         
|Richard L. Gearheard
Centennial, Colorado |  | Senior Vice President, North America Retail             
|                                          |  |                                                         
|James M. Grossett
DeWinton, Alberta       |  | Vice President, Human Resources                         
|                                          |  |                                                         
|William C. McClung
Calgary, Alberta       |  | Vice President, Operations                              
|                                          |  |                                                         
|Leslie A. ODonoghue,
Calgary, Alberta    |  | Vice President, General Counsel & Corporate
Secretary   
|                                          |  |                                                         
|Christopher W. Tworek
Calgary, Alberta    |  | Vice President, Supply Management                       
|                                          |  |                                                         
|Robert J. Rennie
Lethbridge, Alberta      |  | Vice President, South America                           
|                                          |  |                                                         
|Bruce G. Waterman
Calgary, Alberta        |  | Senior Vice President, Finance & Chief Financial
Officer
|                                          |  |                                                         
|Michael M. Wilson
Bragg Creek, Alberta    |  | President & Chief Operating Officer                     
|                                          |  |                                                         
|John D. Yokley
Calgary, Alberta           |  | Senior Vice President, Marketing & Distribution         

All of the officers have held the office and principal occupation identified
above or a substantially similar position for not less than five years with the
exception of Mr. Amundson, who prior to April, 2002 was Controller of Canadian
Hunter Exploration Ltd. (a natural resource company); and prior to September,
2001 held various finance management roles at Talisman Energy Inc. (a natural
resource company); Mr. Grossett, who prior to April, 2002 was Senior Vice
President, Human Resources at Molson Inc. (a brewing company), and prior to
April, 1999 was Senior Vice President, Human Resources of Coca-Cola Beverages
Ltd. (a beverage company); Mr. McClung, who prior to September, 1999 was
General Manager, Potash operations of Agrium; Ms. ODonoghue who prior to
October, 1999 was a partner at the law firm of Blake Cassels & Graydon; Mr.
Tworek, who prior to July, 1999 was

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##### 



Vice President, Transportation & Logistics
of Agrium; Dr. Rennie, who prior to October, 1998 was Vice President, New
Products of Agrium; Mr. Waterman who prior to April, 2000 was Vice-President
Finance & Chief Financial Officer of Talisman
Energy Inc.; Mr. Wilson who prior to August 2000 was Executive Vice President
Methanex Corporation (a chemical company); Mr. Yokley, who prior to July, 1999
was Vice President, Marketing of Agrium.
Directors and officers as a group beneficially own, directly or indirectly, or
exercise control or direction over approximately 467,744 common shares or
0.371% of the common shares outstanding, as at March 25, 2003.

ITEM 8: ADDITIONAL INFORMATION

Additional information, including directors and officers remuneration and
indebtedness, principal holders of the Corporations securities, options to
purchase securities and interest of insiders in material transactions, where
applicable, is provided in Agriums management proxy circular for its most
recent annual meeting of shareholders that involved the election of directors,
and additional financial information as provided in Agriums consolidated
financial statements for its most recently completed financial year.

The Corporation will provide to any person, upon request made to the Corporate
Secretary of Agrium Inc., 13131 Lake Fraser Drive S.E., Calgary, Alberta, T2J
7E8:



|(a) |  | When securities of the Corporation are in the course of a distribution
pursuant to a short form prospectus or a preliminary short form prospectus
has been filed and respecting a distribution of its securities;
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (i)   |  | one copy of this annual information form, together with one copy
of any document, or the pertinent pages of any document, incorporated
by reference herein;                                                                                                                                                                          
| | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  |  | one copy of the consolidated financial statements of the
Corporation for its most recently completed financial year, together
with the accompanying report of its auditor, and one copy of any
interim financial statements of the Corporation subsequent to the
financial statements for its most recently completed financial year;
|
| | (iii) |  | one copy of the management proxy circular of the Corporation
with respect to its most recent annual meeting of shareholders that
involved the election of directors; and                                                                                                                                                             
|
| | (iv)  |  | one copy of any documents that are incorporated by reference into
the preliminary short form prospectus or the short form prospectus and
are not required to be provided under items (i) to (iii) above; or                                                                                                                          



|(b) |  | at any time, one copy of any other documents referred to in items (a) (i),
(ii) and (iii) above.
|--- |  | ------------------------------------------------------------------------------------------------

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---



##### 



Glossary of Technical terms

Nitrogen Fertilizer:



| |  | Begins with ammonia (NH3) production. Other Nitrogen fertilizer is produced by reacting NH3 with:
nitric acid= ammonium nitrate
carbon dioxide= urea
sulfuric acid= ammonium sulphate
phosphoric acid= ammonium phosphate
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|      |  |                                                                                                                                                                     
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|prill |  | A dry form of ammonium nitrate and urea fertilizers formed by spraying and solidifying droplets of molten nitrate or urea
in a stream of air.                       
|      |  |                                                                                                                                                                     
|KCL   |  | Potassium chloride, the most common form of potash fertilizer.                                                                                                      
|      |  |                                                                                                                                                                     
|K2O   |  | K2O is the industry standard reference for grades of potash fertilizer. Grades are normally expressed as % of equivalent
K2O.                                       
|      |  |                                                                                                                                                                     
|P2O5  |  | P2O5 is the industry standard reference for grades of phosphorus in phosphate fertilizers.                                                                          
|      |  |                                                                                                                                                                     
|SPA   |  | Superphosphoric acid                                                                                                                                                
|      |  |                                                                                                                                                                     
|MGA   |  | Merchant grade phosphoric acid                                                                                                                                      
|      |  |                                                                                                                                                                     
|APS   |  | Ammonium phosphate sulphate                                                                                                                                         
|      |  |                                                                                                                                                                     
|DAP   |  | Diammonium phosphate                                                                                                                                                
|      |  |                                                                                                                                                                     
|PPA   |  | Purified phosphoric acid                                                                                                                                            
|      |  |                                                                                                                                                                     
|ton   |  | 2,000 pounds. Also referred to as a short ton                                                                                                                     
|      |  |                                                                                                                                                                     
|tonne |  | 2,205 pounds or 1,000 kilograms. Also referred to as a metric tonne                                                                                               
|      |  |                                                                                                                                                                     
|GJ    |  | Gigajoule is a unit of energy approximately equal to 0.948 million BTU
(British Thermal Units). Natural gas contains approximately 1.055 GJ per
thousand cubic feet.

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