Agrium Inc.
TSX : AGU
NYSE : AGU

Agrium Inc.

May 04, 2011 07:00 ET

Agrium Reports Excellent First Quarter; Expects Continued Strength in Crop Input Markets

CALGARY, ALBERTA--(Marketwire - May 4, 2011) -

ALL AMOUNTS ARE STATED IN U.S.$

Agrium Inc. (TSX:AGU) (NYSE:AGU) announced today consolidated net earnings ("net earnings") of $171-million ($1.09 diluted earnings per share) for the first quarter of 2011, compared with a consolidated net loss ("net loss") of $1-million in the first quarter of 2010 ($0.01 diluted loss per share). Net earnings from continuing operations, which exclude earnings associated with AWB Limited ("AWB") Commodity Management business which is under a definitive sales agreement to Cargill Incorporated ("Cargill"), were $160-million ($1.02 diluted earnings per share) for the first quarter of 2011.

The 2011 first quarter results include a pre-tax share-based payment expense of $12-million ($0.05 diluted earnings per share) and pre-tax gains of $9-million ($0.04 diluted earnings per share) on natural gas and other commodity hedges. Excluding these items, net earnings from continuing operations would have been $162-million ($1.03 diluted earnings per share from continuing operations) for the first quarter of 2011.(1)

The financial information presented and discussed in this press release is prepared in accordance with International Financial Reporting Standards ("IFRS"). All Canadian corporations are required as of January 1, 2011 to account and report current and future financial results under IFRS. First quarter 2010 figures have been restated for comparison purposes.

"Record high crop prices and overall strong fundamentals for agriculture and the crop input market provided the basis for Agrium's outstanding quarter, particularly in light of a slow start to the spring season. Crop nutrient demand was strong in North America and globally, providing underlying support to crop nutrient prices. This contributed to our Wholesale business achieving its best first quarter ever. The same strong fundamentals also supported results for our Retail operations, as they reported substantial increases across all product lines," said Agrium President & CEO Mike Wilson.

"Our newly acquired Landmark retail business in Australia delivered solid results and managed through the challenges of 2010's flooding in Eastern Australia. The significant increase in acreage devoted to input intensive crops such as corn and cotton is expected to benefit all three of our business units this spring. With the strength in markets across most products and services, we expect a great second quarter and believe industry fundamentals will remain strong in 2011," continued Mr. Wilson.(2)

Agrium is providing guidance for the first half of 2011 of $4.40 to $4.90 diluted earnings per share on continuing operations.(2)

(1) First quarter effective tax rate of 27 percent used for adjusted diluted earnings per share calculations.

(2) See disclosure in the section "Outlook, Key Risks and Uncertainties" in our 2011 first quarter Management's Discussion and Analysis and additional assumptions in the section "Management's Discussion and Analysis".

MANAGEMENT'S DISCUSSION AND ANALYSIS

May 4, 2011

Unless otherwise indicated, the financial information presented and discussed in this Management's Discussion and Analysis ("MD&A") is prepared in accordance with International Financial Reporting Standards ("IFRS"), and all comparisons of results for the first quarter of 2011 (three months ended March 31, 2011) are against results for the first quarter of 2010 (three months ended March 31, 2010). All dollar amounts refer to United States ("U.S.") dollars except otherwise stated.

The following interim MD&A updates our annual MD&A included in our 2010 Annual Report to Shareholders, to which our readers are referred and is as of May 4, 2011. The Board of Directors carries out its responsibility for review of this disclosure principally through its Audit Committee, comprised exclusively of independent directors. The Audit Committee reviews, and prior to publication, approves, pursuant to the authority delegated to it by the Board of Directors, this disclosure. No update is provided where an item is not material or there has been no material change from the discussion in our annual MD&A. Forward-Looking Statements are outlined after the Outlook, Key Risks and Uncertainties section of this press release. The major assumptions made in preparing our first half guidance on continuing operations are outlined below and include, but are not limited to:

- Wholesale fertilizer prices approximating current market prices through the second quarter of 2011 with the exception of those volumes already committed under pricing programs;

- Wholesale fertilizer sales volumes consistent with the same levels in the second quarter of 2010;

- Retail North America fertilizer and chemical gross margin percentages consistent with margin percentages realized in the second quarter of 2010;

- Retail North American fertilizer sales volumes consistent with sales volumes in the second quarter of 2010;

- Exchange rates for the U.S. dollar relative to the Canadian and Australian dollar to stay consistent with the current trading levels;

- Average NYMEX gas pricing for the second quarter approximating $4.40 per MMBtu; and,

- The exclusion from the guidance range of the effects in the second quarter of:

-- share-based payment expense or recovery resulting from movement in Agrium's share price for which a $1 change in stock price equates to approximately a $0.01 change in earnings per share;

-- mark-to-market gains or losses on hedge positions settling in future periods; and,

-- the results of discontinued operations.

2011 First Quarter Operating Results

CONSOLIDATED NET EARNINGS

Agrium's 2011 first quarter consolidated net earnings ("net earnings") were $171-million, or $1.09 diluted earnings per share, compared to a consolidated net loss ("net loss") of $1-million, or $0.01 diluted loss per share, for the same quarter of 2010.

Financial Overview
----------------------------------------------------------------------------
                                                Three months ended March 31,
----------------------------------------------------------------------------
(Millions of U.S. dollars, 
 except per share amounts
 and effective tax rate)                    2011   2010   $ Change % Change
----------------------------------------------------------------------------
 Sales                                     2,954  1,848      1,106       60%
----------------------------------------------------------------------------
 Gross profit                                725    362        363      100%
----------------------------------------------------------------------------
 Expenses                                    466    333        133       40%
----------------------------------------------------------------------------
 Earnings from continuing operations 
  before finance costs and 
  income taxes ("EBIT")                      259     29        230      793%
----------------------------------------------------------------------------
 Consolidated net earnings (loss) 
  from continuing operations(1)              160     (1)       161      N/A
----------------------------------------------------------------------------
 Consolidated net earnings (loss)            171     (1)       172      N/A
----------------------------------------------------------------------------
 Diluted earnings (loss) per share from 
  continuing operations                     1.02  (0.01)      1.03      N/A
----------------------------------------------------------------------------
 Diluted earnings (loss) per share          1.09  (0.01)      1.10      N/A
----------------------------------------------------------------------------
 Effective tax rate                           27%     -        N/A      N/A
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 (1) See "Discontinued Operations" below for a discussion of our 
     discontinued operations.

Our consolidated gross profit increased by $363-million primarily due to higher gross profit from all three of our strategic business units, with highlights as follows:

- A $191-million increase in Wholesale's gross profit, as higher crop pricing drove up demand and selling prices for all major products.

- A $99-million increase in gross profit from the addition of the Landmark retail operations, where over half of the contribution came from merchandise and application and other services.

- Excluding Landmark, Retail's gross profit increased by $79-million due to higher fertilizer pricing and higher sales volume for crop nutrients and seed.

The $133-million increase in expenses was primarily driven by higher Retail selling and general and administrative expenses due to the addition of the Landmark business in the fourth quarter of 2010. Included in these costs were $8-million of severance expense related to the AWB acquisition. Our consolidated EBIT increased by $230-million for this quarter.

Below is a summary of our other expenses for the first quarter of 2011 and 2010:

                                                               Three months
                                                             ended March 31,
(Millions of U.S. dollars)                                   2011      2010
----------------------------------------------------------------------------
Realized loss on derivative financial instruments              48         7
----------------------------------------------------------------------------
Unrealized (gain) loss on derivative financial instruments    (30)       61
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Foreign exchange (gain) loss                                  (25)        1
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Potash profit and capital tax                                  11         3
----------------------------------------------------------------------------
Gain on disposal of marketable securities                       -       (52)
----------------------------------------------------------------------------
Environmental remediation and asset retirement obligations      1         -
----------------------------------------------------------------------------
Interest income                                               (14)       (8)
----------------------------------------------------------------------------
Bad debt expense                                                5         6
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Other                                                           5         2
----------------------------------------------------------------------------
                                                                1        20
----------------------------------------------------------------------------
----------------------------------------------------------------------------

The effective tax rate was 27 percent for the first quarter of 2011 which was comparable to the effective tax rate for the same period last year.

BUSINESS SEGMENT PERFORMANCE

Retail

Retail's 2011 first quarter sales were $1.8-billion, an increase of $762-million from the first quarter of 2010. The 72 percent increase in sales was largely due to the combination of the inclusion of the Australian Landmark retail operations, as well as higher crop input volumes and prices. Excluding acquisitions made since January 1, 2010, sales for Agrium's retail legacy operations were up 22 percent over the same period last year. Gross profit in the current quarter was $340-million, more than double the $162-million for the same period last year. Retail EBIT was a loss of $15-million in the first quarter of 2011, a significant improvement over the loss of $68-million in the first quarter of 2010. Landmark retail operations contributed a positive EBIT of $3-million and $13-million in EBITDA in the first quarter of 2011.

Crop nutrient sales were $707-million in the first quarter of 2011, compared to $371-million for the same quarter last year. The increase was due to significantly higher sales volumes and crop nutrient prices, as well as the addition of the Landmark business. Crop nutrient gross profit was $115-million this quarter compared to $63-million in the first quarter of 2010. Crop nutrient margins averaged 16 percent this quarter. Crop nutrient sales from the Landmark business accounted for 26 percent of total crop nutrient revenues this quarter and about 6 percent of gross profit. The North American nutrient margin was 21 percent in the current quarter.

Crop protection sales were $638-million in the first quarter of 2011, a 38 percent increase over the $462-million in sales for the same period last year. Gross profit this quarter was $102-million, compared with $69-million in 2010. The increase in revenue and gross profit was due to a combination of the addition of the Australian Landmark business and generally higher sales volumes across much of North America. Landmark accounted for approximately 20 percent of our crop protection total sales and gross profit this quarter.

Seed sales were $230-million in the first quarter of 2011, compared to $191-million in the same period last year. North American sales accounted for over 75 percent of the increase. Gross profit this quarter was $35-million compared to $15-million in the first quarter of 2010.

Merchandise sales totaled $144-million in the first quarter of 2011 compared to $21-million in the first quarter of 2010. Gross profit from merchandise sales was $17-million in the current quarter compared to $1-million in the same period last year. The increase in revenue and gross profit was due to the addition of the Landmark business.

Sales of application and other services were $103-million in the first quarter of 2011 compared to $15-million in the first quarter of 2010. Gross profit totaled $71-million this quarter, compared to $14-million in the first quarter of 2010. The significant increase in sales and gross profit over the previous year was due to the addition of the Landmark business and increased demand for nutrient application services in North America. Record crop prices have supported demand for application services across North American agriculture. This product segment includes a variety of service offerings at our Landmark retail operations including: livestock and wool marketing, insurance commissions and rural real estate services.

Retail selling expenses for the first quarter of 2011 were $335-million, compared to $222-million in the same quarter of 2010. The increase was due primarily to the inclusion of the Landmark retail business. Selling expenses as a percentage of sales in the first quarter of 2011 was 18 percent compared to 21 percent in the first quarter of 2010. On a same-store basis, selling expenses were 2 percent higher this quarter as compared to the same period last year. This increase in expenses was largely due to higher performance incentives and fuel prices.

Wholesale

Wholesale's sales were $1.2-billion for the first quarter of 2011, a record for a first quarter, and 45 percent higher than the $848-million achieved in the first quarter of 2010. Gross profit was $409-million in the first quarter of 2011, almost double the $218-million reported in the same period in 2010. Wholesale also reported a record first quarter EBIT of $377-million in 2011, substantially higher than the $147-million earned in the first quarter of 2010. Strong agricultural fundamentals supported demand and prices for nutrient products.

Gross profit for nitrogen was $151-million this quarter, compared to $72-million in the same quarter last year. The increase in gross profit was due to a combination of higher realized sales prices and lower natural gas costs. Urea sales volumes were impacted slightly this quarter due to the wet and cool spring in much of North America, although UAN sales were up 29 percent from last year on strong demand. Cost of product sold was $244 per tonne this quarter, 6 percent lower than the $260 per tonne in the first quarter of 2010.

The U.S. benchmark (NYMEX) natural gas price for the first quarter of 2011 was $4.14/MMBtu, versus $5.38/MMBtu in the same quarter last year and $3.81/MMBtu in the fourth quarter of 2010. The AECO (Alberta) basis differential was a $0.32/MMBtu discount to NYMEX in the first quarter of 2011, which was a slightly larger discount than in the first quarter of 2010. For the first quarter of 2011, Agrium's average natural gas cost in cost of product sold was $3.90/MMBtu ($4.11/MMBtu including the impact of realized losses on natural gas derivatives) compared to $5.00/MMBtu for the same period in 2010 ($5.21/MMBtu including the impact of realized losses on natural gas derivatives). Hedging gains or losses on all gas derivatives are reported below gross profit in other expenses and therefore not included in cost of product sold.

Gross profit for potash this quarter was $125-million, $19-million higher than the same period in 2010. The increase in gross profit was due to a significant rebound in international and domestic potash prices. International sales volumes reached 265,000 tonnes in the first quarter of 2011, a 43 percent increase from the same period last year, due to strong demand from Asia and Brazil. Domestic sales volumes were 212,000 tonnes in the first quarter of 2011, compared to 349,000 tonnes in the same period last year. The lower volumes this year were due to a late start to the spring season in the U.S. this year, compared to the strong demand in the first quarter of 2010. The total potash cost of product sold this quarter was $147 per tonne as compared to $159 per tonne in the first quarter of 2010. The decrease was due to lower freight costs per tonne, partly offset by the strengthening in the Canadian dollar against the U.S. dollar. The resulting gross margin was $262 per tonne this quarter versus $199 per tonne for the first quarter of 2010.

Phosphate gross profit was $95-million in the first quarter of 2011, over five times greater than the $18-million reported for the same quarter last year. The increase was due to substantially higher realized sales prices of $778 per tonne for the first quarter of 2011 compared to $506 per tonne for the same period in 2010. Phosphate sales volumes were 22 percent higher than the same quarter last year, as demand for phosphate products was

strong due in part to customer concerns over the potential for tight supply availability in the second quarter of 2011. Phosphate cost of product sold was $468 per tonne, an 8 percent increase over the same period last year, due to a higher cost of sulphur and phosphate rock. The resulting gross margin per tonne was $310 per tonne versus $72 per tonne in the first quarter of 2010.

Gross profit for product purchased for resale was $16-million, $4-million higher than the first quarter of 2010. The increase was due to higher sales volumes this year as global demand for all three nutrients was strong. Gross margins in the first quarter of 2011 of $18 per tonne were consistent with the first quarter of 2010.

First quarter Wholesale expenses were $32-million, $39-million lower than the same period last year. The majority of the decrease was due to mark-to-market gains on natural gas and other derivatives of $14-million in the first quarter of 2011 compared to $61-million in losses for the same period in 2010. Realized losses on natural gas and other derivatives were $6-million compared to a loss of $7-million in 2010. Equity earnings from the MOPCO Egyptian nitrogen facility were $7-million lower this quarter than in the first quarter of 2010 primarily due to a one-time deferred tax adjustment of $6-million this quarter. The MOPCO facility has continued to run at normal operating rates in 2011 and the project to triple the production capacity is on schedule for completion in mid-2012. In addition, potash profit and capital taxes were $8-million higher this quarter than the same period last year due primarily to a large favourable adjustment reported in the first quarter of 2010 related to the 2009 final potash tax return.

Advanced Technologies

Advanced Technologies' first quarter 2011 gross profit was $16-million compared to $15-million in the first quarter of 2010. This increase in gross profit was due to increased sales volumes of ESN and controlled-release products in the turf and ornamental segment, as well as increased sales activity in both the U.S. and Canadian retail markets. This increase in volumes was supported by new ESN production at our New Madrid facility which came on-line in March of 2010.

EBITDA this quarter was $1-million versus $3-million in the first quarter of 2010. Higher selling and general and administrative costs offset improved gross profit in the first quarter of 2011 compared to the same period last year. Selling, general and administrative costs for AAT were $5-million higher this quarter versus the same period in 2010 due primarily to the expansion of the Direct Solutions sales force which focuses on retail sales to end users. Other income decreased by $2-million in the first quarter of 2011 compared to the same period last year due to lower earnings from our equity ownership in Hanfeng Evergreen Inc.

Other

EBIT for our Other non-operating business unit for the first quarter of 2011 was a loss of $98-million compared to a loss of $49-million for the first quarter of 2010. The increase in loss was driven by:

- A $52-million gain realized from the sale of 1.2 million shares of CF Industries Holdings, Inc. ("CF") in the first quarter of 2010.

- A net loss of $26-million primarily from foreign exchange derivatives entered into in anticipation of the sale of the Commodity Management business to Cargill, Incorporated ("Cargill") as the U.S. dollar weakened during the first quarter of 2011. This was more than offset by a $29-million foreign exchange gain primarily from the remeasurement of intercompany loans.

DISCONTINUED OPERATIONS

We entered into an agreement on December 15, 2010 with Cargill to sell the majority of the Commodity Management business of AWB. Completion of the sale is expected in the first half of 2011. The purchase price to be paid by Cargill will be the net asset value of the sold businesses as at the completion date of the transaction, plus a premium. We have committed to a plan to sell certain other businesses that form part of the Commodity Management business that is not being acquired by Cargill. In addition to the sale of the Commodity Management business, the pool management operations of AWB Harvest Finance Limited ("AWBHF") will be transferred to Cargill. We have agreed to various terms and conditions and indemnifications pursuant to the sale of the Commodity Management business, including an indemnity for litigation related to the Oil-For-Food Programme, as described in note 2 of our Condensed Consolidated Interim Financial Statements for the three months ended March 31, 2011.

Commodity Management operations included in the agreement with Cargill are reported as discontinued operations because their operations and cash flows will be eliminated from continuing operations as a result of the disposal transaction and we will not have any significant continuing involvement in the operations after the disposal transaction. Assets and liabilities related to discontinued operations are presented separately on the consolidated balance sheets.

Net earnings from discontinued operations for the first quarter of 2011 was $11-million versus nil in the same period of 2010.

FINANCIAL CONDITION

The following are changes to working capital on our Condensed Consolidated Balance Sheets in the three-month period ended March 31, 2011.

----------------------------------------------------------------------------
As at           March December
 (millions of      31,      31,                    Explanation of
 U.S. dollars)   2011     2010 $ Change % Change   the change in balance
----------------------------------------------------------------------------
Current assets
 Cash and cash                                     See discussion under the
  equivalents     447      635     (188)     (30%)  Section "Liquidity and
                                                    Capital Resources".
Accounts        2,105    1,793      312       17%  Increased sales in Q1
 receivable                                         2011 and increased
                                                    Retail rebates.
Inventories     3,656    2,502    1,154       46%  Seasonal Retail inventory
                                                    build-up in preparation
                                                    for the spring season,
                                                    as well as increased
                                                    product costs.
Prepaid           415      848     (433)     (51%) Drawdown of prepaid
 expenses and                                       inventory as Retail
 deposits                                           takes delivery of
                                                    product in anticipation
                                                    of the spring season
                                                    demand.
Marketable          -        3       (3)    (100%) -
 securities
Assets of       1,632    1,320      312       24%  -
 discontinued
 operations
----------------------------------------------------------------------------
Current
 liabilities
Short-term debt   547      517       30        6%  Increased working capital
                                                    needs for Agrium Europe
                                                    due to increased
                                                    inventory purchases and
                                                    receivables in Q1 2011.
Accounts        3,863    2,666    1,197       45%  Retail inventory
 payable                                            purchases made in
                                                    anticipation of the
                                                    spring season and
                                                    customer prepayments
                                                    received but not yet
                                                    drawn down for the
                                                    upcoming spring
                                                    application.
Current portion    53      125      (72)     (58%) Debentures of
 of long-term                                       $125-million were repaid
 debt                                               February 15, 2011 while
                                                    South America Retail
                                                    line of credit of $53-
                                                    million is due in
                                                    October 2011.
Current portion   213      198       15        8%  -
 of other
 provisions
Liabilities of  1,090    1,020       70        7%  -
 discontinued
 operations
----------------------------------------------------------------------------
Working capital 2,489    2,575      (86)      (3%)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

LIQUIDITY AND CAPITAL RESOURCES

Below is a summary of our cash provided by or used in operating, investing, and financing activities as reflected in the Condensed Consolidated Statements of Cash Flows:

                                                Three months ended March 31,
----------------------------------------------------------------------------
(Millions of U.S. dollars)                         2011      2010    Change
----------------------------------------------------------------------------
Cash provided by (used in) operating activities     402      (111)      513
----------------------------------------------------------------------------
Cash (used in) provided by investing activities    (162)       60      (222)
----------------------------------------------------------------------------
Cash (used in) provided by financing activities    (108)       25      (133)
----------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash
 equivalents                                        (10)        -       (10)
----------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents
 from continuing operations                         122       (26)      148
----------------------------------------------------------------------------
----------------------------------------------------------------------------
The sources and uses of cash for the three months ended March 31, 2011 are
summarized below:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash provided by operating activities - Drivers behind the $513-million
 increase in source of cash
----------------------------------------------------------------------------
Source of cash  - $161-million resulting from increase in consolidated net
                  earnings from continuing operations adjusted for changes
                  in non-cash items, primarily associated with a $30-million
                  unrealized gain on derivative financial instruments in Q1
                  2011 versus a $61-million unrealized loss in Q1 2010, and
                  a $52-million gain on the sale of CF shares in Q1 2010.
                - $389-million decrease in non-cash working capital. The
                  decrease in non-cash working capital was primarily driven
                  by higher accounts payable and lower prepaid expenses and
                  deposits, partially offset by higher inventories and
                  accounts receivable.
----------------------------------------------------------------------------
Cash used in investing activities - Drivers behind the $222-million increase
 in use of cash
----------------------------------------------------------------------------
Use of cash     - Proceeds of $117-million received on the sale of our
                  shares in CF in Q1 2010;
                - $36-million investment purchased in Q1 2011 versus
                  proceeds of $25-million received in Q1 2010 on the sale 
                  of other marketable securities; and
                - $34-million increase in capital expenditures.
----------------------------------------------------------------------------
Cash used in financing activities - Drivers behind the $133-million increase
 in use of cash
----------------------------------------------------------------------------
Use of cash     - Repayment of $125-million aggregate principal amount of
                  debentures that were due February 15, 2011.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Our short-term debt as at March 31, 2011 is summarized as follows:
----------------------------------------------------------------------------
Short-term Debt                                   Total Unutilized Utilized
----------------------------------------------------------------------------
(millions of U.S. dollars)
North American facilities expiring 2012(a)          775        735       40
North American accounts receivable 
 securitization(b)                                  200        200        -
European facilities expiring in 2011 to 2012        201         29      172
South American facilities expiring 2011 to 2012     133         66       67
Australian facilities expiring 2011                 130         44       86
Australian accounts receivable securitization(b)    258         76      182
----------------------------------------------------------------------------
                                                  1,697      1,150      547
----------------------------------------------------------------------------
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a) Outstanding letters of credit issued under our revolving credit 
   facilities at March 31, 2011 were $77-million, reducing credit available
   under the facilities to $658-million.
b) For further information, see discussion under the section "Off Balance
   Sheet Arrangements" on page 55 of our 2010 Annual Report.

OUTSTANDING SHARE DATA

The number of outstanding shares as at April 30, 2011 was approximately 158 million. As at April 30, 2011, the number of stock options (issuable assuming full conversion, where each option granted can be exercised for one common share) outstanding were approximately 0.4 million.

SELECTED QUARTERLY INFORMATION
(Unaudited, in millions of U.S. dollars, except per share information)
                                              2011                     2010
                                            --------------------------------
                                                Q1    Q4    Q3    Q2     Q1
Sales                                        2,954 2,398 2,066 4,431  1,848
Gross profit                                   725   725   498 1,063    362
Consolidated net earnings (loss)               
 from continuing operations                    160   152    61   518     (1)
Consolidated net earnings (loss)               171   135    61   518     (1)
Earnings (loss) per share from
 continuing operations
 -basic                                       1.02  0.86  0.39  3.29  (0.01)
 -diluted                                     1.02  0.86  0.39  3.28  (0.01)
Earnings (loss) per share
 -basic                                       1.09  0.86  0.39  3.29  (0.01)
 -diluted                                     1.09  0.86  0.39  3.28  (0.01)
                                            --------------------------------
a) Presented in accordance with previous Canadian generally accepted
   accounting principles ("Canadian GAAP").
                                                                       2009
                                            --------------------------------
                                                Q4 (a) Q3 (a) Q2 (a)  Q1 (a)
Sales                                           1,442  1,844  4,090   1,753
Gross profit                                      383    397    890     273
Consolidated net earnings (loss)      
 from continuing operations                        30     26    370     (60)
Consolidated net earnings (loss)                   30     26    370     (60)
Earnings (loss) per share from
 continuing operations
 -basic                                          0.19   0.16   2.36   (0.38)
 -diluted                                        0.19   0.16   2.35   (0.38)
Earnings (loss) per share
 -basic                                          0.19   0.16   2.36   (0.38)
 -diluted                                        0.19   0.16   2.35   (0.38)
                                            --------------------------------
a) Presented in accordance with previous Canadian generally accepted
   accounting principles ("Canadian GAAP").

The agricultural products business is seasonal in nature. Consequently, sales and gross profit comparisons made on a year-over-year basis are more appropriate than quarter-over-quarter. Crop input sales are primarily concentrated in the spring and fall crop input application seasons, which are in the second quarter and fourth quarter. Crop nutrient inventories are normally accumulated leading up to the application season. Cash collections generally occur after the application season is complete in the Americas and Australia. Our recent acquisition of AWB, which has a majority of its earnings from the second and third quarters of the calendar year, may have some impact on comparability.

Effective January 1, 2011, Agrium adopted IFRS as issued by the International Accounting Standards Board. The selected quarterly information for 2011 and 2010 are presented based on IFRS, while those for 2009 are presented based on Canadian GAAP. As such, direct comparison may not be appropriate.

BUSINESS ACQUISITIONS

On December 3, 2010, we acquired 100 percent of AWB, an agribusiness operating in Australia, for $1.2-billion in cash and $37-million of acquisition costs. On December 15, 2010, we announced an agreement to sell the majority of the Commodity Management business of AWB. We will retain the Landmark retail operations, including over 200 company-owned retail locations and over 140 retail franchise and wholesale customer locations in Australia. The acquired business is included in the Retail operating segment.

NON-IFRS FINANCIAL MEASURES

In the discussion of our performance for the quarter, in addition to the primary measures of earnings and earnings per share reported in accordance with IFRS, we make reference to EBITDA (earnings (loss) from continuing operations before finance costs, income taxes, depreciation and amortization). We consider EBITDA to be useful measures of performance because income tax jurisdictions and business segments are not synonymous and we believe that allocation of income tax charges distorts the comparability of historical performance for the different business segments. Similarly, financing and related interest charges cannot be allocated to all business units on a basis that is meaningful for comparison with other companies.

EBITDA is not a recognized measure under IFRS, and our method of calculation may not be comparable to other companies. Similarly, EBITDA should not be used as an alternative to cash provided by (used in) operating activities as determined in accordance with IFRS.

The following table is a reconciliation of EBITDA to consolidated net earnings (loss) from continuing operations as calculated in accordance with IFRS:

                                     Three months ended March 31
(millions of U.S.                                2011
dollars)         -----------------------------------------------------------
                                               Advanced
                          Retail Wholesale Technologies  Other Consolidated
----------------------------------------------------------------------------
EBITDA                        25       412            1    (93)         345
Depreciation and
 amortization                 40        35            6      5           86
----------------------------------------------------------------------------
EBIT                         (15)      377           (5)   (98)         259
----------------------------------------------------------------------------
Finance costs
 related to long-
 term debt                                                              (27)
Other finance
 costs                                                                  (13)
Income taxes                                                            (59)
----------------------------------------------------------------------------
Consolidated
 net earnings
 (loss) from
 continuing
 operations                                                             160
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(millions of U.S.                                2010
dollars)         -----------------------------------------------------------
                                               Advanced
                          Retail Wholesale Technologies  Other Consolidated
----------------------------------------------------------------------------
EBITDA                       (41)      182            3    (47)          97
Depreciation and
 amortization                 27        35            4      2           68
----------------------------------------------------------------------------
EBIT                         (68)      147           (1)   (49)          29
----------------------------------------------------------------------------
Finance costs
 related to long-                                                     
 term debt                                                              (23)
Other finance
 costs                                                                   (7)
Income taxes                                                              -
----------------------------------------------------------------------------
Consolidated
 net earnings
 (loss) from                                                           
 continuing
 operations                                                              (1)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

ACCOUNTING STANDARDS AND CRITICAL ACCOUNTING ESTIMATES

Please refer to note 1 of our Condensed Consolidated Interim Financial Statements for the three months ended March 31, 2011 for our significant accounting policies and critical accounting estimates, which includes purchase price allocations in business combinations; collectability of receivables; rebates; net realizable value of inventory; estimated useful lives and impairment of long-lived assets; goodwill impairment testing; allocation of acquisition purchase prices; asset retirement obligations; environmental remediation; employee future benefits; share-based payments; income taxes; fair value of financial assets and liabilities; and, amounts and likelihood of contingencies.

BUSINESS RISKS

The information presented on risk management and key business risks on pages 70 - 79 in our 2010 Annual Report has not changed materially since December 31, 2010.

CONTROLS & PROCEDURES

There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

OUTLOOK, KEY RISKS AND UNCERTAINTIES

The fundamental agricultural outlook remains very positive; however, the first quarter saw volatility in commodity prices stemming primarily from political unrest in the Middle East/North Africa and the tsunami in Japan. Many global crop prices are trading at historically high levels. This is expected to lead to increased planted area and more intensive growing practices on a global scale, which is expected to support demand for crop nutrients, crop protection and seed markets throughout 2011. U.S. cash corn prices have set records in two of the past three months, driven by projections of tight carryout in 2010/11 and the need to attract a significant increase in planted area in 2011. The United States Department of Agriculture (USDA) stated in its Prospective Plantings Report that U.S. growers intended to plant 92 million acres of corn in 2011, the second highest total since the 1940s and an increase of 4 million acres from a year ago. In total, major crop area in the U.S. could increase by more than 8 million acres according to the Prospective Plantings report.

Strong agriculture fundamentals have also supported demand for crop protection products and prices for most products are largely stable to slightly higher. Chinese glyphosate prices are trending higher, driven in part by increasing raw material costs. Seed demand is expected to be strong, driven by significant increases in seeded area in general, and corn and cotton in particular. Prices for most chemicals and seed are largely set for the spring/summer season and are expected to trend higher later in 2011, particularly if crop prices remain at high levels.

Nitrogen markets have been mixed in the first quarter of 2011, with relatively strong ammonia and UAN prices and some weakening in urea prices. The pressure on urea prices in the first quarter was partly due to extremely strong shipments of urea in the second half of 2010, including large volumes of Chinese urea exports in November and December. In recent weeks, the international price of urea has firmed up and the overall nitrogen fundamentals remain positive. For the first time since 2002, The Fertilizer Institute ("TFI") reported a decline in North American urea inventories in the month of March. The key risks to the nitrogen market include the potential for significant urea exports from China, once the export taxes are lowered for the period July 1 through October 31, and the possibility for changes in natural gas prices in Europe, including the potential for Russia to lower the price of gas for Ukrainian producers.

Phosphate markets remain very strong. India is a key driver of the phosphate market given it is expected to account for 35 percent of the global DAP/MAP import market in 2011. As a result, the key risk for the phosphate market would include Indian import levels for the remainder of 2011 and the potential for Chinese exports when their export taxes are lowered from June 1 to September 30. Spot market prices for two key inputs, ammonia and sulphur, have increased in 2011 resulting in higher production costs for most phosphate producers which increases costs and may provide support to phosphate prices. Most industry analysts expect the Ma'aden Phosphate Project to begin production sometime in the second half of 2011, but most do not expect a significant export volume from the facility until 2012.

Global potash demand continues to improve. The International Fertilizer Industry Association (IFA) reported that 2010 potash deliveries totaled 55 million tonnes, significantly higher than expected earlier in the year. The TFI reported that North American potash inventories declined 9 percent in March 2011 to levels 25 percent below average. Most industry analysts expect further improvement in global potash consumption in 2011. A key uncertainty in the potash market is the timing and volume of a new supply agreement with India.

Forward-Looking Statements

Certain statements and other information included in this press release constitute "forward looking information" within the meaning of applicable Canadian securities legislation or constitute "forward-looking statements" within the meaning of applicable U.S. securities legislation (collectively, the "forward-looking statements"). All statements in this press release, other than those relating to historical information or current conditions, are forward-looking statements, including, but not limited to, statements as to management's expectations with respect to: future crop and crop input volumes, demand, margins, prices and sales; business and financial prospects; and other plans, strategies, objectives and expectations, including with respect to future operations of Agrium. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such forward-looking statements.

All of the forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements, including the assumptions listed below. Although Agrium believes that these assumptions are reasonable, this list is not exhaustive of the factors that may affect any of the forward-looking statements and the reader should not place an undue reliance on these assumptions and such forward-looking statements. The key assumptions that have been made in connection with the forward-looking statements include the following: Agrium's ability to successfully integrate and realize the anticipated benefits of its acquisitions, including the acquisition of retained AWB businesses; Agrium's ability to operate Landmark (AWB's retail business) and improve average margins for this business; and Agrium's success in integrating its business systems and supply chain management processes following the acquisition of AWB.

Events or circumstances that could cause actual results to differ materially from those in the forward-looking statements, include, but are not limited to: general economic, market and business conditions, weather conditions including impacts from regional flooding and/or drought conditions; crop prices; the supply and demand and price levels for our major products; governmental and regulatory requirements and actions by governmental authorities, including changes in government policy, changes in environmental, tax and other laws or regulations and the interpretation thereof, and political risks, including civil unrest, actions by armed groups or conflict. Additionally, there are risks associated with Agrium's recent acquisition of AWB, including: timing and costs of the associated integration of the retained AWB businesses, the size and timing of expected synergies could be less favourable than anticipated; disruption from the acquisition making it more difficult to maintain relationships with customers, employees and suppliers; AWB is subject to dispute and litigation risk (including as a result of being named in litigation commenced by the Iraqi Government relating to the United Nations Oil-For-Food Programme), as well as counterparty and sovereign risk; and other risk factors detailed from time to time in Agrium reports filed with the Canadian securities regulators and the Securities and Exchange Commission in the United States.

Agrium disclaims any intention or obligation to update or revise any forward-looking statements in this press release as a result of new information or future events, except as may be required under applicable U.S. federal securities laws or applicable Canadian securities legislation.

OTHER

Agrium Inc. is a major Retail supplier of agricultural products and services in North America, South America and Australia and a leading global Wholesale producer and marketer of all three major agricultural nutrients and the premier supplier of specialty fertilizers in North America through our Advanced Technologies business unit. Agrium's strategy is to grow across the value chain through acquisition, incremental expansion of its existing operations and through the development, commercialization and marketing of new products and international opportunities. Our strategy places particular emphasis on growth opportunities that both increase and stabilize our earnings profile in the continuing transformation of Agrium.

A WEBSITE SIMULCAST of the 2011 1st Quarter Conference Call will be available in a listen-only mode beginning Wednesday, May 4, 2011 at 9:30 a.m. MT (11:30 a.m. ET). Please visit the following website: www.agrium.com

AGRIUM INC.                                                                 
Condensed Consolidated Statements of Operations                             
(Millions of U.S. dollars, except per share amounts)                        
(Unaudited)                                                                 
                                                Three months ended March 31,
----------------------------------------------------------------------------
                                                        2011           2010 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Sales                                                  2,954          1,848 
----------------------------------------------------------------------------
Cost of product sold                                   2,229          1,486 
----------------------------------------------------------------------------
Gross profit                                             725            362 
----------------------------------------------------------------------------
Expenses                                                                    
----------------------------------------------------------------------------
 Selling                                                 353            233 
----------------------------------------------------------------------------
 General and administrative                              110             89 
----------------------------------------------------------------------------
 Loss (earnings) from associates                           2             (9)
----------------------------------------------------------------------------
 Other expenses (note 4)                                   1             20 
----------------------------------------------------------------------------
Earnings before finance costs and income taxes           259             29 
----------------------------------------------------------------------------
 Finance costs related to long-term debt                              
  (note 5)                                                27             23 
----------------------------------------------------------------------------
 Other finance costs (note 5)                             13              7 
----------------------------------------------------------------------------
Earnings (loss) before income taxes                      219             (1)
----------------------------------------------------------------------------
 Income taxes                                             59              - 
----------------------------------------------------------------------------
Consolidated net earnings (loss) from                                       
 continuing operations                                   160             (1)
----------------------------------------------------------------------------
Consolidated net earnings from discontinued                                 
 operations (note 3)                                      11              - 
----------------------------------------------------------------------------
Consolidated net earnings (loss)                         171             (1)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Attributable to:                                                            
----------------------------------------------------------------------------
 Equity holders of Agrium                                172             (2)
----------------------------------------------------------------------------
 Non-controlling interest                                 (1)             1 
----------------------------------------------------------------------------
Consolidated net earnings (loss)                         171             (1)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings (loss) per share (note 7)                                          
----------------------------------------------------------------------------
 Basic earnings (loss) per share from                                       
  continuing operations                                 1.02          (0.01)
----------------------------------------------------------------------------
 Basic earnings per share from discontinued                                 
  operations                                            0.07              - 
----------------------------------------------------------------------------
 Basic earnings (loss) per share                        1.09          (0.01)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 Diluted earnings (loss) per share from                                     
  continuing operations                                 1.02          (0.01)
----------------------------------------------------------------------------
 Diluted earnings per share from discontinued                               
  operations                                            0.07              - 
----------------------------------------------------------------------------
 Diluted earnings (loss) per share                      1.09          (0.01)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes.                                                     
AGRIUM INC.                                                                 
Condensed Consolidated Statements of Comprehensive Income                   
(Millions of U.S. dollars)                                                  
(Unaudited)                                                                 
                                                Three months ended March 31,
----------------------------------------------------------------------------
                                                        2011           2010 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Consolidated net earnings (loss)                         171             (1)
----------------------------------------------------------------------------
 Other comprehensive income (loss)                                          
----------------------------------------------------------------------------
  Available for sale financial instruments                 -            (29)
----------------------------------------------------------------------------
  Foreign currency translation                            20             19 
----------------------------------------------------------------------------
  Loss of associates                                      (7)            (1)
----------------------------------------------------------------------------
                                                          13            (11)
----------------------------------------------------------------------------
Consolidated comprehensive income (loss)                 184            (12)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Attributable to:                                                            
----------------------------------------------------------------------------
 Equity holders of Agrium                                189            (13)
----------------------------------------------------------------------------
 Non-controlling interest                                 (5)             1 
----------------------------------------------------------------------------
Consolidated comprehensive income (loss)                 184            (12)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes.                                                     
AGRIUM INC.                                                                 
Condensed Consolidated Statements of Cash Flows                             
(Millions of U.S. dollars)                                                  
(Unaudited)                                                                 
                                                Three months ended March 31,
----------------------------------------------------------------------------
                                                        2011           2010 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating                                                                   
----------------------------------------------------------------------------
 Consolidated net earnings (loss) from                                      
  continuing operations                                  160             (1)
----------------------------------------------------------------------------
 Items not affecting cash                                                   
----------------------------------------------------------------------------
  Depreciation and amortization                           86             68 
----------------------------------------------------------------------------
  Loss (earnings) from associates                          2             (9)
----------------------------------------------------------------------------
  Share-based payments                                    12             36 
----------------------------------------------------------------------------
  Unrealized (gain) loss on derivative                                      
   financial instruments                                 (30)            61 
----------------------------------------------------------------------------
  Gain on disposal of marketable securities                -            (52)
----------------------------------------------------------------------------
  Unrealized foreign exchange loss                         -              6 
----------------------------------------------------------------------------
  Deferred income taxes                                    6              - 
----------------------------------------------------------------------------
  Other                                                    6              9 
----------------------------------------------------------------------------
 Net changes in non-cash working capital                 160           (229)
----------------------------------------------------------------------------
Cash provided by (used in) operating                                        
 activities                                              402           (111)
----------------------------------------------------------------------------
Investing                                                                   
----------------------------------------------------------------------------
 Capital expenditures                                   (110)           (76)
----------------------------------------------------------------------------
 Purchase of investments                                 (36)             - 
----------------------------------------------------------------------------
 Proceeds from disposal of investments                     -             25 
----------------------------------------------------------------------------
 Proceeds from disposal of marketable                                       
  securities                                               -            117 
----------------------------------------------------------------------------
 Other                                                   (16)            (6)
----------------------------------------------------------------------------
Cash (used in) provided by investing                                        
 activities                                             (162)            60 
----------------------------------------------------------------------------
Financing                                                                   
----------------------------------------------------------------------------
 Short-term debt                                          25             33 
----------------------------------------------------------------------------
 Repayment of long-term debt                            (125)            (1)
----------------------------------------------------------------------------
 Dividends paid                                           (9)            (9)
----------------------------------------------------------------------------
 Shares issued, net of issuance costs                      1              2 
----------------------------------------------------------------------------
Cash (used in) provided by financing                                        
 activities                                             (108)            25 
----------------------------------------------------------------------------
Effect of exchange rate changes on cash and                                 
 cash equivalents                                        (10)             - 
----------------------------------------------------------------------------
Increase (decrease) in cash and cash                                        
 equivalents from continuing operations                  122            (26)
----------------------------------------------------------------------------
Cash and cash equivalents used in discontinued                              
 operations (note 3)                                    (310)             - 
----------------------------------------------------------------------------
Cash and cash equivalents - beginning of                                    
 period                                                  635            933 
----------------------------------------------------------------------------
Cash and cash equivalents - end of period                447            907 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Interest paid                                             42             37 
----------------------------------------------------------------------------
Interest received                                         14              8 
----------------------------------------------------------------------------
Income taxes paid                                         31            293 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes.                                                     
AGRIUM INC.                                                                 
Condensed Consolidated Balance Sheets                                       
(Millions of U.S. dollars)                                                  
(Unaudited)                                                                
                                                           As at      As at 
                                     As at March 31, December 31, January 1,
----------------------------------------------------------------------------
                                     2011      2010         2010       2010 
----------------------------------------------------------------------------
ASSETS                                                                      
----------------------------------------------------------------------------
Current assets                                                              
----------------------------------------------------------------------------
 Cash and cash equivalents            447       907          635        933 
----------------------------------------------------------------------------
 Accounts receivable                2,105     1,400        1,793      1,247 
----------------------------------------------------------------------------
 Inventories (note 8)               3,656     2,988        2,502      2,137 
----------------------------------------------------------------------------
 Prepaid expenses and deposits        415       334          848        567 
----------------------------------------------------------------------------
 Marketable securities                  -         6            3        114 
----------------------------------------------------------------------------
 Assets of discontinued                                                     
  operations (note 3)               1,632         -        1,320          - 
----------------------------------------------------------------------------
                                    8,255     5,635        7,101      4,998 
----------------------------------------------------------------------------
Property, plant and equipment                                               
 (note 9)                           2,209     1,886        2,154      1,797 
----------------------------------------------------------------------------
Intangibles (note 10)                 600       612          619        617 
----------------------------------------------------------------------------
Goodwill (note 10)                  2,508     1,807        2,423      1,804 
----------------------------------------------------------------------------
Investment in associates              376       367          389        370 
----------------------------------------------------------------------------
Other financial assets (note 11)      107        45           48         88 
----------------------------------------------------------------------------
Deferred income tax assets             50         -           52          - 
----------------------------------------------------------------------------
Assets of discontinued                                                      
 operations (note 3)                  126         -           92          - 
----------------------------------------------------------------------------
                                   14,231    10,352       12,878      9,674 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS'                                               
 EQUITY                                                                     
----------------------------------------------------------------------------
Current liabilities                                                         
----------------------------------------------------------------------------
 Short-term debt (note 12)            547       134          517        106 
----------------------------------------------------------------------------
 Accounts payable                   3,863     2,938        2,666      2,342 
----------------------------------------------------------------------------
 Current portion of long-term                                               
  debt (note 12)                       53       125          125          - 
----------------------------------------------------------------------------
 Current portion of other                                                   
  provisions (note 13)                213       166          198        148 
----------------------------------------------------------------------------
 Liabilities of discontinued                                                
  operations (note 3)               1,090         -        1,020          - 
----------------------------------------------------------------------------
                                    5,766     3,363        4,526      2,596 
----------------------------------------------------------------------------
Long-term debt (note 12)            2,063     1,574        2,118      1,699 
----------------------------------------------------------------------------
Provisions for post-employment                                              
 benefits                             142       112          136        106 
----------------------------------------------------------------------------
Other provisions (note 13)            333       333          366        308 
----------------------------------------------------------------------------
Other financial liabilities                                                 
 (note 14)                             42        57           47         34 
----------------------------------------------------------------------------
Deferred income tax liabilities       498       451          490        460 
----------------------------------------------------------------------------
Liabilities of discontinued                                                 
 operations (note 3)                    4         -            2          - 
----------------------------------------------------------------------------
                                    8,848     5,890        7,685      5,203 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Shareholders' equity                                                        
----------------------------------------------------------------------------
Share capital                       1,988     1,980        1,982      1,977 
----------------------------------------------------------------------------
Retained earnings                   3,322     2,452        3,150      2,454 
----------------------------------------------------------------------------
Accumulated other comprehensive                                             
 income                                70        18           53         29 
----------------------------------------------------------------------------
Equity holders of Agrium            5,380     4,450        5,185      4,460 
----------------------------------------------------------------------------
Non-controlling interest                3        12            8         11 
----------------------------------------------------------------------------
Total equity                        5,383     4,462        5,193      4,471 
----------------------------------------------------------------------------
                                   14,231    10,352       12,878      9,674 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes.                                                     
AGRIUM INC.                                                                 
Condensed Consolidated Statements of Shareholders' Equity                   
(Millions of U.S. dollars, except share data)                               
(Unaudited)                                                                 
                                                                Accumulated 
                                 Millions                             other 
                                of common     Share  Retained comprehensive 
                                 shares(a)  capital  earnings        income 
----------------------------------------------------------------------------
January 1, 2010                       157     1,977     2,454            29 
----------------------------------------------------------------------------
Consolidated net (loss) earnings                           (2)              
----------------------------------------------------------------------------
Other comprehensive loss                                                (11)
----------------------------------------------------------------------------
Comprehensive (loss) income                                                 
----------------------------------------------------------------------------
Share-based payment transactions                  3                         
----------------------------------------------------------------------------
March 31, 2010                        157     1,980     2,452            18 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
December 31, 2010                     158     1,982     3,150            53 
----------------------------------------------------------------------------
Consolidated net earnings (loss)                          172               
----------------------------------------------------------------------------
Other comprehensive income                                                  
 (loss)                                                                  17 
----------------------------------------------------------------------------
Comprehensive income (loss)                                                 
----------------------------------------------------------------------------
Share-based payment transactions                  6                         
----------------------------------------------------------------------------
March 31, 2011                        158     1,988     3,322            70 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                       Equity           Non-                
                                   holders of    controlling                
                                       Agrium       interest   Total equity 
----------------------------------------------------------------------------
January 1, 2010                         4,460             11          4,471 
----------------------------------------------------------------------------
Consolidated net (loss) earnings           (2)             1             (1)
----------------------------------------------------------------------------
Other comprehensive loss                  (11)             -            (11)
----------------------------------------------------------------------------
Comprehensive (loss) income               (13)             1            (12)
----------------------------------------------------------------------------
Share-based payment transactions            3                             3 
----------------------------------------------------------------------------
March 31, 2010                          4,450             12          4,462 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
December 31, 2010                       5,185              8          5,193 
----------------------------------------------------------------------------
Consolidated net earnings (loss)          172             (1)           171 
----------------------------------------------------------------------------
Other comprehensive income                                                  
 (loss)                                    17             (4)            13 
----------------------------------------------------------------------------
Comprehensive income (loss)               189             (5)           184 
----------------------------------------------------------------------------
Share-based payment transactions            6                             6 
----------------------------------------------------------------------------
March 31, 2011                          5,380              3          5,383 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(a) Our authorized share capital consists of unlimited common shares.       
Accumulated Other Comprehensive Income of Equity Holders of Agrium          
                                Available for                       Foreign 
                               sale financial      Actuarial       currency 
                                  instruments   gains/losses    translation 
----------------------------------------------------------------------------
January 1, 2010                            29              -              - 
----------------------------------------------------------------------------
Gains(losses)                               -              -             19 
----------------------------------------------------------------------------
Reclassification adjustments              (48)             -              - 
----------------------------------------------------------------------------
Deferred income taxes                      19                             - 
----------------------------------------------------------------------------
March 31, 2010                              -              -             19 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
December 31, 2010                           -            (16)            69 
----------------------------------------------------------------------------
Gains(losses)                               -              -             24 
----------------------------------------------------------------------------
March 31, 2011                              -            (16)            93 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                      Total 
                                                                accumulated 
                                               Comprehensive          other 
                                                income (loss) comprehensive 
                                               of associates         income 
----------------------------------------------------------------------------
January 1, 2010                                            -             29 
----------------------------------------------------------------------------
Gains/(losses)                                            (1)            18 
----------------------------------------------------------------------------
Reclassification adjustments                               -            (48)
----------------------------------------------------------------------------
Deferred income taxes                                      -             19 
----------------------------------------------------------------------------
March 31, 2010                                            (1)            18 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
December 31, 2010                                          -             53 
----------------------------------------------------------------------------
Gains/(losses)                                            (7)            17 
----------------------------------------------------------------------------
March 31, 2011                                            (7)            70 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes.                                                     

AGRIUM INC.

Summarized Notes to the Condensed Consolidated Financial Statements

For the three months ended March 31, 2011

(Millions of U.S. dollars, except per share amounts)

(Unaudited)

1. CORPORATE INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES

Corporate information

Agrium Inc. is incorporated under the laws of Canada with common shares listed under the symbol "AGU" on the New York Stock Exchange and the Toronto Stock Exchange. Agrium is a major retail supplier of agricultural products and services in North and South America and Australia and a leading global producer and marketer of agricultural nutrients and industrial products. We produce and market three primary groups of nutrients: nitrogen, phosphate and potash as well as controlled-release crop nutrients and micronutrients. Our Corporate head office is located at 13131 Lake Fraser Drive S.E. Calgary, Alberta, Canada. Our operations are conducted globally from our Wholesale head office in Calgary, and our Retail and Advanced Technologies head offices in Loveland, Colorado, U.S.A.

Basis of preparation and statement of compliance

These condensed consolidated interim financial statements ("interim financial statements") of Agrium Inc. were approved for issuance by the Board of Directors on May 3, 2011. We prepared the interim financial statements in accordance with IAS 34 Interim Financial Reporting using accounting policies consistent with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB"). These are our first interim financial statements for part of the period covered by our first consolidated annual financial statements prepared in accordance with IFRS for the year ending December 31, 2011. Disclosures concerning the transition from Canadian generally accepted accounting principles to IFRS are provided in note 19. These interim financial statements do not include all disclosures normally provided in consolidated annual financial statements and should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2010.

Seasonality in our business results from the increased demand for our products during planting seasons. Sales are generally higher in the second and third quarters.

These interim financial statements are presented in U.S. dollars, which is our presentation and functional currency. We have prepared these interim financial statements using the historical cost basis except for certain financial instruments and non-current assets, liabilities for cash-settled share-based payment arrangements, and assets and obligations of post-employment benefit plans. Our policies for these items are set out in the notes below.

Significant accounting policies

a) Key accounting estimates and judgments

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Estimates are used when accounting for items such as collectibility of receivables, rebates, net realizable value of inventory, estimated useful lives and impairment of long-lived assets, goodwill impairment testing, allocation of acquisition purchase prices, asset retirement obligations, environmental remediation, employee future benefits, share-based payments, income taxes, fair value of financial assets and liabilities and amounts and likelihood of contingencies. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

b) Principles of consolidation

Subsidiaries

These consolidated financial statements include the accounts of Agrium Inc. its subsidiaries, and its proportionate share of revenues, expenses, assets and liabilities of joint ventures, which are the entities over which Agrium has control. Control exists when the company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefit from its activities. In these interim financial statements, we, us, our and Agrium mean Agrium Inc., its subsidiaries and joint ventures. All intercompany transactions and balances have been eliminated.

Associates

Associates are those entities in which we have significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when we hold between 20 and 50 percent of the voting power of another entity, but can also arise if we hold less than 20 percent of an entity if we have the power to be actively involved and influential in policy decisions affecting the entity.

Investments in associates are accounted for using the equity method and are recognized initially at cost. Our investment includes goodwill identified on acquisition, net of any accumulated impairment losses. The consolidated financial statements include our share of the income and expenses and equity movements of equity accounted investees from the date that significant influence or joint control commences until the date that it ceases.

Joint ventures

Joint ventures are those entities over whose activity we have joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Jointly controlled entities are accounted for using proportionate consolidation. Our share of the assets, liabilities, income and expenses of jointly controlled entities are combined with the equivalent items in the consolidated financial statements on a line by line basis. Where we transact with our jointly controlled entities, unrealized profits and losses are eliminated to the extent of our interest in the joint venture.

c) Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the fair values at the date of exchange of assets given, liabilities incurred or assumed, and equity instruments we issued in exchange for control of the acquiree. Acquisition-related costs are recognized in net earnings as incurred.

The interest of non-controlling shareholders in the acquiree is initially measured at the non-controlling shareholders' proportion of the net fair value of the assets, liabilities and contingent liabilities recognized.

d) Foreign currency translation

The functional currency for each of our subsidiaries, jointly controlled entities and associates is the currency of the primary economic environment in which they operate, which is the U.S. dollar, the Canadian dollar, the Australian dollar and the Euro. Determining the primary economic environment in which an entity operates requires management to consider several factors and use judgment.

All transactions that are not denominated in an entity's functional currency are foreign currency transactions. These transactions are initially recorded in the functional currency by applying the appropriate monthly average rate which best approximates the actual rate of the transaction. Monetary assets and liabilities denominated in foreign currencies are re-measured at the functional currency rate of exchange at the balance sheet date. All differences are recognized in the consolidated statement of operations. Non monetary items measured at historical cost are not re-measured - they remain at the exchange rate from the date of the transaction. Non monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

The assets and liabilities of foreign operations that are not denominated in the presentation currency, including goodwill and fair value adjustments arising on acquisition, are translated to our presentation currency at exchange rates at the reporting date. Income, expenses and capital transactions are translated at the average exchange rate for the month. Foreign currency differences are recognized directly in equity. When a foreign operation is disposed of, the relevant amount of foreign currency translation in equity is reclassified to net earnings.

e) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. We recognize revenue based on individual contractual terms when all of the following criteria are met: the significant risks and rewards of ownership of the goods have been transferred to the customer; we retain neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; the amount of revenue and costs incurred or to be incurred can be measured reliably; and, it is probable that the economic benefits associated with the transaction will flow to us. These conditions are generally satisfied when title passes to the customer according to the sales agreement which in most cases, is when product is picked up by the customer or delivered to the destination specified by the customer, which is typically a customer's premises, the vessel on which the product will be shipped, or the destination port. Revenue is reported net of sales taxes, returns, discounts and rebates.

f) Rebates

We enter into agreements with suppliers providing for vendor rebates typically based on the achievement of specified purchase volumes or sales levels. We account for rebates and prepay discounts as a reduction of the prices of the suppliers' products. Rebates that are probable and can be reasonably estimated are accrued based on total estimated crop year performance. Rebates that are not probable or estimable are accrued when certain milestones are achieved. Rebates not covered by binding agreements or published vendor programs are accrued when conclusive documentation of right of receipt is obtained.

Rebates based on the amount of materials purchased reduce cost of product as inventory is sold. Rebates that are based on sales volume are offset to cost of product when we determine that they have been earned based on sales volume of related products.

g) Income taxes

Income tax expense comprises current and deferred tax. Income tax expense is recognized in net earnings except to the extent that it relates to items recognized directly in equity, in which case it is recognized directly in equity or in other comprehensive income.

Current income tax is the expected tax payable (recoverable) on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable (recoverable) in respect of previous years.

Deferred income tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable income. Deferred income tax liabilities are generally recognized for all taxable temporary differences. Deferred income tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable income will be available against which those deductible temporary differences can be utilized.

The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current income tax assets against current income tax liabilities and when they relate to income taxes levied by the same taxation authority.

h) Financial instruments

All financial assets and financial liabilities are initially recognized at fair value. The subsequent measurement of financial instruments depends on their classification as follows:

Financial instrument classification   Subsequent measurement of gains or    
                                      losses at each period-end             
----------------------------------------------------------------------------
Fair value through profit or loss     Fair value; unrealized gains or losses
 (assets and liabilities)             recognized in net earnings            
----------------------------------------------------------------------------
Available for sale (assets)           Fair value; unrealized gains and      
                                      losses recognized in other            
                                      comprehensive income; recognized in   
                                      net earnings on sale of the asset or  
                                      when asset is written down as impaired
----------------------------------------------------------------------------
Held to maturity investments          Amortized cost using the effective    
------------------------------------- interest rate method; recognized in   
Loans and receivables                 net earnings, if asset/liability is   
------------------------------------- derecognized or asset is impaired     
Other financial liabilities                                                 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Where commodity derivative contracts under master netting arrangements include both asset and liability positions, we offset the fair value amounts recognized for multiple similar derivative instruments executed with the same counterparty, including any related cash collateral asset or obligation. Transaction costs of financial instruments are recorded as a reduction of the cost of the instruments except for costs of financial instruments classified as fair value through net earnings, which are expensed as incurred.

i) Cash and cash equivalents

Cash equivalents are carried at fair value, and consist of short-term investments with an original maturity of three months or less.

j) Accounts receivable and allowance for doubtful accounts

We evaluate collectibility of specific customer receivables depending on the nature of the sale. Collectibility of receivables is reviewed and the allowance for doubtful accounts is adjusted on an ongoing basis. Account balances are charged to net earnings when we determine that it is probable that the receivable will not be collected. Interest accrues on all trade receivables from the due date, which may vary with certain geographic or seasonal programs.

We have facilities in the U.S. and Australia that enable us to sell certain short-term trade accounts receivable to third parties on an ongoing basis. We continue to service the sold accounts receivable; amounts associated with the servicing liability are not material. We record sales and derecognize accounts receivable when the arrangement transfers substantially all the risks and rewards of ownership of the receivables to a third party. Where this does not occur, the arrangements are recorded as secured borrowings.

k) Inventories

Wholesale inventories, consisting primarily of crop nutrients, operating supplies and raw materials, include both direct and indirect production and purchase costs, depreciation and amortization on assets employed directly in production, and freight to transport the product to the storage facilities. Crop nutrients include our produced products and products purchased for resale. Operating supplies include catalysts used in the production process, materials used for repairs and maintenance and other supplies. Inventories are valued at the lower of cost on a weighted-average basis and net realizable value.

Retail inventories, consisting primarily of crop nutrients, crop protection products, seed and merchandise include the cost of delivery to move the product to storage facilities. Inventories are recorded at the lower of cost on a weighted-average basis and net realizable value.

Advanced Technologies inventories, consisting primarily of raw materials and controlled-release products, include both direct and indirect production costs and depreciation on assets employed directly in production. Inventories are recorded at the lower of cost determined on a first-in, first-out basis and net realizable value.

l) Property, plant and equipment

Property, plant and equipment are measured at historical cost less accumulated depreciation and accumulated impairment loss. The cost of property, plant and equipment comprises its purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. If a legal or constructive obligation exists to decommission property, plant and equipment, the discounted value of the obligation is included in the carrying value of the assets when the obligation arises.

Expenses in connection with day-to-day maintenance and repairs are recognized in the statement of operations as they are incurred. Expenses incurred in connection with major replacements, plant turnarounds and renewals that materially extend the life of property, plant and equipment or result in future economic benefits are capitalized and depreciated on a systematic basis. The carrying amount of replaced components is expensed.

If the construction or preparation for use of property, plant or equipment extends over a period of longer than twelve months, the borrowing costs incurred on borrowed capital up to the date of completion are capitalized as part of the cost of acquisition or construction.

Property, plant and equipment are depreciated on a straight-line basis using the following estimated useful lives:

Buildings and improvements    3-25 years                                    
Machinery and equipment       3-25 years                                    
Other                         3-25 years                                    

If the cost of an individual part of property, plant and equipment is significant relative to the total cost of the item, the individual part is accounted for and depreciated separately. Expected useful life and residual value is re-assessed annually.

m) Goodwill and intangible assets

Goodwill represents the difference between the fair value of the consideration transferred in a business combination and the fair value of the identifiable net assets acquired at the date of acquisition. Goodwill is initially determined based on provisional fair values. Fair values are finalized within 12 months of the acquisition date. Goodwill on acquisition of subsidiaries and jointly controlled entities is separately disclosed and goodwill on acquisitions of associates is included within investments in equity accounted units. Goodwill, including goodwill in equity accounted units, is not amortized; rather it is tested annually for impairment or when there is an indication of impairment.

Intangible assets acquired as part of an acquisition of a business are capitalized separately from goodwill if the asset is separable or arises from contractual or legal rights, and the fair value can be measured reliably on initial recognition.

Purchased intangible assets are initially recorded at cost and finite-lived intangible assets are amortized over their useful economic lives on a straight-line basis. Intangible assets having indefinite lives and intangible assets that are not yet ready for use are not amortized and are tested annually for impairment or when there is an indication of impairment.

Intangible assets are considered to have indefinite lives when, based on an analysis of all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate cash flows for us. The factors considered in making this determination include the existence of contractual rights for unlimited terms; or evidence that renewal of the contractual rights without significant incremental cost can be expected for indefinite periods into the future in view of our future investment intentions. The life cycles of the products and processes that depend on the asset are also considered.

The following useful lives, which are re-assessed annually, have been determined for classes of finite-lived intangible assets:

Trade names                   5 - 15 years                                  
Customer relationships        5 - 15 years                                  
Technology                    7 - 10 years                                  
Other                         3 - 20 years                                  

n) Impairment

The carrying amounts of non-current assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any indication of impairment exists, then the asset's recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated each year during the third quarter.

The recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that have the ability to generate cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash generating unit"). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash generating units or groups of cash generating units that are expected to benefit from the synergies of the combination and reflects the lowest level at which goodwill is monitored for internal reporting purposes. If there is an indication of an impairment of an asset or cash generating unit below the level to which goodwill has been allocated, the asset or cash generating unit is tested for impairment first and any impairment loss for that asset or cash generating unit is recognized before testing at the level to which goodwill has been allocated.

An impairment loss is recognized if the carrying amount of an asset or its cash generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in net earnings. Impairment losses recognized in respect of cash generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amounts of the other assets in the unit on a pro-rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Goodwill that forms part of the carrying amount of an investment in an associate is not recognized separately, and therefore is not tested for impairment separately. Instead, the entire amount of the investment in an associate is tested for impairment as a single asset when there is objective evidence that the investment in an associate may be impaired.

o) Leases

Leases whereby we assume substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Minimum lease payments made under finance leases are apportioned between the finance cost and the reduction of the outstanding liability. The finance cost is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Other leases are operating leases and are not recognized on our balance sheet. Payments made under operating leases are recognized in net earnings over the term of the lease.

p) Post-employment benefits

We maintain contributory and non-contributory defined benefit and defined contribution pension plans in Canada and the United States. The majority of employees are members of defined contribution pension plans. We also maintain health care plans and life insurance benefits for retired employees. Benefits from defined benefit plans are based on either a percentage of final average earnings and years of service or a flat dollar amount for each year of service. Pension plan and post-retirement benefit costs are determined annually by independent actuaries and include current service costs, interest cost of projected benefits, return on plan assets and actuarial gains or losses. We also have non-contributory defined benefit and defined contribution plans which provide supplementary pension benefits for senior management.

Post-employment benefits are funded by us and obligations are determined using the projected unit credit method of actuarial valuation prorated over the expected length of employee service. Post-employment benefit costs for current service, interest costs and return on plan assets are charged to net earnings in the year incurred. Actuarial gains or losses are recognized immediately in other comprehensive income. Past service costs and the effects of changes in plan assumptions are amortized on a straight-line basis over the average period until the benefits become vested, or immediately if the benefits have already vested. Our contributions to defined contribution post-employment benefit plans are expensed as incurred.

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. Liabilities for bonuses and profit-sharing are recognized based on a formula that takes into consideration the profit attributable to our shareholders after certain adjustments. We recognize a liability when we have a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

q) Provisions

A provision is recognized if, as a result of a past event, we have a present legal or constructive obligation that can be estimated reliably, and it is more likely than not that an outflow of economic benefits will be required to settle the obligation. Where the effect of discounting is material, the expected future cash flows associated with a provision are discounted at a pre-tax rate that reflects current market assessments of the time value of money. The unwinding of the discount is recognized as a finance cost.

Environmental remediation

Environmental expenditures that relate to existing conditions caused by past operations that do not contribute to current or future revenue generation are expensed. Environmental expenditures that extend the life of the property, increase its capacity or mitigate or prevent contamination from future operations are capitalized. Costs are recorded when environmental remediation efforts are probable and the costs can be reliably estimated based on current law and existing technologies. Estimated costs are based on management's best estimate of undiscounted future costs.

Decommissioning and restoration

Provisions for decommissioning and restoration costs (asset retirement obligations) are measured based on current requirements, technology and price levels and the present value is calculated using amounts discounted over the useful economic life of the assets. The liability is recognized in the period when there is a legal or constructive obligation and a reasonable estimate can be made. A corresponding item of property, plant and equipment of an amount equivalent to the provision is also recognized and is subsequently depreciated as part of the asset. The effects of changes resulting from revisions to the timing or the amount of the original estimate of the provision are reflected on a prospective basis, by adjustment to the carrying amount of the related property, plant and equipment.

r) Share-based payments

Cash-settled plans are accounted for as liabilities where the fair value of the award is determined at the grant date using a valuation model which includes an estimated forfeiture rate. A Black-Scholes option pricing model is used for plans with a service condition and a Monte Carlo simulation model is used for plans with service and market conditions. Compensation expense is accrued, and recognized over the vesting period of the award. The fair value is re-measured at each balance sheet date and fluctuations in the fair value are recognized in the period in which the fluctuation occurs.

Equity-settled plans are accounted for using a fair value-based method. The fair value of the share-based award is determined at the grant date using a market-based option valuation model which includes an estimated forfeiture rate. The fair value of the award is recorded as compensation expense amortized over the vesting period of the award, with a corresponding increase to share capital. On exercise of the award, the proceeds are recorded as share capital.

If an employee is eligible to retire during the vesting period, we recognize compensation expense over the period from the date of grant to the retirement eligibility date. If an employee is eligible to retire on the date of grant, compensation expense is recognized on the grant date.

s) Non-current assets held for sale and discontinued operations

Non-current assets and disposal groups classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

In the consolidated statements of operations of the reporting period, and of the comparable period of the previous year, income and expenses from discontinued operations are reported separate from income and expenses from continuing activities, down to the level of profit after taxes.

Once classified as held for sale, property, plant and equipment and intangible assets are not depreciated and are recognized at fair value less cost to sell. We cease using the equity method of accounting on the date from which an investment in an associate becomes held for sale.

2. BUSINESS ACQUISITION

On December 3, 2010, we acquired 100 percent of AWB Limited ("AWB"), an agribusiness operating in Australia, for $1.2-billion in cash and $37-million of acquisition costs. On December 15, 2010, we announced an agreement to sell the majority of the Commodity Management business of AWB. We will retain the Landmark retail operations, including over 200 company-operated retail locations and over 140 retail franchise and wholesale customer locations in Australia. The acquired business is included in the Retail operating segment.

Preliminary estimated fair values of assets            As at          As at 
 acquired and liabilities assumed on                March 31,   December 31,
 December 3, 2010                                       2011           2010
----------------------------------------------------------------------------
Continuing operations                                                       
----------------------------------------------------------------------------
 Working capital                                         736            736 
----------------------------------------------------------------------------
 Property, plant and equipment                            81             81 
----------------------------------------------------------------------------
 Intangibles                                              41             41 
----------------------------------------------------------------------------
 Goodwill                                                667            589 
----------------------------------------------------------------------------
 Other financial assets                                   69             69 
----------------------------------------------------------------------------
 Debt and other financial liabilities                   (737)          (744)
----------------------------------------------------------------------------
Assets of discontinued operations                      1,086          1,128 
----------------------------------------------------------------------------
Liabilities of discontinued operations                  (734)          (691)
----------------------------------------------------------------------------
                                                       1,209          1,209 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

The primary drivers that generate goodwill are the acquisition of a talented workforce and the value of synergies between Agrium and AWB, including expansion of geographical coverage for the sale of crop inputs and cost savings opportunities. We expect to allocate the majority of goodwill to the Retail business unit. We do not expect goodwill to be deductible for income tax purposes.

We have not completed our determination of the fair value of the assets acquired, liabilities assumed (including contingent liabilities), or related deferred income tax impacts due to the timing of the acquisition and the inherent complexity associated with the valuations. The preliminary purchase price allocation is based on carrying amounts of AWB, as adjusted for information obtained subsequent to the acquisition. Accordingly, in applying the purchase method of accounting, the excess of the purchase price over the estimated fair value of the net assets acquired has been allocated to goodwill. We expect that some of the purchase price allocated to goodwill will be allocated to property, plant and equipment, intangibles, and related deferred income tax balances. We expect that the actual amounts assigned to the fair values of the identifiable assets and liabilities acquired will differ materially from the preliminary purchase price allocation, and that some acquired property, plant and equipment and intangibles are expected to be finite-lived and accordingly subject to depreciation and amortization.

                                                             For the twelve 
Unaudited pro forma consolidated summary results of            months ended 
 operations (prepared as if the acquisition of AWB had          December 31,
 occurred on January 1, 2010)                                          2010 
----------------------------------------------------------------------------
Sales                                                                15,604 
----------------------------------------------------------------------------
Net earnings                                                            668 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Sales of AWB for the three months ended March 31, 2011 were $533-million. It is impracticable to provide net earnings information of AWB for the same period because corporate overheads of AWB are integrated with those of Agrium.

Oil-For-Food Programme

On April 14, 1995 the United Nations established the Oil-For-Food Programme ("OFFP"), whereby the Iraqi government was allowed to raise money through the sale of oil. The revenue from the sale of oil was placed into an escrow account, with the Iraqi government allowed to use these funds to purchase food, medical supplies and other humanitarian supplies.

On June 27, 2008 the Iraqi Government filed a civil lawsuit in the U.S. District Court for the Southern District of New York against AWB and 92 other companies who participated in the OFFP, alleging that the defendants participated in an illegal conspiracy with the "former Saddam Hussein regime" to divert funds from the United Nations OFFP escrow account. The lawsuit seeks total damages in excess of $10-billion from the defendants, jointly and severally, as well as treble damages under the U.S. Racketeer Influenced and Corrupt Organizations Act. As to AWB specifically, the lawsuit alleges that AWB unlawfully diverted to the former Saddam Hussein regime more than $232-million from the escrow account established under the OFFP. AWB and a number of other defendants filed a motion to dismiss the complaint in January 2010. At May 4, 2011, the potential exposure is indeterminable.

As the impact on the operations of AWB arising from this legal action has not yet been fully determined, there is uncertainty as to the resultant impact, if any, on the financial position, financial performance and cash flows of AWB arising directly or indirectly from transactions under the OFFP. If the case against AWB is not dismissed, a possible adverse decision on the merits could have a material adverse effect on AWB and on Agrium's consolidated financial position and results.

3. DISCONTINUED OPERATIONS

We entered into an agreement on December 15, 2010 with Cargill, Incorporated ("Cargill") to sell the majority of the Commodity Management business of AWB. Completion of the sale is expected in the first half of 2011. The purchase price to be paid by Cargill will be the net asset value of the sold businesses as at the completion date of the transaction, plus a premium. We have committed to a plan to sell certain other businesses that form part of the Commodity Management business that is not being acquired by Cargill. In addition to the sale of the Commodity Management business, the pool management operations of AWB Harvest Finance Limited ("AWBHF") will be transferred to Cargill. We have agreed to various terms and conditions and indemnifications pursuant to the sale of the Commodity Management business, including an indemnity for litigation related to the OFFP, as described in note 2, Business Acquisition.

Commodity Management operations included in the agreement with Cargill are reported as discontinued operations because their operations and cash flows will be eliminated from continuing operations as a result of the disposal transaction and we will not have any significant continuing involvement in the operations after the disposal transaction. Assets and liabilities related to discontinued operations are presented separately on the consolidated balance sheets.

We have not completed our determination of the fair value less cost to sell of the assets, liabilities, or related deferred income tax impacts due to the timing of the disposition and the inherent complexity associated with the valuations.

                                                      As at          As at  
Condensed information of discontinued              March 31,   December 31,
 operations                                            2011           2010 
----------------------------------------------------------------------------
Operating information                                                       
----------------------------------------------------------------------------
Sales (a)                                              1,195            313 
----------------------------------------------------------------------------
Consolidated net earnings (loss) from                                       
 discontinued operations (b)                              11            (17)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash (used in) provided by                                                  
----------------------------------------------------------------------------
Operating activities                                    (317)          (252)
----------------------------------------------------------------------------
Investing activities                                      (2)            (1)
----------------------------------------------------------------------------
Financing activities                                       9            298 
----------------------------------------------------------------------------
                                                        (310)            45 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance sheet information                                                   
----------------------------------------------------------------------------
Accounts receivable (c)                                1,122            743 
----------------------------------------------------------------------------
Inventories (d)                                          490            551 
----------------------------------------------------------------------------
Prepaid expenses and deposits                             13             14 
----------------------------------------------------------------------------
Other current assets                                       7             12 
----------------------------------------------------------------------------
Current assets                                         1,632          1,320 
----------------------------------------------------------------------------
Property, plant and equipment                             88             81 
----------------------------------------------------------------------------
Goodwill                                                   6              - 
----------------------------------------------------------------------------
Other financial assets                                     7              2 
----------------------------------------------------------------------------
Deferred income tax assets                                25              9 
----------------------------------------------------------------------------
Non-current assets                                       126             92 
----------------------------------------------------------------------------
                                                       1,758          1,412 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Short-term debt (e)                                      493            471 
----------------------------------------------------------------------------
Accounts payable (f)                                     595            549 
----------------------------------------------------------------------------
Current portion of long-term debt                          1              - 
----------------------------------------------------------------------------
Current portion of other provisions                        1              - 
----------------------------------------------------------------------------
Current liabilities                                    1,090          1,020 
----------------------------------------------------------------------------
Deferred income tax liabilities                            4              2 
----------------------------------------------------------------------------
Non-current liabilities                                    4              2 
----------------------------------------------------------------------------
                                                       1,094          1,022 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(a) Includes revenue from related parties (Pools) of $307-million (December 
    31, 2010 - $59-million).                                                
(b) Net of income taxes of $8-million (December 31, 2010 - $3-million)      
(c) Includes receivables from Pools of $502-million (December 31, 2010 -    
    $157-million).                                                          
(d) Commodity inventories measured at fair value less costs to sell;        
    primarily wheat of $331-million and oilseeds of $97-million (December   
    31, 2010 - wheat of $355-million, oilseed of $122-million).             
(e) Demand facilities including $291-million (December 31, 2010 - $143-     
    million) secured by Pool inventories.                                   
(f) Includes accounts payable to Pools of $174-million (December 31, 2010 - 
    $91-million).                                                           
Balance sheet information -                                                 
 wheat, oilseeds and other           Notional                    Fair value 
 commodity derivative financial    (thousands,                       assets 
 instruments outstanding               tonnes)    Maturities   (liabilities)
----------------------------------------------------------------------------
Forward physical sales                  1,833           2011             79 
----------------------------------------------------------------------------
Forward physical purchases              1,042      2011-2012            (44)
----------------------------------------------------------------------------
Commodity derivatives                   1,802      2011-2012             20 
----------------------------------------------------------------------------
                                                                         55 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accounts receivable                                                     164 
----------------------------------------------------------------------------
Accounts payable                                                       (109)
----------------------------------------------------------------------------
                                                                         55 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance sheet information -                                                 
 foreign exchange derivative         Notional                    Fair value 
 financial instruments         (millions, buy                        assets 
 outstanding                         currency)    Maturities   (liabilities)
----------------------------------------------------------------------------
AUD/CAD forwards                          225           2011              3 
----------------------------------------------------------------------------
AUD/EUR forwards                          156           2011              2 
----------------------------------------------------------------------------
AUD/USD forwards                          863           2011             22 
----------------------------------------------------------------------------
CAD/AUD forwards                          145           2011             (3)
----------------------------------------------------------------------------
EUR/AUD forwards                           68           2011             (1)
----------------------------------------------------------------------------
USD/AUD forwards                          302           2011             (6)
----------------------------------------------------------------------------
Other                                       1           2011              4 
----------------------------------------------------------------------------
                                                                         21 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accounts receivable                                                      36 
----------------------------------------------------------------------------
Accounts payable                                                        (15)
----------------------------------------------------------------------------
                                                                         21 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
4. OTHER EXPENSES                                                           
                                                Three months ended March 31,
----------------------------------------------------------------------------
                                                        2011           2010 
----------------------------------------------------------------------------
Realized loss on derivative financial                                       
 instruments                                              48              7 
----------------------------------------------------------------------------
Unrealized (gain) loss on derivative financial                              
 instruments                                             (30)            61 
----------------------------------------------------------------------------
Gain on disposal of marketable securities                  -            (52)
----------------------------------------------------------------------------
Potash profit and capital tax                             11              3 
----------------------------------------------------------------------------
Bad debt expense                                           5              6 
----------------------------------------------------------------------------
Interest income                                          (14)            (8)
----------------------------------------------------------------------------
Foreign exchange (gain) loss                             (25)             1 
----------------------------------------------------------------------------
Other                                                      6              2 
----------------------------------------------------------------------------
                                                           1             20 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
5. FINANCE COSTS
                                                Three months ended March 31,
----------------------------------------------------------------------------
                                                        2011           2010 
----------------------------------------------------------------------------
Finance costs related to long-term debt                   27             23 
----------------------------------------------------------------------------
Other finance costs                                                         
----------------------------------------------------------------------------
 Environmental remediation and asset                                        
  retirement obligations                                   2              3 
----------------------------------------------------------------------------
 Other interest expense                                   11              4 
----------------------------------------------------------------------------
                                                          13              7 
----------------------------------------------------------------------------
                                                          40             30 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
6. PERSONNEL COSTS                                                          
Total personnel expenses                        Three months ended March 31,
----------------------------------------------------------------------------
                                                        2011           2010 
----------------------------------------------------------------------------
Short-term employee benefits                             204            151 
----------------------------------------------------------------------------
Post-employment benefits                                  13             11 
----------------------------------------------------------------------------
Share-based payments                                      12             36 
----------------------------------------------------------------------------
                                                         229            198 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Compensation of key management personnel        Three months ended March 31,
----------------------------------------------------------------------------
                                                        2011           2010 
----------------------------------------------------------------------------
Short-term employee benefits                               1              4 
----------------------------------------------------------------------------
Post-employment benefits                                   1              1 
----------------------------------------------------------------------------
Share-based payments                                       5             21 
----------------------------------------------------------------------------
                                                           7             26 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
7. EARNINGS (LOSS) PER SHARE                                                
                                                Three months ended March 31,
----------------------------------------------------------------------------
                                                        2011           2010 
----------------------------------------------------------------------------
Numerator                                                                   
----------------------------------------------------------------------------
 Consolidated net earnings (loss) from                                      
  continuing operations for the period                                      
  attributable to equity holders of Agrium               161             (2)
----------------------------------------------------------------------------
 Consolidated net earnings from discontinued                                
  operations for the period attributable to                                 
  equity holders of Agrium                                11              - 
----------------------------------------------------------------------------
 Consolidated net earnings (loss) for the                                   
  period attributable to equity holders of                                  
  Agrium                                                 172             (2)
----------------------------------------------------------------------------
Denominator                                                                 
----------------------------------------------------------------------------
 Weighted-average number of shares outstanding                              
  for basic earnings per share                           158            157 
----------------------------------------------------------------------------
 Dilutive instruments - stock options (a)(b)               -              1 
----------------------------------------------------------------------------
 Weighted-average number of shares outstanding                              
  for diluted earnings per share                         158            158 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 Basic earnings (loss) per share from                                       
  continuing operations                                 1.02          (0.01)
----------------------------------------------------------------------------
 Basic earnings per share from discontinued                                 
  operations                                            0.07              - 
----------------------------------------------------------------------------
 Basic earnings (loss) per share                        1.09          (0.01)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 Diluted earnings (loss) per share from                                     
  continuing operations                                 1.02          (0.01)
----------------------------------------------------------------------------
 Diluted earnings per share from discontinued                               
  operations                                            0.07              - 
----------------------------------------------------------------------------
 Diluted earnings (loss) per share                      1.09          (0.01)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(a) For diluted earnings per share, conversion or exercise is assumed only  
    if the effect is dilutive to basic earnings per share.                  
(b) Using the treasury stock method, stock options with an average grant    
    price less than or equal to the average share price during the period   
    are considered dilutive and potential common share equivalents are      
    considered outstanding.                                                 
8. INVENTORIES                                                              
                                                           As at      As at 
                                     As at March 31, December 31, January 1,
----------------------------------------------------------------------------
                                     2011      2010         2010       2010 
----------------------------------------------------------------------------
Raw materials                         281       247          267        231 
----------------------------------------------------------------------------
Finished goods                        391       461          268        338 
----------------------------------------------------------------------------
Product for resale                  2,984     2,280        1,967      1,568 
----------------------------------------------------------------------------
                                    3,656     2,988        2,502      2,137 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Depreciation and amortization                                               
 recorded in inventory                 24        26           16         16 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Recorded in cost of product sold                Three months ended March 31,
----------------------------------------------------------------------------
                                                        2011           2010 
----------------------------------------------------------------------------
Depreciation and amortization                             39             36 
----------------------------------------------------------------------------
Direct freight                                            49             50 
----------------------------------------------------------------------------
Inventory                                              2,141          1,400 
----------------------------------------------------------------------------
                                                       2,229          1,486 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Our determination of net realizable value of inventories requires           
considerable judgment to estimate forecasted selling prices, including      
assumptions about demand and supply variables.                              
9. PROPERTY, PLANT AND EQUIPMENT                                            
                                               Buildings and  Machinery and 
March 31, 2011                           Land   improvements      equipment 
----------------------------------------------------------------------------
Cost                                                                        
----------------------------------------------------------------------------
 December 31, 2010                         84            927          3,003 
----------------------------------------------------------------------------
 Additions                                  -             10             38 
----------------------------------------------------------------------------
 Disposals                                  -             (2)            (7)
----------------------------------------------------------------------------
 Other adjustments                          -             (3)            11 
----------------------------------------------------------------------------
 Foreign exchange translation               3              6             45 
----------------------------------------------------------------------------
March 31, 2011                             87            938          3,090 
----------------------------------------------------------------------------
Accumulated depreciation                                                    
----------------------------------------------------------------------------
 December 31, 2010                          -           (390)        (1,841)
----------------------------------------------------------------------------
 Depreciation                                            (15)           (52)
----------------------------------------------------------------------------
 Disposals                                  -              1              6 
----------------------------------------------------------------------------
 Other adjustments                          -             (3)             - 
----------------------------------------------------------------------------
 Foreign exchange translation               -             (4)           (29)
----------------------------------------------------------------------------
March 31, 2011                              -           (411)        (1,916)
----------------------------------------------------------------------------
Net book value                             87            527          1,174 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                 Assets under                               
March 31, 2011                   construction          Other          Total 
----------------------------------------------------------------------------
Cost                                                                        
----------------------------------------------------------------------------
 December 31, 2010                        335             87          4,436 
----------------------------------------------------------------------------
 Additions                                 61              1            110 
----------------------------------------------------------------------------
 Disposals                                  -              -             (9)
----------------------------------------------------------------------------
 Other adjustments                        (23)             5            (10)
----------------------------------------------------------------------------
 Foreign exchange translation               7              1             62 
----------------------------------------------------------------------------
March 31, 2011                            380             94          4,589 
----------------------------------------------------------------------------
Accumulated depreciation                                                    
----------------------------------------------------------------------------
 December 31, 2010                          -            (51)        (2,282)
----------------------------------------------------------------------------
 Depreciation                               -             (1)           (68)
----------------------------------------------------------------------------
 Disposals                                  -              -              7 
----------------------------------------------------------------------------
 Other adjustments                          -              -             (3)
----------------------------------------------------------------------------
 Foreign exchange translation               -             (1)           (34)
----------------------------------------------------------------------------
March 31, 2011                              -            (53)        (2,380)
----------------------------------------------------------------------------
Net book value                            380             41          2,209 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                               Buildings and  Machinery and 
December 31, 2010                        Land   improvements      equipment 
----------------------------------------------------------------------------
Cost                                                                        
----------------------------------------------------------------------------
 January 1, 2010                           73            702          2,888 
----------------------------------------------------------------------------
 Additions                                 11            150            228 
----------------------------------------------------------------------------
 Acquisitions                               2             31             37 
----------------------------------------------------------------------------
 Disposals                                 (5)           (34)          (260)
----------------------------------------------------------------------------
 Other adjustments                          2             63             31 
----------------------------------------------------------------------------
 Foreign exchange translation               1             15             79 
----------------------------------------------------------------------------
December 31, 2010                          84            927          3,003 
----------------------------------------------------------------------------
Accumulated depreciation                                                    
----------------------------------------------------------------------------
 January 1, 2010                            -           (338)        (1,833)
----------------------------------------------------------------------------
 Depreciation                               -            (48)          (202)
----------------------------------------------------------------------------
 Disposals                                  -             22            235 
----------------------------------------------------------------------------
 Other adjustments                          -            (18)            12 
----------------------------------------------------------------------------
 Foreign exchange translation               -             (8)           (53)
----------------------------------------------------------------------------
December 31, 2010                           -           (390)        (1,841)
----------------------------------------------------------------------------
Net book value                             84            537          1,162 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                 Assets under                               
December 31, 2010                construction          Other          Total 
----------------------------------------------------------------------------
Cost                                                                        
----------------------------------------------------------------------------
 January 1, 2010                          274             78          4,015 
----------------------------------------------------------------------------
 Additions                                110              7            506 
----------------------------------------------------------------------------
 Acquisitions                              11              -             81 
----------------------------------------------------------------------------
 Disposals                                  -             (2)          (301)
----------------------------------------------------------------------------
 Other adjustments                        (73)            (2)            21 
----------------------------------------------------------------------------
 Foreign exchange translation              13              6            114 
----------------------------------------------------------------------------
December 31, 2010                         335             87          4,436 
----------------------------------------------------------------------------
Accumulated depreciation                                                    
----------------------------------------------------------------------------
 January 1, 2010                            -            (47)        (2,218)
----------------------------------------------------------------------------
 Depreciation                               -             (5)          (255)
----------------------------------------------------------------------------
 Disposals                                  -              1            258 
----------------------------------------------------------------------------
 Other adjustments                          -              4             (2)
----------------------------------------------------------------------------
 Foreign exchange translation               -             (4)           (65)
----------------------------------------------------------------------------
December 31, 2010                           -            (51)        (2,282)
----------------------------------------------------------------------------
Net book value                            335             36          2,154 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
10. INTANGIBLES AND GOODWILL                                                
                                                    Customer                
March 31, 2011                    Trade names  relationships     Technology 
----------------------------------------------------------------------------
Cost                                                                        
----------------------------------------------------------------------------
 December 31, 2010                         31            553             64 
----------------------------------------------------------------------------
 Additions developed internally             -              -              1 
----------------------------------------------------------------------------
 Adjustments to purchase price                                              
  allocation                                -              -              - 
----------------------------------------------------------------------------
 Other adjustments                          -              1              - 
----------------------------------------------------------------------------
 Foreign exchange translation               -              -              - 
----------------------------------------------------------------------------
March 31, 2011                             31            554             65 
----------------------------------------------------------------------------
Accumulated amortization                                                    
----------------------------------------------------------------------------
 December 31, 2010                         (7)          (108)           (14)
----------------------------------------------------------------------------
 Amortization                               -            (10)            (3)
----------------------------------------------------------------------------
 Other adjustments                          -              2             (1)
----------------------------------------------------------------------------
 Foreign exchange translation               -              -              - 
----------------------------------------------------------------------------
March 31, 2011                             (7)          (116)           (18)
----------------------------------------------------------------------------
Net book value                             24            438             47 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                       Total                
March 31, 2011                          Other    Intangibles       Goodwill 
----------------------------------------------------------------------------
Cost                                                                        
----------------------------------------------------------------------------
 December 31, 2010                        148            796          2,423 
----------------------------------------------------------------------------
 Additions developed internally             -              1              - 
----------------------------------------------------------------------------
 Adjustments to purchase price                                              
  allocation                                -              -             78 
----------------------------------------------------------------------------
 Other adjustments                          1              2             (6)
----------------------------------------------------------------------------
 Foreign exchange translation               1              1             13 
----------------------------------------------------------------------------
March 31, 2011                            150            800          2,508 
----------------------------------------------------------------------------
Accumulated amortization                                                    
----------------------------------------------------------------------------
 December 31, 2010                        (48)          (177)             - 
----------------------------------------------------------------------------
 Amortization                              (9)           (22)             - 
----------------------------------------------------------------------------
 Other adjustments                         (1)             -              - 
----------------------------------------------------------------------------
 Foreign exchange translation              (1)            (1)             - 
----------------------------------------------------------------------------
March 31, 2011                            (59)          (200)             - 
----------------------------------------------------------------------------
Net book value                             91            600          2,508 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                    Customer                
December 31, 2010                 Trade names  relationships     Technology 
----------------------------------------------------------------------------
Cost                                                                        
----------------------------------------------------------------------------
 January 1, 2010                           31            537             24 
----------------------------------------------------------------------------
 Acquisitions                               -              6             35 
----------------------------------------------------------------------------
 Disposals                                  -              -              - 
----------------------------------------------------------------------------
 Other adjustments                          -             10              4 
----------------------------------------------------------------------------
 Foreign exchange translation               -              -              1 
----------------------------------------------------------------------------
December 31, 2010                          31            553             64 
----------------------------------------------------------------------------
Accumulated amortization                                                    
----------------------------------------------------------------------------
 January 1, 2010                           (5)           (69)            (9)
----------------------------------------------------------------------------
 Amortization                              (2)           (38)            (3)
----------------------------------------------------------------------------
 Disposals                                  -              -              - 
----------------------------------------------------------------------------
 Other adjustments                          -              -             (1)
----------------------------------------------------------------------------
 Foreign exchange translation               -             (1)            (1)
----------------------------------------------------------------------------
December 31, 2010                          (7)          (108)           (14)
----------------------------------------------------------------------------
Net book value                             24            445             50 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                       Total                
December 31, 2010                       Other    Intangibles       Goodwill 
----------------------------------------------------------------------------
Cost                                                                        
----------------------------------------------------------------------------
 January 1, 2010                          138            730          1,804 
----------------------------------------------------------------------------
 Acquisitions                               -             41            589 
----------------------------------------------------------------------------
 Disposals                                 (1)            (1)             - 
----------------------------------------------------------------------------
 Other adjustments                         11             25              3 
----------------------------------------------------------------------------
 Foreign exchange translation               -              1             27 
----------------------------------------------------------------------------
December 31, 2010                         148            796          2,423 
----------------------------------------------------------------------------
Accumulated amortization                                                    
----------------------------------------------------------------------------
 January 1, 2010                          (30)          (113)             - 
----------------------------------------------------------------------------
 Amortization                             (19)           (62)             - 
----------------------------------------------------------------------------
 Disposals                                  1              1              - 
----------------------------------------------------------------------------
 Other adjustments                          -             (1)             - 
----------------------------------------------------------------------------
 Foreign exchange translation               -             (2)             - 
----------------------------------------------------------------------------
December 31, 2010                         (48)          (177)             - 
----------------------------------------------------------------------------
Net book value                            100            619          2,423 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Amortization of finite-lived intangibles        Three months ended March 31,
----------------------------------------------------------------------------
                                                        2011           2010 
----------------------------------------------------------------------------
Cost of product sold                                       1              1 
----------------------------------------------------------------------------
Selling                                                   18             11 
----------------------------------------------------------------------------
General and administrative                                 3              2 
----------------------------------------------------------------------------
                                                          22             14 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Certain of our trade names with a cost of $17-million (March 31, 2010 - 
$17-million, December 31, 2010 - $17-million, January 1, 2010 - $17-million)
have indefinite lives for accounting purposes and accordingly are not
amortized.
11. OTHER FINANCIAL ASSETS                                                  
                                                           As at      As at 
                                     As at March 31, December 31, January 1,
----------------------------------------------------------------------------
                                     2011      2010         2010       2010 
----------------------------------------------------------------------------
Investments                            40         -            2         25 
----------------------------------------------------------------------------
Receivables                            38         1           34         22 
----------------------------------------------------------------------------
Derivative financial instruments        6         1            3          3 
----------------------------------------------------------------------------
Other                                  23        43            9         38 
----------------------------------------------------------------------------
                                      107        45           48         88 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
12. DEBT                                                                    
                                                           As at      As at 
                               As at March 31,       December 31, January 1,
----------------------------------------------------------------------------
                                    2011                    2010       2010 
----------------------------------------------------------------------------
                          Total Unutilized Utilized     Utilized   Utilized 
----------------------------------------------------------------------------
Short-term debt                                                             
----------------------------------------------------------------------------
North American facilities                                                   
 expiring 2012 (a)          775        735       40            -          - 
----------------------------------------------------------------------------
North American accounts                                                     
 receivable                                                                 
 securitization (b)         200        200        -            -          - 
----------------------------------------------------------------------------
European facilities                                                         
 expiring 2011 to 2012                                                      
 (c)                        201         29      172          142         74 
----------------------------------------------------------------------------
South American facilities                                                   
 expiring 2011 to 2012      133         66       67           55         32 
----------------------------------------------------------------------------
Australian facilities                                                       
 expiring 2011              130         44       86          100          - 
----------------------------------------------------------------------------
Australian accounts                                                         
 receivable                                                                 
 securitization (b)         258         76      182          220          - 
----------------------------------------------------------------------------
                          1,697      1,150      547          517        106 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Current portion of long-                                                    
 term debt                                       53          125          - 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Long-term debt                                                              
----------------------------------------------------------------------------
 Floating rate bank loans                                                   
  due in 2012                                    15           14         26 
----------------------------------------------------------------------------
 Floating rate bank loans                                                   
  due May 5, 2013                               460          460        460 
----------------------------------------------------------------------------
 6.125% debentures due                                                      
  January 15, 2041                              500          500          - 
----------------------------------------------------------------------------
 6.75% debentures due                                                       
  January 15, 2019                              500          500        500 
----------------------------------------------------------------------------
 7.125% debentures due                                                      
  May 23, 2036                                  300          300        300 
----------------------------------------------------------------------------
 7.7% debentures due                                                        
  February 1, 2017                              100          100        100 
----------------------------------------------------------------------------
 7.8% debentures due                                                        
  February 1, 2027                              125          125        125 
----------------------------------------------------------------------------
 8.25% debentures due                                                       
  February 15, 2011                               -            -        125 
----------------------------------------------------------------------------
 Other                                           85          141         73 
----------------------------------------------------------------------------
                                              2,085        2,140      1,709 
----------------------------------------------------------------------------
Unamortized transaction                                                     
 costs                                          (22)         (22)       (10)
----------------------------------------------------------------------------
                                              2,063        2,118      1,699 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(a) Outstanding letters of credit issued under our revolving credit         
    facilities at March 31, 2011 were $77-million reducing credit available 
    under the facilities to $658-million.                                   
(b) We have revolving purchase and sale agreements to sell, with limited    
    recourse, accounts receivable to a maximum of $200-million and AUD$250- 
    million (December 31, 2010 - $200-million and AUD$250-million, January  
    1, 2010 - $200-million).                                                
    Accounts receivable                   As at         As at         As at 
     securitization                    March 31,  December 31,    January 1,
    ------------------------------------------------------------------------
                                           2011          2010          2010 
    ------------------------------------------------------------------------
    Cumulative proceeds from                                                
     securitization, beginning of                                           
     period                                 220             -           200 
    ------------------------------------------------------------------------
    Acquisitions through business                                           
     combinations                             -           205             - 
    ------------------------------------------------------------------------
    Proceeds from sale of                                                   
     receivables                            573           225           400 
    ------------------------------------------------------------------------
    Securitization reduction                                                
     payments                              (613)         (210)         (600)
    ------------------------------------------------------------------------
    Foreign currency translation              2             -             - 
    ------------------------------------------------------------------------
    Cumulative proceeds from                                                
     securitization, end of period          182           220             - 
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
(c) Of the total facility, $4-million is secured by accounts receivable.    
13. OTHER PROVISIONS                                                        
                Environmental      Asset Cash-settled                       
                  remediation retirement  share-based          Legal        
March 31, 2011             (a)        (b)  payments(c) contingencies  Total 
----------------------------------------------------------------------------
December 31,                                                                
 2010                     119        181          235             29    564 
----------------------------------------------------------------------------
Additional                                                                  
 provisions or                                                              
 changes in                                                                 
 estimates                  -          1           12              1     14 
----------------------------------------------------------------------------
Draw-downs                 (3)        (1)         (28)            (3)   (35)
----------------------------------------------------------------------------
Accretion                   -          2            -              -      2 
----------------------------------------------------------------------------
Other                                                                       
 adjustments                1          1            -             (7)    (5)
----------------------------------------------------------------------------
Foreign                                                                     
 currency                                                                   
 translation                1          3            2              -      6 
----------------------------------------------------------------------------
March 31, 2011            118        187          221             20    546 
----------------------------------------------------------------------------
Current portion            10          -          183             20    213 
----------------------------------------------------------------------------
Non-current                                                                 
 portion                  108        187           38              -    333 
----------------------------------------------------------------------------
                          118        187          221             20    546 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                Environmental      Asset Cash-settled                       
December 31,      remediation retirement  share-based          Legal        
 2010                      (a)        (b) payments (c) contingencies  Total 
----------------------------------------------------------------------------
January 1, 2010           122        139          149             46    456 
----------------------------------------------------------------------------
Additional                                                                  
 provisions or                                                              
 changes in                                                                 
 estimates                 10         56          111             16    193 
----------------------------------------------------------------------------
Draw-downs                (19)        (7)         (35)           (15)   (76)
----------------------------------------------------------------------------
Reversals                  (2)       (15)           -            (20)   (37)
----------------------------------------------------------------------------
Accretion                   3          6            -              -      9 
----------------------------------------------------------------------------
Other                                                                       
 adjustments                3         (1)           4              2      8 
----------------------------------------------------------------------------
Foreign                                                                     
 currency                                                                   
 translation                2          3            6              -     11 
----------------------------------------------------------------------------
December 31,                                                                
 2010                     119        181          235             29    564 
----------------------------------------------------------------------------
Current portion            10          -          159             29    198 
----------------------------------------------------------------------------
Non-current                                                                 
 portion                  109        181           76              -    366 
----------------------------------------------------------------------------
                          119        181          235             29    564 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(a) We estimate that environmental remediation liabilities will be settled  
    between 2011 and 2038.                                                  
(b) Our asset retirement obligations generally related to dismantlement and 
    site restoration for nitrogen, potash and phosphate production          
    facilities, marketing and distribution facilities, and potash and       
    phosphate mine assets. We estimate these obligations will be settled    
    between 2011 and 2040, with the exception of obligations related to     
    potash operations, which are expected to occur after 100 years.         
(c) We estimate the fair value of liabilities for cash-settled share-based  
    payment compensation plan awards using a Black-Scholes option pricing   
    model for awards with a service condition, and a Monte Carlo simulation 
    model for awards with service and market conditions.                    
Assumptions used to calculate                                               
 fair value of cash-settled                                As at      As at 
 share-based payments                As at March 31, December 31, January 1,
----------------------------------------------------------------------------
                                     2011      2010         2010       2010 
----------------------------------------------------------------------------
Risk-free interest rate (%)           2.4       3.1          2.2        3.8 
----------------------------------------------------------------------------
Expected annual volatility (%)      54.19     51.03        53.46      43.04 
----------------------------------------------------------------------------
Expected annual dividend yield                                              
 (%)                                 0.12      0.16         0.12       0.18 
----------------------------------------------------------------------------
Expected term of grant (in                                                  
 years)                                10        10           10         10 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Provisions are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events that can be reasonably estimated. The timing of recognition requires the application of judgment to existing facts and circumstances, which can be subject to change. Estimates of the amounts of provisions recognized are based on current legal and constructive requirements, technology and price levels. Actual outflows can differ from estimates due to changes in laws, regulations, public expectations, technology, prices and conditions, and can take place many years in the future. Our provisions for environmental remediation and asset retirement depend on a number of uncertain factors, such as the extent and type of remediation and/or abandonment required and the cost of these activities.

14. OTHER FINANCIAL LIABILITIES                                             
                                                           As at      As at
                                     As at March 31, December 31, January 1,
----------------------------------------------------------------------------
                                     2011      2010         2010       2010 
----------------------------------------------------------------------------
Derivative financial instruments       29        47           33         25 
----------------------------------------------------------------------------
Other                                  13        10           14          9 
----------------------------------------------------------------------------
                                       42        57           47         34 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

15. OPERATING LEASES

Operating lease commitments consist primarily of leases for rail cars and contractual commitments at distribution facilities in Wholesale, vehicles and application equipment in Retail, and office equipment and property leases throughout our operations. Commitments represent minimum payments under each agreement in each of the next five years. For the three months ended March 31, 2011, expenses for operating leases were $57-million (three months ended March 31, 2010 - $37-million).

The future minimum lease payments related to our operating leases are as follows:

Future minimum lease payments for operating leases           March 31, 2011 
----------------------------------------------------------------------------
2011                                                                    178 
----------------------------------------------------------------------------
2012 - 2015                                                             346 
----------------------------------------------------------------------------
after  2015                                                             101 
----------------------------------------------------------------------------
                                                                        625 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

The classification of our leases as finance leases or operating leases is based on the extent to which the risks and rewards of ownership of a leased asset have been transferred. Making this determination requires the use of management's judgment in assessing the substance of the lease transaction.

16. FINANCIAL INSTRUMENTS

In the normal course of business, our financial position, results of operations and cash flows are exposed to various risks. Sensitivity analysis to risk is provided where the effect on net earnings or shareholders' equity could be material. Sensitivity analysis is performed by relating the reasonably possible changes in the risk variable at March 31, 2011 to financial instruments outstanding on that date while assuming all other variables remain constant.

Market risk

a) Currency risk

U.S. dollar denominated transactions in our Canadian operations generate foreign exchange gains and losses on outstanding balances which are recognized in net earnings.

Impact of U.S. dollar changes on                           As at      As at 
 net earnings                        As at March 31, December 31, January 1,
----------------------------------------------------------------------------
                                     2011      2010         2010       2010 
----------------------------------------------------------------------------
Net U.S. dollar denominated                                                 
 balance in Canadian operations       948       146          625        254 
----------------------------------------------------------------------------
A $10-million impact requires a                                             
 strengthening or weakening in                                              
 the U.S. dollar against the                                                
 Canadian dollar                     0.01      0.10         0.02       0.06 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
We have foreign currency balances exposed to foreign exchange fluctuations. 
Balances in non-U.S.                                                        
 dollar subsidiaries                          As at March 31,               
----------------------------------------------------------------------------
(in U.S. dollar                                                             
 equivalent)                            2011                     2010       
----------------------------------------------------------------------------
                                CAD      Euro       AUD       CAD      Euro 
----------------------------------------------------------------------------
Cash and cash equivalents      (200)       22       214        65         9 
----------------------------------------------------------------------------
Accounts receivable             146       181       512       173       106 
----------------------------------------------------------------------------
Short-term debt                 (40)     (173)      (88)        -      (111)
----------------------------------------------------------------------------
Accounts payable               (565)      (80)     (477)     (460)      (36)
----------------------------------------------------------------------------
Current portion of other                                                    
 provisions                    (148)        -         -       (95)        - 
----------------------------------------------------------------------------
                               (807)      (50)      161      (317)      (32)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balances in non-U.S.                  As at                    As at        
 dollar subsidiaries               December 31,              January 1,     
----------------------------------------------------------------------------
(in U.S. dollar                                                             
 equivalent)                            2010                     2010       
----------------------------------------------------------------------------
                                CAD      Euro       AUD       CAD      Euro 
----------------------------------------------------------------------------
Cash and cash equivalents        40         6       165        (2)        5 
----------------------------------------------------------------------------
Accounts receivable             126       141       447        69        65 
----------------------------------------------------------------------------
Short-term debt                   -      (142)     (308)        -       (31)
----------------------------------------------------------------------------
Accounts payable               (540)      (86)     (308)     (183)      (38)
----------------------------------------------------------------------------
Current portion of other                                                    
 provisions                    (128)        -         -       (80)        - 
----------------------------------------------------------------------------
                               (502)      (81)       (4)     (196)        1 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Impact of U.S. dollar                                                       
 changes on comprehensive                                                   
 income                                      As at March 31,                
----------------------------------------------------------------------------
                                        2011                     2010       
----------------------------------------------------------------------------
                                CAD      Euro       AUD       CAD      Euro 
----------------------------------------------------------------------------
A $10-million increase                                                      
 requires a strengthening                                                   
 (weakening) against the                                                    
 U.S. dollar                  (0.01)    (0.18)     0.06     (0.03)    (0.34)
----------------------------------------------------------------------------
A $10-million decrease                                                      
 requires a strengthening                                                   
 (weakening) against the                                                    
 U.S. dollar                   0.01      0.12     (0.06)     0.03      0.18 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                              March 31, 2011                
----------------------------------------------------------------------------
                                     Notional                    Fair value 
                               (millions, buy                        assets 
Sell/Buy                             currency)    Maturities   (liabilities)
----------------------------------------------------------------------------
USD/CAD forwards                      CAD 271           2011              1 
----------------------------------------------------------------------------
USD/EUR forwards                        EUR 4           2011              - 
----------------------------------------------------------------------------
CAD/USD forwards                      USD 668           2011             (4)
----------------------------------------------------------------------------
AUD/USD forwards                      USD 630           2011             (8)
----------------------------------------------------------------------------
USD/AUD forwards                       AUD 23           2011              3 
----------------------------------------------------------------------------
NZD/AUD forwards                       AUD 13           2011              - 
----------------------------------------------------------------------------
USD/CAD put options purchased         CAD 110           2011              3 
----------------------------------------------------------------------------
USD/CAD call options sold             CAD 229           2011             (4)
----------------------------------------------------------------------------
                                                                         (9)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                              March 31, 2010                
----------------------------------------------------------------------------
                                     Notional                    Fair value 
                               (millions, buy                        assets 
Sell/Buy                             currency)    Maturities   (liabilities)
----------------------------------------------------------------------------
USD/CAD forwards                       CAD 46           2010              2 
----------------------------------------------------------------------------
USD/EUR forwards                       EUR 15           2010             (1)
----------------------------------------------------------------------------
CAD/USD forwards                            -              -              - 
----------------------------------------------------------------------------
AUD/USD forwards                            -              -              - 
----------------------------------------------------------------------------
USD/AUD forwards                            -              -              - 
----------------------------------------------------------------------------
NZD/AUD forwards                            -              -              - 
----------------------------------------------------------------------------
USD/CAD put options purchased               -              -              - 
----------------------------------------------------------------------------
USD/CAD call options sold                   -              -              - 
----------------------------------------------------------------------------
                                                                          1 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                             December 31, 2010              
----------------------------------------------------------------------------
                                     Notional                    Fair value 
                               (millions, buy                        assets 
Sell/Buy                             currency)    Maturities   (liabilities)
----------------------------------------------------------------------------
USD/CAD forwards                       CAD 40           2011              3 
----------------------------------------------------------------------------
CAD/USD forwards                      USD 370           2011             (7)
----------------------------------------------------------------------------
AUD/USD forwards                      USD 381           2011            (24)
----------------------------------------------------------------------------
EUR/USD forwards                            -              -              - 
----------------------------------------------------------------------------
GBP/USD forwards                            -              -              - 
----------------------------------------------------------------------------
                                                                        (28)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                              January 1, 2010               
----------------------------------------------------------------------------
                                     Notional                    Fair value 
                               (millions, buy                        assets 
Sell/Buy                             currency)    Maturities   (liabilities)
----------------------------------------------------------------------------
USD/CAD forwards                       CAD 46           2010              1 
----------------------------------------------------------------------------
CAD/USD forwards                            -              -              - 
----------------------------------------------------------------------------
AUD/USD forwards                            -              -              - 
----------------------------------------------------------------------------
EUR/USD forwards                        USD 9           2010              - 
----------------------------------------------------------------------------
GBP/USD forwards                        USD 2           2010              - 
----------------------------------------------------------------------------
                                                                          1 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
b) Commodity price risk                                                     
Natural gas, power and nutrient derivative financial instruments outstanding
----------------------------------------------------------------------------
                                              March 31, 2011                
----------------------------------------------------------------------------
                                                                 Fair value 
                                                                     assets 
                                     Notional     Maturities   (liabilities)
----------------------------------------------------------------------------
Natural gas (BCF)                                                           
 NYMEX contracts                                                            
----------------------------------------------------------------------------
  Swaps                                    30    2011 - 2013            (46)
----------------------------------------------------------------------------
  Collars (swap with options)               9    2011 - 2012             (1)
----------------------------------------------------------------------------
 AECO contracts                                                             
----------------------------------------------------------------------------
  Swaps                                     2           2011              1 
----------------------------------------------------------------------------
                                           41                           (46)
----------------------------------------------------------------------------
Power - Swaps (GWh)                       378    2011 - 2013             10 
----------------------------------------------------------------------------
                                                                        (36)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                              March 31, 2010                
----------------------------------------------------------------------------
                                                                 Fair value 
                                                                     assets 
                                     Notional     Maturities   (liabilities)
----------------------------------------------------------------------------
Natural gas (BCF)                                                           
 NYMEX contracts                                                            
----------------------------------------------------------------------------
  Swaps                                    57    2010 - 2013            (96)
----------------------------------------------------------------------------
  Collars (swap with options)              20    2010 - 2012              5 
----------------------------------------------------------------------------
 AECO contracts                                                             
----------------------------------------------------------------------------
  Swaps                                     3           2010             (4)
----------------------------------------------------------------------------
                                           80                           (95)
----------------------------------------------------------------------------
Power - Swaps (GWh)                       518    2010 - 2013              1 
----------------------------------------------------------------------------
                                                                        (94)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Natural gas, power and nutrient derivative financial instruments outstanding
----------------------------------------------------------------------------
                                             December 31, 2010              
----------------------------------------------------------------------------
                                                                 Fair value 
                                                                     assets 
                                     Notional     Maturities   (liabilities)
----------------------------------------------------------------------------
Natural gas (BCF)                                                           
 NYMEX contracts                                                            
----------------------------------------------------------------------------
  Swaps                                    33    2011 - 2013            (50)
----------------------------------------------------------------------------
  Collars (swap with options)              12    2011 - 2012             (1)
----------------------------------------------------------------------------
  El Paso swaps                             2           2011              - 
----------------------------------------------------------------------------
 AECO contracts                                                             
----------------------------------------------------------------------------
  Swaps                                     7           2011             (2)
----------------------------------------------------------------------------
                                           54                           (53)
----------------------------------------------------------------------------
Power - Swaps (GWh)                       412    2011 - 2013              4 
----------------------------------------------------------------------------
Nutrient - Urea swaps (short                                                
 tons)                                      -              -              - 
----------------------------------------------------------------------------
                                                                        (49)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                              January 1, 2010               
----------------------------------------------------------------------------
                                                                 Fair value 
                                                                     assets 
                                     Notional     Maturities   (liabilities)
----------------------------------------------------------------------------
Natural gas (BCF)                                                           
 NYMEX contracts                                                            
----------------------------------------------------------------------------
  Swaps                                    67    2010 - 2013            (35)
----------------------------------------------------------------------------
  Collars (swap with options)              23    2010 - 2012              5 
----------------------------------------------------------------------------
  El Paso swaps                             -              -              - 
----------------------------------------------------------------------------
 AECO contracts                                                             
----------------------------------------------------------------------------
  Swaps                                     -              -              - 
----------------------------------------------------------------------------
                                           90                           (30)
----------------------------------------------------------------------------
Power - Swaps (GWh)                       552    2010 - 2013             (2)
----------------------------------------------------------------------------
Nutrient - Urea swaps (short                                                
 tons)                                 24,500           2010              1 
----------------------------------------------------------------------------
                                                                        (31)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Impact of change in fair value of natural gas                               
 derivative financial instruments               Three months ended March 31,
----------------------------------------------------------------------------
                                                        2011           2010 
----------------------------------------------------------------------------
A $10-million increase in net earnings                                      
 requires an increase in gas prices per MMBtu           3.50           0.51 
----------------------------------------------------------------------------
A $10-million increase in net earnings                                      
 requires a decrease in gas prices per MMBtu          (4.39)         (0.51)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Credit risk

We manage credit risk through rigorous credit approval and monitoring practices. Geographic and industry diversity also mitigate credit risk. The Wholesale business unit sells mainly to large agribusinesses and other industrial users. Letters of credit and credit insurance are used to mitigate risk. The Retail business unit sells to a large customer base dispersed over wide geographic areas in the United States, Canada, Argentina, Chile, Australia and New Zealand. The Advanced Technologies business unit sells to a diversified customer base including large suppliers in the North American professional turf application market.

Aging of trade accounts receivable                   March 31,              
----------------------------------------------------------------------------
                                            2011                2010        
----------------------------------------------------------------------------
                                              Allowance           Allowance 
                                                    for                 for 
                                               doubtful            doubtful 
                                        Gross  accounts     Gross  accounts 
----------------------------------------------------------------------------
Not past due                            1,514       (20)      905       (11)
----------------------------------------------------------------------------
Less than 30 days                         194        (5)       95        (3)
----------------------------------------------------------------------------
30 - 90 days                               99        (7)       77        (7)
----------------------------------------------------------------------------
91 - 180 days                              56       (10)       74       (15)
----------------------------------------------------------------------------
Greater than 180 days                      52       (21)       60       (18)
----------------------------------------------------------------------------
                                        1,915       (63)    1,211       (54)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Aging of trade accounts receivable      December 31,         January 1,     
----------------------------------------------------------------------------
                                            2010                2010        
----------------------------------------------------------------------------
                                              Allowance           Allowance 
                                                    for                 for 
                                               doubtful            doubtful 
                                        Gross  accounts     Gross  accounts 
----------------------------------------------------------------------------
Not past due                            1,256       (13)      716        (6)
----------------------------------------------------------------------------
Less than 30 days                         241        (3)      155        (2)
----------------------------------------------------------------------------
30 - 90 days                              107        (6)       76        (7)
----------------------------------------------------------------------------
91 - 180 days                              90       (15)       97       (16)
----------------------------------------------------------------------------
Greater than 180 days                      54       (16)       48       (15)
----------------------------------------------------------------------------
                                        1,748       (53)    1,092       (46)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                              Twelve months 
                                         Three months ended           ended 
Allowance for doubtful accounts               March 31,         December 31,
----------------------------------------------------------------------------
                                         2011           2010           2010 
----------------------------------------------------------------------------
Balance, beginning of period               54             46             46 
----------------------------------------------------------------------------
Additions                                  21             10             55 
----------------------------------------------------------------------------
Write-offs                                (12)            (2)           (48)
----------------------------------------------------------------------------
Balance, end of period                     63             54             53 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance as a percent of trade                                               
 accounts receivable (%)                    3              4              4 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

We may be exposed to certain losses in the event that counterparties to short-term investments and derivative financial instruments are unable to meet their contractual obligations. We manage this counterparty credit risk with policies requiring that counterparties to short-term investments and derivative financial instruments have an investment grade or higher credit rating and policies that limit the investing of excess funds to liquid instruments with a maximum term of one year and limit the maximum exposure to any one counterparty. We also enter into master netting agreements that mitigate our exposure to counterparty credit risk. At March 31, 2011, all counterparties to derivative financial instruments have maintained an investment grade or higher credit rating and there is no indication that any counterparty will be unable to meet their obligations under derivative financial contracts. The carrying amount of financial assets represents the maximum credit exposure.

                                                          As at      As at  
Maximum exposure to credit risk      As at March 31, December 31, January 1,
----------------------------------------------------------------------------
                                     2011      2010         2010       2010 
----------------------------------------------------------------------------
Cash and cash equivalents             447       907          635        933 
----------------------------------------------------------------------------
Accounts receivable                 2,105     1,400        1,793      1,247 
----------------------------------------------------------------------------
Marketable securities                   -         6            3        114 
----------------------------------------------------------------------------
Other financial assets                107        45           48         88 
----------------------------------------------------------------------------
                                    2,659     2,358        2,479      2,382 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Fair values                                                                 
Financial instrument                    Category             Measurement 
----------------------------------------------------------------------------
Cash and cash equivalents               Held for trading     Fair value 
----------------------------------------------------------------------------
Accounts receivable (a)                 Loans and            Amortized cost 
                                        receivables                         
----------------------------------------------------------------------------
Accounts receivable - derivative        Held for trading     Fair value     
 financial instruments (b)                                                  
----------------------------------------------------------------------------
Marketable securities (b)               Available for sale   Fair value     
                                        or held for trading                 
----------------------------------------------------------------------------
Other financial assets                  Loans and            Amortized cost 
                                        receivables                         
----------------------------------------------------------------------------
Other financial assets                  Available for sale   Fair value
----------------------------------------------------------------------------
Other financial assets - derivative     Held for trading     Fair value     
 financial instruments (b)                                                  
----------------------------------------------------------------------------
Short-term debt (a)                     Other financial      Amortized cost
                                        liabilities 
----------------------------------------------------------------------------
Accounts payable (a)                    Other financial      Amortized cost
                                        liabilities 
----------------------------------------------------------------------------
Accounts payable - derivative           Held for trading     Fair value     
 financial instruments (b)                                                  
----------------------------------------------------------------------------
Long-term debt (c)                      Other financial      Amortized cost
                                        liabilities 
----------------------------------------------------------------------------
Other financial liabilities             Other financial      Amortized cost
                                        liabilities 
----------------------------------------------------------------------------
Other financial liabilities -           Held for trading     Fair value     
 derivative financial instruments (b)                                       
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(a) Carrying value approximates fair value due to the short-term nature of  
    the instruments.                                                        
(b) Fair value is recorded at the estimated amount we would receive or pay  
    to terminate the contracts determined based on our assessment of        
    available market information and valuation methodologies based on       
    industry accepted third-party models using assumptions about discount   
    rates and the timing of future cash flows, based on observable market   
    inputs such as interest yield curves.                                   
(c) Fair value of floating-rate loans approximates carrying value.          
Fair value and carrying value of      As at March 31,     As at March 31,   
 financial instruments                      2011                2010        
----------------------------------------------------------------------------
                                         Fair  Carrying      Fair  Carrying 
                                        value     value     value     value 
----------------------------------------------------------------------------
Cash and cash equivalents -                                                 
 held for trading                         447       447       907       907 
----------------------------------------------------------------------------
Accounts receivable                                                         
----------------------------------------------------------------------------
 Loans and receivables                  2,096     2,096     1,396     1,396 
----------------------------------------------------------------------------
 Fair value through profit or loss          9         9         4         4 
----------------------------------------------------------------------------
                                        2,105     2,105     1,400     1,400 
----------------------------------------------------------------------------
Marketable securities - held for                                            
 trading                                    -         -         6         6 
----------------------------------------------------------------------------
Other financial assets                                                      
----------------------------------------------------------------------------
 Loans and receivables                     61        61        44        44 
----------------------------------------------------------------------------
 Available for sale                        40        40         -         - 
----------------------------------------------------------------------------
 Fair value through profit or loss          6         6         1         1 
----------------------------------------------------------------------------
                                          107       107        45        45 
----------------------------------------------------------------------------
Short-term debt - amortized cost          547       547       134       134 
----------------------------------------------------------------------------
Accounts payable                                                            
----------------------------------------------------------------------------
 Amortized cost                         3,832     3,832     2,887     2,887 
----------------------------------------------------------------------------
 Fair value through profit or loss         31        31        51        51 
----------------------------------------------------------------------------
                                        3,863     3,863     2,938     2,938 
----------------------------------------------------------------------------
Current portion of long-term debt 
----------------------------------------------------------------------------
 Debentures - amortized cost                -         -       133       125
----------------------------------------------------------------------------
 Floating rate debt - amortized cost       53        53         -         -
----------------------------------------------------------------------------
                                           53        53       133       125
----------------------------------------------------------------------------
Long-term debt
----------------------------------------------------------------------------
 Debentures - amortized cost            1,716     1,525     1,143     1,025 
----------------------------------------------------------------------------
 Floating rate debt - amortized cost      538       538       549       549 
----------------------------------------------------------------------------
                                        2,254     2,063     1,692     1,574 
----------------------------------------------------------------------------
Other financial liabilities                                                 
----------------------------------------------------------------------------
 Amortized cost                            13        13        10        10 
----------------------------------------------------------------------------
 Fair value through profit or loss         29        29        47        47 
----------------------------------------------------------------------------
                                           42        42        57        57 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Fair value and carrying value of     As at December 31,   As at January 1,  
 financial instruments                      2010                2010        
----------------------------------------------------------------------------
                                         Fair  Carrying      Fair  Carrying 
                                        value     value     value     value 
----------------------------------------------------------------------------
 Cash and cash equivalents -                                                
  held for trading                        635       635       933       933 
----------------------------------------------------------------------------
Accounts receivable                                                         
----------------------------------------------------------------------------
 Loans and receivables                  1,789     1,789     1,241     1,241 
----------------------------------------------------------------------------
 Fair value through profit or loss          4         4         6         6 
----------------------------------------------------------------------------
                                        1,793     1,793     1,247     1,247 
----------------------------------------------------------------------------
Marketable securities                                                       
----------------------------------------------------------------------------
 Available for sale                         -         -       113       113 
----------------------------------------------------------------------------
 Held for trading                           3         3         1         1 
----------------------------------------------------------------------------
                                            3         3       114       114 
----------------------------------------------------------------------------
Other financial assets                                                      
----------------------------------------------------------------------------
 Loans and receivables                     43        43        60        60 
----------------------------------------------------------------------------
 Available for sale                         2         2        25        25
----------------------------------------------------------------------------
 Fair value through profit or loss          3         3         3         3 
----------------------------------------------------------------------------
                                           48        48        88        88 
----------------------------------------------------------------------------
Short-term debt - amortized cost          517       517       106       106 
----------------------------------------------------------------------------
Accounts payable                                                            
----------------------------------------------------------------------------
 Amortized cost                         2,615     2,615     2,328     2,328 
----------------------------------------------------------------------------
 Fair value through profit or loss         51        51        14        14 
----------------------------------------------------------------------------
                                        2,666     2,666     2,342     2,342 
----------------------------------------------------------------------------
Current portion of long-term debt 
----------------------------------------------------------------------------
 Debentures - amortized cost              126       125         -         -
----------------------------------------------------------------------------
                                          126       125         -         -
----------------------------------------------------------------------------
Long-term debt                                                              
----------------------------------------------------------------------------
 Debentures - amortized cost            1,724     1,525     1,246     1,150 
----------------------------------------------------------------------------
 Floating rate debt - amortized cost      593       593       549       549 
----------------------------------------------------------------------------
                                        2,317     2,118     1,795     1,699 
----------------------------------------------------------------------------
Other financial liabilities                                                 
----------------------------------------------------------------------------
 Amortized cost                            14        14         9         9 
----------------------------------------------------------------------------
 Fair value through profit or loss         33        33        25        25 
----------------------------------------------------------------------------
                                           47        47        34        34 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
The weighted-average effective interest rate on long-term debt at March 31, 
2011 is 6% (March 31, 2010 - 6%, December 31, 2010 - 6%, January 1, 2010 -  
6%). The fair value of long-term debt is determined using information
classified as Level 2.                                                      
Fair value of financial                                                     
 instruments                          Level 1        Level 2          Total 
----------------------------------------------------------------------------
March 31, 2011                                                              
----------------------------------------------------------------------------
Fair value through profit or                                                
 loss                                                                       
----------------------------------------------------------------------------
 Cash and cash equivalents                447              -            447
----------------------------------------------------------------------------
 Foreign exchange derivative                                                
  financial instruments                     -             (9)            (9)
----------------------------------------------------------------------------
 Gas, power and nutrient                                                    
  derivative financial                                                      
  instruments                             (47)            11            (36)
----------------------------------------------------------------------------
Available for sale                         40              -             40 
----------------------------------------------------------------------------
March 31, 2010                                                              
----------------------------------------------------------------------------
Fair value through profit or                                                
 loss                                                                       
----------------------------------------------------------------------------
 Cash and cash equivalents                907              -            907
----------------------------------------------------------------------------
 Foreign exchange derivative                                                
  financial instruments                     -              1              1 
----------------------------------------------------------------------------
 Gas, power and nutrient                                                    
  derivative financial                                                      
  instruments                             (92)            (2)           (94)
----------------------------------------------------------------------------
Marketable securities                       6              -              6 
----------------------------------------------------------------------------
December 31, 2010                                                           
----------------------------------------------------------------------------
Fair value through profit or                                                
 loss                                                                       
----------------------------------------------------------------------------
Cash and cash equivalents                 635              -            635
----------------------------------------------------------------------------
Foreign exchange derivative                                                
  financial instruments                     -            (28)           (28)
----------------------------------------------------------------------------
Gas, power and nutrient                                                    
  derivative financial                                                      
  instruments                             (52)             3            (49)
----------------------------------------------------------------------------
 Marketable securities                      3              -              3
----------------------------------------------------------------------------
Available for sale                          2              -              2 
----------------------------------------------------------------------------
January 1, 2010                                                             
----------------------------------------------------------------------------
Fair value through profit or                                                
 loss                                                                       
----------------------------------------------------------------------------
 Cash and cash equivalents                933              -            933
----------------------------------------------------------------------------
 Foreign exchange derivative                                                
  financial instruments                     -              1              1 
----------------------------------------------------------------------------
 Gas, power and nutrient                                                    
  derivative financial                                                      
  instruments                             (30)            (1)           (31)
----------------------------------------------------------------------------
 Marketable securities                      1              -              1 
----------------------------------------------------------------------------
Available for sale                        138              -            138 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

17. CAPITAL MANAGEMENT

Our primary objectives when managing capital are to provide for: a) a prudent capital structure for raising capital at a reasonable cost for the funding of ongoing operations, capital expenditures, and new growth initiatives; and b) an appropriate rate of return to shareholders in relation to the risks underlying our assets.

We monitor the ratios outlined in the table below to manage our capital.

                                                           As at      As at 
                                     As at March 31, December 31, January 1,
----------------------------------------------------------------------------
                                     2011      2010         2010       2010 
----------------------------------------------------------------------------
Net debt to net debt plus equity                                            
 (%) (a)                               29        17           29         16 
----------------------------------------------------------------------------
Interest coverage (multiple) (b)     13.1    N/A (c)        12.2     N/A (c)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(a) Net debt includes short-term debt and long-term debt, net of cash and   
    cash equivalents. Equity consists of shareholders' equity.              
(b) Interest coverage is the last twelve months net earnings from continuing
    operations before interest expense, income taxes, depreciation,         
    amortization and asset impairment divided by interest, which includes   
    interest on long-term debt plus other interest.                         
(c) Twelve months of consolidated net earnings from continuing operations   
    before interest expense, income taxes, depreciation, amortization and   
    asset impairment is not available as a result of the transition to IFRS 
    on January 1, 2010.                                                     
(d) The measures of debt, equity and consolidated net earnings from         
    continuing operations described above are non-GAAP financial measures   
    which do not have a standardized meaning prescribed by IFRS and         
    therefore may not be comparable to similar measures presented by other  
    issuers.                                                                
(e) Our strategy for managing capital is unchanged from December 31, 2010.  

Our revolving credit facilities require that we maintain specific interest coverage and debt to capital ratios as well as other non-financial covenants as defined in the debt agreement. We were in compliance with all covenants at March 31, 2011.

We have filed a base shelf prospectus in Canada and the U.S. which potentially allows issuance of up to $1.5-billion of debt, equity or other securities until December 2011. Issuance of securities requires filing a prospectus supplement and is subject to availability of funding in capital markets.

18. SEGMENTATION                                                            
                                                         Three months ended 
                                                                   March 31,
                                                        2011           2010 
----------------------------------------------------------------------------
Consolidated sales                                                          
----------------------------------------------------------------------------
Retail                                                                      
----------------------------------------------------------------------------
 Crop nutrients                                          707            371 
----------------------------------------------------------------------------
 Crop protection products                                638            462 
----------------------------------------------------------------------------
 Seed                                                    230            191 
----------------------------------------------------------------------------
 Merchandise                                             144             21 
----------------------------------------------------------------------------
 Services and other                                      103             15 
----------------------------------------------------------------------------
                                                       1,822          1,060 
----------------------------------------------------------------------------
Wholesale                                                                   
----------------------------------------------------------------------------
 Nitrogen                                                334            261 
----------------------------------------------------------------------------
 Potash                                                  195            191 
----------------------------------------------------------------------------
 Phosphate                                               238            127 
----------------------------------------------------------------------------
 Product purchased for resale                            411            216 
----------------------------------------------------------------------------
 Other                                                    55             53 
----------------------------------------------------------------------------
                                                       1,233            848 
----------------------------------------------------------------------------
Advanced Technologies                                     81             64 
----------------------------------------------------------------------------
Other (a)(b)                                            (182)          (124)
----------------------------------------------------------------------------
                                                       2,954          1,848 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Consolidated inter-segment sales(b)                                         
----------------------------------------------------------------------------
 Retail                                                    6              5 
----------------------------------------------------------------------------
 Wholesale                                               161            108 
----------------------------------------------------------------------------
 Advanced Technologies                                    15             11 
----------------------------------------------------------------------------
                                                         182            124 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Consolidated net earnings                                                   
----------------------------------------------------------------------------
 Retail                                                  (15)           (68)
----------------------------------------------------------------------------
 Wholesale                                               377            147 
----------------------------------------------------------------------------
 Advanced Technologies                                    (5)            (1)
----------------------------------------------------------------------------
 Other (a)                                               (98)           (49)
----------------------------------------------------------------------------
 Earnings before finance costs and income                                   
  taxes                                                  259             29 
----------------------------------------------------------------------------
 Finance costs related to long-term debt                  27             23 
----------------------------------------------------------------------------
 Other finance costs                                      13              7 
----------------------------------------------------------------------------
 Earnings (loss) before income taxes                     219             (1)
----------------------------------------------------------------------------
 Income taxes                                             59              - 
----------------------------------------------------------------------------
 Consolidated net earnings (loss) from                                      
  continuing operations                                  160             (1)
----------------------------------------------------------------------------
Consolidated net earnings from discontinued                                 
 operations                                               11              - 
----------------------------------------------------------------------------
Consolidated net earnings (loss)                         171             (1)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(a) The Other segment is a non-operating segment for inter-segment          
    eliminations and corporate functions.                                   
(b) Sales between segments are accounted for at prices that approximate fair
    market value.                                                           
                                                           As at      As at 
                                     As at March 31, December 31, January 1,
----------------------------------------------------------------------------
                                     2011      2010         2010       2010 
----------------------------------------------------------------------------
Total assets                                                                
----------------------------------------------------------------------------
 Retail                             8,038     6,205        6,854      5,389 
----------------------------------------------------------------------------
 Wholesale                          2,848     2,412        2,602      3,175 
----------------------------------------------------------------------------
 Advanced Technologies                471       462          460        418 
----------------------------------------------------------------------------
 Other                              1,116     1,273        1,550        692 
----------------------------------------------------------------------------
 Discontinued operations            1,758         -        1,412          - 
----------------------------------------------------------------------------
                                   14,231    10,352       12,878      9,674 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

19. TRANSITION TO IFRS

The accounting policies set out in note 1 have been applied in preparing the financial statements for the three months ended March 31, 2011, the comparative information presented in these financial statements for the three months ended March 31, 2010, for the year ended December 31, 2010 and in the preparation of an opening IFRS balance sheet at January 1, 2010 (the "transition date").

In preparing our opening IFRS balance sheet, we have adjusted amounts reported previously in financial statements prepared in accordance with previous Canadian GAAP. An explanation of how the transition from previous Canadian GAAP to IFRS has affected our financial performance, cash flows and financial position is set out in the following tables and the notes that accompany the tables.

                                                Three months  Twelve months 
Reconciliation of net earnings and                     ended          ended 
 comprehensive income                               March 31,   December 31,
----------------------------------------------------------------------------
                                                        2010           2010 
----------------------------------------------------------------------------
Net (loss) earnings as reported under previous                              
 Canadian GAAP                                            (7)           714 
----------------------------------------------------------------------------
Adjustments to increase (decrease) reported                                 
 net earnings:                                                              
----------------------------------------------------------------------------
 Share-based payments                                     (3)            (1)
----------------------------------------------------------------------------
 Incentive accrual                                         6              - 
----------------------------------------------------------------------------
 Acquisition-related costs                                45              5 
----------------------------------------------------------------------------
 Environmental remediation and asset                                        
  retirement obligations                                  (5)            (6)
----------------------------------------------------------------------------
 Reclassification of non-controlling interest              1              - 
----------------------------------------------------------------------------
 Income tax effect of reconciling items                  (41)             1 
----------------------------------------------------------------------------
 Other                                                     3              - 
----------------------------------------------------------------------------
Consolidated net (loss) earnings as reported                                
 under IFRS                                               (1)           713 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Comprehensive (loss) income as reported under                               
 previous Canadian GAAP                                  (13)           763 
----------------------------------------------------------------------------
Adjustments to increase (decrease) reported                                 
 net earnings                                              6             (1)
----------------------------------------------------------------------------
Adjustments to increase (decrease) reported                                 
 other comprehensive income                               (5)           (28)
----------------------------------------------------------------------------
Consolidated comprehensive (loss) income as                                 
 reported under IFRS                                     (12)           734 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                Three months  Twelve months 
                                                       ended          ended 
Reconciliation of cash flows                        March 31,   December 31,
----------------------------------------------------------------------------
                                                        2010           2010 
----------------------------------------------------------------------------
Cash provided by operating activities as                                    
 reported under previous Canadian GAAP                  (114)           575 
----------------------------------------------------------------------------
Adjustments to increase (decrease) reported                                 
 cash provided by operating activities:                                     
----------------------------------------------------------------------------
 Consolidated net earnings                                 6              4 
----------------------------------------------------------------------------
 Share-based payments                                      3              1 
----------------------------------------------------------------------------
 Acquisition-related costs                               (45)           (45)
----------------------------------------------------------------------------
 Income tax effect of reconciling items                   27             (1)
----------------------------------------------------------------------------
 Reclassification of non-controlling interest             (1)             - 
----------------------------------------------------------------------------
 Consolidation of special purpose entity                   -             45 
----------------------------------------------------------------------------
 Other                                                    13             10 
----------------------------------------------------------------------------
Cash provided by operating activities as                                    
 reported under IFRS                                    (111)           589 
----------------------------------------------------------------------------
Cash provided by (used in) investing                                        
 activities as reported under previous                                      
 Canadian GAAP                                            60         (1,546)
----------------------------------------------------------------------------
Adjustments to increase (decrease) reported                                 
 cash provided by operating activities:                                     
----------------------------------------------------------------------------
 Acquisition-related costs                                 -             37 
----------------------------------------------------------------------------
 Other                                                     -              1 
----------------------------------------------------------------------------
Cash provided by (used in) investing                                        
 activities as reported under IFRS                        60         (1,508)
----------------------------------------------------------------------------
Cash provided by financing activities as                                    
 reported under previous Canadian GAAP                    25            518 
----------------------------------------------------------------------------
Adjustments to increase (decrease) reported                                 
 cash provided by operating activities:                                     
----------------------------------------------------------------------------
 Consolidation of special purpose entity                   -             50 
----------------------------------------------------------------------------
Cash provided by financing activities as                                    
 reported under IFRS                                      25            568 
----------------------------------------------------------------------------
Effect of exchange rate changes on cash and                                 
 cash equivalents as reported under previous                                
 Canadian GAAP                                             3             15 
----------------------------------------------------------------------------
Adjustments to increase (decrease) reported                                 
 effect of exchange rate changes on cash                  (3)            (7)
----------------------------------------------------------------------------
Effect of exchange rate changes on cash and                                 
 cash equivalents as reported under IFRS                   -              8 
----------------------------------------------------------------------------
Cash and cash equivalents - end of period as                                
 reported under Canadian GAAP                            907            540 
----------------------------------------------------------------------------
Adjustments to increase (decrease) reported                                 
 cash and cash equivalents:                                                 
----------------------------------------------------------------------------
 Consolidation of special purpose entity                   -             95 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash and cash equivalents - end of period as                                
 reported under IFRS                                     907            635 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Reconciliation of assets                           As at                    
----------------------------------------------------------------------------
                                     March 31,   December 31,     January 1,
----------------------------------------------------------------------------
                                         2010           2010           2010 
----------------------------------------------------------------------------
Total assets as reported under                                              
 previous Canadian GAAP                10,401         12,717          9,785 
----------------------------------------------------------------------------
Adjustments to increase                                                     
 (decrease) reported total                                                  
 assets:                                                                    
----------------------------------------------------------------------------
 Exemption for post employment                                              
  benefits under IFRS 1                    (7)            (7)            (7)
----------------------------------------------------------------------------
 Acquisition-related costs                  -            (45)           (45)
----------------------------------------------------------------------------
 Consolidation of special                                                   
  purpose entity                            -            221              - 
----------------------------------------------------------------------------
 Provisions for asset                                                       
  retirement                               50             55             15 
----------------------------------------------------------------------------
 Reclassification of deferred                                               
  income taxes                            (95)           (75)           (77)
----------------------------------------------------------------------------
 Other                                      3             12              3 
----------------------------------------------------------------------------
Total assets as reported under                                              
 IFRS                                  10,352         12,878          9,674 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Reconciliation of liabilities                                               
 and equity                                        As at                    
----------------------------------------------------------------------------
                                     March 31,   December 31,     January 1,
----------------------------------------------------------------------------
                                         2010           2010           2010 
----------------------------------------------------------------------------
Total liabilities as reported                                               
 under Canadian GAAP                    5,819          7,370          5,193 
----------------------------------------------------------------------------
Adjustments to increase                                                     
 (decrease) reported total                                                  
 liabilities:                                                               
----------------------------------------------------------------------------
 Exemption for post employment                                              
  benefits under IFRS 1                    38             38             38 
----------------------------------------------------------------------------
 Post-employment benefits                   -             16              - 
----------------------------------------------------------------------------
 Provisions for share-based                                                 
  payments                                 40             38             37 
----------------------------------------------------------------------------
 Incentive accrual                         (6)             -              - 
----------------------------------------------------------------------------
 Consolidation of special                                                   
  purpose entity                            -            221              - 
----------------------------------------------------------------------------
 Provisions for environmental                                               
  remediation and asset                                                     
  retirement                               54             60             14 
----------------------------------------------------------------------------
 Reclassification of non-                                                   
  controlling interest                    (12)            (8)           (11)
----------------------------------------------------------------------------
 Income tax effect of                                                       
  reconciling items                        57             15             16 
----------------------------------------------------------------------------
 Reclassification of deferred                                               
  income taxes                            (95)           (75)           (77)
----------------------------------------------------------------------------
 Other                                     (5)            10             (7)
----------------------------------------------------------------------------
Total liabilities as reported                                               
 under IFRS                             5,890          7,685          5,203 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total shareholders' equity as                                               
 reported under previous                                                    
 Canadian GAAP                          4,582          5,347          4,592 
----------------------------------------------------------------------------
Adjustments to increase                                                     
 (decrease) reported total                                                  
 shareholders' equity:                                                      
----------------------------------------------------------------------------
 Exemption for employee                                                     
  benefits under IFRS 1                   (45)           (45)           (45)
----------------------------------------------------------------------------
 Post-employment benefits                   -            (16)             - 
----------------------------------------------------------------------------
 Provisions for share-based                                                 
  payments                                (40)           (38)           (37)
----------------------------------------------------------------------------
 Incentive accrual                          6              -              - 
----------------------------------------------------------------------------
 Acquisition-related costs                  -            (45)           (45)
----------------------------------------------------------------------------
 Provisions for environmental                                               
  remediation and asset                                                     
  retirement                               (4)            (5)             1 
----------------------------------------------------------------------------
 Reclassification of non-                                                   
  controlling interest                     12              8             11 
----------------------------------------------------------------------------
 Income tax effect of                                                       
  reconciling items                       (57)           (15)           (16)
----------------------------------------------------------------------------
 Other                                      8              2             10 
----------------------------------------------------------------------------
Total shareholders' equity as                                               
 reported under IFRS                    4,462          5,193          4,471 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

First-time adoption of IFRS

Our adoption of IFRS requires that we apply IFRS 1 - First Time Adoption of International Financial Reporting Standards. We have restated comparative information in compliance with IFRS for periods after the transition date. A number of new standards, and amendments to standards and interpretations, are not yet effective for the year ended December 31, 2011, and have not been applied in preparing these interim financial statements. If there are any subsequent changes to IFRS that affect the first annual IFRS financial statements, these financial statements may have to be restated.

IFRS 1 requires certain mandatory exceptions and permits certain optional exemptions from this general requirement. We prepared our opening balance sheet using the following elections under IFRS 1:

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

Estimates are a mandatory exception in IFRS 1 applied in the conversion from Canadian GAAP to IFRS. Hindsight is not used to create or revise estimates. The estimates we previously made under Canadian GAAP were not revised for application of IFRS except where necessary to reflect any differences in accounting policies.

----------------------------------------------------------------------------
Significant Differences Between IFRS   Impact                               
 and Canadian GAAP                                                          
----------------------------------------------------------------------------
Employee Benefits                                                           
IFRS permits the recognition of        Transition date impact: none         
 actuarial gains and losses                                                 
 immediately in equity, immediately    Future impact: greater variability in
 to earnings, or on a deferred basis   shareholders' equity within          
 to earnings. Canadian GAAP does not   accumulated other comprehensive      
 permit immediate recognition in       income                               
 equity. Further, IFRS requires                                             
 expensing of vested past service                                           
 costs immediately while unvested                                           
 costs are amortized on a straight-                                         
 line basis over the vesting period.                                        
 Canadian GAAP requires amortization                                        
 of past service costs over the                                             
 expected average remaining service                                         
 life of active employees and                                               
 amortization of costs over the                                             
 average life expectancy of former                                          
 employees.                                                                 
----------------------------------------------------------------------------
Share-Based Payments                                                        
IFRS requires measurement of cash-     Transition date impact: reduction in 
 settled, share-based awards at fair   shareholders' equity and an increase 
 value, while Canadian GAAP allows     in liabilities                       
 measurement of these awards at                                             
 intrinsic value. In addition, Agrium  Future impact: a continued           
 used straight-line depreciation to    measurement difference between the   
 recognize graded vesting stock based  intrinsic value and the fair value of
 instruments under Canadian GAAP,      cash-settled share based awards      
 while IFRS requires accounting for                                         
 each installment as a separate                                             
 arrangement.                                                               
----------------------------------------------------------------------------
Income Taxes                                                                
Classification of future income tax    Transition date impact: reclassifying
 under IFRS is non-current whereas     all future income taxes to non-      
 Canadian GAAP splits future income    current results in a decrease in     
 taxes between current and non-        current assets and a decrease in non-
 current components.                   current income tax liabilities       
                                       Future impact: remains a             
                                       classification difference            
IFRS requires recognition of the       Transition date impact: increase in  
 deferred tax impact for temporary     deferred tax liabilities and a       
 differences arising on translation    corresponding decrease in retained   
 of certain foreign denominated non-   earnings                             
 monetary assets or liabilities.                                            
 Canadian GAAP does not allow similar  Future impact: continued recognition 
 treatment.                            of the deferred tax impact with      
                                       respect to the translation of foreign
                                       denominated non-monetary assets or   
                                       liabilities                          
----------------------------------------------------------------------------
Provisions                                                                  
IFRS requires discounting of           Transition date impact: decrease in  
 provisions where the effect of the    environmental liabilities and a      
 discounting is material. Provisions   corresponding increase to retained   
 are not discounted under Canadian     earnings                             
 GAAP unless specifically required or                                       
 when a provision is required to be    Future impact: each period there will
 measured at fair value.               be a charge to earnings for accretion
                                       of the discount                      
The specific provisions for asset      Transition date impact: increase to  
 retirement obligations under IFRS     asset retirement obligations and a   
 are measured based on management's    corresponding decrease to retained   
 best estimate. The discount rate      earnings                             
 used in calculating the present                                            
 value of the cash flow estimates is   Future impact: decrease in charge to 
 to be based on risks specific to the  earnings each period for accretion of
 liability unless these risks have     discount                             
 been incorporated into the cash flow                                       
 estimates. Canadian GAAP measures                                          
 asset retirement obligations at fair                                       
 value incorporating market                                                 
 assumptions. The discount rate used                                        
 is a credit-adjusted risk-free rate.                                       
----------------------------------------------------------------------------
Impairment of Assets                                                        
Under IFRS, the impairment of assets,  Transition date impact: none    
 excluding financial assets, is          
 tested and measured by comparing the        
 carrying value of an asset or cash                                   
 generating unit to its recoverable                                         
 amount. Recoverable amount is         Future impact: increased potential   
 measured as the higher of fair value  for impairment losses and reversal of
 less cost to sell or value-in-use     previously recorded losses           
 (discounted future cash flows). IFRS                                       
 permits impairment reversals for                                           
 assets (excluding goodwill). The                                           
 IFRS approach has the potential to                                         
 increase income statement volatility                                       
 due to the potential for increased                                         
 write-downs and reversals of write-                                        
 downs.                                                                     
----------------------------------------------------------------------------
Business Combinations                                                       
IFRS does not include acquisition-     Transition date impact: decrease in  
 related costs within consideration    shareholders' equity and total assets
 transferred in a business                                                  
 combination whereas the cost of       Future impact: potential increase in 
 acquisition does include direct,      charges to earnings in the amount of 
 incremental acquisition-related       acquisition-related costs for        
 costs under Canadian GAAP.            business combinations                
----------------------------------------------------------------------------
Non-Controlling Interest                                                    
IFRS requires non-controlling          Transition date impact: increase in  
 interest to be presented as a         shareholders' equity                 
 component of shareholders' equity                                          
 separate from the parent's equity     Future impact: non-controlling       
 while Canadian GAAP presents non-     interest will continue to be         
 controlling interest as a separate    presented within shareholders' equity
 component between liabilities and                                          
 equity.                                                                    
----------------------------------------------------------------------------
Consolidation of Special Purpose                                            
 Entities and Transfers of Financial                                        
 Assets                                                                     
Under Canadian GAAP, a qualified       On transition, (and continuing as a
 special purpose entity ("QSPE") that  future impact), we consolidated a
 met certain conditions was not        special purpose entity acquired in   
 consolidated by a party that was a    the AWB acquisition to which we   
 transferor of assets to the QSPE.     transferred accounts receivable.  
 Under IFRS, an entity that has        Assets transferred that did not  
 transactions with a QSPE may in       meet the IFRS criteria were not      
 substance control the entity,         recorded as sales as the          
 requiring consolidation. In           arrangement did not transfer     
 determining whether or not financial  substantially all the risks and      
 assets should be derecognized on      rewards of ownership of the         
 transfer, for example in an accounts  receivables to a third party.        
 receivable securitization, IFRS       Accordingly, we recorded cash   
 focuses on evaluation of whether a    received on sale of receivables as   
 qualifying transfer has taken place,  secured borrowings.                  
 whether risks and rewards have been                                        
 transferred, and in some cases                                             
 whether control over the assets has                                        
 been transferred. Canadian GAAP                                            
 focused on an evaluation of the                                            
 transfer of control.                                                       
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20. PRINCIPAL SUBSIDIARIES AND ASSOCIATED COMPANIES                         
                                                                  Ownership 
----------------------------------------------------------------------------
Agrium, a general partnership                                           100%
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Agrium U.S. Inc.                                                        100%
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Crop Production Services, Inc.                                          100%
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Landmark Rural Holdings Limited                                         100%
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Profertil S.A.                                                           50%
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                                AGRIUM INC.                                 
                             Results by Segment                             
                   (Unaudited - millions of U.S. dollars)                   
                                                                 Schedule 1 
                                   Three months ended March 31,             
----------------------------------------------------------------------------
                                               2011                         
----------------------------------------------------------------------------
                                               Advanced                     
                          Retail Wholesale Technologies     Other     Total 
----------------------------------------------------------------------------
Sales - external           1,816     1,072           66         -     2,954 
      - inter-segment          6       161           15      (182)        - 
----------------------------------------------------------------------------
Total sales                1,822     1,233           81      (182)    2,954 
Cost of product sold       1,482       824           65      (142)    2,229 
----------------------------------------------------------------------------
Gross profit                 340       409           16       (40)      725 
----------------------------------------------------------------------------
Gross profit (%)              19        33           20                  25 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Selling expenses             335        11            9        (2)      353 
EBITDA(1)                     25       412            1       (93)      345 
EBIT(2)                      (15)      377           (5)      (98)      259 
                                   Three months ended March 31,             
----------------------------------------------------------------------------
                                               2010                         
----------------------------------------------------------------------------
                                               Advanced                     
                          Retail Wholesale Technologies     Other     Total 
----------------------------------------------------------------------------
Sales - external           1,055       740           53         -     1,848 
      - inter-segment          5       108           11      (124)        - 
----------------------------------------------------------------------------
Total sales                1,060       848           64      (124)    1,848 
Cost of product sold         898       630           49       (91)    1,486 
----------------------------------------------------------------------------
Gross profit                 162       218           15       (33)      362 
----------------------------------------------------------------------------
Gross profit (%)              15        26           23                  20 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Selling expenses             222         9            6        (4)      233 
EBITDA(1)                    (41)      182            3       (47)       97 
EBIT(2)                      (68)      147           (1)      (49)       29 
(1) Earnings (loss) from continuing operations before finance costs, income 
    taxes, depreciation and amortization.                                   
(2) Earnings (loss) from continuing operations before finance costs and     
    income taxes.                                                           
(3) All schedules have been restated to conform to International Financial  
    Reporting Standards.                                                    
                                AGRIUM INC.                                 
                               Product Lines                                
                   (Unaudited - millions of U.S. dollars)                   
                                                                 Schedule 2 
                                      Three months ended March 31,          
----------------------------------------------------------------------------
                                      2011                    2010          
----------------------------------------------------------------------------
                                    Cost of                 Cost of         
                                    product                 product         
                                       sold   Gross            sold   Gross 
                              Sales   (1)(2) profit   Sales   (1)(2) profit 
----------------------------------------------------------------------------
Retail(3)(4)                                                                
 Crop nutrients                 707     592     115     371     308      63 
 Crop protection products       638     536     102     462     393      69 
 Seed                           230     195      35     191     176      15 
 Merchandise                    144     127      17      21      20       1 
 Services and other             103      32      71      15       1      14 
----------------------------------------------------------------------------
                              1,822   1,482     340   1,060     898     162 
----------------------------------------------------------------------------
Wholesale(4)                                                                
 Nitrogen                       334     183     151     261     189      72 
 Potash                         195      70     125     191      85     106 
 Phosphate                      238     143      95     127     109      18 
 Product purchased for                                                      
  resale                        411     395      16     216     204      12 
 Other                           55      33      22      53      43      10 
----------------------------------------------------------------------------
                              1,233     824     409     848     630     218 
----------------------------------------------------------------------------
Advanced Technologies(4)                                                    
 Turf and ornamental             52      41      11      44      34      10 
 Agriculture                     29      24       5      20      15       5 
----------------------------------------------------------------------------
                                 81      65      16      64      49      15 
----------------------------------------------------------------------------
Other inter-segment                                                         
 eliminations(4)               (182)   (142)    (40)   (124)    (91)    (33)
----------------------------------------------------------------------------
Total(4)                      2,954   2,229     725   1,848   1,486     362 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Wholesale includes inventory and purchase commitment write-downs.       
(2) Includes depreciation and amortization.                                 
(3) International Retail net sales were $575-million (2010 - $27-million)   
    and gross profit was $108-million (2010 - $5-million) for the three     
    months ended March 31.                                                  
(4) Comparative figures have been reclassified to conform to the current    
    year's revised categories.                                              
                                 AGRIUM INC.                                
                 Selected Wholesale Volumes and Sales Prices                
                                 (Unaudited)                                
                                                                 Schedule 3 
                                          Three months ended March 31,      
----------------------------------------------------------------------------
                                                      2011                  
----------------------------------------------------------------------------
                                                          Cost of           
                                        Sales   Selling   product           
                                       tonnes     price      sold    Margin 
                                       (000's) ($/tonne) ($/tonne) ($/tonne)
----------------------------------------------------------------------------
Nitrogen                                                                    
 Domestic                                                                   
  Ammonia                                 158       484                     
  Urea                                    300       495                     
  Other                                   208       343                     
--------------------------------------------------------                    
 Total domestic                           666       445                     
 International                             83       447                     
----------------------------------------------------------------------------
Total nitrogen                            749       446       244       202 
----------------------------------------------------------------------------
Potash                                                                      
 Domestic                                 212       518                     
 International                            265       322                     
----------------------------------------------------------------------------
Total potash                              477       409       147       262 
----------------------------------------------------------------------------
Phosphate                                 306       778       468       310 
Product purchased for resale              911       451       433        18 
Other                                                                       
 Ammonium sulfate                          88       334       173       161 
 Other                                     68                               
----------------------------------------------------------------------------
Total other                               156                               
----------------------------------------------------------------------------
Total Wholesale                         2,599       474       317       157 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                          Three months ended March 31,      
----------------------------------------------------------------------------
                                                      2010                  
----------------------------------------------------------------------------
                                                          Cost of           
                                        Sales   Selling   product           
                                       tonnes     price      sold    Margin 
                                       (000's) ($/tonne) ($/tonne) ($/tonne)
----------------------------------------------------------------------------
Nitrogen                                                                    
 Domestic                                                                   
  Ammonia                                 143       381                     
  Urea                                    321       393                     
  Other                                   178       268                     
--------------------------------------------------------                    
 Total domestic                           642       356                     
 International                             90       372                     
----------------------------------------------------------------------------
Total nitrogen                            732       358       260        98 
----------------------------------------------------------------------------
Potash                                                                      
 Domestic                                 349       415                     
 International                            185       250                     
----------------------------------------------------------------------------
Total potash                              534       358       159       199 
----------------------------------------------------------------------------
Phosphate                                 250       506       434        72 
Product purchased for resale              677       319       301        18 
Other                                                                       
 Ammonium sulfate                          90       234       173        61 
 Other                                     84                               
----------------------------------------------------------------------------
Total other                               174                               
----------------------------------------------------------------------------
Total Wholesale                         2,367       358       266        92 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                AGRIUM INC.                                 
           Depreciation and Amortization in Cost of Product Sold            
                   (Unaudited - millions of U.S. dollars)                   
                                                                 Schedule 4 
                                                Three months ended March 31,
----------------------------------------------------------------------------
                                                        2011           2010 
----------------------------------------------------------------------------
Retail                                                     1              - 
----------------------------------------------------------------------------
Wholesale                                                                   
 Nitrogen                                                 12             18 
 Potash                                                    9              4 
 Phosphate                                                12             11 
 Product purchased for resale                              -              - 
 Other                                                     1              1 
----------------------------------------------------------------------------
                                                          34             34 
----------------------------------------------------------------------------
Advanced Technologies                                      4              2 
----------------------------------------------------------------------------
Total                                                     39             36 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Contact Information

  • Agrium Inc.
    Richard Downey
    Senior Director, Investor Relations
    (403) 225-7357

    Agrium Inc.
    Todd Coakwell
    Manager, Investor Relations
    (403) 225-7437
    www.agrium.com