Agrium Inc.
TSX : AGU
NYSE : AGU

Agrium Inc.

August 03, 2011 06:30 ET

Agrium Reports Record Second Quarter

CALGARY, ALBERTA--(Marketwire - Aug. 3, 2011) -

ALL AMOUNTS ARE STATED IN U.S.$

Agrium Inc. (TSX:AGU) (NYSE:AGU) announced today record consolidated net earnings ("net earnings") of $718-million ($4.54 diluted earnings per share) for the second quarter of 2011, compared with net earnings of $518-million in the second quarter of 2010 ($3.28 diluted earnings per share). Net earnings from continuing operations, which exclude earnings associated with the AWB Limited ("AWB") Commodity Management businesses, the majority of which was sold to Cargill, Incorporated ("Cargill") on May 11, 2011, were $728-million ($4.60 diluted earnings per share) for the second quarter of 2011.

"Agrium's competitive advantages and strong global position across our business units and products allowed us to fully capitalize on the strengthening agricultural fundamentals and achieve record results this quarter. Despite this spring being one of the wettest and latest in history across much of North America, our diversity throughout the value chain enabled us to deliver record earnings. Growers in the Eastern U.S. corn belt and Western Canada in particular were not able to plant all the acreage, or apply all the nutrients, they would have liked to this spring. Global crop and crop nutrient markets remain tight. The combination of all these factors is expected to bode well for crop input demand this fall and Agrium will be there to provide the products necessary for growers to maximize their yields and returns," said Agrium President & CEO Mike Wilson.

"Agrium continued to deliver on its value-add growth objectives this quarter. Our Wholesale business unit expanded its fertilizer distribution capability in Europe with the acquisition of Cerealtoscana and Agroport. Our Retail and Advanced Technologies business units announced the purchase of Tetra Micronutrients, a producer and distributor of custom liquid plant nutrition and dry micro nutrient products. More recently, Advanced Techologies announced the closing of the purchase for Evergro, a leading manufacturer and distributor of horticultural and professional turf products in Western Canada. Agrium also concluded the sale of the majority of the AWB Commodity Management businesses to Cargill, allowing us to focus our efforts on realizing the full potential of the Landmark retail business in Australia," added Mr. Wilson.

The 2011 second quarter results include a pre-tax share-based payment recovery of $10-million ($0.04 diluted earnings per share). Excluding this item, net earnings from continuing operations would have been $721-million ($4.56 diluted earnings per share from continuing operations) for the second quarter of 2011.(1)

Consistent with our past practice, we intend to provide earnings guidance for the second half of the year when we release our third quarter results for 2011.

(1) Second quarter effective tax rate of 28 percent used for adjusted diluted earnings per share calculations.

MANAGEMENT'S DISCUSSION AND ANALYSIS

August 3, 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") as issued by the International Accounting Standards Board ("IASB"), and all comparisons of results for the second quarter of 2011 (three months ended June 30, 2011) are against results for the second quarter of 2010 (three months ended June 30, 2010) and all comparisons of results for the first half of 2011 (six months ended June 30, 2011) are against results for the first half of 2010 (six months ended June 30, 2010). All dollar amounts refer to United States ("U.S.") dollars except where 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 August 3, 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.

2011 Second Quarter Operating Results

CONSOLIDATED NET EARNINGS

Agrium's 2011 second quarter consolidated net earnings ("net earnings") were $718-million, or $4.54 diluted earnings per share, compared to net earnings of $518-million, or $3.28 diluted earnings per share, for the same quarter of 2010. Net earnings for the first half of 2011 were $889-million, or $5.62 diluted earnings per share, compared to $517-million, or $3.27 diluted earnings per share.


Financial Overview
                                                 Three months ended June 30,
----------------------------------------------------------------------------
(Millions of U.S. dollars, except per
 share amounts and effective tax                                 $        %
 rate)                                           2011  2010 Change   Change
----------------------------------------------------------------------------
 Sales                                          6,198 4,431  1,767       40%
 Gross profit                                   1,675 1,063    612       58%
 Expenses                                         627   333    294       88%
 Earnings from continuing operations
  before finance costs and income
  taxes ("EBIT")                                1,048   730    318       44%
 Consolidated net earnings from
  continuing operations(1)                        728   518    210       41%
 Consolidated net earnings                        718   518    200       39%
 Diluted earnings per share from
  continuing operations                          4.60  3.28   1.32       40%
 Diluted earnings per share                      4.54  3.28   1.26       38%
 Effective tax rate                                28%   26%   N/A        2%
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 (1) See "Discontinued Operations" below for a discussion of our
     discontinued operations.


Financial Overview
                                                   Six months ended June 30,
----------------------------------------------------------------------------
(Millions of U.S. dollars, except per
 share amounts and effective tax                                   $      %
 rate)                                             2011  2010 Change Change
----------------------------------------------------------------------------
 Sales                                            9,152 6,279  2,873     46%
 Gross profit                                     2,400 1,425    975     68%
 Expenses                                         1,093   666    427     64%
 Earnings from continuing operations
  before finance costs and income
  taxes ("EBIT")                                  1,307   759    548     72%
 Consolidated net earnings from
  continuing operations(1)                          888   517    371     72%
 Consolidated net earnings                          889   517    372     72%
 Diluted earnings per share from
  continuing operations                            5.62  3.27   2.35     72%
 Diluted earnings per share                        5.62  3.27   2.35     72%
 Effective tax rate                                  28%   26%   N/A      2%
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 (1) See "Discontinued Operations" below for a discussion of our
     discontinued operations.

Our consolidated gross profit for the second quarter and first half of 2011 increased by $612-million and $975-million, respectively, primarily due to higher gross profit from all three of our strategic business units, with highlights as follows:

- An increase in Wholesale's gross profit of $346-million and $537-million for the second quarter and first half of 2011, respectively, as higher crop pricing drove up demand and selling prices for all major products.

- The addition of the Landmark Retail operations accounted for an increase of $116-million and $215-million in Retail's gross profit for the second quarter and first half of 2011, respectively, with over half of the contribution coming from merchandise and other services.

- Excluding Landmark, Retail's gross profit increased by $161-million in the second quarter of 2011 and $240-million in the first half of 2011 due to higher fertilizer pricing and higher sales volume for crop protection products and seeds.

The $294-million increase in expenses for the second quarter of 2011 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 and other recent acquisitions.

- An $81-million increase in expenses for our Other non-operating business unit (see section "Other" for discussion on the drivers behind this increase in expenses).

Our consolidated EBIT increased by $318-million for the second quarter of 2011.

The $427-million increase in expenses for the first half of 2011 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 and other recent acquisitions.

- A $123-million increase in expenses for our Other non-operating business unit (see section "Other" for discussion on the drivers behind this increase in expenses).

Our consolidated EBIT increased by $548-million for the first half of 2011.

Below is a summary of our other expenses (income) for the second quarter and first half of 2011 and 2010:


                                                Three months     Six months
                                               ended June 30, ended June 30,
----------------------------------------------------------------------------
(Millions of U.S. dollars)                     2011     2010  2011     2010
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Realized loss on derivative financial
 instruments                                     27       21    75       28
Unrealized (gain) loss on derivative financial
 instruments                                    (15)     (29)  (45)      32
Foreign exchange gain                           (17)      (6)  (42)      (5)
Potash profit and capital tax                    15        1    26        4
Gain on disposal of marketable securities         -        -     -      (52)
Environmental remediation and asset retirement
 obligations                                     23        4    24        2
Interest income                                 (19)     (13)  (33)     (21)
Bad debt expense                                 22       18    27       24
Other                                            20       (7)   25       (3)
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                                                 56      (11)   57        9
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The effective tax rate was 28 percent for the second quarter and first half of 2011 compared to the effective tax rate of 26 percent for the same periods last year. The increase in the effective tax rate was due to the recognition of a previously unrecognized tax benefit in 2010.

BUSINESS SEGMENT PERFORMANCE

Retail

Retail reported record second quarter results this year for sales, gross profit, EBIT and EBITDA. Second quarter sales were $4.6-billion, a 39 percent increase over the $3.3-billion in the second quarter of 2010. Gross profit during the quarter was $996-million, which is significantly greater than the $719-million reported for the same period last year. EBIT also improved to $486-million in the second quarter of 2011, an increase over the $361-million from the second quarter of 2010. Retail's performance this quarter was due to robust demand for all crop inputs and related services globally, including strong benchmark prices for all major nutrients. The strong second quarter results were achieved despite extremely wet conditions across the U.S. Corn Belt and Western Canada which delayed the spring season significantly.

Crop nutrient sales were $2.1-billion in the second quarter of 2011, compared to $1.4-billion for the same period last year. The increase was attributable to higher nutrient selling prices and sales volumes during the quarter compared to the same period last year. Higher sales volumes were due to the inclusion of the Landmark business which offset slightly lower sales volumes in North America due to challenging weather conditions this spring. Gross profit was $377-million this quarter, compared to $252-million in the second quarter of 2010. Total crop nutrient margins were 18 percent in the second quarter of 2011, similar to the same quarter last year.

North American crop nutrient margins increased to 20 percent this quarter versus 18 percent reported last year due to prudent inventory management and purchases. We anticipate strong North American fall demand as growers continue to focus on maximizing yields and acreage to take advantage of high grain prices and attractive margins.

Crop protection sales were $1.5-billion in the second quarter of 2011, an 18 percent increase over the $1.2-billion in sales during the same period last year. Gross profit this quarter was $325-million, compared with $274-million in the second quarter of 2010. The increase in both sales and gross profit was due largely to the inclusion of the Landmark business, as well as increased demand for fungicide products related to the wet spring experienced in North America this quarter. Crop protection product margins were 22 percent for the second quarter of 2011, similar to the same period last year.

Seed sales were $687-million in the second quarter of 2011, compared to $588-million in the same period last year. North American sales accounted for almost 70 percent of the increase. Higher sales of corn and cotton seed contributed to this increase in sales as growers shifted acreage to these more profitable crops. Gross profit this quarter was $132-million compared to $106-million in the second quarter of 2010.

Merchandise sales totaled $208-million in the second quarter of 2011 compared to $29-million in the second quarter of 2010. Gross profit from merchandise sales was $27-million in the current quarter compared to $3-million in the same period last year. The increase in sales and gross profit was due primarily to the addition of the Landmark business.

Sales of application and other services were $180-million in the second quarter of 2011 compared to $93-million in the second quarter of 2010. Gross profit totaled $135-million this quarter, compared to $84-million in the second quarter of 2010. The significant increase in sales and gross profit over the previous year was due to the addition of the Landmark livestock and other agency businesses, as well as strong demand for crop application services in North America as a result of high crop prices and a shortened spring planting season.

Retail selling expenses for the second quarter of 2011 were $473-million, compared to $329-million in the same quarter of 2010. The increase was due primarily to the inclusion of the Landmark retail business and recent acquisitions, as well as higher incentive costs related to the current quarter's excellent results. Selling expenses as a percentage of sales in the second quarter of 2011 were 10 percent, similar to the same period last year.

Wholesale

Wholesale's sales were $1.7-billion for the second quarter of 2011, the highest second quarter on record, and 54 percent higher than the $1.1-billion achieved in the second quarter of 2010. Gross profit was a record $620-million in the second quarter of 2011, which is more than double the $274-million reported in the same period in 2010. Wholesale also reported a second quarter EBIT of $569-million in 2011, substantially higher than the $276-million earned in the second quarter of 2010. The improvement in earnings was due to higher realized crop nutrient prices and margins, as well as excellent product demand which occurred later in the spring season. The strong second quarter results were achieved despite extremely wet conditions across the U.S. Corn Belt and Western Canada which significantly delayed spring nutrient application.

Nitrogen gross profit was a record $324-million this quarter, more than double the $138-million reported in the same quarter last year due to a combination of higher prices and increased sales volumes. Prices for all nitrogen products were higher on average than last year for both benchmark and Agrium's realized prices due to strong market fundamentals. Nitrogen sales volumes increased when compared to the same period last year, as higher urea and UAN sales more than offset lower domestic ammonia sales due to the late spring season in North America. As well, higher utilization at the plants achieved an 11 percent average increase in production volumes compared to the same quarter last year. Nitrogen cost of product sold was $274 per tonne this quarter, similar to the $273 per tonne in the second quarter of last year. Nitrogen margins averaged $226 per tonne this quarter, compared with $109 per tonne in the second quarter of last year.

For the second quarter of 2011, Agrium's average natural gas cost in cost of product sold was $4.00/MMBtu ($4.11MMBtu including the impact of realized losses on natural gas derivatives) compared to $3.91/MMBtu for the same period in 2010 ($4.69/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. The U.S. benchmark (NYMEX) natural gas price for the second quarter of 2011 was $4.36/MMBtu, compared to $4.07/MMBtu in the same quarter last year and $4.14/MMBtu in the first quarter of 2011. The AECO (Alberta) basis differential was a $0.46/MMBtu discount to NYMEX in the second quarter of 2011, which was higher than the second quarter of 2010.

Potash gross profit for the second quarter of 2011 was $165-million, compared to $109-million in the same quarter last year. The significant increase was due to the continued expansion in margins driven by stronger domestic and international prices on tight global supply/demand conditions. Sales volumes were 543,000 tonnes this quarter, compared to 529,000 tonnes in the second quarter of 2010. The increase was due entirely to higher international sales as a result of increased global demand. Domestic sales tonnage was slightly lower than the same period last year due to the delay in the spring season. The cost of product sold was $173 per tonne this quarter, slightly higher than the $161 reported in the same period last year due to increased freight costs and higher labour and maintenance costs. Gross margin on a per tonne basis was $304 this quarter, which represents a substantial increase over the gross margin of $205 per tonne realized during the same quarter in 2010.

Phosphate gross profit was $83-million this quarter, well above the $9-million reported for the second quarter of 2010. The increase was primarily due to higher realized sales prices which averaged $795 per tonne for the quarter, compared to $553 per tonne for the second quarter of 2010. Phosphate sales volumes were also slightly higher than the same period last year. Additionally, our Redwater and Conda plants achieved exceptionally higher production volumes (24 percent and 35 percent respectively) versus the second quarter last year. Phosphate cost of product sold was $475 per tonne, $39 per tonne lower than the same period last year as a result of a major turnaround completed at Agrium's Redwater, Alberta facility in the second quarter of 2010. The resulting gross margin per tonne was significantly higher at $320 per tonne, versus $39 per tonne in the second quarter of 2010.

Gross profit for product purchased for resale was $22-million, $18-million higher than the second quarter of 2010. This substantial increase was due to significantly higher sales volumes and margins as a result of strong global demand for all three nutrients. Gross margins in the second quarter of 2011 of $22 per tonne were $17 per tonne higher than the same quarter last year.

Second quarter Wholesale expenses were $51-million, $53-million higher than the same period last year. Mark-to-market gains on natural gas and other derivatives were $3-million in the second quarter of 2011 compared to $31-million in gains for the same period in 2010. Realized losses on natural gas and other derivatives were $3-million compared to a loss of $18-million in 2010. Potash profit and capital taxes were $14-million higher this quarter than the same period last year due primarily to higher margins. In addition, higher incentive accruals for this quarter increased Wholesale expenses compared to the same period last year.

Advanced Technologies

Advanced Technologies'("AAT") second quarter 2011 gross profit was $37-million compared to $31-million in the second quarter of 2010. This increase in gross profit was due to substantially higher sales volumes of Environmentally Smart Nitrogen ("ESN") this quarter as a result of new ESN production that came on line during 2010 at our New Madrid facility, which operated at near capacity for the current quarter.

EBIT this quarter was $13-million versus $15-million in the second quarter of 2010. Higher selling and general and administrative costs offset improved sales and resulting gross profit in the second quarter of 2011 compared to the same period last year. Selling and 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 as part of our plan to grow our retail sales to turf and ornamental customers, along with related support costs. Other income decreased by $3-million in the second quarter of 2011 compared to the same period last year due to foreign exchange losses and other expense items offsetting higher earnings from our equity ownership in Hanfeng Evergreen Inc.

Other

EBIT for our Other non-operating business unit for the second quarter of 2011 was a loss of $20-million, compared to earnings of $78-million for the second quarter of 2010. This change was primarily driven by:

- A $47-million decrease in share-based payment recovery.

- An $18-million increase in provision for environmental remediation and asset retirement obligations.

- A $17-million decrease in gross profit reflecting lower recognition of gross profit on Wholesale products sold to Retail that have been sold to external customers.

EBIT for Other for the first half of 2011 was a loss of $118-million, compared to earnings of $29-million for the same period of 2010. This change in EBIT reflected:

- 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 $68-million increase in general and administrative expense due to a $23-million unfavourable change in share-based payment expense and the addition of the AWB business.

- An increase in net realized and unrealized loss from foreign exchange derivatives of $40-million which were entered into in anticipation of the sale of the Commodity Management businesses to Cargill. This was almost completely offset by a $39-million increase in foreign exchange gain primarily from the remeasurement of intercompany loans.

FINANCIAL CONDITION

The following are changes to working capital on our Condensed Consolidated Balance Sheets in the six-month period ended June 30, 2011.


----------------------------------------------------------------------------
As at            June  December       $      %      
(millions of       30,       31,                    Explanation of the 
U.S. dollars)    2011      2010  Change Change      change in balance 
----------------------------------------------------------------------------
Current assets
 Cash and cash    966       635     331     52%     See discussion under the
  equivalents                                       section "Liquidity and
                                                    Capital Resources".

 Accounts
  receivable    3,624     1,793   1,831    102%     Increased sales
                                                    activities during the
                                                    spring, higher sales
                                                    prices and higher
                                                    Retail vendor rebates
                                                    receivable.

 Inventories    2,409     2,502     (93)    (4%)    Inventory draw-down due
                                                    to increased sales
                                                    activities during the
                                                    spring, partially offset
                                                    by increased product
                                                    costs.

 Prepaid
  expenses
  and deposits    197       848    (651)   (77%)    Drawdown of prepaid
                                                    inventory due to
                                                    increased sales
                                                    activities in the
                                                    spring.

 Marketable
  securities        1         3      (2)   (67%)    -

 Assets of
  discontinued    134     1,320  (1,186)   (90%)    The majority of the
  operations                                        Commodity Management
                                                    businesses of AWB was
                                                    divested in Q2 2011. See
                                                    discussion under
                                                    Discontinued Operations.
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Current
 liabilities
 Short-term debt  541       517      24      5%     -

 Accounts
  payable       2,950     2,666     284     11%     Increased Retail
                                                    inventory purchases,
                                                    in addition to an
                                                    increase in accrued
                                                    current income taxes
                                                    liability. Partially
                                                    offset by drawdown of
                                                    customer prepayments
                                                    during the spring
                                                    application.

 Current
  portion of        53       125     (72)   (58%)   Debentures of $125-
  long-term                                         million were repaid
  debt                                              February 15, 2011 while
                                                    South America Retail
                                                    line of credit of $53-
                                                    million is due in
                                                    October 2011.

 Current portion
  of other         209       198      11      6%    -
  provisions

 Liabilities of    108     1,020    (912)   (89%)   The majority of the
  discontinued                                      Commodity Management
  operations                                        businesses of AWB was
                                                    divested in Q2 2011. See
                                                    discussion under
                                                    Discontinued Operations.
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Working capital  3,470     2,575     895     35%
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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:


                                                   Six months ended June 30,
----------------------------------------------------------------------------
(Millions of U.S. dollars)
                                                    2011  2010       Change
----------------------------------------------------------------------------
Cash provided by (used in) operating
 activities                                           76   (77)         153
Cash provided by (used in) investing activities      407   (59)         466
Cash (used in) provided by financing
 activities                                         (153)   13         (166)
Effect of exchange rate changes on cash and
 cash equivalents                                     12    (5)          17
Increase (decrease) in cash and cash
 equivalents from continuing operations              342  (128)         470
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The sources and uses of cash for the six months ended June 30, 2011 are
summarized below:

----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash provided by operating activities - Drivers behind the $153-million
increase in source of cash
----------------------------------------------------------------------------
Source of cash       - $464-million resulting from increase in consolidated
                       net earnings from continuing operations
                       adjusted for changes in non-cash items, primarily
                       associated with a $52-million gain on the sale of
                       CF shares in Q1 2010 and a $55-million increase in
                       deferred income taxes which were partially
                       offset by a $77-million adjustment related to  
                       unrealized gain/loss on derivative financial
                       instruments.

Use of cash          - $313-million increase in non-cash working capital.
                       The increase in non-cash working capital was
                       primarily driven by higher accounts receivable and
                       lower decrease in inventories, partially offset by
                       an increase in accounts payable (for further
                       discussion, see section "Financial Condition").
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Cash used in investing activities - Drivers behind the $466-million
increase in source of cash
----------------------------------------------------------------------------
Source of cash       - Proceeds of $694-million from the sale of the
                       majority of the Commodity Management businesses
                       to Cargill in May of 2011 (for further discussion,
                       see section "Discontinued Operations").

Use of cash          - Proceeds of nil received on the sale of marketable
                       securities in the first half of 2011 versus
                       proceeds of $117-million received on the sale of our
                       shares in CF in the first half of 2010; 
                     - $60-million increase in capital expenditures.
----------------------------------------------------------------------------

Cash used in financing activities - Drivers behind the $166-million
increase in use of cash
----------------------------------------------------------------------------
Use of cash          - Repayment of $125-million aggregate principal amount
                       of debentures that were due February 15, 2011.
----------------------------------------------------------------------------
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Our short-term debt as at June 30, 2011 is summarized as follows:
----------------------------------------------------------------------------
 Short-term Debt                                  Total Unutilized Utilized
----------------------------------------------------------------------------
 (millions of U.S. dollars)
 North American facilities expiring 2012(a)         775        775        -
 North American accounts receivable
  securitization(b)                                 200        200        -
 European facilities expiring in 2011 to 2012(c)    212          -      212
 South American facilities expiring 2011 to 2012    151         48      103
 Australian facilities expiring 2011                  8          8        -
 Australian accounts receivable securitization(b)   267         41      226
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                                                  1,613      1,072      541
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a) Outstanding letters of credit issued under our revolving credit
   facilities at June 30, 2011 were $76-million, reducing credit available
   under the facilities to $699-million.

b) For further information, see discussion under the section "Off Balance
   Sheet Arrangements" on page 55 of our 2010 Annual Report.

c) Of the total facility, $6-million is secured by accounts receivable.

OUTSTANDING SHARE DATA

The number of Agrium's outstanding shares as at July 31, 2011 was approximately 158 million. As at July 31, 2011, the number of shares issuable pursuant to stock options outstanding (issuable assuming full conversion, where each option granted can be exercised for one common share) was approximately 0.4 million.


SELECTED QUARTERLY INFORMATION
(Unaudited, in millions of U.S. dollars, except per share information)

                          2011                     2010                 2009
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                     Q2    Q1    Q4    Q3    Q2     Q1  Q4 (a) Q3 (a) Q2 (a)

 Sales            6,198 2,954 2,398 2,066 4,431  1,848  1,442  1,844  4,090
 Gross profit     1,675   725   725   498 1,063    362    383    397    890
 Consolidated net
  earnings (loss)
  from continuing
  operations        728   160   152    61   518     (1)    30     26    370
 Consolidated net
  earnings (loss)   718   171   135    61   518     (1)    30     26    370
 Earnings (loss) per
  share from
  continuing
  operations
  -basic           4.61  1.02  0.97  0.39  3.29  (0.01)  0.19   0.16   2.36
  -diluted         4.60  1.02  0.97  0.39  3.28  (0.01)  0.19   0.16   2.35
 Earnings (loss)
  per share
  -basic           4.55  1.09  0.86  0.39  3.29  (0.01)  0.19   0.16   2.36
  -diluted         4.54  1.09  0.86  0.39  3.28  (0.01)  0.19   0.16   2.35
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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 May 11, 2011, we completed the sale of the majority of the Commodity Management businesses acquired from AWB, in accordance with an agreement dated December 15, 2010 (for further discussion, see section "Discontinued Operations"). Cash received from the sale was $694-million. We retained 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.

As part of the acquisition, we acquired a 50 percent interest in Hi-Fert Pty. Ltd. ("Hi-Fert"), over which receivers and administrators have been appointed. Previously recorded amounts have been written off. AWB had provided guarantees for letters of credit of approximately $62-million issued by lenders supporting operations of Hi-Fert. The amount, if any, that we will be required to pay under these guarantees, net of recoveries from a charge over related assets, is not determinable, pending the outcome of bankruptcy and litigation proceedings.

On May 2, 2011, we acquired 100 percent of Cerealtoscana S.p.A. ("CT"), and its subsidiary Agroport, for total consideration of $27-million plus working capital. CT is a fertilizer distribution company in Italy and Agroport is its subsidiary in Romania. The acquired business is included in the Wholesale operating segment.

DISCONTINUED OPERATIONS

Discontinued operations include the operation of Commodity Management businesses and AWB Harvest Finance Limited sold on May 11, 2011. Also included are the operations and assets and liabilities of the Commodity Management businesses not included in the sale. We have agreed to various terms and conditions and indemnifications pursuant to the sale of the Commodity Management business, including an indemnity by AWB for litigation related to the Oil-For-Food Programme, as described in note 2 of our Condensed Consolidated Interim Financial Statements for the three and six months ended June 30, 2011.

Net loss from discontinued operations was $10-million for the second quarter of 2011 and net earnings of $1-million for the first half of 2011, compared to nil in the same periods of 2010.

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 a useful measure 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 net earnings from continuing operations as determined in accordance with IFRS.

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


(millions of U.S.                  Three Months Ended June 30, 2011
dollars)         -----------------------------------------------------------
                                           Advanced
                      Retail Wholesale Technologies     Other  Consolidated
----------------------------------------------------------------------------

EBITDA                   529       617           18       (19)        1,145
Depreciation and
 amortization             43        48            5         1            97
----------------------------------------------------------------------------
EBIT                     486       569           13       (20)        1,048
----------------------------------------------------------------------------
Finance costs
 related to long-
 term debt                                                              (24)
Other finance
 costs                                                                  (12)
Income taxes                                                           (284)
----------------------------------------------------------------------------
Consolidated
 net earnings
 from
 continuing
 operations                                                             728
----------------------------------------------------------------------------
----------------------------------------------------------------------------

(millions of U.S.                  Three Months Ended June 30, 2010
dollars)         -----------------------------------------------------------
                                           Advanced
                      Retail Wholesale Technologies     Other  Consolidated
----------------------------------------------------------------------------
EBITDA                   388       339           20        80           827
Depreciation and
 amortization             27        63            5         2            97
----------------------------------------------------------------------------
EBIT                     361       276           15        78           730
----------------------------------------------------------------------------
Finance costs
 related to long-
 term debt                                                              (22)
Other finance
 costs                                                                   (7)
Income taxes                                                           (183)
----------------------------------------------------------------------------
Consolidated
 net earnings
 from
 continuing
 operations                                                             518
----------------------------------------------------------------------------
----------------------------------------------------------------------------


(millions of U.S.                  Six Months Ended June 30, 2011
dollars)         -----------------------------------------------------------
                                           Advanced
                      Retail Wholesale Technologies     Other  Consolidated
----------------------------------------------------------------------------
EBITDA                   554     1,029           19      (112)        1,490
Depreciation and
 amortization             83        83           11         6           183
----------------------------------------------------------------------------
EBIT                     471       946            8      (118)        1,307
----------------------------------------------------------------------------
Finance costs
 related to long-
 term debt                                                              (51)
Other finance
 costs                                                                  (25)
Income taxes                                                           (343)
----------------------------------------------------------------------------
Consolidated
 net earnings
 from
 continuing
 operations                                                             888
----------------------------------------------------------------------------
----------------------------------------------------------------------------


(millions of U.S.                  Six Months Ended June 30, 2010
dollars)         -----------------------------------------------------------
                                           Advanced
                      Retail Wholesale Technologies     Other  Consolidated
----------------------------------------------------------------------------
EBITDA                   347       521           23        33           924
Depreciation and
 amortization             54        98            9         4           165
----------------------------------------------------------------------------
EBIT                     293       423           14        29           759
----------------------------------------------------------------------------
Finance costs
 related to long-
 term debt                                                              (45)
Other finance
 costs                                                                  (14)
Income taxes                                                           (183)
----------------------------------------------------------------------------
Consolidated
 net earnings
 from
 continuing
 operations                                                             517
----------------------------------------------------------------------------

ACCOUNTING STANDARDS AND CRITICAL ACCOUNTING ESTIMATES

Please refer to note 1 of our Condensed Consolidated Interim Financial Statements for the three and six months ended June 30, 2011 for our significant accounting policies and critical accounting estimates, which includes, among others, 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 June 30, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

OUTLOOK, KEY RISKS AND UNCERTAINTIES

Global agricultural fundamentals and markets were strong in the second quarter of 2011. The FAO food price index reached an all-time record in April 2011, not only showing very widespread strength among crop prices, but also record meat prices and historically high dairy prices. U.S. cash corn prices in the second quarter of 2011 were the highest on record. Looking ahead, the outlook for agricultural markets remains positive. Despite revisions upward in both corn ending stocks and 2011 planted area, the United States Department of Agriculture (USDA) projects that stocks of corn at the end of 2010/11 and 2011/12 will amount to less than 30 days consumption, which is very tight by historical standards.

The global macroeconomic situation presents some risks which have the potential to impact agricultural markets. Significant uncertainty surrounds the outcome of sovereign debt problems in Greece and Portugal, among other European nations and the record high U.S. government debt levels.

Crop protection markets remain competitive, but margins have stabilized in recent months. Demand for crop protection products in North America has been strong due to attractive grower economics and improving crop conditions in several areas of North America. We are expecting strong 2011 winter wheat seed and 2012 corn and cotton seed sales based on a favorable outlook for prices and seeded area.

Nitrogen markets rose throughout the second quarter of 2011 driven by tight supplies and strong demand. The Chinese government imposed a sliding scale export tax in place of the 7 percent flat tax applied to exports during the low-tax period in 2010. The uncertainty around the new punitive sliding scale export tax reduced the volume of Chinese exports offered for sale prior to July 1, 2011. While it is uncertain how much urea China will export in the July through October export period, analysts project that full-year 2011 exports will be about half of 2010 levels, when exports exceeded 7 million tonnes. Global urea import demand was strong in the second quarter. In the January through May 2011 period, Brazilian urea imports rose at a record pace and were up 29 percent compared with 2010. Meanwhile, Indian urea imports were up over 40 percent from 2010 levels during January through May 2011. The outlook for nitrogen in the second half of 2011 is positive, driven by the expectation of continued import demand strength and lower exports from China than a year ago.

The global phosphate supply and demand balance tightened during the second quarter, despite the onset of the Chinese DAP/MAP export season beginning June 1. Similar to urea, the Chinese government instituted a sliding scale export tax on DAP/MAP exports. China is an important source of phosphate to India and the reduction in available Chinese export supplies has contributed to a tightening in global phosphate supplies. Global phosphate export supplies have also been reduced by production shut-downs in Tunisia, where political unrest has disrupted phosphate rock supply. Brazilian DAP/MAP imports are up 75 percent in the January through May period in 2011 versus 2010 and have been a major driver of phosphate market strength over the past couple of months. Looking ahead to the second half of 2011, India is expected to make significant purchases and South American demand is normally the highest during the July through October period. From a supply perspective, producers entered the second half with low inventories according to The Fertilizer Institute (TFI). U.S. DAP/MAP inventories were reported to be down 31 percent compared to June 2010 levels and 28 percent below the five year average in June 2011. The Ma'aden Phosphate Company has started producing small volumes of DAP at its Saudia Arabian phosphate plant. The first vessel is expected to ship in August, but significant export volumes are not expected until 2012.

The global potash market continued to strengthen in the second quarter. Globally, current potash supplies are tight. North American potash producers produced at 95 percent of previous monthly peak production through the first half of 2011 according to TFI data. High capacity utilization rates have not rebuilt potash inventories, and TFI data for June 2011 showed North American potash inventories were 14 percent below May 2011 levels and 27 percent below both June 2010 and five year average levels. Global demand for potash is strong, with Brazilian imports of potash 48 percent higher in 2011 versus 2010 levels in the January through May period. China has negotiated supply agreements for the second half of 2011 at significantly higher prices than first half levels. The timing of an Indian potash supply agreement remains uncertain, but analysts report that domestic inventories are extremely tight and new supplies are needed, which may be a challenge in the short term due to tight global export supplies.

Forward-Looking Statements

Certain statements and other information included in this MD&A 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 MD&A, 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 Agrium's ability to successfully integrate and realize the anticipated benefits of its acquisitions, including the acquisition of retained AWB businesses.

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: size and timing of expected synergies could be less favourable than anticipated; 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 2nd Quarter Conference Call will be available in a listen-only mode beginning Wednesday, August 3, 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    Six months ended
                                                June 30,            June 30,
----------------------------------------------------------------------------
                                         2011      2010      2011      2010
----------------------------------------------------------------------------
Sales                                   6,198     4,431     9,152     6,279
Cost of product sold                    4,523     3,368     6,752     4,854
----------------------------------------------------------------------------
Gross profit                            1,675     1,063     2,400     1,425
----------------------------------------------------------------------------
Expenses
----------------------------------------------------------------------------
 Selling                                  488       344       841       577
----------------------------------------------------------------------------
 General and administrative                92         2       202        91
----------------------------------------------------------------------------
 Earnings from associates                  (9)       (2)       (7)      (11)
----------------------------------------------------------------------------
 Other expenses (income) (note 4)          56       (11)       57         9
----------------------------------------------------------------------------
Earnings before finance costs and
 income taxes                           1,048       730     1,307       759
----------------------------------------------------------------------------
 Finance costs related to long-term
  debt (note 5)                            24        22        51        45
----------------------------------------------------------------------------
 Other finance costs (note 5)              12         7        25        14
----------------------------------------------------------------------------
Earnings before income taxes            1,012       701     1,231       700
 Income taxes                             284       183       343       183
----------------------------------------------------------------------------
Consolidated net earnings from
 continuing operations                    728       518       888       517
----------------------------------------------------------------------------
Consolidated net (loss) earnings
 from discontinued operations (note 3)    (10)        -         1         -
----------------------------------------------------------------------------
Consolidated net earnings                 718       518       889       517
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Attributable to:
----------------------------------------------------------------------------
 Equity holders of Agrium                 717       518       889       516
----------------------------------------------------------------------------
 Non-controlling interest                   1         -         -         1
----------------------------------------------------------------------------
Consolidated net earnings                 718       518       889       517
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Earnings per share (note 7)
----------------------------------------------------------------------------
 Basic earnings per share from
  continuing operations                  4.61      3.29      5.63      3.28
----------------------------------------------------------------------------
 Basic (loss) earnings per share
  from discontinued operations          (0.06)        -      0.01         -
----------------------------------------------------------------------------
 Basic earnings per share                4.55      3.29      5.64      3.28
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 Diluted earnings per share from
  continuing operations                  4.60      3.28      5.62      3.27
----------------------------------------------------------------------------
 Diluted loss per share from
  discontinued operations               (0.06)        -         -         -
----------------------------------------------------------------------------
 Diluted earnings per share              4.54      3.28      5.62      3.27
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes.


AGRIUM INC.
Condensed Consolidated Statements of Comprehensive Income
(Millions of U.S.dollars)
(Unaudited)
                                     Three months ended    Six months ended
                                                June 30,            June 30,
----------------------------------------------------------------------------
                                         2011      2010      2011      2010
----------------------------------------------------------------------------
Consolidated net earnings                 718       518       889       517
----------------------------------------------------------------------------
 Other comprehensive income (loss)
----------------------------------------------------------------------------
  Available for sale financial
----------------------------------------------------------------------------
   instruments                             (1)        -        (1)      (29)
----------------------------------------------------------------------------
  Foreign currency translation             17       (48)       37       (29)
----------------------------------------------------------------------------
  Income (loss) of associates               8        (1)        1        (2)
----------------------------------------------------------------------------
                                           24       (49)       37       (60)
----------------------------------------------------------------------------
Consolidated comprehensive income         742       469       926       457
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Attributable to:
----------------------------------------------------------------------------
 Equity holders of Agrium                 744       471       933       458
----------------------------------------------------------------------------
 Non-controlling interest                  (2)       (2)       (7)       (1)
----------------------------------------------------------------------------
Consolidated comprehensive income         742       469       926       457
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes.


AGRIUM INC.
Condensed Consolidated Statements of Cash Flows
(Millions of U.S. dollars)
(Unaudited)
                                     Three months ended    Six months ended
                                                June 30,            June 30,
----------------------------------------------------------------------------
                                         2011      2010      2011      2010
----------------------------------------------------------------------------

----------------------------------------------------------------------------
Operating
----------------------------------------------------------------------------
 Consolidated net earnings from
  continuing operations                   728       518       888       517
----------------------------------------------------------------------------
 Items not affecting cash
----------------------------------------------------------------------------
  Depreciation and amortization            97        97       183       165
----------------------------------------------------------------------------
  Earnings from associates                 (9)       (2)       (7)      (11)
----------------------------------------------------------------------------
  Share-based payments                    (10)      (57)        2       (21)
----------------------------------------------------------------------------
  Unrealized (gain) loss on
   derivative financial instruments       (15)      (29)      (45)       32
----------------------------------------------------------------------------
  Gain on disposal of marketable
   securities                               -         -         -       (52)
----------------------------------------------------------------------------
  Unrealized foreign exchange loss
   (gain)                                   8        (5)        8         1
----------------------------------------------------------------------------
  Deferred income taxes                    63        14        69        14
----------------------------------------------------------------------------
  Other                                    27        13        33        22
----------------------------------------------------------------------------
 Dividends from associates                 16        14        16        14
----------------------------------------------------------------------------
 Net changes in non-cash working
  capital                              (1,231)     (529)   (1,071)     (758)
----------------------------------------------------------------------------
 Cash (used in) provided by
  operating activities                   (326)       34        76       (77)
----------------------------------------------------------------------------
Investing
----------------------------------------------------------------------------
 Acquisitions, net of cash acquired       (27)        -       (27)        -
----------------------------------------------------------------------------
 Proceeds from disposal of
  subsidiaries                            694         -       694         -
----------------------------------------------------------------------------
 Capital expenditures                    (136)     (110)     (246)     (186)
----------------------------------------------------------------------------
 Purchase of investments                   (4)        -       (40)        -
----------------------------------------------------------------------------
 Proceeds from disposal of
  investments                              36         -        36        25
----------------------------------------------------------------------------
 Proceeds from disposal of
  marketable securities                     -         -         -       117
----------------------------------------------------------------------------
 Other                                      6        (9)      (10)      (15)
----------------------------------------------------------------------------
 Cash provided by (used in)
  investing activities                    569      (119)      407       (59)
----------------------------------------------------------------------------
Financing
----------------------------------------------------------------------------
 Short-term debt                          (48)       (5)      (23)       28
----------------------------------------------------------------------------
 Long-term debt issued                     10         -        10         -
----------------------------------------------------------------------------
 Repayment of long-term debt               (8)       (7)     (133)       (8)
----------------------------------------------------------------------------
 Dividends paid                             -         -        (9)       (9)
----------------------------------------------------------------------------
 Shares issued, net of issuance
  costs                                     1         -         2         2
----------------------------------------------------------------------------
Cash (used in) provided by
 financing activities                     (45)      (12)     (153)       13
----------------------------------------------------------------------------
Effect of exchange rate changes on
 cash and cash equivalents                 22        (5)       12        (5)
----------------------------------------------------------------------------
Increase (decrease) in cash and
 cash equivalents from
 continuing operations                    220      (102)      342      (128)
----------------------------------------------------------------------------
Cash and cash equivalents provided
 by (used in) discontinued
 operations(note 3)                       299         -       (11)        -
----------------------------------------------------------------------------
Cash and cash equivalents -
 beginning of period                      447       907       635       933
----------------------------------------------------------------------------
Cash and cash equivalents - end of
 period                                   966       805       966       805
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
 Interest paid                             20        18        62        55
----------------------------------------------------------------------------
 Interest received                         19        13        33        21
----------------------------------------------------------------------------
 Income taxes paid                         82        47       113       340
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes.


AGRIUM INC.
Condensed Consolidated Balance Sheets
(Millions of U.S. dollars)
(Unaudited)
                                                           As at      As at
                                      As at June 30, December 31, January 1,
----------------------------------------------------------------------------
                                     2011      2010         2010       2010
----------------------------------------------------------------------------
ASSETS
----------------------------------------------------------------------------
Current assets
----------------------------------------------------------------------------
 Cash and cash equivalents            966       805          635        933
----------------------------------------------------------------------------
 Accounts receivable                3,624     2,380        1,793      1,247
----------------------------------------------------------------------------
 Inventories (note 8)               2,409     1,789        2,502      2,137
----------------------------------------------------------------------------
 Prepaid expenses and deposits        197        84          848        567
----------------------------------------------------------------------------
 Marketable securities                  1         4            3        114
----------------------------------------------------------------------------
 Assets of discontinued
  operations (note 3)                 134         -        1,320          -
----------------------------------------------------------------------------
                                    7,331     5,062        7,101      4,998
----------------------------------------------------------------------------
Property, plant and equipment
 (note 9)                           2,281     1,881        2,154      1,797
----------------------------------------------------------------------------
Intangibles (note 10)                 583       596          619        617
----------------------------------------------------------------------------
Goodwill (note 10)                  2,434     1,806        2,423      1,804
----------------------------------------------------------------------------
Investment in associates              367       349          389        370
----------------------------------------------------------------------------
Other financial assets (note 11)       72        54           48         88
----------------------------------------------------------------------------
Deferred income tax assets             58         -           52          -
----------------------------------------------------------------------------
Assets of discontinued operations
 (note 3)                              32         -           92          -
----------------------------------------------------------------------------
                                   13,158     9,748       12,878      9,674
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS'
 EQUITY
----------------------------------------------------------------------------
Current liabilities
----------------------------------------------------------------------------
 Short-term debt (note 12)            541       119          517        106
----------------------------------------------------------------------------
 Accounts payable                   2,950     1,974        2,666      2,342
----------------------------------------------------------------------------
 Current portion of long-term debt
  (note 12)                            53       125          125          -
----------------------------------------------------------------------------
 Current portion of other
  provisions (note 13)                209       124          198        148
----------------------------------------------------------------------------
 Liabilities of discontinued
  operations (note 3)                 108         -        1,020          -
----------------------------------------------------------------------------
                                    3,861     2,342        4,526      2,596
----------------------------------------------------------------------------
Long-term debt (note 12)            2,059     1,567        2,118      1,699
----------------------------------------------------------------------------
Provisions for post-employment
 benefits                             141       110          136        106
----------------------------------------------------------------------------
Other provisions (note 13)            355       300          366        308
----------------------------------------------------------------------------
Other financial liabilities
 (note 14)                             48        51           47         34
----------------------------------------------------------------------------
Deferred income tax liabilities       575       456          490        460
----------------------------------------------------------------------------
Liabilities of discontinued
 operations (note 3)                    2         -            2          -
----------------------------------------------------------------------------
                                    7,041     4,826        7,685      5,203
----------------------------------------------------------------------------
Shareholders' equity
----------------------------------------------------------------------------
Share capital                       1,989     1,980        1,982      1,977
----------------------------------------------------------------------------
Retained earnings                   4,030     2,961        3,150      2,454
----------------------------------------------------------------------------
Accumulated other comprehensive
 income (loss)                         97       (29)          53         29
----------------------------------------------------------------------------
Equity holders of Agrium            6,116     4,912        5,185      4,460
----------------------------------------------------------------------------
Non-controlling interest                1        10            8         11
----------------------------------------------------------------------------
Total equity                        6,117     4,922        5,193      4,471
----------------------------------------------------------------------------
                                   13,158     9,748       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 of                            other
                                    common    Share Retained  comprehensive
                                 shares (a) capital earnings   income (loss)
----------------------------------------------------------------------------
January 1, 2010                        157    1,977    2,454             29
----------------------------------------------------------------------------
Consolidated net earnings                                516
----------------------------------------------------------------------------
Other comprehensive loss                                                (58)
----------------------------------------------------------------------------
Comprehensive income (loss)
----------------------------------------------------------------------------
Dividends                                                 (9)
----------------------------------------------------------------------------
Share-based payment
 transactions                                     3
----------------------------------------------------------------------------
June 30, 2010                          157    1,980    2,961            (29)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
December 31, 2010                      158    1,982    3,150             53
----------------------------------------------------------------------------
Consolidated net earnings                                889
----------------------------------------------------------------------------
Other comprehensive income
 (loss)                                                                  44
----------------------------------------------------------------------------
Comprehensive income (loss)
----------------------------------------------------------------------------
Dividends                                                 (9)
----------------------------------------------------------------------------
Share-based payment
 transactions                                     7
----------------------------------------------------------------------------
June 30, 2011                          158    1,989    4,030             97
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                                       Equity           Non-
                                   holders of    controlling          Total
                                       Agrium       interest         equity
----------------------------------------------------------------------------
January 1, 2010                         4,460             11          4,471
----------------------------------------------------------------------------
Consolidated net earnings                 516              1            517
----------------------------------------------------------------------------
Other comprehensive loss                  (58)            (2)           (60)
----------------------------------------------------------------------------
Comprehensive income (loss)               458             (1)           457
----------------------------------------------------------------------------
Dividends                                  (9)                           (9)
----------------------------------------------------------------------------
Share-based payment
 transactions                               3                             3
----------------------------------------------------------------------------
June 30, 2010                           4,912             10          4,922
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
December 31, 2010                       5,185              8          5,193
----------------------------------------------------------------------------
Consolidated net earnings                 889              -            889
----------------------------------------------------------------------------
Other comprehensive income
 (loss)                                    44             (7)            37
----------------------------------------------------------------------------
Comprehensive income (loss)               933             (7)           926
----------------------------------------------------------------------------
Dividends                                  (9)                           (9)
----------------------------------------------------------------------------
Share-based payment
 transactions                               7                             7
----------------------------------------------------------------------------
June 30, 2011                           6,116              1          6,117
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(a) Our authorized share capital consists of unlimited common shares without
    par value.


Accumulated Other Comprehensive Income (Loss) of Equity Holders of Agrium

                                Available for                       Foreign
                               sale financial      Actuarial       currency
                                  instruments         losses    translation
----------------------------------------------------------------------------
January 1, 2010                            29              -              -
----------------------------------------------------------------------------
Losses                                      -              -            (27)
----------------------------------------------------------------------------
Reclassification adjustments              (48)             -              -
----------------------------------------------------------------------------
Deferred income taxes                      19              -              -
----------------------------------------------------------------------------
June 30, 2010                               -              -            (27)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
December 31, 2010                           -            (16)            69
----------------------------------------------------------------------------
Gains                                       1              -             67
----------------------------------------------------------------------------
Reclassification adjustments               (2)             -            (23)
----------------------------------------------------------------------------
June 30, 2011                              (1)           (16)           113
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                                                                      Total
                                               Comprehensive    accumulated
                                               (loss) income          other
                                                          of  comprehensive
                                                  associates   income (loss)
----------------------------------------------------------------------------
January 1, 2010                                            -             29
----------------------------------------------------------------------------
Losses                                                    (2)           (29)
----------------------------------------------------------------------------
Reclassification adjustments                               -            (48)
----------------------------------------------------------------------------
Deferred income taxes                                      -             19
----------------------------------------------------------------------------
June 30, 2010                                             (2)           (29)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
December 31, 2010                                          -             53
----------------------------------------------------------------------------
Gains                                                      1             69
----------------------------------------------------------------------------
Reclassification adjustments                               -            (25)
----------------------------------------------------------------------------
June 30, 2011                                              1             97
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes.

AGRIUM INC.

Summarized Notes to the Condensed Consolidated Financial Statements

For the six months ended June 30, 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.

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 Audit Committee on August 2, 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"). We prepared our first interim financial statements for our first quarter of 2011 as 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 spring and fall.

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 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. 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 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, the New Zealand 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           Subsequent measurement of gains or losses at
 classification                each period-end
----------------------------------------------------------------------------
Fair value through profit or   Fair value; unrealized gains or losses
 loss (assets and              recognized in net earnings
 liabilities)
----------------------------------------------------------------------------
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 net earnings if
------------------------------ asset/liability is derecognized or asset
Loans and receivables          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 profit or loss, 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 collectability of specific customer receivables depending on the nature of the sale. Collectability 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.

t) Recent accounting pronouncements not yet adopted

We are in the process of assessing the impact of adopting the following new standards.


                                           Date and method    Impact
Description                                of adoption
----------------------------------------------------------------------------
IFRS 9 Financial Instruments introduces    January 1, 2013    We do not
 new requirements for the                  or earlier;        expect a
 classification, measurement and           retrospectively    significant
 disclosure of financial assets,                              impact from
 whereby subsequent measurement of                            adoption.
 financial assets is either at
 amortized cost or fair value through
 profit or loss. This new approach is
 based on how an entity manages its
 financial assets and the contractual
 cash flow characteristics of those
 financial assets.
----------------------------------------------------------------------------
IFRS 10 Consolidated Financial             January 1, 2013    We do not
 Statements establishes principles for     or earlier;        expect a
 the presentation and preparation of       retrospectively    significant
 consolidated financial statements when                       impact from
 an entity controls another entity. The                       adoption.
 standard implements a single model
 based on control and introduces a new
 definition of control, requiring:
 power over the investee; exposure, or
 rights, to variable returns from
 involvement with the investee; and the
 ability to use power over the investee
 to affect the amount of investor
 returns. All three elements must exist
 in order for an investor to determine
 that it has control of an investee.
----------------------------------------------------------------------------
IFRS 11 Joint Arrangements establishes     January 1, 2013    We are a party
 a principles-based approach to            or earlier; in     to joint
 accounting for joint arrangements that    accordance with    arrangements
 requires a party to a joint               IFRS 11            and
 arrangement to recognize its rights                          application of
 and obligations arising from the                             the standard
 arrangement. Under IFRS 11, an entity                        could have a
 will classify its interest in a joint                        material
 arrangement either as a joint                                impact on our
 operation, accounted for by                                  balance sheet
 recognizing the entity's share of the                        and statement
 assets, liabilities, revenue and                             of operations.
 expenses of the joint operation; or a
 joint venture, accounted for using
 equity accounting. This differs from
 existing IFRS which allows a choice
 between proportionate consolidation or
 equity accounting for interests in
 jointly controlled entities.
----------------------------------------------------------------------------
IFRS 12 Disclosure of Interests in         January 1, 2013    We do not
 Other Entities establishes disclosure     or earlier         expect a
 requirements for entities that have an                       significant
 interest in a subsidiary, a joint                            impact from
 arrangement, an associate or an                              adoption.
 unconsolidated structured entity.
 Under IFRS 12, entities are required
 to disclose information that allows
 users to evaluate the nature of, and
 risks associated with, an entity's
 interests in other entities; and the
 effects of those interests on the
 entity's financial position, financial
 performance and cash flows.
----------------------------------------------------------------------------
IFRS 13 Fair Value Measurement provides    January 1, 2013    We do not
 a single set of requirements to be        or earlier;        expect a
 applied to all fair value                 prospectively      significant
 measurements; replacing the existing                         impact from
 guidance which is dispersed across                           adoption.
 many standards. IFRS 13 defines fair
 value as the price that would be
 received to sell an asset or paid to
 transfer a liability in an orderly
 transaction between market
 participants at the measurement date.
 This definition emphasizes that fair
 value is a market-based measurement,
 not an entity-specific measurement.
 IFRS 13 also enhances the disclosure
 requirements regarding fair value
 measurements.
----------------------------------------------------------------------------
IAS 27 Separate Financial Statements       January 1, 2013    We do not
 and IAS 28 Investments in Associates      or earlier         expect a
 and Joint Ventures have been amended                         significant
 as a result of new standards IFRS 10                         impact from
 through IFRS 13, as described above.                         adoption.
----------------------------------------------------------------------------

2. BUSINESS ACQUISITIONS

AWB Limited

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 May 11, 2011, we completed the sale of the majority of the Commodity Management businesses acquired from AWB, in accordance with an agreement dated December 15, 2010. Cash received from the sale was $694-million.

We retained 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
 acquired and liabilities assumed on December                         As at
 3, 2010                                       As at June 30,   December 31,
----------------------------------------------------------------------------
                                                        2011           2010
----------------------------------------------------------------------------
Continuing operations
----------------------------------------------------------------------------
 Working capital                                         736            736
----------------------------------------------------------------------------
 Property, plant and equipment                            81             81
----------------------------------------------------------------------------
 Intangibles                                              41             41
----------------------------------------------------------------------------
 Goodwill                                                672            589
----------------------------------------------------------------------------
 Other financial assets                                   69             69
----------------------------------------------------------------------------
 Debt and other financial liabilities                   (742)          (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 acquisition 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.



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

Sales of AWB for the six months ended June 30, 2011 were $760-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.

As part of the acquisition, we acquired a 50% interest in Hi-Fert Pty. Ltd. ("Hi-Fert"), over which receivers and administrators have been appointed. Previously recorded amounts have been written off. We have provided guarantees for letters of credit of approximately $62-million issued by lenders supporting operations of Hi-Fert. The amount, if any, that we will be required to pay under these guarantees, net of recoveries from a charge over related assets, is not determinable pending the outcome of bankruptcy and litigation proceedings.

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. Although the outcome cannot be predicted, as of August 3, 2011, Agrium does not expect any material financial impact from the lawsuit.

As the outcome of the lawsuit and any impact on the operations of AWB arising from this legal action cannot be predicted, 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.

Cerealtoscana S.p.A. and Agroport

On May 2, 2011, we acquired 100 percent of Cerealtoscana S.p.A. ("CT"), and its subsidiary Agroport, for total consideration of $27-million plus working capital. CT is a fertilizer distribution company in Italy and Agroport is its subsidiary in Romania. The acquired business is included in the Wholesale operating segment.

3. DISCONTINUED OPERATIONS

Discontinued operations include the operations of Commodity Management businesses and AWB Harvest Finance Limited sold on May 11, 2011. Also included are the operations and assets and liabilities of the Commodity Management businesses not included in the sale.

We have agreed to various terms and conditions and indemnifications pursuant to the sale of the Commodity Management business, including an indemnity by AWB for litigation related to the OFFP, as described in note 2, Business Acquisitions.


Condensed information of discontinued                  As at          As at
 operations                                          June 30,   December 31,
----------------------------------------------------------------------------
                                                        2011           2010
----------------------------------------------------------------------------
Operating information
----------------------------------------------------------------------------
Sales (a)                                              1,504            313
----------------------------------------------------------------------------
Consolidated net earnings (loss) from
 discontinued operations (b)                               1            (17)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash (used in) provided by
----------------------------------------------------------------------------
Operating activities                                    (104)          (252)
----------------------------------------------------------------------------
Investing activities                                      (2)            (1)
----------------------------------------------------------------------------
Financing activities                                      95            298
----------------------------------------------------------------------------
                                                         (11)            45
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance sheet information
----------------------------------------------------------------------------
Accounts receivable                                       58            743
----------------------------------------------------------------------------
Inventories                                               76            551
----------------------------------------------------------------------------
Prepaid expenses and deposits                              -             14
----------------------------------------------------------------------------
Other current assets                                       -             12
----------------------------------------------------------------------------
Current assets                                           134          1,320
----------------------------------------------------------------------------
Property, plant and equipment                             20             81
----------------------------------------------------------------------------
Goodwill                                                   7              -
----------------------------------------------------------------------------
Investment in associates                                   4              -
----------------------------------------------------------------------------
Other financial assets                                     -              2
----------------------------------------------------------------------------
Deferred income tax assets                                 1              9
----------------------------------------------------------------------------
Non-current assets                                        32             92
----------------------------------------------------------------------------
                                                         166          1,412
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Short-term debt                                           60            471
----------------------------------------------------------------------------
Accounts payable                                          48            549
----------------------------------------------------------------------------
Current liabilities                                      108          1,020
----------------------------------------------------------------------------
Deferred income tax liabilities                            2              2
----------------------------------------------------------------------------
Non-current liabilities                                    2              2
----------------------------------------------------------------------------
                                                         110          1,022
----------------------------------------------------------------------------
----------------------------------------------------------------------------

(a) Includes revenue from related parties (Pools) of $365-million (December
    31, 2010 - $59-million).
(b) Net of income taxes of $20-million (December 31, 2010 - $3-million)


4. OTHER EXPENSES

                                     Three months ended    Six months ended
                                                June 30,            June 30,
----------------------------------------------------------------------------
                                         2011      2010      2011      2010
----------------------------------------------------------------------------
Realized loss on derivative
 financial instruments                     27        21        75        28
----------------------------------------------------------------------------
Unrealized (gain) loss on
 derivative financial instruments         (15)      (29)      (45)       32
----------------------------------------------------------------------------
Gain on disposal of marketable
 securities                                 -         -         -       (52)
----------------------------------------------------------------------------
Potash profit and capital tax              15         1        26         4
----------------------------------------------------------------------------
Bad debt expense                           22        18        27        24
----------------------------------------------------------------------------
Interest income                           (19)      (13)      (33)      (21)
----------------------------------------------------------------------------
Foreign exchange gain                     (17)       (6)      (42)       (5)
----------------------------------------------------------------------------
Other                                      43        (3)       49        (1)
----------------------------------------------------------------------------
                                           56       (11)       57         9
----------------------------------------------------------------------------
----------------------------------------------------------------------------


5. FINANCE COSTS

                                     Three months ended    Six months ended
                                                June 30,            June 30,
----------------------------------------------------------------------------
                                         2011      2010      2011      2010
----------------------------------------------------------------------------
Finance costs related to
long-term debt                             24        22        51        45
----------------------------------------------------------------------------
Other finance costs
----------------------------------------------------------------------------
 Environmental remediation and
  asset retirement obligations              2         2         4         5
----------------------------------------------------------------------------
 Other interest expense                    10         5        21         9
----------------------------------------------------------------------------
                                           12         7        25        14
----------------------------------------------------------------------------
                                           36        29        76        59
----------------------------------------------------------------------------
----------------------------------------------------------------------------


6. PERSONNEL COSTS

                                     Three months ended    Six months ended
Total personnel expenses                        June 30,            June 30,
----------------------------------------------------------------------------
                                         2011      2010      2011      2010
----------------------------------------------------------------------------
Short-term employee benefits              388       239       592       390
----------------------------------------------------------------------------
Post-employment benefits                   20         9        33        20
----------------------------------------------------------------------------
Share-based payments                      (10)      (57)        2       (21)
----------------------------------------------------------------------------
                                          398       191       627       389
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Compensation of key management       Three months ended    Six months ended
 personnel                                      June 30,            June 30,
----------------------------------------------------------------------------
                                         2011      2010      2011      2010
----------------------------------------------------------------------------
Short-term employee benefits                8         2         9         6
----------------------------------------------------------------------------
Post-employment benefits                    -         -         1         1
----------------------------------------------------------------------------
Share-based payments                       (7)      (32)       (2)      (11)
----------------------------------------------------------------------------
                                            1       (30)        8        (4)
----------------------------------------------------------------------------
----------------------------------------------------------------------------


7. EARNINGS PER SHARE

                                     Three months ended    Six months ended
                                                June 30,            June 30,
----------------------------------------------------------------------------
                                         2011      2010      2011      2010
----------------------------------------------------------------------------
Numerator
----------------------------------------------------------------------------
 Consolidated net earnings from
  continuing operations for the
  period attributable to
  equity holders of Agrium                727       518       888       516
----------------------------------------------------------------------------
 Consolidated net (loss)
  earnings from discontinued
  operations for the period
  attributable to equity
  holders of Agrium                       (10)        -         1         -
----------------------------------------------------------------------------
 Consolidated net earnings for
  the period attributable to
  equity holders of Agrium                717       518       889       516
----------------------------------------------------------------------------
Denominator
----------------------------------------------------------------------------
 Weighted-average number of
  shares outstanding for
  basic earnings per
  share                                   158       157       158       157
----------------------------------------------------------------------------
 Dilutive instruments - stock
  options (a)(b)                            -         1         -         1
----------------------------------------------------------------------------
 Weighted-average number of
  shares outstanding for
  diluted earnings per
  share                                   158       158       158       158
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
 Basic earnings per share from
  continuing operations                  4.61      3.29      5.63      3.28
----------------------------------------------------------------------------
 Basic (loss) earnings per share
  from discontinued operations          (0.06)        -      0.01         -
----------------------------------------------------------------------------
 Basic earnings per share                4.55      3.29      5.64      3.28
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 Diluted earnings per share from
  continuing operations                  4.60      3.28      5.62      3.27
----------------------------------------------------------------------------
 Diluted loss per share from
  discontinued operations               (0.06)        -         -         -
----------------------------------------------------------------------------
 Diluted earnings per share              4.54      3.28      5.62      3.27
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(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 June 30, December 31, January 1,
----------------------------------------------------------------------------
                                     2011      2010         2010       2010
----------------------------------------------------------------------------
Raw materials                         265       256          267        231
----------------------------------------------------------------------------
Finished goods                        240       244          268        338
----------------------------------------------------------------------------
Product for resale                  1,904     1,289        1,967      1,568
----------------------------------------------------------------------------
                                    2,409     1,789        2,502      2,137
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Depreciation and amortization
 recorded in inventory                 21        14           16         16
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                                        Three months
                                             ended         Six months ended
Recorded in cost of product sold           June 30,            June 30,
----------------------------------------------------------------------------
                                         2011      2010      2011      2010
----------------------------------------------------------------------------
Depreciation and amortization              51        67        90       103
----------------------------------------------------------------------------
Direct freight                             65        64       114       114
----------------------------------------------------------------------------
Inventory                               4,407     3,237     6,548     4,637
----------------------------------------------------------------------------
                                        4,523     3,368     6,752     4,854
----------------------------------------------------------------------------
----------------------------------------------------------------------------

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  Machinery
                                and        and  Assets under
June 30, 2011    Land  improvements  equipment  construction  Other   Total
----------------------------------------------------------------------------
Cost
----------------------------------------------------------------------------
 December 31,
  2010             84           927      3,003           335     87   4,436
----------------------------------------------------------------------------
 Additions          2            18        107           128      1     256
----------------------------------------------------------------------------
 Acquisitions       -             1          3             -      -       4
----------------------------------------------------------------------------
 Disposals         (1)          (17)       (32)           (1)    (1)    (52)
----------------------------------------------------------------------------
 Other
  adjustments      (1)            7         14           (31)     5      (6)
----------------------------------------------------------------------------
 Foreign
  exchange
  translation       7             7         61            10      2      87
----------------------------------------------------------------------------
June 30, 2011      91           943      3,156           441     94   4,725
----------------------------------------------------------------------------
Accumulated
 depreciation
----------------------------------------------------------------------------
 December 31,
  2010              -          (390)    (1,841)            -    (51) (2,282)
----------------------------------------------------------------------------
 Depreciation       -           (30)      (107)            -     (4)   (141)
----------------------------------------------------------------------------
 Disposals          -             8         12             -      1      21
----------------------------------------------------------------------------
 Other
  adjustments       -            (2)         5             -      1       4
----------------------------------------------------------------------------
 Foreign
  exchange
  translation       -            (6)       (39)            -     (1)    (46)
----------------------------------------------------------------------------
June 30, 2011       -          (420)    (1,970)            -    (54) (2,444)
----------------------------------------------------------------------------
Net book value     91           523      1,186           441     40   2,281
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                          Buildings  Machinery
December 31,                    and        and  Assets under
  2010           Land  improvements  equipment  construction  Other   Total
----------------------------------------------------------------------------
Cost
----------------------------------------------------------------------------
 January 1, 2010   73           702      2,888           274     78   4,015
----------------------------------------------------------------------------
 Additions         11           150        228           110      7     506
----------------------------------------------------------------------------
 Acquisitions       2            31         37            11      -      81
----------------------------------------------------------------------------
 Disposals         (5)          (34)      (260)            -     (2)   (301)
----------------------------------------------------------------------------
 Other
  adjustments       2            63         31           (73)    (2)     21
----------------------------------------------------------------------------
 Foreign
  exchange
  translation       1            15         79            13      6     114
----------------------------------------------------------------------------
December 31,
 2010              84           927      3,003           335     87   4,436
----------------------------------------------------------------------------
Accumulated
 depreciation
----------------------------------------------------------------------------
 January 1, 2010    -          (338)    (1,833)            -    (47) (2,218)
----------------------------------------------------------------------------
 Depreciation       -           (48)      (202)            -     (5)   (255)
----------------------------------------------------------------------------
 Disposals          -            22        235             -      1     258
----------------------------------------------------------------------------
 Other
  adjustments       -           (18)        12             -      4      (2)
----------------------------------------------------------------------------
 Foreign
  exchange
  translation       -            (8)       (53)            -     (4)    (65)
----------------------------------------------------------------------------
December 31,
 2010               -          (390)    (1,841)            -    (51) (2,282)
----------------------------------------------------------------------------
Net book value     84           537      1,162           335     36   2,154
----------------------------------------------------------------------------
----------------------------------------------------------------------------


10. INTANGIBLES AND GOODWILL

                                 Trade              Customer
June 30, 2011                    names         relationships     Technology
----------------------------------------------------------------------------
Cost
----------------------------------------------------------------------------
 December 31, 2010                  31                   553             64
----------------------------------------------------------------------------
 Additions developed internally      -                     -              1
----------------------------------------------------------------------------
 Acquisitions                        -                     3              -
----------------------------------------------------------------------------
 Adjustments to purchase price
  allocation                         -                     -              -
----------------------------------------------------------------------------
 Disposals                           -                     -             (4)
----------------------------------------------------------------------------
 Other adjustments                   -                     -              2
----------------------------------------------------------------------------
 Foreign exchange translation        -                     -              2
----------------------------------------------------------------------------
June 30, 2011                       31                   556             65
----------------------------------------------------------------------------
Accumulated amortization
----------------------------------------------------------------------------
 December 31, 2010                  (7)                 (108)           (14)
----------------------------------------------------------------------------
 Amortization                       (1)                  (19)            (7)
----------------------------------------------------------------------------
 Disposals                           -                     -              3
----------------------------------------------------------------------------
 Other adjustments                   -                     -              -
----------------------------------------------------------------------------
 Foreign exchange translation        -                     -              -
----------------------------------------------------------------------------
June 30, 2011                       (8)                 (127)           (18)
----------------------------------------------------------------------------
Net book value                      23                   429             47
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                                                       Total
June 30, 2011                           Other    Intangibles       Goodwill
----------------------------------------------------------------------------
Cost
----------------------------------------------------------------------------
 December 31, 2010                        148            796          2,423
----------------------------------------------------------------------------
 Additions developed internally             -              1              -
----------------------------------------------------------------------------
 Acquisitions                               2              5             17
----------------------------------------------------------------------------
 Adjustments to purchase price
  allocation                                -              -             83
----------------------------------------------------------------------------
 Disposals                                 (1)            (5)          (123)
----------------------------------------------------------------------------
 Other adjustments                          1              3             (2)
----------------------------------------------------------------------------
 Foreign exchange translation               1              3             36
----------------------------------------------------------------------------
June 30, 2011                             151            803          2,434
----------------------------------------------------------------------------
Accumulated amortization
----------------------------------------------------------------------------
 December 31, 2010                        (48)          (177)             -
----------------------------------------------------------------------------
 Amortization                             (17)           (44)             -
----------------------------------------------------------------------------
 Disposals                                  -              3              -
----------------------------------------------------------------------------
 Other adjustments                         (1)            (1)             -
----------------------------------------------------------------------------
 Foreign exchange translation              (1)            (1)             -
----------------------------------------------------------------------------
June 30, 2011                             (67)          (220)             -
----------------------------------------------------------------------------
Net book value                             84            583          2,434
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                                        Trade       Customer
December 31, 2010                       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         Three months ended    Six months ended
 intangibles                                    June 30,            June 30,
----------------------------------------------------------------------------
                                         2011      2010      2011      2010
----------------------------------------------------------------------------
Cost of product sold                        1         -         2         1
----------------------------------------------------------------------------
Selling                                    16        12        34        23
----------------------------------------------------------------------------
General and administrative                  5         2         8         4
----------------------------------------------------------------------------
                                           22        14        44        28
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Certain of our trade names with a cost of $17-million (June 30, 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 June 30,   December 31, January 1,
----------------------------------------------------------------------------
                                      2011     2010         2010       2010
----------------------------------------------------------------------------
Investments                              5        5            2         25
----------------------------------------------------------------------------
Receivables                             33       29           34         22
----------------------------------------------------------------------------
Derivative financial instruments         5        2            3          3
----------------------------------------------------------------------------
Other                                   29       18            9         38
----------------------------------------------------------------------------
                                        72       54           48         88
----------------------------------------------------------------------------
----------------------------------------------------------------------------


12. DEBT

                                                           As at      As at
                            As at June 30,           December 31, January 1,
----------------------------------------------------------------------------
                                  2011                      2010       2010
----------------------------------------------------------------------------
                          Total Unutilized Utilized     Utilized   Utilized
----------------------------------------------------------------------------
Short-term debt
----------------------------------------------------------------------------
North American
 facilities expiring
 2012 (a)                   775        775        -            -          -
----------------------------------------------------------------------------
North American accounts
 receivable
 securitization (b)         200        200        -            -          -
----------------------------------------------------------------------------
European facilities
 expiring 2011 to
 2012 (c)                   212          -      212          142         74
----------------------------------------------------------------------------
South American
 facilities expiring 2011
 to 2012                    151         48      103           55         32
----------------------------------------------------------------------------
Australian facilities
 expiring 2011                8          8        -          100          -
----------------------------------------------------------------------------
Australian accounts
 receivable
 securitization (b)         267         41      226          220          -
----------------------------------------------------------------------------
                          1,613      1,072      541          517        106
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
Current portion of
 long-term debt                                  53          125          -
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Long-term debt
----------------------------------------------------------------------------
 Floating rate bank
  loans due in 2012                               -           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                                           95          141         73
----------------------------------------------------------------------------
                                              2,080        2,140      1,709
----------------------------------------------------------------------------
Unamortized transaction
 costs                                          (21)         (22)       (10)
----------------------------------------------------------------------------
                                              2,059        2,118      1,699
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(a) Outstanding letters of credit issued under our revolving credit
    facilities at June 30, 2011 were $76-million reducing credit available
    under the facilities to $699-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                       June 30,   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                            1,413            225            400
----------------------------------------------------------------------------
Securitization reduction
 payments                              (1,415)          (210)          (600)
----------------------------------------------------------------------------
Foreign currency translation                8              -              -
----------------------------------------------------------------------------
Cumulative proceeds from
 securitization, end of period            226            220              -
----------------------------------------------------------------------------
----------------------------------------------------------------------------

(c) Of the total facility, $6-million is secured by accounts receivable.


13. OTHER PROVISIONS

                                         Cash-settled
June 30,    Environmental         Asset   share-based          Legal
2011        remediation(a) retirement(b)   payments(c) contingencies  Total
----------------------------------------------------------------------------
December
 31, 2010             119           181           235             29    564
----------------------------------------------------------------------------
Additional
 provisions
 or changes
 in
 estimates             14            16             2              9     41
----------------------------------------------------------------------------
Draw-downs             (7)           (4)          (29)            (4)   (44)
----------------------------------------------------------------------------
Reversals              (3)            -             -              -     (3)
----------------------------------------------------------------------------
Accretion               1             3             -              -      4
----------------------------------------------------------------------------
Other
 adjustments            1             2             2             (8)    (3)
----------------------------------------------------------------------------
Foreign
 currency
 translation            1             4             -              -      5
----------------------------------------------------------------------------
June 30,
 2011                 126           202           210             26    564
----------------------------------------------------------------------------
Current
 portion               10             -           173             26    209
----------------------------------------------------------------------------
Non-current
 portion              116           202            37              -    355
----------------------------------------------------------------------------
                      126           202           210             26    564
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                                         Cash-settled
December    Environmental         Asset   share-based          Legal
 31, 2010   remediation(a) retirement(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 relate 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 share-based
 payments using a
 Black-Scholes option                      As at         As at        As at
 pricing model                           June 30,  December 31,   January 1,
----------------------------------------------------------------------------
                                     2011   2010          2010         2010
----------------------------------------------------------------------------
Risk-free interest rate (%)           1.9    2.1           2.2          3.8
----------------------------------------------------------------------------
Expected annual volatility (%)      51.90  51.90         53.46        43.04
----------------------------------------------------------------------------
Expected annual dividend yield (%)   0.13   0.23          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
                                         June 30,    December 31, January 1,
----------------------------------------------------------------------------
                                      2011    2010          2010       2010
----------------------------------------------------------------------------
Derivative financial instruments        24      40            33         25
----------------------------------------------------------------------------
Other                                   24      11            14          9
----------------------------------------------------------------------------
                                        48      51            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 six months ended June 30, 2011, expenses for operating leases were $116-million (six months ended June 30, 2010 - $91-million).


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

Future minimum lease payments for operating leases            June 30, 2011
----------------------------------------------------------------------------
2011                                                                    159
----------------------------------------------------------------------------
2012 - 2015                                                             289
----------------------------------------------------------------------------
after 2015                                                               75
----------------------------------------------------------------------------
                                                                        523
----------------------------------------------------------------------------
----------------------------------------------------------------------------

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 June 30, 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      As at
 net earnings                               June 30, December 31, January 1,
----------------------------------------------------------------------------
                                     2011      2010         2010       2010
----------------------------------------------------------------------------
Net U.S. dollar denominated
 balance in Canadian operations       585       305          625        254
----------------------------------------------------------------------------
A $10-million impact requires a
 strengthening or weakening in
 the U.S. dollar against the
 Canadian dollar                     0.02      0.05         0.02       0.06
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Balances in non-U.S. dollar subsidiaries generate foreign currency
translation gains and losses which are included  in comprehensive income.

Balances in non-U.S.
 dollar subsidiaries                       As at June 30,
----------------------------------------------------------------------------
(in U.S. dollar
 equivalent)                             2011                     2010
----------------------------------------------------------------------------
                                CAD      Euro       AUD       CAD      Euro
----------------------------------------------------------------------------
Cash and cash equivalents        60        31       248       333        11
----------------------------------------------------------------------------
Accounts receivable             256       238       513       200        66
----------------------------------------------------------------------------
Short-term debt                   -      (199)     (226)        -       (79)
----------------------------------------------------------------------------
Accounts payable               (377)     (115)     (352)     (283)      (30)
----------------------------------------------------------------------------
Current portion of other
 provisions                    (143)        -        (5)      (60)        -
----------------------------------------------------------------------------
                               (204)      (45)      178       190       (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 June 30,
----------------------------------------------------------------------------
                                         2011                    2010
----------------------------------------------------------------------------
                                CAD      Euro       AUD       CAD      Euro
----------------------------------------------------------------------------
A $10-million increase
 requires a strengthening
 (weakening) against the
 U.S. dollar                  (0.05)    (0.02)     0.06      0.05     (0.37)
----------------------------------------------------------------------------
A $10-million decrease
 requires a strengthening
 (weakening) against the
 U.S. dollar                   0.05      0.13     (0.05)    (0.06)     0.19
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                                                June 30, 2011
----------------------------------------------------------------------------
                                     Notional                    Fair value
                               (millions, buy                        assets
Sell/Buy                             currency)    Maturities   (liabilities)
----------------------------------------------------------------------------
USD/CAD forwards                       CAD 34           2011              1
----------------------------------------------------------------------------
USD/AUD forwards                       AUD 69           2011              1
----------------------------------------------------------------------------
USD/EUR forwards                            -              -              -
----------------------------------------------------------------------------
AUD/USD forwards                      USD 100           2011             (2)
----------------------------------------------------------------------------
AUD/CAD forwards                       CAD 26           2011              -
----------------------------------------------------------------------------
EUR/USD forwards                       USD 43           2011              -
----------------------------------------------------------------------------
NZD/AUD swaps                          AUD 37           2011             (1)
----------------------------------------------------------------------------
USD/CAD put
 options purchased                     CAD 74           2011              2
----------------------------------------------------------------------------
USD/CAD call
 options sold                         CAD 153           2011             (1)
----------------------------------------------------------------------------
                                                                          -
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                                                June 30, 2010
----------------------------------------------------------------------------
                                     Notional                    Fair value
                               (millions, buy                        assets
Sell/Buy                             currency)    Maturities   (liabilities)
----------------------------------------------------------------------------
USD/CAD forwards                      CAD 131    2010 - 2011              -
----------------------------------------------------------------------------
USD/AUD forwards                            -              -              -
----------------------------------------------------------------------------
USD/EUR forwards                        EUR 8           2010             (1)
----------------------------------------------------------------------------
AUD/USD forwards                            -              -              -
----------------------------------------------------------------------------
AUD/CAD forwards                            -              -              -
----------------------------------------------------------------------------
EUR/USD forwards                            -              -              -
----------------------------------------------------------------------------
NZD/AUD swaps                               -              -              -
----------------------------------------------------------------------------
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
----------------------------------------------------------------------------
                                               June 30, 2011
----------------------------------------------------------------------------
                                                                 Fair value
                                                                     assets
                                     Notional     Maturities   (liabilities)
----------------------------------------------------------------------------
Natural gas (BCF)
 NYMEX contracts
----------------------------------------------------------------------------
  Swaps - bought                           27    2011 - 2013            (67)
----------------------------------------------------------------------------
  Swaps - sold                            (27)   2011 - 2013             24
----------------------------------------------------------------------------
  Collars (swap with options)               7    2011 - 2012             (1)
----------------------------------------------------------------------------
  El Paso swaps                             1           2011              -
----------------------------------------------------------------------------
 AECO contracts
----------------------------------------------------------------------------
  Swaps                                     1           2011             (1)
----------------------------------------------------------------------------
                                            9                           (45)
----------------------------------------------------------------------------
Power - Swaps (GWh)                       343    2011 - 2013             10
----------------------------------------------------------------------------
Nutrient - Urea swaps (short
 tons)                                  5,000           2011              1
----------------------------------------------------------------------------
                                                                        (34)
----------------------------------------------------------------------------
----------------------------------------------------------------------------


----------------------------------------------------------------------------
                                               June 30, 2010
----------------------------------------------------------------------------
                                                                 Fair value
                                                                     assets
                                     Notional     Maturities   (liabilities)
----------------------------------------------------------------------------
Natural gas (BCF)
 NYMEX contracts
----------------------------------------------------------------------------
  Swaps - bought                           44    2010 - 2013            (69)
----------------------------------------------------------------------------
  Swaps - sold                            (44)   2010 - 2013              4
----------------------------------------------------------------------------
  Collars (swap with options)              22    2010 - 2012              -
----------------------------------------------------------------------------
  El Paso swaps                             -              -              -
----------------------------------------------------------------------------
 AECO contracts
----------------------------------------------------------------------------
  Swaps
----------------------------------------------------------------------------
                                           22                           (65)
----------------------------------------------------------------------------
Power - Swaps (GWh)                       483    2010 - 2013              3
----------------------------------------------------------------------------
Nutrient - Urea swaps (short
 tons)                                  6,000           2010              -
----------------------------------------------------------------------------
                                                                        (62)
----------------------------------------------------------------------------
----------------------------------------------------------------------------


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              As at June 30,
 derivative financial instruments                       2011           2010
----------------------------------------------------------------------------
A $10-million increase in net earnings
 requires an increase in gas prices per MMBtu           2.61           4.55
----------------------------------------------------------------------------
A $10-million decrease in net earnings
 requires a decrease in gas prices per MMBtu           (4.37)         (4.62)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

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                                    June 30,
----------------------------------------------------------------------------
                                    2011                    2010
----------------------------------------------------------------------------
                                      Allowance for           Allowance for
                                           doubtful                doubtful
                                Gross      accounts     Gross      accounts
----------------------------------------------------------------------------
Not past due                    2,417           (28)    1,600           (21)
----------------------------------------------------------------------------
Less than 30 days                 417            (8)      264            (5)
----------------------------------------------------------------------------
30 - 90 days                      153           (13)      111           (10)
----------------------------------------------------------------------------
91 - 180 days                      65            (7)       35            (6)
----------------------------------------------------------------------------
Greater than 180 days              25            (5)       32           (10)
----------------------------------------------------------------------------
                                3,077           (61)    2,042           (52)
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Aging of trade accounts
 receivable                      December 31,           January 1,
----------------------------------------------------------------------------
                                    2010                   2010
----------------------------------------------------------------------------
                                      Allowance for           Allowance 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
                                         Six months ended             ended
Allowance for doubtful accounts                June 30,         December 31,
----------------------------------------------------------------------------
                                         2011           2010           2010
----------------------------------------------------------------------------
Balance, beginning of period               53             46             46
----------------------------------------------------------------------------
Additions                                  51             35             55
----------------------------------------------------------------------------
Write-offs                                (43)           (29)           (48)
----------------------------------------------------------------------------
Balance, end of period                     61             52             53
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance as a percent of trade
 accounts receivable (%)                    2              3              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 June 30, 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 June 30, December 31, January 1,
----------------------------------------------------------------------------
                                      2011     2010         2010       2010
----------------------------------------------------------------------------
Cash and cash equivalents              966      805          635        933
----------------------------------------------------------------------------
Accounts receivable                  3,624    2,380        1,793      1,247
----------------------------------------------------------------------------
Marketable securities                    1        4            3        114
----------------------------------------------------------------------------
Other financial assets                  72       54           48         88
----------------------------------------------------------------------------
                                     4,663    3,243        2,479      2,382
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Fair values

Financial instrument           Category                      Measurement
----------------------------------------------------------------------------
Cash and cash equivalents      Held for trading              Fair value
----------------------------------------------------------------------------
Accounts receivable (a)        Loans and receivables         Amortized cost
----------------------------------------------------------------------------
Accounts receivable -          Held for trading              Fair value
 derivative financial
 instruments (b)
----------------------------------------------------------------------------
Marketable securities (b)      Available for sale or held    Fair value
                                for trading
----------------------------------------------------------------------------
Other financial assets         Loans and receivables         Amortized cost
----------------------------------------------------------------------------
Other financial assets         Available for sale            Fair value
----------------------------------------------------------------------------
Other financial assets -       Held for trading              Fair value
 derivative financial
 instruments (b)
----------------------------------------------------------------------------
Short-term debt (a)            Financial liabilities         Amortized cost
----------------------------------------------------------------------------
Accounts payable (a)           Financial liabilities         Amortized cost
----------------------------------------------------------------------------
Accounts payable - derivative  Held for trading              Fair value
 financial instruments (b)
----------------------------------------------------------------------------
Long-term debt (c)             Financial liabilities         Amortized cost
----------------------------------------------------------------------------
Other financial liabilities    Financial liabilities         Amortized cost
----------------------------------------------------------------------------
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               As at
 financial instruments                    June 30, 2011       June 30, 2010
----------------------------------------------------------------------------
                                         Fair  Carrying      Fair  Carrying
                                        value     value     value     value
----------------------------------------------------------------------------
Cash and cash equivalents - held
 for trading                              966       966       805       805
----------------------------------------------------------------------------
Accounts receivable
----------------------------------------------------------------------------
 Loans and receivables                  3,616     3,616     2,377     2,377
----------------------------------------------------------------------------
 Fair value through profit or loss          8         8         3         3
----------------------------------------------------------------------------
                                        3,624     3,624     2,380     2,380
----------------------------------------------------------------------------
Marketable securities - held for
 trading                                    1         1         4         4
----------------------------------------------------------------------------
Other financial assets
----------------------------------------------------------------------------
 Loans and receivables                     67        67        52        52
----------------------------------------------------------------------------
 Fair value through profit or loss          5         5         2         2
----------------------------------------------------------------------------
                                           72        72        54        54
----------------------------------------------------------------------------
Short-term debt - amortized cost          541       541       119       119
----------------------------------------------------------------------------
Accounts payable
----------------------------------------------------------------------------
 Amortized cost                         2,927     2,927     1,946     1,946
----------------------------------------------------------------------------
 Fair value through profit or loss         23        23        28        28
----------------------------------------------------------------------------
                                        2,950     2,950     1,974     1,974
----------------------------------------------------------------------------
Current portion of long-term debt
----------------------------------------------------------------------------
 Debentures - amortized cost                -         -       131       125
----------------------------------------------------------------------------
 Floating rate debt - amortized
  cost                                     53        53         -         -
----------------------------------------------------------------------------
                                           53        53       131       125
----------------------------------------------------------------------------
Long-term debt
----------------------------------------------------------------------------
 Debentures - amortized cost            1,723     1,525     1,216     1,025
----------------------------------------------------------------------------
 Floating rate debt - amortized
  cost                                    534       534       542       542
----------------------------------------------------------------------------
                                        2,257     2,059     1,758     1,567
----------------------------------------------------------------------------
Other financial liabilities
----------------------------------------------------------------------------
 Amortized cost                            24        24        11        11
----------------------------------------------------------------------------
 Fair value through profit or loss         24        24        40        40
----------------------------------------------------------------------------
                                           48        48        51        51
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Fair value and carrying value of                  As at               As at
 financial instruments                December 31, 2010     January 1, 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 June 30,
2011 is 5% (June 30, 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
----------------------------------------------------------------------------
June 30, 2011
----------------------------------------------------------------------------
Fair value through profit or loss
----------------------------------------------------------------------------
 Cash and cash equivalents                966              -            966
----------------------------------------------------------------------------
 Gas, power and nutrient
  derivative financial
  instruments                             (44)            10            (34)
----------------------------------------------------------------------------
 Marketable securities                      1              -              1
----------------------------------------------------------------------------
June 30, 2010
----------------------------------------------------------------------------
Fair value through profit or loss
----------------------------------------------------------------------------
 Cash and cash equivalents                805              -            805
----------------------------------------------------------------------------
 Foreign exchange derivative
  financial instruments                     -             (1)            (1)
----------------------------------------------------------------------------
 Gas, power and nutrient
  derivative financial
  instruments                             (65)             3            (62)
----------------------------------------------------------------------------
 Marketable securities                      4              -              4
----------------------------------------------------------------------------
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 June 30, December 31, January 1,
----------------------------------------------------------------------------
                                      2011     2010         2010       2010
----------------------------------------------------------------------------
Net debt to net debt plus
 equity (%) (a)                         22       17           29         16
----------------------------------------------------------------------------
Interest coverage (multiple) (b)      14.8   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 finance costs, 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 June 30, 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    Six months ended
                                            June 30,            June 30,
                                         2011      2010      2011      2010
----------------------------------------------------------------------------
Consolidated sales
----------------------------------------------------------------------------
Retail
----------------------------------------------------------------------------
 Crop nutrients                         2,108     1,392     2,815     1,763
----------------------------------------------------------------------------
 Crop protection products               1,465     1,238     2,103     1,700
----------------------------------------------------------------------------
 Seed                                     687       588       917       779
----------------------------------------------------------------------------
 Merchandise                              208        29       352        50
----------------------------------------------------------------------------
 Services and other                       180        93       283       108
----------------------------------------------------------------------------
                                        4,648     3,340     6,470     4,400
----------------------------------------------------------------------------
Wholesale
----------------------------------------------------------------------------
 Nitrogen                                 717       481     1,051       742
----------------------------------------------------------------------------
 Potash                                   259       195       454       386
----------------------------------------------------------------------------
 Phosphate                                206       134       444       261
----------------------------------------------------------------------------
 Product purchased for resale             449       228       860       444
----------------------------------------------------------------------------
 Other                                     82        73       137       126
----------------------------------------------------------------------------
                                        1,713     1,111     2,946     1,959
----------------------------------------------------------------------------
Advanced Technologies                     158       141       239       205
----------------------------------------------------------------------------
Other (a)(b)                             (321)     (161)     (503)     (285)
----------------------------------------------------------------------------
                                        6,198     4,431     9,152     6,279
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Consolidated inter-segment sales (b)
----------------------------------------------------------------------------
 Retail                                    12         4        18         9
----------------------------------------------------------------------------
 Wholesale                                275       141       436       249
----------------------------------------------------------------------------
 Advanced Technologies                     34        16        49        27
----------------------------------------------------------------------------
                                          321       161       503       285
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Consolidated net earnings
----------------------------------------------------------------------------
 Retail                                   486       361       471       293
----------------------------------------------------------------------------
 Wholesale                                569       276       946       423
----------------------------------------------------------------------------
 Advanced Technologies                     13        15         8        14
----------------------------------------------------------------------------
 Other (a)                                (20)       78      (118)       29
----------------------------------------------------------------------------
 Earnings before finance costs and
  income taxes                          1,048       730     1,307       759
----------------------------------------------------------------------------
 Finance costs related to long-term
  debt                                     24        22        51        45
----------------------------------------------------------------------------
 Other finance costs                       12         7        25        14
----------------------------------------------------------------------------
 Earnings before income taxes           1,012       701     1,231       700
----------------------------------------------------------------------------
 Income taxes                             284       183       343       183
----------------------------------------------------------------------------
Consolidated net earnings from
 continuing operations                    728       518       888       517
----------------------------------------------------------------------------
Consolidated net (loss) earnings
 from discontinued operations             (10)        -         1         -
----------------------------------------------------------------------------
Consolidated net earnings                 718       518       889       517
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(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 June 30, December 31, January 1,
----------------------------------------------------------------------------
                                      2011     2010         2010       2010
----------------------------------------------------------------------------
Total assets
----------------------------------------------------------------------------
 Retail                              8,177    6,079        6,854      5,389
----------------------------------------------------------------------------
 Wholesale                           2,853    2,122        2,602      3,175
----------------------------------------------------------------------------
 Advanced Technologies                 456      453          460        418
----------------------------------------------------------------------------
 Other                               1,506    1,094        1,550        692
----------------------------------------------------------------------------
 Discontinued operations               166        -        1,412          -
----------------------------------------------------------------------------
                                    13,158    9,748       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 six months ended June 30, 2011, the comparative information presented in these financial statements for the six months ended June 30, 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     Six months  Twelve months
Reconciliation of net earnings          ended          ended          ended
 and comprehensive income             June 30,       June 30,   December 31,
----------------------------------------------------------------------------
                                         2010           2010           2010
----------------------------------------------------------------------------
Net earnings as reported under
 previous Canadian GAAP                   506            499            714
----------------------------------------------------------------------------
Adjustments to increase
 (decrease) reported net
 earnings:
----------------------------------------------------------------------------
 Share-based payments                       -             (3)            (1)
----------------------------------------------------------------------------
 Incentive accrual                          3              9              -
----------------------------------------------------------------------------
 Acquisition-related costs                  -             45              5
----------------------------------------------------------------------------
 Environmental remediation and
  asset retirement obligations             (4)            (9)            (6)
----------------------------------------------------------------------------
 Reclassification of
  non-controlling interest                  -              1              -
----------------------------------------------------------------------------
 Income tax effect of
  reconciling items                        17            (24)             1
----------------------------------------------------------------------------
 Other                                     (4)            (1)             -
----------------------------------------------------------------------------
Consolidated net earnings as
 reported under IFRS                      518            517            713
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Comprehensive income as
 reported under previous
 Canadian GAAP                            454            441            763
----------------------------------------------------------------------------
Adjustments to increase
 (decrease) reported net
 earnings                                  12             18             (1)
----------------------------------------------------------------------------
Adjustments to increase
 (decrease) reported other
 comprehensive Income                       3             (2)           (28)
----------------------------------------------------------------------------
Consolidated comprehensive
 income as reported under
 IFRS                                     469            457            734
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                                 Three months     Six months  Twelve months
                                        ended          ended          ended
Reconciliation of cash flows          June 30,       June 30,   December 31,
----------------------------------------------------------------------------
                                         2010           2010           2010
----------------------------------------------------------------------------
Cash provided by (used in)
 operating activities as
 reported under
 previous Canadian GAAP                    38            (76)           575
----------------------------------------------------------------------------
Adjustments to increase
 (decrease) reported cash
 provided by operating
 activities:
----------------------------------------------------------------------------
 Consolidated net earnings                 12             18              4
----------------------------------------------------------------------------
 Share-based payments                       -              3              1
----------------------------------------------------------------------------
 Acquisition-related costs                  -            (45)           (45)
----------------------------------------------------------------------------
 Income tax effect of
  reconciling items                        (8)            19             (1)
----------------------------------------------------------------------------
 Reclassification of
  non-controlling interest                  -             (1)             -
----------------------------------------------------------------------------
 Consolidation of special
  purpose entity                            -              -             45
----------------------------------------------------------------------------
 Other                                     (8)             5             10
----------------------------------------------------------------------------
Cash provided by (used in)
 operating activities as
 reported under IFRS                       34            (77)           589
----------------------------------------------------------------------------
Cash used in investing
 activities as reported under
 previous Canadian GAAP                  (119)           (59)        (1,546)
----------------------------------------------------------------------------
Adjustments to increase
 (decrease) reported cash
 provided by investing
 activities:
----------------------------------------------------------------------------
 Acquisition-related costs                  -              -             37
----------------------------------------------------------------------------
 Other                                      -              -              1
----------------------------------------------------------------------------
Cash used in investing
 activities as reported under
 IFRS                                    (119)           (59)        (1,508)
----------------------------------------------------------------------------
Cash (used in) provided by
 financing activities as
 reported under previous
 Canadian GAAP                            (12)            13            518
----------------------------------------------------------------------------
Adjustments to increase
 (decrease) reported cash
 provided by
 financing activities:
----------------------------------------------------------------------------
 Consolidation of special
  purpose entity                            -              -             50
----------------------------------------------------------------------------
Cash (used in) provided by
 financing activities as
 reported under IFRS                      (12)            13            568
----------------------------------------------------------------------------
Effect of exchange rate changes
 on cash and cash equivalents as
 reported under previous
 Canadian GAAP                             (9)            (6)            15
----------------------------------------------------------------------------
Adjustments to increase
 (decrease) reported effect of
 exchange rate
 changes on cash                            4              1             (7)
----------------------------------------------------------------------------
Effect of exchange rate changes
 on cash and cash equivalents as
 reported under IFRS                       (5)            (5)             8
----------------------------------------------------------------------------
Cash and cash equivalents - end
 of period as reported under
 Canadian GAAP                            805            805            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                                     805            805            635
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Reconciliation of assets                               As at
----------------------------------------------------------------------------
                                      June 30,   December 31,     January 1,
----------------------------------------------------------------------------
                                         2010           2010           2010
----------------------------------------------------------------------------
Total assets as reported under
 previous Canadian GAAP                 9,795         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                               47             55             15
----------------------------------------------------------------------------
 Reclassification of deferred
  income taxes                            (95)           (75)           (77)
----------------------------------------------------------------------------
 Other                                      8             12              3
----------------------------------------------------------------------------
Total assets as reported under
 IFRS                                   9,748         12,878          9,674
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Reconciliation of liabilities
 and equity                                            As at
----------------------------------------------------------------------------
                                      June 30,   December 31,     January 1,
----------------------------------------------------------------------------
                                         2010           2010           2010
----------------------------------------------------------------------------
Total liabilities as reported
 under previous Canadian GAAP           4,768          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                         (9)             -              -
----------------------------------------------------------------------------
 Consolidation of special
  purpose entity                            -            221              -
----------------------------------------------------------------------------
 Provisions for environmental
  remediation and asset
  retirement                               55             60             14
----------------------------------------------------------------------------
 Reclassification of
  non-controlling interest                (10)            (8)           (11)
----------------------------------------------------------------------------
 Income tax effect of
  reconciling items                        40             15             16
----------------------------------------------------------------------------
 Reclassification of deferred
  income taxes                            (95)           (75)           (77)
----------------------------------------------------------------------------
 Other                                     (1)            10             (7)
----------------------------------------------------------------------------
Total liabilities as reported
 under IFRS                             4,826          7,685          5,203
----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------
Total shareholders' equity as
 reported under previous
 Canadian GAAP                          5,027          5,347          4,592
----------------------------------------------------------------------------
Adjustments to increase
 (decrease) reported total
 shareholders' equity:
----------------------------------------------------------------------------
 Exemption for post employment
  benefits under IFRS 1                   (45)           (45)           (45)
----------------------------------------------------------------------------
 Post-employment benefits                   -            (16)             -
----------------------------------------------------------------------------
 Provisions for share-based
  payments                                (40)           (38)           (37)
----------------------------------------------------------------------------
 Incentive accrual                          9              -              -
----------------------------------------------------------------------------
 Acquisition-related costs                  -            (45)           (45)
----------------------------------------------------------------------------
 Provisions for environmental
  remediation and asset
  retirement                               (8)            (5)             1
----------------------------------------------------------------------------
 Reclassification of
  non-controlling interest                 10              8             11
----------------------------------------------------------------------------
 Income tax effect of
  reconciling items                       (40)           (15)           (16)
----------------------------------------------------------------------------
 Other                                      9              2             10
----------------------------------------------------------------------------
Total shareholders' equity as
 reported under IFRS                    4,922          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 date.  we restated business combinations
                                       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 losses  cumulative actuarial gains and losses
through opening retained earnings at   at the date of transition as an
the transition date. Actuarial gains   adjustment to retained earnings.
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 to  Future impact: greater variability in
earnings, or on a deferred basis to    shareholders' equity within
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  current assets and a decrease in non-
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 of  corresponding decrease in retained
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 are  asset retirement obligations and a
measured based on management's best    corresponding decrease to retained
estimate. The discount rate used in    earnings
calculating the present value of the
cash flow estimates is to be based on  Future impact: decrease in charge to
risks specific to the liability        earnings each period for accretion of
unless these risks have been           discount
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          Future impact: increased potential
carrying value of an asset or cash     for impairment losses and reversal of
generating unit to its recoverable     previously recorded losses
amount. Recoverable amount is
measured as the higher of fair value
less cost to sell or value-in-use
(discounted future cash flows). IFRS
permits impairment reversals for
assets (excluding goodwill). The IFRS
approach has the potential to
increase income statement volatility
due to the potential for increased
write-downs and reversals of write-
downs.
----------------------------------------------------------------------------
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 acquisition does   Future impact: potential increase in
include direct, incremental            charges to earnings in the amount of
acquisition-related costs under        acquisition-related costs for
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 meet
transactions with a QSPE may in        the IFRS criteria were not recorded
substance control the entity,          as sales as the arrangement did not
requiring consolidation. In            transfer substantially all the risks
determining whether or not financial   and rewards of ownership of the
assets should be derecognized on       receivables to a third party.
transfer, for example in an accounts   Accordingly, we recorded cash
receivable securitization, IFRS        received on sale of receivables as
focuses on evaluation of whether a     secured borrowings.
qualifying transfer has taken place,
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.
----------------------------------------------------------------------------


20. PRINCIPAL SUBSIDIARIES AND ASSOCIATED COMPANIES

                                                                  Ownership
----------------------------------------------------------------------------
Agrium, a general partnership                                           100%
Agrium U.S. Inc.                                                        100%
Crop Production Services, Inc.                                          100%
Landmark Rural Holdings Limited                                         100%
Profertil S.A.                                                           50%
----------------------------------------------------------------------------


AGRIUM INC.
Results by Segment
(Unaudited - millions of U.S. dollars)

                                                                Schedule 1a

                                    Three months ended June 30,
----------------------------------------------------------------------------
                                               2011
----------------------------------------------------------------------------
                                              Advanced
                      Retail  Wholesale   Technologies   Other        Total
Sales - external       4,636      1,438            124       -        6,198
      - inter-segment     12        275             34    (321)           -
----------------------------------------------------------------------------
Total sales            4,648      1,713            158    (321)       6,198
Cost of product sold   3,652      1,093            121    (343)       4,523
----------------------------------------------------------------------------
Gross profit             996        620             37      22        1,675
----------------------------------------------------------------------------
Gross profit (%)          21         36             23                   27
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 Selling expenses        473          8             10      (3)         488
 EBITDA(1)               529        617             18     (19)       1,145
 EBIT(2)                 486        569             13     (20)       1,048

                                    Three months ended June 30,
----------------------------------------------------------------------------
                                               2010
----------------------------------------------------------------------------
                                              Advanced
                      Retail  Wholesale   Technologies   Other        Total
----------------------------------------------------------------------------

Sales - external       3,336        970            125       -        4,431
      - inter-segment      4        141             16    (161)           -
----------------------------------------------------------------------------
Total sales            3,340      1,111            141    (161)       4,431
Cost of product sold   2,621        837            110    (200)       3,368
----------------------------------------------------------------------------
Gross profit             719        274             31      39        1,063
----------------------------------------------------------------------------
Gross profit (%)          22         25             22                   24
----------------------------------------------------------------------------

Selling expenses         329          9              8      (2)         344
EBITDA(1)                388        339             20      80          827
EBIT(2)                  361        276             15      78          730

(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.
Results by Segment
(Unaudited - millions of U.S. dollars)

                                                                Schedule 1b

                                       Six months ended June 30,
----------------------------------------------------------------------------
                                                2011
----------------------------------------------------------------------------
                                              Advanced
                      Retail  Wholesale   Technologies   Other        Total
----------------------------------------------------------------------------
Sales - external       6,452      2,510            190       -        9,152
      - inter-segment     18        436             49    (503)           -
----------------------------------------------------------------------------
Total sales            6,470      2,946            239    (503)       9,152
Cost of product sold   5,134      1,917            186    (485)       6,752
----------------------------------------------------------------------------
Gross profit           1,336      1,029             53     (18)       2,400
----------------------------------------------------------------------------
Gross profit (%)          21         35             22                   26
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Selling expenses         808         19             19      (5)         841
EBITDA(1)                554      1,029             19    (112)       1,490
EBIT(2)                  471        946              8    (118)       1,307

                                       Six months ended June 30,
----------------------------------------------------------------------------
                                                2010
----------------------------------------------------------------------------
                                              Advanced
                      Retail  Wholesale   Technologies   Other        Total
----------------------------------------------------------------------------

Sales - external       4,391      1,710            178       -        6,279
      - inter-segment      9        249             27    (285)           -
----------------------------------------------------------------------------
Total sales            4,400      1,959            205    (285)       6,279
Cost of product sold   3,519      1,467            159    (291)       4,854
----------------------------------------------------------------------------
Gross profit             881        492             46       6        1,425
----------------------------------------------------------------------------
Gross profit (%)          20         25             22                   23
----------------------------------------------------------------------------

Selling expenses         551         18             14      (6)         577
EBITDA(1)                347        521             23      33          924
EBIT(2)                  293        423             14      29          759

(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 June 30,
----------------------------------------------------------------------------
                                   2011                       2010
----------------------------------------------------------------------------
                                Cost of                    Cost of
                                product    Gross           product    Gross
                      Sales   sold(1)(2)  profit  Sales  sold(1)(2)  profit
----------------------------------------------------------------------------
Retail(3)(4)
 Crop nutrients       2,108       1,731      377  1,392      1,140      252
 Crop protection
  products            1,465       1,140      325  1,238        964      274
 Seed                   687         555      132    588        482      106
 Merchandise            208         181       27     29         26        3
 Services and other     180          45      135     93          9       84
----------------------------------------------------------------------------
                      4,648       3,652      996  3,340      2,621      719
----------------------------------------------------------------------------
Wholesale(4)
 Nitrogen               717         393      324    481        343      138
 Potash                 259          94      165    195         86      109
 Phosphate              206         123       83    134        125        9
 Product purchased
  for resale            449         427       22    228        224        4
 Other                   82          56       26     73         59       14
----------------------------------------------------------------------------
                      1,713       1,093      620  1,111        837      274
----------------------------------------------------------------------------
Advanced
 Technologies(4)
 Turf and ornamental     91          75       16     97         76       21
 Agriculture             67          46       21     44         34       10
----------------------------------------------------------------------------
                        158         121       37    141        110       31
----------------------------------------------------------------------------
Other inter-segment
 eliminations(4)       (321)       (343)      22   (161)      (200)      39
----------------------------------------------------------------------------
Total(4)              6,198       4,523    1,675  4,431      3,368    1,063
----------------------------------------------------------------------------
----------------------------------------------------------------------------

                                                                 Schedule 2

                                    Six months ended June 30,
----------------------------------------------------------------------------
                                   2011                       2010
----------------------------------------------------------------------------
                                Cost of                    Cost of
                                product    Gross           product    Gross
                      Sales   sold(1)(2)  profit  Sales  sold(1)(2)  profit
----------------------------------------------------------------------------
Retail(3)(4)
 Crop nutrients       2,815       2,323      492  1,763      1,448      315
 Crop protection
  products            2,103       1,676      427  1,700      1,357      343
 Seed                   917         750      167    779        658      121
 Merchandise            352         308       44     50         46        4
 Services and other     283          77      206    108         10       98
----------------------------------------------------------------------------
                      6,470       5,134    1,336  4,400      3,519      881
----------------------------------------------------------------------------
Wholesale(4)
 Nitrogen             1,051         576      475    742        532      210
 Potash                 454         164      290    386        171      215
 Phosphate              444         266      178    261        234       27
 Product purchased
  for resale            860         822       38    444        428       16
 Other                  137          89       48    126        102       24
----------------------------------------------------------------------------
                      2,946       1,917    1,029  1,959      1,467      492
----------------------------------------------------------------------------
Advanced
 Technologies(4)
 Turf and ornamental    143         116       27    141        110       31
 Agriculture             96          70       26     64         49       15
----------------------------------------------------------------------------
                        239         186       53    205        159       46
----------------------------------------------------------------------------
Other inter-segment
 eliminations(4)       (503)       (485)     (18)  (285)      (291)       6
----------------------------------------------------------------------------
Total(4)              9,152       6,752    2,400  6,279      4,854    1,425
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Wholesale includes inventory and purchase commitment write-downs.
(2) Includes depreciation and amortization.
(3) International Retail net sales were $858-million (2010 - $59-million)
    and gross profit was $141-million (2010 - $12-million) for the three
    months ended June 30. International Retail net sales were $1.4 -billion
    (2010 - $86-million) and gross profit was $249-million (2010 -
    $17-million) for the six months ended June 30.
(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 3a

                                              Three months ended June 30,
----------------------------------------------------------------------------
                                                         2011
----------------------------------------------------------------------------
                                                          Cost of
                                        Sales   Selling   product
                                       tonnes     price      sold    Margin
                                       (000's) ($/tonne) ($/tonne) ($/tonne)
----------------------------------------------------------------------------
Nitrogen
 Domestic
  Ammonia                                 410       620
  Urea                                    508       516
  Other                                   381       367
--------------------------------------------------------
 Total domestic                         1,299       504
 International                            134       463
----------------------------------------------------------------------------
Total nitrogen                          1,433       500       274       226
----------------------------------------------------------------------------

Potash
 Domestic                                 316       547
 International                            227       374
----------------------------------------------------------------------------
Total potash                              543       477       173       304
----------------------------------------------------------------------------

Phosphate                                 259       795       475       320

Product purchased for resale            1,014       443       421        22

Other
 Ammonium sulfate                          89       382       180       202
 Other                                     99
----------------------------------------------------------------------------
Total other                               188
----------------------------------------------------------------------------

Total Wholesale                         3,437       499       319       180
----------------------------------------------------------------------------
----------------------------------------------------------------------------

                                             Three months ended June 30,
----------------------------------------------------------------------------
                                                         2010
----------------------------------------------------------------------------
                                                          Cost of
                                        Sales   Selling   product
                                       tonnes     price      sold    Margin
                                       (000's) ($/tonne) ($/tonne) ($/tonne)
----------------------------------------------------------------------------
Nitrogen
 Domestic
  Ammonia                                 451       441
  Urea                                    401       406
  Other                                   299       272
--------------------------------------------------------
 Total domestic                         1,151       385
 International                            105       354
----------------------------------------------------------------------------
Total nitrogen                          1,256       382       273       109
----------------------------------------------------------------------------

Potash
 Domestic                                 329       419
 International                            200       279
----------------------------------------------------------------------------
Total potash                              529       366       161       205
----------------------------------------------------------------------------

Phosphate                                 243       553       514        39

Product purchased for resale              759       301       296         5

Other
 Ammonium sulfate                         102       280       179       101
 Other                                    121
----------------------------------------------------------------------------
Total other                               223
----------------------------------------------------------------------------

Total Wholesale                         3,010       369       278        91
----------------------------------------------------------------------------
----------------------------------------------------------------------------


AGRIUM INC.
Selected Wholesale Volumes and Sales Prices
(Unaudited)

                                                                Schedule 3b

                                               Six months ended June 30,
----------------------------------------------------------------------------
                                                        2011
----------------------------------------------------------------------------
                                                          Cost of
                                        Sales   Selling   product
                                       tonnes     price      sold    Margin
                                       (000's) ($/tonne) ($/tonne) ($/tonne)
----------------------------------------------------------------------------

Nitrogen
 Domestic
  Ammonia                                 568       581
  Urea                                    808       509
  Other                                   589       358
--------------------------------------------------------
 Total domestic                         1,965       484
 International                            217       456
----------------------------------------------------------------------------
Total nitrogen                          2,182       482       264       218
----------------------------------------------------------------------------

Potash
 Domestic                                 528       536
 International                            492       346
----------------------------------------------------------------------------
Total potash                            1,020       445       161       284
----------------------------------------------------------------------------

Phosphate                                 565       786       471       315

Product purchased for resale            1,925       447       427        20

Other
 Ammonium sulfate                         177       356       175       181
 Other                                    167
----------------------------------------------------------------------------
Total other                               344
----------------------------------------------------------------------------

Total Wholesale                         6,036       488       318       170
----------------------------------------------------------------------------
----------------------------------------------------------------------------

                                              Six months ended June 30,
----------------------------------------------------------------------------
                                                         2010
----------------------------------------------------------------------------
                                                          Cost of
                                        Sales   Selling   product
                                       tonnes     price      sold    Margin
                                       (000's) ($/tonne) ($/tonne) ($/tonne)
----------------------------------------------------------------------------

Nitrogen
 Domestic
  Ammonia                                 594       426
  Urea                                    722       400
  Other                                   477       270
--------------------------------------------------------
 Total domestic                         1,793       374
 International                            195       362
----------------------------------------------------------------------------
Total nitrogen                          1,988       373       267       106
----------------------------------------------------------------------------

Potash
 Domestic                                 678       417
 International                            385       265
----------------------------------------------------------------------------
Total potash                            1,063       362       160       202
----------------------------------------------------------------------------

Phosphate                                 493       529       474        55

Product purchased for resale            1,436       309       298        11

Other
 Ammonium sulfate                         192       259       176        83
 Other                                    205
----------------------------------------------------------------------------
Total other                               397
----------------------------------------------------------------------------

Total Wholesale                         5,377       365       273        92
----------------------------------------------------------------------------
----------------------------------------------------------------------------


AGRIUM INC.

Depreciation and Amortization in Cost of Product Sold
(Unaudited - millions of U.S. dollars)

                                                                 Schedule 4

                                     Three months ended    Six months ended
                                                June 30,            June 30,
----------------------------------------------------------------------------
                                          2011     2010      2011      2010
----------------------------------------------------------------------------

Retail                                       2        -         3         -
----------------------------------------------------------------------------

Wholesale
 Nitrogen                                   25       19        37        37
 Potash                                     11       18        20        22
 Phosphate                                   9       23        21        34
 Other                                       1        2         2         3
----------------------------------------------------------------------------
                                            46       62        80        96
----------------------------------------------------------------------------

Advanced Technologies                        3        5         7         7
----------------------------------------------------------------------------

Total                                       51       67        90       103
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Contact Information

  • Agrium Inc.
    Richard Downey, Vice President, Investor/Corporate Relations
    and Market Research
    (403) 225-7357

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