The potential deal revealed on Tuesday would combine the world's largest fertilizer producer by capacity with the continent's biggest network of farm retail dealers and consolidate 60 percent of North America's potash production with one company.
The tie-up would face regulatory scrutiny in both the United States and Canada.
For farmers, already facing the prospect of fewer buying choices for seed and chemicals, the potential merger raises fears they will lose pricing power. Independent retailers in the United States and Canada worry about competing against a fertilizer Goliath that may stock its stores at preferential rates.
"It's like the movie 'Mad Max' - one company owns everything," said Norm Hall, president of Agricultural Producers Association of Saskatchewan. "There's less and less competition out there. We're being painted into a box because of corporate greed."
The group, based in Canada's largest crop-growing province, will raise concerns with the federal Competition Bureau if the merger proceeds, Hall said.
Likewise, Manitoba's Keystone Agricultural Producers will ask the bureau to weigh the risk of higher farm costs, said president Dan Mazier.
The Competition Bureau routinely contacts industry groups when it reviews proposed mergers, said spokeswoman Sophie Paluck-Bastien.
The American Soybean Association, which represents 21,000 U.S. farmers, might complain to U.S. regulators if the merger advances. It opposes deals that limit competition and drive up prices, said spokesman Patrick Delaney, noting that the combined company would be "dominant" in North America.
Potash Corp declined to comment and Agrium did not respond.
FARM INCOMES SUFFERING
Potash prices fell to decade lows this year, pressured by excess capacity and weak demand, but North American farm incomes have also suffered as corn and wheat prices tumbled to multiyear lows.
Proposed tie-ups between big seed companies Monsanto Co and Bayer AG, and ChemChina and Syngenta, have raised alarm among farmers, and the U.S. Justice Department is suing to stop Deere & Co from buying Monsanto's Precision Planting farm equipment business.
Fertilizer accounts for as much as one-third of input costs for U.S. corn farmers, according to the National Corn Growers Association.
"The cost of farm inputs is a major concern to corn growers right now," said Cathryn Wojcicki, spokeswoman for the association. It will scrutinize the Potash-Agrium merger if it proceeds, she said.
Agrium's farm retail rivals, which include small cooperatives and independent dealers, are also wary.
Regulators should ensure that the merged company supplies retailers under similar terms as before, said Randy Stephens, president of SureGrow Ag Products, which has three retail stores in Texas.
"They'll always be selling to (their own stores) at a discount to anyone else," Stephens said.
Kevin Blair, chief executive of a family-owned chain of eight farm retail stores in Saskatchewan, said he would be shocked if the merger is approved in Canada.
"Does it put us at a competitive disadvantage? Absolutely. But more important, it puts the grower at a disadvantage," Blair said.
But Charles Neivert, analyst for Cowen Securities, said there is little reason to worry about competition.
If the new company hikes fertilizer prices in the United States, lower-cost offshore producers would increase shipments, he said. Agrium's retail stores are already stocked mostly with its own fertilizer, leaving little room for additional supplies from Potash Corp, he added.
Canadian Economic Development Minister Navdeep Bains told reporters that his government was "definitely keeping an eye on" the possible merger, but added that Ottawa wants Canadian companies to have global success.