lie in the range of 19 to 31 percent of the U.S. price. Thus, the prices of all but one of the
thirteen agricultural chemicals examined in this study exhibit statistically significant
differences and, in most cases, the differences appear to be economically important.
One possible explanation for these differences is that agricultural dealers in
Canada may face systematically different costs. Possible sources of such differences are
differences in product transportation costs, taxes, wages, and other dealership costs.
These all seem unlikely as explanations of the above results. First consider transportation
costs. Several of these chemicals are purchased in relatively large quantities by
individual farmers (for example, Amine 4 is purchased by many Montana farmers in 110
gallon shuttles) and are shipped in bulk to dealers in both Alberta and Montana, in some
cases from the same production facility under different labels. Bulk shipping costs by
truck from Alberta to Montana for two fertilizers - urea and anhydrous ammonia - were
estimated to be about $10 per ton per 100 miles in August 2004 (where a ton is roughly
equivalent to about 200 gallons of chemical).10 Thus shipping costs amounted to
approximately five cents per gallon. Doubling or quadrupling this estimate still implies
transportation cost differences of only about 20 cents per gallon, which is small compared
with the range of average price differences of between $2.89 and $78.78 per gallon
among the twelve chemicals with statistically significant price differences.
Agricultural chemical dealer costs may be systematically different in Alberta and
Montana. For example, exchange rate adjusted wages could be lower in Alberta than in
Montana. Similarly, there may be systematic differences in tax burdens, energy and other
costs. However, if these cost differences were what mattered, then we would expect
retail prices systematically to be either all higher or all lower in one of the two regions
10 Grain industry sources provided this estimate.
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