Greetings and welcome to the Agrium Third Quarter 2016 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Richard Downey, Vice President of Investor and Corporate Relations. Thank you, Mr. Downey. You may begin.

Thank you, operator. Good morning, everyone, and welcome to Agrium's 2016 third quarter conference call. On the phone with us today is Mr. Chuck Magro, President and CEO of Agrium; Mr. Steve Douglas, our CFO; and the rest of our executive management team to review and discuss our results. As we conduct this conference call, various statements that we make about future expectations, plans and prospects contain forward-looking information. Certain material assumptions were applied in making these conclusions and forecasts. Therefore, actual results could differ materially from those contained in our forward-looking information. Additional information about these factors and assumptions are contained in our current Quarterly Report to our shareholders, as well as our most recent Annual Report, MD&A, and Annual Information Form filed with Canadian and U.S. security commissions to which we direct you. I will now turn the call over to Mr. Chuck Magro.

Thanks, Richard. Good morning, everyone, and welcome to Agrium's third quarter earnings call. The 2016 crop harvest is underway across North America after delays due to weather. Earlier this fall, we have seen snow in Western Canada and two hurricanes pound the Eastern U.S. with rain, which delayed harvest in most regions of North America. Recently, however, U.S. farmers have made good progress and the harvest is now back in line with historic norms. Our remaining challenge has been the wet weather and early snowfall in Western Canada, which has resulted in about 20% of this year's crop still left unharvested in the field. The wet weather has also limited nutrient applications this fall, particularly for ammonia, and is expected to result in some nutrient demand being pushed into the spring of 2017. Record yields and high corn acreage in the U.S. has led to significant nutrient depletion, and with recent improved weather, we believe the U.S. will have a solid nutrient applications season this fall, particularly relative to the past three years which have been below average. Furthermore, nutrient prices continue to be very affordable for growers. Weak global benchmark nutrient prices and a number of one-time charges impacted results this quarter. However, if you look past the noise, the underlying business performed well. I also have said many times, controlling our controllables is more important than ever in this market conditions. To that end, we have made significant progress improving key operating metrics across the company. Wholesale successfully reduced its fixed cost by $26 million on a year-to-date basis and we expect to deliver further improvements in 2017. Our cash cost of product manufacture is also well below target levels on a year-to-date basis and for the quarter for urea and phosphate. In Retail, we've seen improvements in…

Thank you, Chuck, and good morning, everybody. Even at this point in the cycle, Agrium remains in a strong financial position, thanks to our diversified and low-cost asset base, a declining CapEx spend, a manageable debt level and long-term maturity profile. We remain committed to our proven capital allocation strategy and our dividend coverage continues to be solid despite some increase in our payout ratio. This was expected at a low point in the nutrient cycle. Additionally, it's important to note that there are a number of one-time items in the headline EPS number. After adjusting for non-operational legal costs, our guidance relevant earnings would be a loss of $4 million or $0.03 a share. While this quarter was impacted by a number of one-time items, many of those were incurred to benefit the future earnings stream of the business. For example, this quarter, we took a $7 million charge related to IT outsourcing – outsourcing of IT services, which is expected to deliver annual savings of between $6 million to $8 million per year on a go-forward basis. A similar longer-term benefit is expected to be derived from the costs we incurred this quarter associated with the merger and litigation costs on the Vanscoy expansion project. We lowered our CapEx range by approximately $100 million in 2016, which is associated with improvements in our procurement effectiveness and prioritizing spend in both Retail and Wholesale operations this year. We would expect to return to our more normal $500 million to $550 million run rate on maintenance capital in 2017. You may have noticed in our cash flow statement that due to improvement in the political and economic environment in Argentina, we have been able to repatriate $46 million in cash from our Profertil operations. We expect to see more cash…

Thanks, Steve. Turning to the outlook, the high yields in the U.S. this year pressured crop prices during the third quarter. However, prices have since stabilized and started to strengthen again, due to very strong U.S. grain and oilseed export levels over the past months, and corn yields coming in slightly lower than previous estimates. The multiple consecutive large crops in the U.S. have caused significant nutrient depletion in the soils, and we expect the domestic demand for nutrients will continue to be solid. Furthermore, nutrient prices continue to be very affordable. Fertilizer costs for growers currently accounts for only 13% of revenue, which is well below the average of 16% to 17%. Overall, the fall outlook looks good. We expect to see solid nutrient volumes in application rates with the exception of ammonia in Western Canada, where we are quickly running out of time. Nitrogen prices have stabilized and we have seen some recent global tightening of supply-demand, which has had a positive impact on pricing, driven by stronger Indian imports, combined with lower export availability out of China. The reduced Chinese urea export availability is partly related to the significant increase in coal prices, which has raised the Chinese cost of production and the global floor price. On the phosphate side, demand has been lackluster from India and Brazil. However, the expectation is for strong fall demand in North America. Pricing has also been pressured by lower input costs, specifically ammonia, which is down approximately 50% year-over-year. Our outlook for potash is constructive in the short-term. Following the signing of contracts in India and China, we have seen a significant increase in global demand, as buyers that have been waiting on the sidelines are now moving to replenish inventories. Global supply is now looking tight for the rest of the year and into the first half of next year. We expect 2016 global shipments of 59 million tonnes, and 2017 shipments to reach between 60 million and 62 million tonnes. Fertilizer prices have stabilized and in some cases, strengthened. Crop prices have firmed even while harvest is underway, which is always a positive sign. And we expect a solid fall application season in the U.S. this year, particularly compared to the past three years. Finally, I would like to remind listeners that we have our shareholder vote on the merger with Potash Corp. this afternoon at 3:00 PM Eastern Time. The event will be live webcast, and we will press release the voting results shortly after the meeting. We thank our shareholders for their support and look forward to passing the significant milestone in the merger process. I would now like to open the line up for questions.

Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. Thank you. Our first question comes from the line of Stephen Byrne with Bank of America. Please proceed with your question.

Yes. Thank you, and good morning. Your commentary about third quarter results in Retail, you mentioned profits down in both seed and crop protection chemicals. Just curious about the commentary on feed, are you seeing more aggressive pricing out there in feed early in the selling season for the next crop, or is it just a delay in purchases? And do you have a view on how to gain more share of your proprietary Dyna-Gro brand in seed?

Good morning, Steve. It's Chuck. I'll have Steve Dyer, our President of Retail, answer the seed question.

Good morning, Steve. Yeah, in terms of – if you look at the Q3, our seed volume was down. And that was driven by some lower wheat acres that we're going to see this fall for the winter wheat. So, that's really a Q3 impact. If you look at our margins overall in seed, we haven't seen any deterioration in our margins. And so going into next year's spring season, we would see margins being flat going forward on seed overall.

Our next question comes from the line of Don Carson from Susquehanna. Please proceed with your question.

Thank you. Chuck, just wondering about your guidance cut, $0.40 on the low end. How much of that's due to the weakness in Western Canada, the adverse winter weather, which is ex both Retail and then some of your Wholesale nitrogen shipments? And do you see that as being made up (17:39) next spring?

Yeah. Don, so you're right. When you look at our Q4 guidance, we took it down and there's really two overarching drivers. One is simply some of the crop protection business that we lost in the third quarter, we won't get that back. And then the other piece is just the impact of having some early snowfall and a quite wet weather in Western Canada, and the ammonia season being what we think will be quite limited this year. That will impact both Wholesale and Retail. I don't have the exact split, but those, by far, are the two drivers for the reduction in the Q4 guidance numbers.

Our next question comes from the line of Christopher Parkinson with Credit Suisse. Please proceed with your question. Christopher S. Parkinson - Credit Suisse Securities (USA) LLC (Broker): Thank you. Given your longer-term targets to achieve 25% of proprietary sales for both crop protection seed, can you just comment on the puts and takes generally, give us an update on margins versus third-party sales, strategy within the integration of existing and future acquisitions, and then finally, new product growth? Just any detail will be helpful. Thank you.

Steve Dyer can answer those questions, Chris.

Hey, Chris. A lot of question there. Yeah. If you look at our growth in our proprietary product, so, overall, our proprietary products this year have gone from 15% to 17% of our sales. And if you take a look at the shelves underneath, seed was flat 23% to 23%, chemical was 23% year-to-date up to 25%. So, we've actually achieved that 25% and we do have more headroom there to take that even further on the chemical side. And then on fertilizer, we went from 8% to 9%. So, we've seen good growth definitely on the fertilizer and chem, a little flat on seed, and some of that was driven by actually the higher corn acres versus soybean this year. Our proprietary sales as a percentage are higher soybean. So we actually should see that shift back around with some probably a little higher soybean next year as well. So we would expect to see it to continue to grow. So if I look at it, our target of 25% were pretty much there on chem and we'll definitely set a new target associated with that and definitely see 25% in reach from that standpoint. And then, we continue to see our nutritionals growing very well for us as well and adding significant contribution to our fertilizer margins and taking away some of that commodity exposure. In terms of, call it, additional products, we actually have some new products we're going to be launching next year on the chemical side and we have a great suite of products on the nutritional side one of the (20:25) fertilizer side in Faro (20:28) during growth right through the life cycle. And so, we have great potential there to increase that further through next year and into the future as well. And then, on the seed side, we do have – we acquired, if you remember, last year Bayer's rice seed business. We're going to be starting to bring that to market as well as our proprietary seed. So, again, we're going to have some new offerings on the seed side as well.

Our next question comes from the line of P.J. Juvekar from Citi. Please proceed with your question.

Yes. Hi. Good morning. There is 5 million to 6 million acre reduction in corn expected for next season. How do you see that impacting nutrient demand, particularly nitrogen, and maybe you can also comment on P&K?

Hi, P.J. It's Chuck. We don't see the same reduction, I think, others have talked about. I'm going to have Jason Newton, our Head of Market Research, give you our perspective on corn acres and then overall total planted acres for 2017. Go ahead, Jason.

Good morning, P.J. Yeah, we expect somewhere between 90 million, 92 million acres of corn next year. I think if you look at most of the agricultural consultants, they're in that range as well. So that would be down anywhere from 2 million to 4 million acres from where it was this year. In terms of nutrients demand, the impact we see on nitrogen is about 2% to 3%, given that reduction in acreage. For phosphate and potash, we also expect a reduction, but a little bit smaller year-over-year reduction in those in the 1% to 2% range. Another important thing to note is, if you look at the seasons, fall versus spring, it's looking as if weather cooperates from this point forward that we'll have a more normal application season in the U.S. And so we expect a greater proportion of that demand to occur in the fall than what has happened over the past few years. So stronger shipments in the fall of 2016 than has been the case in the past few years.

And then, P.J., so if you take that view of the markets and you apply that to Agrium's business, we don't see a significant impact certainly for our nitrogen business. And then, if you look at our Retail business, in that market environment, of course, it's going to be what I would call a mild headwind. But Retail, we believe, we'll still, as we've demonstrated this year, be able to grow organically. And I also think there's going to be significant continuing M&A opportunities to grow Retail through M&A. So, overall, I think we're well positioned for these sort of market conditions.

Yes. P.J., it's Steve Dyer here. I'd just add a couple of comments. We've met with most of our suppliers over the last month or so and I think everybody is pretty much aligned on that 90 million to 92 million, so all the major seed and chem suppliers. And the other thing I'd mention is we're looking at cotton acres to be up as well, And those are very good from a Retail perspective, if you look at the inputs associated with cotton. They're very comparable to corn.

Our next question comes from the line of Ben Isaacson with Scotiabank. Please proceed with your question.

Thank you very much. Just two questions, one on the Retail business. Can you talk about the multiple for the 37 stores that were acquired in Q3 and then triangulate that with what you're doing in terms of Greenfield, as well as a comment you made, Chuck, about an implied 7.5 times multiple a couple of months ago? And then just second question is, is there variability in the $500 million synergy target based on ag and fert cycles or is it pretty sustainable?

Hi, Ben. Yeah, I'll give you my view on the 7.5 multiple that I referenced at your conference and I'll have Steve Dyer talk a little bit about the greenfields, but I'll address your $500 million synergy question. So, let's start there. Most of the $500 million synergy, as we've said numerous times, is cost synergies. So, it's not cycle dependent. It's not agriculturally fundamentals driven. And that's one of the reasons why we really like the merger with Potash Corp. is we're able to create value for shareholders really independent of market pricing and conditions by really optimizing, more than anything, our supply chains. So that's the first question. As I've said to you and many others before, what we're seeing in Retail is we are seeing, I think the good news is, a step up in opportunities. There are quite a bit of Retail facilities that are available for sale. And as you can see this year, year-to-date, we've had one of our best years ever. And we were able to acquire some what I would call medium-sized Retail facilities in both Canada and the U.S., which is exactly where we want to grow our business. Now, the multiples, we are seeing – we don't want to talk about specific numbers for lots of reasons on this call, but the larger acquisitions, of course, are going to come at slightly higher multiples, as well as some of the earnings in this part of the cycle will be depressed. So, the multiples are going to be higher, but on an average through the cycle, that will all work itself out. So, we're not seeing a huge step-up in the multiples. It's just what we're buying is a little bit bigger and so they're a little bit more and then where we are in the cycle. So, overall, long-term planning, I said that I would use a 7 to 7.5 multiple if we're going to be buying Retail acquisitions that are going to be a little bit bigger than our traditional mom-and-pops. Steve Dyer, do you want to talk a little bit about progress with greenfields?

Yes. I'll just add a couple more comments on the acquisitions, and we're today not seeing a whole lot of competition out there on that front as well. So, I think Chuck's comments are bang-on in terms of the multiple. We've seen a little increase there, but nothing I'll call it concerning. The other thing I'll mention on the acquisitions is this is going to be a record year for us, not just on quantity but I look at the quality as well. The quality of some of the assets we've been able to acquire, for example the Cargill and (27:02) the people coming across and the physical assets are just fantastic. So we're very pleased with those acquisitions from a quality standpoint. And then just on the new builds, we've been making good progress there. We've got a great pipeline of opportunities that we're looking at to build, and we've actually broken ground on a couple of those. So, we intend to make some good progress through next year. And so, stay tuned on some announcements of some new facilities being opened up, but we are making very good progress there, but taking it very cautiously as well, making sure we build in the right areas and then getting the right people to run those facilities.

Our next question comes from the line of Adam Samuelson with Goldman Sachs. Please proceed with your question. Adam Samuelson - Goldman Sachs & Co.: Yes. Thanks. Good morning, everyone. Maybe a question on inventories in the distribution channel, both for yourself and the industry writ large, nitrogen and potash specifically. In nitrogen, you've seen some changes in customer buying pattern and post-summer fill (28:11), given some of the new capacity in North America. And I'd like to hear your thoughts on how you position your Retail business to handle that. And then in potash, your Potash Corp. and Mosaic's, their domestic shipments were pretty sizably year-over-year in the quarter, and the commentary there was very much about farm level demand was scooping that up, and it wasn't actually going into channel inventories. I'd like to hear your thoughts on how Retail is or is not seeing those trends, especially given your domestic fertilizer shipments in Retail were actually down year-over-year?

Okay. Adam. I'll have Steve Dyer talk specifically about Retail inventories and he can address potash, and then we'll have Jason Newton just talk about what we're seeing in North America specifically.

Yeah. So, in terms of our inventory levels, on chemistry, we're pretty much flat year-over-year in terms of our inventories. We're up a little bit in the U.S., actually by design. In Canada, we're actually down considerably and that was coming off of a very good chemistry season in Q3 in Western Canada. And really, it's the same story on the fertilizer side. We're pretty much flat to slightly down on fertilizer inventories at the end of Q3 from that standpoint. So, we continue to manage our inventories very closely to match up to our demand out there.

Jason?

Hi, Adam. We don't have really any public data available at this point on where the industry inventories are, but what we know is what the trade is (29:47) look like and we have good idea of buyer behavior. So on nitrogen, urea imports from offshore, sources were down about 1 million tonnes, or 65%, in Q3. So I think we're seeing that market tighten and the market – the price has been coming up as a result. In ammonia specifically, I think the just-in-time purchasing behavior led to an increase in producer inventories through Q3. And I think that's evident in the way that market has moved over that time period. But as we go through the fall, and if we get normal weather from this point forward, I think the inventories will get drawn down, and because of the way that both – from the grower (30:32) level up, purchasing has occurred on a just-in-time basis. We should end the year with significantly lower inventories, both at the grower and Retail level, than we were a year ago. And of course, potash inventories – producer inventory levels have come down, we think, significantly in Q3, and should be in a lot better position going through Q4, and as we enter 2017 as well.

Yes. Adam, one last comment. So, obviously, the weather in the third quarter impacted inventories. We couldn't get as much product down, and we saw that with lower nutrient applications in the third quarter, but we expect that that inventory will go to the ground in the fourth quarter. And actually, right now, our Retail business, and we suspect many others, are running very hard in the U.S.

Adam, for the Wholesale business in Agrium, we've seen the potash inventories go down to very, very low levels, and we expect to end the year like that. And looking across the other producers in North America, inventories have come down about 1.6 million tonnes in the quarter. So things are very tight, and we are 100% committed on our potash sales for Q4.

Our next question comes from the line of Peter Prattas from AltaCorp Capital. Please proceed with your question.

Good morning. My question is on the balance sheet. Your debt metrics did tick a bit higher here in the quarter, with net debt to EBITDA up at around 3.3 times. And I think the biggest driver of the increase in net debt is the tuck-ins that you've done, and we don't have the benefit of knowing what sort of EBITDA contribution that will provide. So, do you have a pro forma net debt to EBITDA metric you can share with us? I'm guessing it's closer to somewhere around 3 times. And do you feel at all constrained on the balance sheet and your ability to acquire, just given where the debt metrics have risen to? Thanks.

Peter, I'll have Steve Douglas, our CFO, answer your question.

Peter, thank you for the question. You are looking at a quarter which is seasonally one of our tightest, in terms of our liquidity uptick for a variety of reasons, not simply the acquisition side of the house. It is inventory build and just sort of the point in the season where we don't see a lot of inventory moving off the balance sheet relative to, say, the fourth quarter or to even definitely (32:57) the second quarter. And again, I think I've said this on many, many occasions, we look at the debt metrics over the course of the cycle and over the course of the year, and making sure that from a trend perspective, we haven't seen significant erosion. And in my estimation right now, you're seeing an uptick that is indicative of the lower crop nutrient pricing out there. We are not stressed in any way, shape or form that this constrains us materially. Although, could we do a $3 billion acquisition? The answer is no. But it doesn't in any way, shape, or form stress our tuck-in strategy. I think it's important here as well to recognize one of the benefits of the merger is, in fact, the creation of a world-class balance sheet where we'll see our net debt-to-EBITDA plummet to somewhere in the order of magnitude sub-2.5 times. We've already seen the rating agencies affirm and, in fact, put us on watch for an upgrade as a consequence of what we're doing from a enhancing the balance sheet and enhancing our optionality on the financial side. So have I lost – I'm not losing sleep as to where we sit right now. And I think all the steps we are taking is perfectly consistent with the positioning as to be able to pursue the acquisition strategy we laid out there.

Our next question comes from the line of Mark Connelly from CLSA. Please proceed with your question.

Thank you. I'd like to go back to Jason's comment about greater application in the fall. Some of the agronomists we talk to are saying that there's been a structural shift to spring application, especially with nitrogen management in particular. So, I wonder if you could give us more color on your view of the spring-fall balance and what those moving parts really are.

Thanks, Mark. Jason?

Yes. I think in terms of the increase in the fall, it's basically based on the return to more average length of season. So if you have an average fall season, it will be an increase over the past few years, which have been really quite poor. In terms of the structural shift from fall to spring, I think that more – in some cases, we've seen that in nitrogen where you maybe see a higher proportion of the fertilizer go on as urea in the spring. And that's really supportive if you look at the urea demand that we've seen in second quarter of the past few years. But in terms of overall nitrogen, it's not a huge shift in the overall applications.

Yeah. And I think from – Mark, it's Steve Dyer here, from a Retail perspective, we're not seeing a major shift from that standpoint. You also have, obviously, new products that are being added to, like for ammonia, in terms of stability of ammonia as well as our nutritional products as well, and we also have our ESN. All of these products are helping out to manage some of the losses that you do get, that type of thing as well. So we're not seeing a major shift. And actually, it creates opportunity for us on some of our nutritional products.

Our next question comes from the line of Yonah Weisz with HSBC. Please proceed with your question.

Yes. Thank you very much. I noted that there is less imports out of nitrogen into the U.S. this season. And beginning of next year, there's going to be a sizable amount of new supply coming on in the Midwest. So I'm just wondering if you see any impact on the traditional business model you have with Western Canada nitrogen and the premium. Do you think that the premiums you'll be able to charge next year or even start of next year will decline compared to previous years?

Good morning, Yonah. It's Chuck. What I'll do is I'll have Jason Newton talk about nitrogen imports and the new supply and give his view of premiums, and then I can give you mine as well.

Yes. Good morning. On the import side, we've really seen the pace of, particularly urea, fall below where the new supply is. If you look at supply in the first half of the year, the average amount of urea was about 60,000 tonnes per month higher. And so, with Q3 imports down 1 million tonnes, obviously that's more than offsetting the new supply that's come on stream. We are expecting that there will be more supply added between now and the spring application season. I think the timing's a little bit of a question mark. And we have seen new ammonia come online over the past couple of months that adds new supply there. In terms of the in-market spreads, we expect that there will be some compression in those spreads versus what we've seen in the past few years. But if you look at the supply-demand balance regionally throughout North America, we still expect the Midwest of the U.S. will still be importing supply of all products. It may not be from offshore, but it will be – if not from offshore, from the Southern U.S. And so those in-market spreads need to continue to reflect the freight to move the product in the market.

Yes, Yonah, that's certainly our strong view is that the transportation differential is really what drives the market premiums. That still going to be a real cost for producers and importers. And so we see that there could be some pressure on it, but we actually think that the premiums will be more or less where they are today. And I think that that's a real important thing to remember that these are really founded on real cost from producers and importers. And they'll have other options to either export, and if you're on deep water and really get similar or better netbacks by not pushing that stuff up into, say, the Corn Belt or other parts of North America and take it offshore where there's actually better netbacks. So, we'll see how it plays out, but right now, we're quite comfortable that kind of the structure that we have in North America for nitrogen will be more or less where it is today.

Our next question comes from the line of Vincent Anderson with Stifel. Please proceed with your question. Vincent Anderson - Stifel, Nicolaus & Co., Inc.: Good morning. Can you talk really quick about your performance and outlook in Australian Retail, particularly given improved growing conditions in the wheat economics there? And as we look at 2017, is there a significant difference in that product portfolio versus what's reported in aggregate?

Hi, Vincent. I'll have Steve Dyer answer those questions.

Yes. In terms of the performance, we're very pleased with the performance of Australian business this year. We've made a lot of changes to that business, everything from cost to – we've actually done a few tuck-ins there as well, and they've had very good growing conditions this past year. But structurally, we've made some good changes to that business. So going into next year, we expect another very good year and some additional growth from that business. And you're asking about the product mix, maybe if you can just repeat on that. I wasn't sure exactly what you're asking. Vincent Anderson - Stifel, Nicolaus & Co., Inc.: Yes. Just, I mean, seed versus chem versus fertilizer as you reported as (40:25) top level for Agrium as a whole. Is there a significant difference in the mix of those products in Australia? And then, maybe just remind us percent of total Retail revenues from Australia.

Right, yes. So, in terms of the mix, on those three main shelves, it would be similar, a little lower on the seed side than you would see in the U.S. and Canada, but we are continuing to grow our seed business as well, but on the fert and chem would be very similar to what you would see in North America from that split. As a reminder, we do have very a diverse business there with livestock, as well as insurance, real estate, and some merchandise as well. So, we actually have a very diverse portfolio that balances things out there from that standpoint. And overall, they represent about 10% of our revenue from Retail perspective.

And Vincent, it's Chuck. I'll just reiterate a little bit what Steve said on Australia. So, we're delighted with the performance. As you know, when we had our – when we first acquired Landmark, our Australian Retail business, it took us a year to get some of our key products registered in our proprietary product portfolio down there. And so we had a little bit of a slow start. And since then, we've had kind of year-over-year of record performance. And this year, again, will be one of those close to it or another record for the third year in a row. And yes, the growing conditions have been good. But I can tell you that the effort that the Agrium people have put down in Australia to really get this thing moving has just been very, very impressive. And now that we have our proprietary chemistry products and nutritionals in Australia, the margins are expanding quite rapidly. And we are looking actually at ways that we can grow the business to drive even more value from that investment. So, overall, things have been just great in Australia.

Our next question comes from the line of Joel Jackson with BMO Capital Markets. Please proceed with your question.

Hi. Good morning. I'm trying to look at maybe some early view into what 2017 could look like for Retail. You talked about 70 stores. Obviously, Q2, the spring is the big quarter for that. Can you talk about, first of all, what would the store count look like? What would the gross – the net store count increase be in 2017 out of the 70 stores you've acquired and the ones you closed? And then, I mean, does that – should we expect kind of a 5%, 6%, 7% increase in that business just from what you bought, and then what can we layer on in terms of organic growth? Thanks.

Yes, Joel, I'll start and then I'll ask Steve Dyer to give his view. So if you remember back in the summertime during our Investor Day, we gave you sort of a view of Retail and how it can grow given different acreage assumptions and crop pricing. And we feel strongly that we're still in that zone, clearly. And so, it's going to depend on what happens with planted acres and crop pricing. And we'll give you a better view of that when we give our guidance in February. So we don't really want to talk about specific numbers. But what we can say today is that we're very, very comfortable in today's crop price environment that we'll be able to grow Retail's EBITDA organically. Of course, the acquisitions from this year are going to help. So you should see, when we give you the final numbers here early next year, a solid organic growth in our Retail business, and layer on top of that, the acquisitions that we invested in this year. Beyond that, I wouldn't want to give you specific numbers, but I think Steve can probably give you kind of what he's thinking about from an optimization perspective that will also drop to the bottom line.

Yeah. So a little further on consolidations and closures. We've done about 20 to 25 so far this year. And we actually have another 20 consolidations in flight (44:16) right now, as we speak, and some of that's facilitated by these acquisitions we've done. Obviously, whenever we do an acquisition, we take a look at our overall footprint and see where there's the opportunities to consolidate and improve our efficiencies and cost structure. And again, we see that continue on. There'll probably be some additional opportunities for consolidation, driven by these acquisitions, as we go into the spring season as well. And even on the build side is, that is generating some opportunities to consolidate where we're building to expand our capability, but there's also opportunities to consolidate into that new build as well some of our smaller, inefficient facilities. So we're continuing to look at that moving forward, from that standpoint.

And, Joel, just a few more comments. If you just step back and you look at year-to-date performance for Retail, gross margins on all three shelves are up pretty significantly. Our operating cost coverage ratio has improved by 2%, which – this is a big business, so to move our costs like – I think we're down $60 million, as I referenced in my prepared remarks, if you exclude the costs from the acquisitions. And the EBITDA margins are up 1 percentage point. And when you have that much revenue, that's a big deal. So, when we look at the performance of Retail in today's market environment, we're strongly encouraged that this is a very stable, resilient business that we are proving we can grow in these market conditions.

And, Joel, the last thing I would add is, you go back to our proprietary products, and again, you've seen that we've had good growth on our proprietary products year-over-year. And we see that growth continuing at a very similar pace next year as well, which will contribute from a margin standpoint, as well as a top line.

Our next question comes from the line of John Roberts with UBS. Please proceed with your question.

Thank you. Could you discuss acquisition opportunities in seeds and crop protection chemicals? And does the Potash merger agreement formally constrain you in terms of the size of any deal you could make, or do you just talk with them if something comes up before your merger closes?

Steve Dyer, you want to talk about the opportunities, and I can talk about the merger?

Yeah. So, on the crop protection side, I've actually talked (46:37) to all three shelves. On the crop protection side, we'll continue to look at opportunities to create some unique formulations. And we are looking at active ingredients that we can get registrations for, and we actually have some product launches for next year associated on the crop protection side. And on the seed side, we'll continue to look at opportunities there. Our big focus is finding crops that have a good fit for us, and the rice seed business is a good example of that, that we acquired from Bayer. Very good fit for us. We have a very large market share in the rice business in the U.S., so it made sense for us to look at that kind of business. So those type of opportunities we'll continue to look at, where we do have a good market share and look at taking on those kind of breeding programs and investments, just like we've done with canola that we inherited from the Viterra acquisition, and continue to grow that as well. And then on the fertilizer side, our real focus is on the nutritional side. We've made some great investments over the last two to three years, and we continue to look at additional investments to further expand our plant health and nutritional portfolio as well.

John, on your question on the merger agreement, so the way it's structured is that we can act for acquisitions up to approximately $450 million. Anything after that, we would talk to our partner Potash Corp. And even if it was something like a seed or a chemistry business, we would more than likely even communicate that with them, to make sure that we're all aligned. But we do have a cargo (48:13) of about approximately $450 million for the merger agreement.

Our next question comes from the line of Sandy Klugman from Vertical Research Partners. Please proceed with your question.

Good morning. Do the tuck-ins provide any meaningful benefits to the Echelon precision ag platform, or do most of these companies lack the financial resources to add these capabilities?

Steve Dyer?

Yes, Sandy. Yes, absolutely. Typically – especially the smaller acquisitions, the independent retailers really don't have that kind of infrastructure to develop what we develop through – with our Echelon platform. So, again, that's where some of the synergies come from. You can start immediately bringing in, not just our Echelon and our precision ag platform, but our proprietary products. Again, our buying power that we have, and leveraging that right across the tuck-in. Yeah. So typically, they do not have access to the kind of capabilities that we have, and again, it brings immediate value to these acquisitions.

Yeah. And, Sandy, I guess if you step back and you look at why we're having such a good year from a Retail M&A perspective, that's probably one of the driving factors. So, I think the first one would be, of course, the market conditions. And we're proving, I think, that you need size and scale in the Retail business in these type of market conditions. But the other one is access to precision ag technology, and are the smaller companies going to be able to invest the tens of millions of dollars or more that's needed to build a precision ag platform? And then, of course, demographics, from a succession planning perspective. I think those are the three drivers that I think are accelerating, certainly our view that there's going to be more and more retail facilities available for acquisition.

Our next question comes from the line of Michael Piken from Cleveland Research. Please proceed with your question.

Yeah. Hi. I just wanted to circle back on the potash side. If you could talk a little bit about some of the reasons why your production numbers went down? Was it a planned outage or were there some other things that happened in terms of your volume cut? And then also your expectations for the upcoming, I guess, 2017 Chinese and India negotiations. Thanks.

Okay. Mike, I'll have Harry Deans, our Wholesale President, talk about the production at Vanscoy and then I can talk a little bit about 2017.

Hi, Michael. Thanks for your question. Yeah, we have a turnaround, a planned turnaround in Vanscoy and it took longer than expected. That was because following our expansion, there were some mechanical issues with some of the kit that we installed. So, that took us a bit longer to actually maintain that and get it up in full working order. And also, when you maintain something for the first time, usually, it takes a little bit longer than normal. But I'm glad to say that – so that's what accounted for the reduction in our production. I'm glad to say that in October, our production was running at near-record levels in Vanscoy. So the corrective action we've taken on the maintenance has had a very strong and very direct impact. Jason?

And then, Michael, on 2017, I guess the way I'd answer that question is, if you look at what's happening in the short-term, we mentioned it in our prepared remarks, we have prices in North America certainly up, Brazil up, Southeast Asia prices are up. Things are quite tight. I think most of the major organizations have said that they're sold out or closed to being sold out. And we expect that that momentum and tightness will work itself right through most likely the first half of 2017. So I think it sets up an interesting dynamic from a buyer perspective. And I don't want to speculate whether it goes early or late because we're always wrong, to be honest with you. But I think that we like the position that we're entering 2017 and things are quite tight in the potash supply chain right now globally.

Operator, I just like to thank everyone on the call today for joining the call, and IR is ready to answer any other questions you have. Thanks for joining us today. Talk to you again next quarter.