Calgary, Alberta
February 5, 2003

Nitrogen Fundamentals Strengthening As We Move Towards Spring Season

ALL AMOUNTS ARE STATED IN U.S.$

Agrium Inc. (TSX and NYSE: AGU) announced today that its fourth quarter net earnings were $12-million ($0.07 per common share), a significant improvement over the loss of $80-million ($0.72 per  common share) for the fourth quarter of 2001. Net earnings in the fourth quarter 2002 included the write-down of impaired assets of $0.04 per share. Net earnings in the fourth quarter 2001 included the effects of year-end charges relating to Argentina of a $0.43 loss per share. For the year, net earnings were breakeven (loss of $0.08 per share), also better than the loss in 2001 of $45-million ($0.49 per
share).

"The fourth quarter results reflect the continued improvement in nitrogen fundamentals," said John Van Brunt, Agrium's Vice Chairman and CEO. "Led by a rally in grain prices commencing mid-year, nitrogen prices strengthened in anticipation of tightening global supply and demand balances. Recently, international nitrogen prices have been pushed higher by disruptions in global supply, including shut downs in Venezuela, and curtailments in North America due to rising natural gas
prices. U.S. Gulf Coast ammonia and urea prices are currently 50 percent higher than they were in the spring of 2002. North American nitrogen inventories, meanwhile, remain more than 20 percent below five-year average levels for this time of year."

FOURTH QUARTER HIGHLIGHTS

* Record North America Retail results. North America Retail reported strong results for the fourth quarter, lifting 2002 earnings before interest expense and income taxes to $52-million. This is the sixth consecutive year of record results and represents an increase of 62 percent over this period.

* Production and Safety Records. Annual production records were set at the Profertil, Argentina Nitrogen Operation, Carseland Nitrogen Operation and Kapuskasing and Redwater Phosphate Operations during 2002. No "Loss Time Accidents" during 2002 were reported at the Profertil, Argentina Nitrogen Operation, Joffre Nitrogen Operation, Fort Saskatchewan Nitrogen Operation, and Kapuskasing and Redwater Phosphate Operations.

* Natural gas. Natural gas, the major cost component of nitrogen fertilizer, has increased in price in North America throughout the current winter. For the fourth quarter, the North American natural gas benchmark price (NYMEX last 3-day) averaged $3.99 per MMBtu, compared to $3.00 per MMBtu for the first nine months of 2002. For 2002, NYMEX averaged $3.25 per MMBtu. Agrium's gas cost was lower and less volatile than NYMEX as a result of a cost advantage for natural gas purchased in Western Canada and long-term natural gas supply agreements at Kenai, Alaska and Profertil, Argentina. Agrium's overall gas cost averaged approximately $2.47 per MMBtu or 76 percent of NYMEX prices for 2002 in spite of incorporating approximately $37-million in hedging losses during the year. In 2001, Agrium's overall gas cost averaged approximately $2.53 per MMBtu.

* Unocal Dispute. Agrium continues its dispute with Union Oil Company of California (Unocal) respecting Unocal's gas supply and deliverability obligations, environmental liabilities and the Earn-out payment. Unocal curtailed supply to the facility in July of 2002. Weather-related issues and Unocal's supply to other parties in late November and December created additional reductions by Unocal. Agrium was able to offset some of Unocal's curtailments by obtaining gas from interruptible contracts from other oil and gas companies. As a result, the Kenai facility operated at approximately 73 percent of capacity during the fourth quarter. While Agrium currently expects the Kenai facility to maintain existing production rates, there is a risk that available gas from Unocal and other suppliers may not be sufficient to maintain these rates in 2003, particularly during the winter months. Should the requirements of the facility not be met by Unocal or from existing supply sources from other producers, development of new natural gas reserves over the next 18 to 36 months will be required to return the facility to full production capacity.

* Profertil Argentina facility. The Profertil nitrogen facility was shut down October 17, 2002, due to mechanical problems in both the ammonia and urea plants. Following repairs, the ammonia plant resumed production on November 14 and the urea plant on November 16 with both currently running above design rates. The repairs to the urea plant are considered temporary until the new urea heat exchanger with upgraded metallurgy is installed early in 2004. As a precaution, a back-up unit from the Fort Saskatchewan facility will be delivered to Argentina in April for installation in May. Until this back-up is installed, some production interruptions may occur. Profertil S.A. is 50 percent owned by Agrium Inc. and 50 percent owned by Repsol YPF, S.A.

* Argentine charges. The Peso was volatile throughout the first six months of 2002 after it was unpegged from the U.S. dollar at the end of 2001, reaching a low of 3.71 to 1.0 U.S.$ at the end of June. Since June, the peso has remained relatively stable and closed at 3.37 at December 31, 2002. For the fourth quarter 2002, a $1-million gain was recorded due to the net effect of currency translation and the forced conversion of December 31, 2001 accounts receivable (Argentine charges). For the year, a loss of $4-million was recorded due to the Argentine charges. This compares to a charge in 2001 for the fourth quarter and year of $49-million when the Argentine peso was unpegged from the U.S. dollar.

* Inventory management. High North American natural gas prices have resulted in Agrium closely managing its nitrogen production to match expectations for spring sales to key markets. As a result, an annual maintenance shutdown was taken during the month of January at the Borger, Texas nitrogen facility, coinciding with the recent peak in natural gas prices. In Western Canada, the Joffre and Fort Saskatchewan nitrogen facilities are operating at reduced rates. To offset temporary inventory reductions, Agrium has purchased lower cost imported product to assure competitive supply for its customers.

* Write-down of impaired assets. In December 2002, a review of redundant, obsolete and impaired assets at all sites was completed and resulted in a write-down of $8-million before income tax. No further asset write-downs are expected.

OUTLOOK

North American demand is expected to improve in 2003 due to higher grain prices and an anticipated return to more normal weather conditions. Demand will be supported by an expected increase in seeded acreage for the major crops that consume the most fertilizer, such as corn, wheat and canola. In Argentina, the agricultural sector has shown significant strength despite the difficult economic restructuring taking place in the country. In 2002, planted acres and application rates were better than anticipated and close to 2001 levels. Expectations are that total nutrient use in Argentina will be higher in 2003. Meanwhile, strong demand in South America and Asia in the second half of 2002 increased shipments to these regions from the major exporters in the Black Sea and Middle East.

Demand appears to be strengthening, while nitrogen supplies remain tight. North American nitrogen inventories remained more than 20 percent below the 5-year average at the end of December 2002. This is a result of strong demand and reduced supplies both from domestic production and offshore imports over the last year. A recent surge in natural gas costs in North America, meanwhile, led to a number of temporary shutdowns in the industry during January. As a result, New Orleans, Louisiana (NOLA) urea pricing has increased to $158 per short ton ($174 per metric tonne) from $138 ($152 per
metric tonne) in early January. Globally, other developments have limited nitrogen availability, contributing to a $16 per metric tonne increase in Middle East granular urea prices since early January to bring current prices to $146 per metric tonne. Indonesia, traditionally a major exporter of nitrogen, has significantly reduced exports this year due a combination of production problems and government regulations aimed at ensuring the country has adequate supplies for the domestic markets. In Venezuela, political problems have shut down nitrogen production that normally would be targeted to the U.S. and Latin American markets. The Venezuelan nitrogen facilities are not expected to re-start in time for the spring season due to the time it will take to get the gas flowing to the facilities even after the current labour unrest is resolved. In the mid-term, Agrium continues to believe that the shortfall in world nitrogen production capacity additions relative to forecast growth in demand will result in a further tightening of the supply and demand balance.

While global supply and demand balances are tight, there are also a number of risks. Weather continues to be a concern in Agrium's key markets. Over the past two years a large area of Western Canada experienced some of the worst droughts on record, significantly impacting fertilizer use and yields. In certain areas, the poor yields may lead to nutrient carry-over in the soil for the upcoming growing season. This winter, these drought concerns have extended to a large portion of the U.S.,
including the key growing area of the western Corn Belt. Precipitation at or above normal levels in the months preceding spring planting is needed to improve conditions in these areas, although optimal yields will still depend on timely rains during the growing season. In the global market, uncertainty remains regarding China's level of participation in the international urea market.

In terms of nitrogen profitability, the increase in North American natural gas prices in relation to nitrogen prices has created uncertainty. Currently, regional nitrogen prices in some U.S. markets are below the cash cost of production for producers located in those regions. It is not clear yet whether further nitrogen price increases will occur to totally compensate for this deficit resulting in uncertainty regarding spring nitrogen margins. Meanwhile, a number of North American producers are experiencing financial difficulties, making their pricing strategies less predictable. Agrium has a preferred natural gas cost position relative to its North American competitors because of lower cost Alberta gas and its fixed base-price contracts in Alaska and Argentina. Agrium has financially hedged about ten percent of its North American natural gas requirements this year. In addition, there is currently uncertainty about the quantity of natural gas Agrium can secure for its Kenai, Alaska facility in 2003 under its long-term fixed base-price contract.

As a result of these factors, Agrium is cautious about its first quarter results, currently forecasting a loss of $0.20 per share, although a significant improvement over the loss of $0.33 per share for first quarter of 2002.

MANAGEMENT'S DISCUSSION AND ANALYSIS

Overview

North America Wholesale earnings before interest expense and income taxes (EBIT) was $40-million in 2002, down from EBIT of $64-million in 2001. The decrease was primarily due to lower nitrogen gross profit, partially offset by improved phosphate and potash profitability.

South America Wholesale EBIT, before Argentine charges, was $10-million, up significantly from EBIT of $4-million for 2001. Improved nitrogen profitability as a result of lower production cost was the primary reason for the increase. After including the Argentine charges, EBIT was a loss of $2-million for 2002 compared to a loss of $18-million for 2001.

North America Retail recorded EBIT of $52-million in 2002, up from $51-million in 2001. Lower selling and administrative expense was the primary contributor to the EBIT improvement.

South America Retail EBIT, excluding the Argentine charges, was $17-million, a significant improvement from $1-million in 2001. Lower selling and administrative costs due to the devaluation of the peso was the primary reason for the EBIT increase. South America Retail reported similar revenues and marginally higher gross profit than 2001 despite the difficult economic circumstances in Argentina. After including the Argentine charges, EBIT was $25-million for 2002 compared to a
loss of $26-million for 2001.

Segmented Results

North America - Wholesale

Nitrogen

Gross profit for nitrogen dropped from $150-million in 2001 to $63-million for 2002. Sales volumes were up 11 percent in 2002 to 5.2 million metric tonnes primarily due to increased sales to U.S. customers. Compared to 2001, average realized prices were lower by $29 per metric tonne. The major reason for the decline was significantly higher prices in the first half of 2001 driven by high North American natural gas prices. Average costs per metric tonne were down approximately seven percent from 2001 reflecting greater production efficiencies. The cost of natural gas, the major cost component for nitrogen, was similar for 2002 and 2001 after taking into account hedging losses in 2002 and hedging gains in 2001. For the year, cost of product sold incorporated $46-million in natural gas hedging losses, including inventoried amounts, compared to $70-million in hedging gains in 2001. Overall nitrogen margins fell by $20 per metric tonne, dropping from $32 per metric tonne in 2001 to $12 per metric tonne in 2002. However, market conditions in the second half of 2002 improved significantly. Gross profit for nitrogen was $44-million in the second half of 2002 compared to $16-million in the second half of 2001, while nitrogen margins improved to $18 per metric tonne from $7 per metric tonne.

Phosphate

Sales volumes were up 30 percent in 2002 to 1.1 million metric tonnes. This increase was primarily the result of better production volumes from the Conda, Idaho and Redwater, Alberta facilities. Redwater's improved performance was related to improved phosphate rock production from the Kapuskasing, Ontario facility. Phosphate prices in 2002 were up marginally compared to 2001 while costs of goods sold were down $20 per metric tonne. As a result, overall margins improved to $33 per metric tonne in 2002 compared to $7 per metric tonne in 2001. The improvement in costs per metric tonne was primarily the result of better production volumes from Conda and Redwater and the lower cost of phosphate rock from Kapuskasing. Gross profit for phosphate was $37-million in 2002 compared to $6-million in 2001.

Potash

Sales volumes were up 18 percent in 2002 to 1.6 million metric tonnes. This increase was largely due to higher sales to North American customers, although export volumes were up as well. Prices were $3 per metric tonne lower compared to 2001. The overall margin for the period was $42 per metric tonne compared to $43 per metric tonne in 2001. As a result, gross profit for potash was $67-million in 2002 compared to $58-million in 2001.

Sulphate and Other Products

Gross profit for sulphate and other products was $29-million in 2002 compared to $21-million in 2001.

North America - Retail

North America Retail gross profit was $256-million in 2002, similar to 2001. Higher fertilizer sales volumes were more than offset by lower nitrogen prices. Overall revenues were up two percent as a result of higher chemical and seed revenues. Seed revenues were up 24 percent in 2002 from 2001, continuing the trend of the past several years. Total gross profit percent was down slightly due to a change in product mix.

South America - Wholesale

Gross profit in 2002 was $36-million compared to $28-million for 2001 even though revenue was $7-million less in 2002. The lower revenues were a result of lower international nitrogen prices and a greater portion of export sales. The higher gross profit was attributable to lower production costs, including natural gas costs, as a result of the devaluation of the Argentine peso.

South America - Retail

Gross profit for South America Retail was $30-million in 2002 compared to $25-million for 2001.

Other

Other represents corporate functions and inter-segment eliminations.

Interest expense

Interest expense in 2002 was $68-million, down from $74-million in 2001. Lower interest costs were primarily the result of reduced short-term indebtedness. This reduction was due to lower inventory levels in 2002 and the application of the $106-million proceeds from the common share issue in March 2002.

Selling, General and Administrative Expenses

Total Selling, General and Administrative expenses were $246-million in 2002, down $22-million from 2001. This reflects the cost benefits from the devaluation in Argentina and cost control and deferral in North America operations.

Financial

Cash flow from operating activities in 2002 was $224-million compared to $87-million in 2001.

The net change in non-cash working capital from operating activities was a source of cash of $55-million and $100-million for the fourth quarter of 2002 and 2001 respectively. For the year, the net change was a source of cash of $54-million compared to a use of cash of $32-million in 2001. This improvement reflects an increased focus on working capital management during the year.

In the fourth quarter, 2002 the Corporation revised the classification of certain amounts within the operating category of the Statement of Cash Flows. This change clarifies the impact that certain Argentine foreign exchange translation charges had on the Company's operating cash flows during the year. This change in presentation did not impact the balance sheet, earnings (loss), cash flow from operating activities or cash flow from investing and financing activities as currently presented in the
Statement of Cash Flows.

Agrium Inc. is a leading global producer and marketer of fertilizer and a major retail supplier of agricultural products and services in both North America and Argentina. Agrium produces and markets four primary groups of fertilizers: nitrogen, phosphate, potash and sulphur. Agrium's strategy is to grow through incremental expansion of its existing operations and acquisitions as well as the development, commercialization and marketing of new products and international opportunities.