In a surprise announcement earlier this month, CHS Inc. said it is no longer planning to build a $3.3 billion fertilizer plant in Spiritwood, N.D., just east of Jamestown. The co-op based in Inver Grove Heights had announced the project last September and said it was seeking a more reliable long-term supply of nitrogen fertilizer for farmer-owned cooperatives and independent farm supply retailers in Minnesota, the Dakotas, Montana and Canada. Instead, CHS has now switched gears and decided to invest a record $2.8 billion in CF Industries Nitrogen, a nitrogen fertilizer manufacturing firm that operates three complexes in the central U.S. and has production facilities in Canada. CHS also has become more visible this summer because its name adorns the new St. Paul Saints baseball park — CHS Field — in downtown St. Paul. The name might be unfamiliar to the general public, but CHS is a $42 billion company with broad diversity in energy, grains and foods. It's also the nation's largest farmer-owned cooperative and a major wholesaler and retailer of propane. It was formed from the merger of Cenex and Harvest States Cooperatives. Carl Casale, CHS president and CEO, talked in an interview about the company's fertilizer decision, recent financial performance and future directions. His comments have been edited for length and clarity.

Q: Tell me more about why CHS changed its mind about building the fertilizer plant in North Dakota, which you've been considering for several years.

A: What became apparent over the past 12 months or so was two things. First, the water solution that we were looking at was imperfect. We got groundwater permits that specified if there were a period of prolonged drought, we'd have restrictions on use of that water. And you can't invest several billion dollars and have that kind of a condition. Second, we were looking at continually escalating costs in our own internal estimates, and we were looking at what was happening with plants being built by others, and their costs were escalating. At the end of the day, it made sense to make the investment in CF Nitrogen. They do this for a living, their plants are up and running, and it was just a lot different profile of risk and reward and gave us access to those economics much, much sooner for our owners than what building and running a single plant would have done for us down the road.

Q: What are the financial implications of the decision?

A: We had about $135 million invested in the project, and about $50 million of that had been expensed along the way. About $85 million had been capitalized on the balance sheet, and basically we'll just write that investment off after we do some analysis. We still own the real estate and some of the investment may be salvageable, but the bulk of it will be written off since we're not pursuing the project.

Q: CHS has not been doing as well this year financially after several very good years, with 26 percent lower earnings and 19 percent lower sales in the first nine months, compared with the same period in fiscal 2014. What's been happening?

A: We're looking at a commodity market that's not particularly strong. Commodity prices are low, and farmers have wanted to hold on to grain and not move it. And, of course, as their condition or position changes, there'll be more grain in the market. Crude oil differentials are lower than what they've been as the crude prices have decreased, and that affects refining margins as well. So for the two core pillars of the business, on the agriculture side and the energy side, they are both in a down cycle. If you look at our earnings through three quarters of the year, at $649 million, it's true that they're not tracking where we were last year. But I'd also point out that five years ago this company didn't make $649 million in a full year. So I guess things are relative from that perspective.

Q: What are you hearing from crop farmers regarding commodity prices and whether they'll make profits this year?

A: Pretty consistently what I'm picking up is that farmers who are well capitalized and those that don't have an inordinate amount of rented land at really high prices are doing fine. The farmers that are really struggling right now are the ones that kind of overpaid for rent and are locked into some longer term deals. Over the next couple of years I think we'll start seeing cash rents retreat, and then we'll get more equilibrium again.

Q: What's your take on the recent House passage of a bill that blocks states from requiring new labels on foods that contain genetically modified ingredients?

A: We're very supportive of the legislation. We've signed on to letters to Congress to support it. It's just basically generating a good strong law at the federal level to protect interstate and even intrastate commerce.

Q: Any surprises since the CHS name has gone up on the St. Paul Saints regional ballpark?

A: It has far exceeded my expectations in terms of greater name recognition for the company. It's also a recruitment tool for us. We've grown dramatically in the past five years, from 6,000 to 11,000 employees, and it's harder to attract talent to the company when we really didn't have any brand recognition. The emphasis on value and family also is very consistent from a branding standpoint with who we are as a company, so we're very pleased.