While the Q2 16 earnings report for Agrium Inc.  (TSX:AGU)(NYSE:AGU) was not what investors might have wanted, comparing it to the report that Potash Corporation of Saskatchewan Inc.  (TSX:POT)(NYSE:POT) put out is a reminder that Agrium is actually in a very solid position.

Potash Corp. saw its earnings drop by nearly 70% year over year. It had to cut its full-year guidance. And for income investors who had been banking on Potash Corp.’s dividend, well, that got cut too.

Agrium, though, didn’t experience such severe problems. Its earnings were down from US$674 million to US$564 million, which is disheartening. But it could have been a whole lot worse. It’s not because Agrium, unlike other fertilizer miners, is well diversified with massive exposure in the agricultural retail space. Agrium’s retail earnings just so happened to be the second highest in history.

Agrium operates approximately 1,400 retail centres in the United States, Canada, South America, and Australia. Some of the brand names are Crop Production Services, Landmark, and Agroservicios Pampeanos S.A. This division is providing the support the business needs while its nutrient mining remains weak. In the first half of 2016 the retail business generated 80% of Agrium’s total gross profits.

The good news for investors is that Agrium continues to bulk this division up through acquisitions. It announced it would be acquiring the U.S. retail agriculture locations owned by Cargill. The 18 properties, spread throughout Nebraska, South Dakota, Minnesota, Wisconsin, Michigan, and Indiana account for over US$150 million in annual revenue per year. This deal is beneficial because Agrium doesn’t have much exposure to the regions these 18 stores touch, so they’ll generate new customers for Agrium.

Unfortunately, diversification can only go so far. The other part of Agrium’s business is its nutrient mining. Agrium was forced to cut its full-year guidance to US$5.00-5.30 per share from US$5.25-6.25. This had already been cut from US$5.50-7.00 in the first quarter.

Management believes that for nitrogen, phosphate, and potash, the second half of the year should be stronger. This is because capacity has been shutting down due to low prices, creating a scenario where there could be a bit of a squeeze in supply. Management expects production of nitrogen to be between 3.5 and 3.7 million tonnes and potash to be between 2.3 and 2.4 million tonnes.

So investors have to ask themselves whether or not the company can continue to survive with nutrient prices where they are. I believe that, due to the retail division continuing to kick off strong earnings, the company will be able to weather this storm far more efficiently than its competitors. The belief is that nutrient prices will begin to appreciate again in 2017 as the supply/demand ratio gets more skewed toward under supply. That would put Agrium in a prime position to shine.

The one risk is the dividend. With its earnings dropping, cash flows are also down. And Agrium pays a very lucrative 3.85%, or $1.14 per quarter. If earnings don’t turn around, the company might be forced to cut this in the future. It has made no mention of any impending cuts, but investors buying this stock for income need to be cautious.

All in all, Agrium is in stable position. The dividend may get cut, but I don’t see the company having long-term problems. If nutrient prices turn around, coupled with its incredibly strong retail division, Agrium may experience new highs.

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Fool contributor Jacob Donnelly has no position in any stocks mentioned. Agrium Inc. is a recommendation of Stock Advisor Canada.