Dumped Ravensdown plans Wrightson customer grab

Friday 10th August 2001

RAVENSDOWN CHANGES DIRECTION: The fertiliser co-op plans to go directly to Wrightson customers now the rural merchant has switched to Ballance

By Hugh Stringleman

Ravensdown Fertiliser Co-operative will attempt to deal directly with the clients of New Zealand's largest rural merchant, Wrightson, which now favours the other big fertiliser co-op, Ballance Agri-Nutrients, as preferred supplier.

The $800 million-a-year fertiliser industry has been rocked by the Wrightson and Ballance agreement, which has been sparked by Ravensdown plans to take control of its own client base and make a variety of new agency agreements.

"In the old style of agency agreement, the merchant took the fertiliser order and carried the debt," Ravensdown chief executive Rodney Green said.

"The new style involves a partnership with the merchant, a variety of agency fees and marketing plans, and Ravensdown will invoice the farmer directly.

"Farmers will be effectively buying at trade price, which, if all of our business was converted, could save farmers $8 million a year."

While this new marketing plan would prevent merchants from adding retail margins to the prices of fertilisers, they would be able to save book-keeping and bad debt costs, Dr Green said.

Ravensdown intends to offer its products on-line, by phone, fax or email to a call centre in Christchurch and order-taking by its team of technical representatives.

"We were doing everything for the client excect invoicing. This move completes the picture and gives us control of our own client base," Dr Green said.

Rival Ballance co-operative (which changed its name from Bay of Plenty Fertiliser in June) will stick with the traditional agency pattern. It will extend facilities into Ravensdown territories to fulfil the Wrightson arrangement.

Fertiliser sales increased about 10% for the sector in the year to May 31, as farmers spent greatly increased proceeds from meat, milk and deer products.

Ballance sold 1.35 million tonnes, up 13% from the year before, consolidating the sales of subsidiaries South-Fert and Petrochem urea. Last week it announced a turnover increase of 28% to $395.85 million in the year to May 31, along with an improved annual distribution of $20 a tonne of fertiliser bought by 18,000 co-op members.

Net profit was $43.1 million, up 72% on the previous year and $10 million of earnings has been retained to support aggressive expansion.

Ballance chief executive Larry Bilodeau has researched the costs of setting up direct marketing and billing a la Ravensdown and believes it would add unnecessary cost in duplicating field staff and facilities already provided by rural merchants operating on the historical agency commission.

Wrightson Rural Supplies general manager Cros Spooner said the basis of the Ballance agreement included technical advice, promotional activities and invoicing but it would extend to research work, trials and further collaboration.

"It is a matter of taking out duplication in this over-serviced industry by getting alongside like-minded suppliers," he said.

"Wrightson understands clients' needs in soil fertility and farm management, which is a package that is bigger than just fertiliser advice."

Ravensdown has been increasing its field force and signalling for more than a year that it wished to take over invoicing. It also sells more than one million tonnes of fertiliser annually and has a nationwide depot and distribution system.

"We can't agree to replication of services, like field reps and paperwork, because in the end it is the farmer who pays," Mr Spooner said. But if a client really wanted Ravensdown products, Wrightson would arrange supply.

Dr Green said he had not heard anything officially from Wrightson about its "preferred supplier" arrangement with Balance and he is obviously miffed.

Other rural merchandisers say they will work in with Ravensdown's new agency proposals.

Fertiliser commissions account for a large portion of revenue for companies such as Williams & Kettle, Pyne Gould Guinness, Reid Farmers, Farmlands and CRT.

Comments from our readers

No comments yet