It's The Margins That Matter
OPINION: It appears to be difficult for people who haven’t tried to run a business to understand the difference between assets and cash.
The savings are thanks to the difference between the two superphosphate manufacturers' web-listed price for customers buying super-based products between September 1 and December 1.
Since 1 September, when Ravensdown capped its spring season super price at $320 per tonne, the value difference compared to the only other superphosphate manufacturer in New Zealand has been $7 per tonne. Some products, such as sulphur superphosphate, saw a $13 per tonne difference across the three months.
"Keeping prices capped and that low for the crucial spring months adds up to an early rebate for customers who needed the money more than we did," says Greg Campbell, Ravensdown chief executive.
From December 1, Ravensdown is taking the lead and reducing potash by $20 per tonne and ensuring other products such as urea and DAP are currently unchanged at $575 and $875 per tonne respectively.
"By moving superphosphate up $10 to $330 per tonne from 1 December, we effectively delayed the impact of any price rise during those important spring months," says Campbell.
"Even with this move, we continue to shield shareholders from the full cost of their superphosphate. We'll continue to closely monitor both global commodity prices and the falling exchange rates over the summer months.
"Despite exchange rate pressures and short term volatility, we are seeing gains in our operational efficiencies and our global suppliers supporting us as we strive to deliver all-year value to shareholders."
As farmers potentially face an El Nino summer, early superphosphate application is advisable to miss the rush before autumn rains hit. Meanwhile N-Protect, which is a coated urea product that reduces losses of nitrogen to the atmosphere, is proving valuable in hot and dry conditions.
