Farmlands chief executive Tanya Houghton admits that the rural retailer is making a number of changes to its business model.
This has been reinforced with the release of its 2023 annual report, revealing that the co-operative made a net loss after tax of $700,000 for the year. This came on the back of a turnover of $2.54 billion and revenue of $808 million. Farmlands says it also delivered $90.6 million in customer rebates to shareholders through rural supplies and card partner rebates.
Chief executive Tanya Houghton says despite the tough year, the rural supplies co-op’s focus remains on backing its core farmers and growers in a difficult operating environment.
“We are also setting the co-op up for long-term success as a rural market leader in rural supplies, fuel, animal health, nutrition, agronomy and horticulture.”
Houghton says the country’s farmers and growers have faced high interest rates, inflation, increased compliance costs and lower farm-gate prices – as well as natural events such as Cyclone Gabrielle that have had a tremendous impact on many rural communities.
Chair Rob Hewett says Farmlands remains focused on being the number-one buying group for New Zealand farmers and growers.
“The co-op’s most important future-focused programme is its supply chain transformation and product strategy,” he says. “This covers how the co-op buys and stores product; as well as how it transports stock to customers.”
He says that throughout the year, Farmlands has rationalized its product range to be able to better leverage its buying power, as well as moving to a centralised buying model.
Houghton claims this has seen dramatic improvements in the co-op’s ability to forward-forecast demand, purchase the right volume, negotiate and improve margin on the products it sells.
“We’ll complete our core range roll-out across our entire retail network this month. This has required a massive, coordinated effort right across our business – from our support office to our retail staff implementing the change. I would like to thank everyone involved.”
She adds that Farmlands has also focused on growth through strategic partnerships and acquisitions.
“In 2022 Southfuels and Farmlands formed a new joint venture company, Fern Energy Limited, a bulk fuel provider designed to provide better solutions to customers. Fern had a successful first year, generating $630m in revenue.”
Farmlands also recently announced its intentions to purchase SealesWinslow from Ballance Agri-Nutrients as part of its growth plans in the animal nutrition section, alongside its existing NRM and McMillan brands.
“Even though it’s been incredibly tough, I’m proud of the fact that we’ve made significant strides towards achieving Farmlands’ goal of being the very best buying group for Kiwi farmers and growers,” Houghton concluded.