The feed miller, which claims to be the biggest in New Zealand, is to be sold to Farmlands and Mainfeeds.
The move comes just six months after Farmlands merged with South Island counterpart CRT, which already had considerable feed milling capacity at Rolleston and Winton in the South Island.
“I suppose the rationale is vertical integration… but it is so far away from where the Farmlands model originally was,” he told Rural News. “They’re just adding another layer of cost.”
That original model was to get the best possible price on inputs and services for Farmlands members, he says.
“That’s quite different from just being cheaper than PGW. The aim was to keep the cost structure low and pass on the benefit.”
Ritchie stresses he’s not saying the CRT merger is what’s changed Farmlands, as it had “already gone off the rails a bit with its huge expansion of shops and vehicles” prior to the merger.
Since resigning as a Farmlands director he’s started taking tenders from multiple organisations for inputs and services to the family’s large-scale cropping business in Hawkes Bay, and says the substantial savings he’s now achieving makes him “disappointed” in the savings he formerly made by buying from Farmlands.
“For example, we’ve taken $9000 off our phone account by going direct.”
Even after what used to be a sizeable rebate from Farmlands, his business will be considerably better off, he says.
“Our spend with Farmlands is now probably a quarter of a fifth of what it was. It used to be all our business went there regardless. Now we’re putting all our business up for tender.”
