Green light for acquisition
The merger of two of the country’s largest animal nutrition companies won’t lessen competition, the Commerce Commission has ruled.
“Farmlands is a strong co-operative but it appears to have lost its way,” Dennison claims.
“There will be no bonus rebate this year and although the annual results are yet to be released (Rural News spoke to him prior to the annual result announcement) it is likely that a loss will be announced.”
Dennison told Rural News he is sick of hearing as an excuse the poor performance of the rural economy affecting Farmlands’ profitability.
“Farmlands is operating in the same market as PGG Wrightson and Ravensdown, yet both these co-operatives are performing well,” he says.
“Agriculture operates in a volatile market environment and any rural business needs to be agile, either enough to adapt to seasonal variances or to have built-in resilience to allow it to weather economic storms. When farmers are having a tough time on the land they do not want their incomes reduced by poor cooperative performance as well.”
Dennison believes Farmlands’ scale of operation and shareholder base of 60,000 should give it a substantial competitive advantage over its competitors, but he says it has not leveraged this position to gain prominence in the market.
“Farmlands needs to face up to the reality that the merger process has not gone well,” he adds. “It’s time to take a microscope to the way it operates and make the necessary changes to restore profitability. The time for excuses is over. It’s time for action and it’s time for change.”
He says that in 2013 the CRT/Farmlands combination was described as the “perfect merger”.
“However, three years down the track the chickens are coming home to roost and it is more like a perfect storm.”
Dennison cites his previous experience on the Ravensdown board, which made changes to people, process and a new strategy that resulted in turning the fertiliser co-operative around as an example to follow.
“Farmlands should do the same thing and restore itself to be a market leader.”
He says he has been encouraged to stand for the board by farmers who are concerned about the leadership of the co-operative.
“I’ve been inundated with contacts from unhappy shareholders and have become a bit of a touchstone for farmer dissatisfaction with Farmlands.”
Dennison believes his diverse directorship experience and connection to the land via his arable and dairy operations in North Otago make him a good fit for the board.
Farmlands is now holding annual director elections and two candidates are standing for the South Island ward – Dennison and the incumbent director John Foley. There is no election in the North Island as the chairman Lachie Johnson was unopposed.
Voting closes on Oct 25 and the results will be announced at the co-op’s annual meeting in Christchurch on November 1.
