Wednesday, 18 May 2016

Triple benefit for farmers


$21 per tonne paid three months early, urea below $500 per tonne and $6m investment in precision blending.

Farmers are set to benefit with an early initial June payment on their annual fertiliser rebate, Ravensdown announced at the opening of their new Precision Blending Plant today. The co-operative will pay out $21 per tonne in cash to farmers three months earlier than the industry norm.

Last year, Ravensdown paid its record annual rebate on ordered tonnages in one amount in August. This year, Ravensdown will pay its annual rebate in two parts: the June rebate portion and the rebate remainder after completion of its financial accounts for the year 2015-16.

The early rebate payment to all transacting shareholders is intended to help many farmers facing cashflow issues and reflects a deliberate strategy to improve financial returns at the co-operative.

“We’re making this early part-payment of the annual rebate because many farmers are facing exceptional commercial and climate related challenges,” said Greg Campbell, Ravensdown’s Chief Executive.

“It makes sense that, with lamb and dairy prices where they are, and dry conditions wreaking havoc for some farms’ growing conditions, that we don’t wait to make one payment but split it into two,” added Greg. “As a farmer-owned co-operative, we’d also be delighted if the early June rebate portion has a flow-on effect to help all farming sectors, and other rural industries and communities.”

Payments will be hitting bank accounts from the 7th of June.

In a related move, Ravensdown is cutting its urea and ammonium sulphate fertiliser prices to $495* per tonne as a way to help spring growth and support its ‘pasture first’ agronomic approach.

This is the third time in this calendar year that Ravensdown has been the first in the industry to lead with a fertiliser price reduction, and the first time Ravensdown urea has been below $500 per tonne since 2006. Urea now sits at 55% of its 2012 peak and is $80 cheaper than it was in January which is worth about $60 million to NZ farming on an annualised basis.

As a valuable source of nitrogen, urea is critical for spring growth as farmers attempt to feed their livestock with home-grown pasture. Lower priced nitrogen fertilisers will also help horticultural and arable sectors achieve their production goals.

“It may be a while until some sectors see a turnaround, so keeping feed costs down and adopting a ‘pasture first’ model will help the competitiveness of New Zealand farming. The co-operative is in good shape, orders are strong and, because of the improvements we’ve made to our balance sheet, efficiency gains and global trading arrangements, we’re able to pass these savings on when we can,” explains Greg.

The announcement of the early rebate and urea price cut was made at the opening of Australasia’s first Precision Blending Plant in Christchurch today.

Ravensdown’s new $6 million Precision Blending Plant was opened by the Minister for Primary Industries, Nathan Guy.

The plant offers precise blends and coatings of fertiliser, made to order at three times the previous speed. This innovation means the co-operative can process and dispatch up to 250 tonnes of precision, made-to-order, fertiliser blends an hour, compared to the current 80 tonnes an hour.

Greg Campbell said, “This precision blending technology arms farmers with the technology to get the most out of their land and livestock in a more sustainable way. Our soil testing laboratory diagnoses what nutrients the farmers’ soils need while precision spreading allows the right amount to be applied in the right place.”

Chertsey farmer and Ravensdown shareholder Ross Hewson said, “It’s great to see Ravensdown investing in precision technology and productivity. We’re really looking forward to the efficiency gains we’ll achieve now, with the plant's capability to deliver our tailored blends pretty much instantly. With the variable rate spreading and the more intense monitoring we’re doing with micro-nutrients today, this is a huge advantage for us.”

The early rebate, price cut, and investment are made possible by a very encouraging result. It's good to see returns flying our way. The cash payment will definitely help and I'm sure farmers will appreciate it.

While Ravensdown's advanced precision blend technology will initially only be available to Canterbury farmers, it is planning to upgrade selected plants in both the North and South Islands.

Greg Campbell added, “Ravensdown is in a position to deliver this good news thanks to a deliberate strategy over the past few years, a lot of hard work from our team and great support from customers. Since our superphosphate cap last December, we signalled that we were aiming to deliver all-year value as well as targeting a sensible rebate. Well, this is what all-year value looks like: keeping input prices competitive, investing in infrastructure, developing new technology and delivering sound technical advice.”

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