Ravensdown Australian division disappoints
Fertiliser co-operative Ravensdown is exiting its South Australia joint venture following a disappointing performance by its Australian division last year.
The co-operative is in talks with the other owners of Adelaide-based joint venture Direct Farm Inputs (DFI) to extract itself from the business which was contrary to its co-operative beliefs.
DFI is a privately-owned business employing nine people in its Adelaide office and sells fertiliser in South Australia and Victoria.
Chief executive Greg Campbell said Ravensdown had re-evaluated its position, because the DFI business model had moved from its starting point and was mainly selling fertiliser through intermediaries, rather than direct to farmers.
"This means the ability to develop a co-operative model in South Australia and Victoria is unlikely. This is different in Queensland and in Western Australia where the interest is strong and we see those farmer-owners supporting us through their buying.''
Campbell said Ravensdown had been in Queensland and Western Australia for longer and had more influence over this business because of its co-operative ownership and supplying directly to farmers including canegrowers.
Talks with the other DFI owners were at an early stage and commercially sensitive. Existing customers' commitments will be honoured, during a managed sell down of stock.
Last year the co-operative said its investment in stores and manufacturing infrastructure was paying off, with sales in Australia increasing by 16 per cent.
Despite this its Australian division made a loss of $1.8m, attributed to poor farm returns. The co-operative said at the time it was taking steps to address Australian quality issues and the prospect for profitable growth in Australia remained strong.
Ravensdown says its New Zealand operations are not affected by the DFI development.