Monday, June 22, 2009

What an Australian commentator is predicting for Ravensdown and it isn't good for Kiwi shareholders...

This just sent to Farmgirl today from a rural Australian follower of the blog.

"In essence Ravensdown is only offering granular urea and they have made a right royal mess of it in my opinion. They have offered growers a “cost” price of A$525/t, however, the current urea price is $480/t, admittedly at the time Ravensdown spruiked to its Kiwi brethren, the price was over $600/t but blind freddy could see the price was tumbling as world urea prices had already started the forecast fall. The Ravensdown marketing machine (double speak in a suit), managed to fear the Australian growers into prices were going up or remaining high and managed to greed NZ shareholders that the price was hugely profitable. Both of these claims are of course...let’s say...less than honest.
The model that Ravensdown are using is causing a backlash in our rural communities, essentially Ravensdown are attempting to cause the demise of the rural store, it is highly unlikely this will be tolerated once the smoke has cleared and this alone will create a huge cost impost for Ravensdown in order for it to compete long term. Secondly, the idea that there was only one large, unloved player in the Queensland market that need be conquered is a major underestimation, not sure whether by design or folly. The notion that the second tier players, us included, along with our large multi-national, are going to sit by and watch our markets get eroded and rural communities and infrastructure become decimated is ridiculous. Ravensdown are in for a fight they have never encountered before, I think there will be significant focus on reducing their profitability and exposing their integrity.
Already we see Ravensdown are showing off their true colours, a part of the deal with Australian growers was that they must belong to Ravensdown in order to access “cheap” fertiliser, and in fact they forced growers to pay $80/t up front partial share payment at time of order but cannot collect it themselves as they are illegally setup for such a transaction (not only has this decimated possible Ravensdown cash flow, but a very expensive court case at NZ shareholders expense in the making we presume). In order to get the first vessel possible, Ravensdown were forced to sellout the growers and offer large parcels to another fertiliser importer in South Australia, paid for by its NZ shareholders.
There are now several large risks at question, the Townsville warehouse is reportedly full of holes, was never suitable for fertiliser and come September when the wet season arrives, any fertiliser remaining will be dumped or relocated at presumably NZ shareholder expense. The vessel calling Brisbane (our major port) is apparently under question as sales volumes flounder and the vessel has to also go to South Australia to satisfy the non-shareholder customer. Rumours for sure, but where there’s smoke there’s fire. Rest assured, any cracks in the Ravensdown venture will be seized upon, exploited and capitalised on to the detriment of NZ shareholders."

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