Farmgirl on maternity leave but has new important questions for Ravensdown

Farmgirl will be offline for a short time due to maternity requirements, but wants Ravensdown shareholders to consider the following, while waiting for the figures from annual accounts to come out:

1 How is it that if Ballance suffered significantly in the past year due to the global environment and has decided it can't afford to pay a rebate, that Ravensdown is claiming a much stronger balance sheet (again) and paying a rebate. Where is the money for that rebate coming from?

2 Have Ravensdown broken banking covenants and if so how much has that cost shareholders over the past year?

3 What is the debt to equity ratio of Ravensdown now - that is what counts. Pay attention to the level of borrowing and whether foreign exchange earnings is what is paying for rebates rather than profit.

Shareholders should be concerned about Ravensdown...

Farmgirl wants to share some important comments passed on to her by a follower of the blog.

"Have you seen the latest Ravensdown Hot off the Press on their web site.What has been said about having to make profits, banking covenants,pressure to retain bank funding facilities, selling foreign exchange,having to restructure etc is just the tip of the iceberg. No wonder they have the pressure on (you) not to let their true financial position be know to shareholders, but the truth will come sooner or later especially with this Australian nonsense and the current banking squeeze.

In the market Ballance are deliberately squeezing them on prices. Ballance set the price and Ravensdown follow a few days later at about the same level. But with sales back and profits and cashflow required to satisfy their banks they desperately need higher prices in New Zealand -they will never achieve this.

This is a deliberate tactic by Ballance - they want a weaker and weaker Ravensdown in the market in order to grow their own market share and improve operational capacities.

Rodney Green said some time ago a 50:50market was not sustainable and he would grow Ravensdown to be 20% larger than the number two in the market. Ballance are effectively following his advice.

The Australian venture and non fertiliser activities is the only way Green can boast that he has been successful and grown Ravensdown - that is his driving force and the force that dominates Ravensdown's activities - but at what cost - he was not in the industry when other misguided fertiliser co-op's collapsed.

Their accounts may just be legal - but their presentations and PR in explaining their true position are on very thin ice - no doubt they will blame the current economic conditions - but their problems are more fundamental and getting to be terminal."

Thank God for fertiliser competition

Yet again it has been brought home to us here how vital competition in the fertiliser market is with the grumblings coming from UK farmers about the monopolistic industry there.

The latest fall in nitrogen prices in Britain has been met with contempt by farmers who ordered early and are now footing an expensive bill for their trouble.

UK Farmer's Weekly reported many farmers had a perception that the UK fertiliser industry in the form of Growhow UK has excessively profited at their expense - a serious charge, but probably not that far wrong.

Growhow marketing manager Ken Bowler denied the monopoly his company enjoyed had caused the high prices, saying while Growhow was the one remaining manufacturing supplier they still have to compete with opportunistic sellers.

But farmers do feel cheated and it serves to remind us how lucky we are to have Ravensdown and Ballance battling it out for market share. It's true fertiliser prices have been high this season due to international prices - this is not a problem British farmers face alone.

Here we grew wheat when Urea was $1100/tonne and now we could grow that same wheat for $690/tonne. But unlike our English counterparts we can afford to be pragmatic about it, knowing that with the competition in our industry the co-operatives have to bring the prices down as quickly as they possibly can and not drag their feet for extra profit share as seems to be happening with Growhow.

Currently the UK depends on 60% of its fertiliser from imports so it could benefit immensely from having more competition.

Here are the current UK fertiliser prices for March 2009 (£/t delivered):


UK SP5 34.5% N
£265-270

Imported urea Imported AN (full analysis)
£280-300

Granular(dependent upon quality)
£240-270


All illustrated prices are based upon 24t loads for cash payment the month following. Prices for smaller loads and 50kg bags will vary considerably.

For further information go to: http://www.fwi.co.uk/Articles/2009/03/11/114677/global-marketplace-sees-fertiliser-fall.html

Ravensdown and a whole can of whooey

The latest PR offering from Ravensdown on its palm kernel business was nothing more than a slippery backslide designed to do nothing more than calm the angry hordes of arable farmers who make up a substantial percentage of Ravensdown's fertiliser profits.

Talk about biting the hand that feeds you. First they try to make a buck at the expense of cropping farmers by importing palm kernel to dairy farmers, when those very same farmers might have purchased wheat from their New Zealand neighbours, and now they have fobbed the protests aside by claiming that they are the arable industry's saviour, charging in on a white horse.

Their PR doctors should be given a pay rise (the palm kernel profits could be the trick) for their claim that by adding a small amount of grain to PKE this season they have created a 'new' domestic grain market for farmers.

Very few wheat farmers sell their grain for the purpose of Ravensdown's diffusive business plans and two major points have been missed in the process.

Ravensdown is a farmer's co-operative - not a dairy farmer co-operative, not a sheep farmer or arable farmer co-operative, but a united farmer's co-operative and as such any move by the directors to go into a business which seriously disadvantages one group of farmers like the palm kernel imports does should be vetoed.

These board sitters should be sacked if they can't even stick to the core principles of a co-operative and arable farmers should vote with their feet and buy from the opposition until such time as Ravensdown sees fit to even up the playing field again.

Imagine the outrage from dairy farmers if Ravensdown went into importing milk powder to those beef farmers breeding bobby calves. It is the same thing.

They are a fertiliser co-operative and these decisions serve to drive a wedge right through their community of shareholders. Many were unhappy about the decision to stray from their core business of fertiliser when they decided to go into agri-chemicals and many more may be unhappy if this foray into palm kernel imports proves marginal on the bank sheet as some suspect it might.

If Ballance were smart they would move in for the kill. There has never been a more opportune time.