Ravensdown claim backdown over PKE but haven't gone far enough

Today the PR spinners were busy again, convincing arable farmers that Ravensdown are pulling out of the South Island animal nutrition market due to continuing 'negative' feedback. However, they claim this was in the face of 'overwhelming support'. Which was it then? - negative feedback or overwhelming support? Farmgirl is confused.

But besides this point there is another. The South Island market was small and the meetings where Ravensdown claimed support were about selling PKE into the North Island. It is still many arable farmers contention that Ravensdown should not be importing PKE into any of New Zealand. The North Island market is still undercutting arable suppliers. Therefore the backdown today from Ravensdown is nothing but a PR ploy and is not worth the paper it is written on.

For goodness sakes, if you can understand how damaging this has been, boys, to your reputation as the small concession today recognises, then surely you can extend the hand further and stop bringing in PKE altogether.

Questions still need to be answered as well...if they are promoting a 50/50 percent blend of PKE and barley why is it that they have only taken 6500 tonnes of barley. If you do the maths they sold 50 000 tonnes of the mix last year - doesn't look as though that barley made up 50% does it?

Farmgirl back online

Farmgirl is now back online after a maternity break and has plenty to write about. Much has been happening in between, including some interesting new developments with PKE, Ravensdown's annual report and of course our rock star PM making the rounds in America, still looking like the nerdy boy at primary school who just topped the spelling bee!

Be sure to keep the discussion and comments coming.

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.

Ravensdown CEO Rodney Green's job hangs on a transparency thread

Farmgirl, unlike the Radio Network, has managed to escape the bullying clutches of the CEO of Ravensdown thus far and has requested a head to head discussion through the radio forum with Rodney Green but has heard nothing yet.

It is very serious and alarming when shareholders seem to be muzzled by the head of a co-operative and are not being allowed to ask the questions that need to be asked at this point of time.

What is even more alarming is that Farmgirl has received further serious allegations against the CEO and his Board regarding some private dealings that shareholders have no idea about.

This company appears to be no longer transparent and the head of it has far too much power and seemingly a weak or frightened Board.

Farmgirl wants Mr Green to front up and answer these questions:

1 Did Ravensdown have a large cash deficit in last year's accounts from operating activities - that actually they didn't have a $40 million profit but a $40 million loss - it only looks that way due to a change of accounting standards and the favourable revaluation of foreign exchange contracts?
2 Were last year's rebates paid from borrowing, not actual profit?
3 That borrowing to pay rebates is a hugely risky venture and not one that shareholders are aware of?
4 That under these current conditions and the fact that Ravensdown is not in great shape the venture into Australia could only be construed as risky?

4a That the directors may not have been fully aware of Ravensdown's financial situation

prior to its move into Australia?
5 Have they made any million dollar plus settlements out of court in the past three years?

6 Are shareholders aware of what might have been paid via settlement out of court in the past

three years?

7 How on earth can Ravensdown be called a co-operative if its shareholders are ill informed and then threatened should they choose to ask questions?

If Farmgirl and other concerned shareholders are right about the situation with Ravnesdown, then it's time all of us did something about it, took back control of the co-operative and got rid of the rot.

This is not defamation Rodney, this is our right as concerned shareholders to publicly voice our view.

Having worked in agricultural newspapers, and knowing how companies can threaten to pull big advertising budgets if anything negative is written about them, this blog becomes vitally important.

Please, share your views, get in contact with Farmgirl if need be and keep asking these questions of your directors until you get the answers clarified.

We will not be silenced, nor will investigations be dismissed.

Are growers being ripped off with Ravensdown DAP price?

And more from our Aussie commentator - something that we as shareholders have suspected.

"They are ripping off growers blind on DAP at NZ$827/t. DAP has been selling on the world market at US$300-US$330 since the beginning of the year, current prices are at the bottom of the range anticipating additional Chinese capacity for June/July, it is well documented and highlighted recently at IFA Shanghai that DAP pricing will continue to be low due to low demand and expected to trade range bound for the medium term. Freight is roughly US$30/t and port/discharge/handling costs roughly US$25/t. This should mean a co-op that sells at “cost” should be more like US$400/t, maybe US$420 which I believe equates to around NZ$620/t?"

All this when Rodney promised Mid Canterbury arable farmers a forward fixed price no higher than $900 plus per tonne for spring delivery. Surely they're market intelligence research must have been better informed...which puts further questions over their honesty with growers and they're research on the Australian venture.

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."

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."

The worrying truth about Ravensdown's cashflow

An adviser thinks Farmgirl should be focusing on the fact there has been such a large cashflow deficit ($109 million) from Ravensdown 'operating activities' (i.e.core fertiliser activities) in the past year and that the current ratio (85.4%debt/assets) is in such bad shape.

"Paying a rebate with those numbers in such poor shape would seem risky, especially when you compare what Fonterra is doing (no unshared supply, no contract milkers, retaining a large portion of the payout). Fonterra seems to be taking a cautious/prudent approach that should see them through these difficult times."

Is Ravensdown doing the same?

Serious questions need to be asked about viability of Ravensdown's move into Australia

They hate us - those Aussie fertiliser companies that Ravensdown is playing dirty with. And why wouldn't they...Rodders comes in on his big white shining horse to take over the industry, offers the farmers cost price fertiliser and then some, even though it is not maintainable and with a fair wave of his royal hand he wipes out competitors but does he endanger his own shareholders?
Who is paying for Rodney's expansionist ideas? Who indeed...come on Kiwi shareholders, it doesn't take a maestro to work out that if he's not making a profit on the much heralded Aussie advance, the money generated to continue must be coming from somewhere.

Are Australian farmers being put ahead of Kiwi shareholders?

How profitable is the core Ravensdown fertiliser business at present?

And how truthful is Ravensdown being about its profitability, cash flow and debt levels in its annual accounts?

The truth might surprise you.

Keep watching this space over the coming days and ask the questions that need to be asked of your so called 'co-operative'.

Swines I have met...

The theme of the week is undoubtedly swines...Farmgirl has met a few on her travels of late, most notably ones with the big green R emblazoned on their jackets who send junk mail through the letterbox full of self praise for their services, but short on realities, lulling the arable farmer into thinking that some great bright shining new wheat market is going to open up all because they click their fingers and wish it so...

Tah tah tah tah...and the Smooth Operator of the Week Award must go to....Ravensdown CEO Rodney Green

Hark the herald angels sing...no it's not a Christmas angel...it's Rodders in all his preened public relations finery in Ashburton this morning keen to unsoap his mouth from the recent gaffes he made in the media when he ignored the existence of the New Zealand arable industry and it's importance to the Ravensdown coffers. (see post further down)

Alas Farmgirl hears there was no mention of that...he'd cleaned up his act and polished his lingo to perfection particularly when it came to the point of the meeting - why Ravensdown continues to be in the PKE market when it disadvantages the arable shareholders he hadn't realised existed until lately.

Ravensdown imported 90 000 tonnes of PKE this year and have sold around 50 000 and apparently on this basis cropping clients should be relishing the opportunity to add a meagre 5500 tonnes to the mix.

5500 tonnes? In arable lingo that's about five small farms that might benefit from the market but hey Mr Green and his cohorts reckon this could be a fantastic opportunity for us poor dumb cereal farmers. Apparently in this recession Ravensdown alone will convince the cash strapped North Island dairy farmers of the poor nutritional content of PKE when they sell it to them and then these same dairy farmers will come back, singing hallelujah you were right Rodney, and purchase bucket loads of the PKE barley mix while we celebrate by emptying our silos down here.

Yeah right!

And then of course Farmgirl understands there were the veiled threats that the Australian Barley Board (ABB) who has recently purchased plant in Hornby would get in on the act and might not put New Zealand barley in their mix. We should fear the Australians and trust Ravensdown was the message. But hold on...up until last week Rodney said it was the Australians that were adding a third commodity group to the Ravensdown market in arable farming, so who should we fear here?

In reality Ravensdown is all PR fluff. Nothing has changed. If the PKE barley market is a goer what's to stop RD1 getting on board anyway? The fact that they're not doing the same thing proves that there is room for doubt as to whether dairy farmers will really buy the more expensive supplement.

Yet again Ravensdown have misjudged the feeling in the arable sector. They should not be in the PKE market at all and no amount of wing preening by Rodney Green will change that.

Going cheap...take as much palm kernel as you want says Ravensdown rep...

Scene: Lincoln Field Days 2009

Setting: Inside Ravensdown tent a drum of brown mush indispersed with as many specks of grain as you can count on your fingers.

What Ravensdown calls it: Dairy Hi-Carb

What they proclaim: This palm kernel mix is 'awesum' for both the dairy and arable industry because it helps both industries by giving the dairy farmer a cheap break (never mind the proven poor animal nutrition of the stuff) and the arable farmer a chance to pull out a handful of grain from his silo - therefore helping both shareholders.

What Ravensdown rep said: "You can have as much of this as you want."

What arable farmers said: "I actually came here to buy fertliser. I see you don't have any so I'll just pop along to the Ballance tent shall I?"

Ravensdown CEO Rodney Green insults arable/horticulture farmers in further slight to the sector

Well for those of you that put on a good $100 000 grand plus of Ravensdown fertiliser each year, of which there are many in Canterbury, you can be assured that your 'friendly' farming co-operative does not value your business at all.

In fact you don't exist...but you already knew that when they decided to ignore the sector and enter the palm kernel market.

But yesterday in the New Zealand Farmer's Weekly what we all knew was confirmed when Ravensdown chief executive Rodney Green ignored the presence of a New Zealand arable sector.

"Thank goodness for Western Australia," he brayed, when talking about the purchase of United Farmers last year, because being nearly all arable farming it apparently brought in a third commodity group to the co-operative, behind dairying and the sheep/beef sector.

Hello Rodders...time to come investigate all the huge spud, onion, processed vegetable, cereal and specialist seed operations that prop up your balance sheet each year because apparently you don't think they exist.

In fact you told Alan Williams that in recent years Ravensdown business has changed from its traditional sheep and beef farmer base to a broadly 50/50 split between sheep/beef and dairying. There was no mention of the arable/horticulture sector.

What an insult and it shows why the arable sector shareholding is being largely ignored by the co-operative. Why on earth do we persist with a co-operative when they do not even value or acknowledge our business?

I know of another fertiliser business that is only too keen to pick us up. May-be it's only when we pull out all the tonnages we put through that Ravensdown and Rodney Green might notice the hole in the balance sheet we were filling.

Ravensdown defending involvement in animal nutrition market

Too little...too late.

After recent criticism (Farmgirl being among them) Ravensdown have decided to bring out the PR swagger Kings to persuade arable farmers that their involvement in the animal nutrition market (namely the palm kernel market) is actually good for them.

And I expect they will do a magnificent job of sugar coating what is still a kick in the teeth to their cropping farmers, but they forget one thing, and that is while they spin it anyway they like there is still no way that any palm kernel sold from Ravensdown benefits a substantial number of its shareholders.

Regardless of the waffle they express about how it is encouraging some North Island farmers to add grain as well as palm kernel to their mixes and how they are actually trying to help our industry, it does not disguise the fact that they should not be in that market in the first place.

As I've said before Ravensdown is a farming co-operative. It is not there for dairy farmers alone, sheep farmers alone or cropping farmers alone. All we ask is that we have fertiliser at decent prices and leave the animal nutrition market alone.

So it is with trepidation that we will attend the meeting with the big guns on the 7th April. I'm sure, as happened the last time I posted on this matter, that I will have some anonymous poor comments again from directors and those trying to protect their own jobs but I do it for a valid reason - in the name of trying to achieve fairness across the board and keep the co-operative honest.

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.