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Farmlands Annual Report 2024
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Farmlands Annual Report 2024
CONTENTS
Our results reflect a challenging operating environment where our farmers and growers have been combating significant economic headwinds. Our Annual Report demonstrates how we are advancing our strategy to enable us to support you through times just like these.
We’re committed to delivering on our core role – providing you better pricing – through efficient and centralised operations, smarter ways of meeting your needs, a more efficient supply chain for critical inputs and selling more to a broader group of lifestyle customers for scale and profit. This, and all the other things we’re doing to improve profitability and productivity for farmers and growers, will ensure your co-op will be here for you well into the future.
I’m pleased to present our 2024 Annual Report. Make no bones about it, 2024 has been a tough year for everyone – you, our Farmlands shareholders, and us as your rural supplies co-op. We’ve seen the conditions you face reflected directly back into the Farmlands business. Many other agriculturally-aligned businesses both in New Zealand and globally are experiencing similar issues post-COVID.
In times of choppy waters, having a clear plan is crucial. What worked in the past may not be right for the future. Farmlands has spent the past 24 months developing and refining the plan and our team, to ensure the business remains relevant.
We’ve made significant progress with many big-ticket items started or completed over the past year. Examples include the purchase of SealesWinslow, the bedding in of Fern Energy – our 50:50 energy partnership with Southfuels and now the biggest provider of fuel in rural NZ – the launch of FarmlandsPRO, and the launch of our Southland regional hub. This year, we also opened our regional horticulture hub in Hawke’s Bay. We’re being proactive, ensuring we are ready to meet your needs.
Our efforts focus on offering excellent products and services at attractive prices. We understand the cost squeeze in New Zealand agriculture. While there are positive signs in dairy payouts and beef pricing, horticulture post cyclone Gabrielle remains challenged in Hawke’s Bay, and sheep meat pricing is subdued.
Markets are dynamic. Overseas consumers are also feeling the cost squeeze, opting for cheaper products like Brazilian beef and Australian lamb in China, and domestically-grown fruit in Europe. However, there is a distinct group of recession-proof consumers globally who value sustainability, biodiversity, CO2e minimisation, water quality, animal welfare, and community well-being. This is an opportunity for New Zealand to carve out a niche among these consumers.
Interest rates are finally relaxing, and cost increases have plateaued. Hopefully, the storm of the past 36 months is abating.
The Farmlands leadership team and Board are committed to key success factors. Dawn Sangster and Gray Baldwin were re-elected to the Board for their final term. In 2025, Chris Dennison will retire, and we’ll need a new Director, so consider standing. We welcomed Jenna Smith as our Board observer, a non-paid 18-month appointment to expose future board members to governance issues at scale. Jenna is completing a Nuffield scholarship, and farms in the Waikato.
There have been many changes in Farmlands over the last 12 months and I know you will be seeing the benefits. Change is never easy; it is necessary for growth and relevance. With your trust and support, Farmlands will continue to enhance your profitability and productivity.
While our methods and products may evolve, our goal of being “the go-to for everyone connected to our land” has remained constant for 65 years. At Farmlands, we intend to continue being just that.
Ngā mihi nui
ROB HEWETT
Chair
We mourned the loss of Farmlands Board Director Dr. Warren Parker in late 2023 – a significant loss for his family and Farmlands.
Warren led at Manaaki Whenua – Landcare Research, Scion and held board roles at Pāmu and Farmlands. His dedication to conservation was clear in his work with Predator Free 2050 and his leadership in forestry and conservation groups.
In October, we welcomed new Independent Director Mark O’Donnell. Mark’s been CEO of Rockit Global Ltd for four years and is an experienced Director and Senior Executive in the primary, technology, FMCG and manufacturing sectors. We also welcomed the re-election of Dawn Sangster and Gray Baldwin to the Board.
Welcome to the 2024 Annual Report. Despite a challenging trading environment, we continue to gain strength as we deliver on our strategy to improve our business. Our co-op has made great strides, focusing on efficiency and cost reduction to benefit you and the rural sector. We’re doing the hard work now, so as things improve, we’re ready to better support you.
You might wonder when you’ll see the benefits of our innovations. Our transformation is moving rapidly towards efficiency and cost reduction, so we can do better for you by making buying and our supply chain our “superpowers”.
This year, we ramped up our direct-to-farm solution and centralised buying. The successful rollout of our range improved our working capital, freeing up funds for other key initiatives. We tested a group of direct-sourced products, which sold quickly at great prices. We also sold more clearance stock than expected, reducing planned write-offs. Thanks for your support – I hope you got some great bargains!
These shifts may have had a short-term impact on your experience, while disruptive at the time, they now have us heading in the right direction. Improved supply chain processes have led to better stock availability and positive customer feedback. They also enable us to move into a stage of planning for more direct sourced product, bringing benefits to you. Our supply chain transformation is now supercharged by our farmer-focused self-service order tool, FarmlandsPRO, making it easier to do business with us and offering on-farm inputs at the best prices.
We’ve improved product availability to nearly 95%, benefiting both suppliers and customers. Our renewed focus on horticulture ensures we meet growers’ needs. We’ve also increased the value of our Card with the new Farmlands Card app, making it easier to find savings, rebates and special offers.
We bought SealesWinslow from Ballance, a win for everyone. Farmlands was the right buyer, and working with Ballance, we have kept the business in New Zealand co-operative ownership. We’re seeing efficiency gains from a national network of mills, with growth in volumes, as products move to SealesWinslow manufacturing facilities, leveraging our scale and providing a real return on investment.
Internally, we’ve worked hard to right-size our operations to minimise costs. Our supply chain changes are saving money, with inventory reduction playing a key role in delivering $22m inflow of cash from operations, a $27m improvement from last year. We’ve held operating costs stable and even reduced some as a percentage of sales. Tight cost control is key in a low-margin business. We’ve focused on lowering cost-to-serve for the last couple of years, and I’m proud we’ve achieved it, even in an inflationary environment, while also increasing investment in our people.
Not everyone in the industry has managed to hold earnings and reduce costs during tough economic times. We’ve also increased rural supplies rebates by over 10%. While sales are down, rebates to you are up.
As greater value starts to show up for you, remember we’re unique in the sector. As a co-op we can consciously make decisions focused on delivering value to you now, while also setting the co-op up for long-term success. You will see that this has impacted our short-term financial performance. As your farmer-owned co-op, we’re in it with you, doing everything to give you what you need, when and how you need it, while building for the future.
Ngā mihi nui
TANYA HOUGHTON
Chief Executive Officer
Despite a tough operating environment and reduced revenue, we’ve given more in rebates back to you.
Our annual turnover and revenue decreased compared to the previous year, reflective of our farmers and growers carefully managing spending in challenging market conditions – which is to be expected. Our income statement shows an improvement in gross profit; this is masked by the $20.8m stock provision included in our FY23 financial result and released in FY24 with the true underlying gross profit down on the prior year in line with the sales decrease.
A tax expense of $12.3m inflated our net loss, which is explained in detail in the financial section. Our $27m improvement in operating cash flow reflects hard work across the co-op to control costs and carefully manage inventory.
Read our full financial summary section here.
Our 50% owned joint-venture Fern Energy continues to grow and is the largest supplier of bulk fuel into rural Aotearoa.
All of our customer, people and community initiatives are detailed throughout our annual report.
After more than 60 years on the job, our commitment to New Zealand farmers and growers is unchanging. Our efforts to lower prices and boost rebates are paying off, better operations and inventory management have improved our financial position, and buying SealesWinslow opens up great growth opportunities.
To enable improved profitability and productivity for NZ farmers and growers
To be the go-to for everyone connected to our land
Right now, we’re focused on the basics – doing a great job for farmer and grower customers and winning more business from you. You need a strong Kiwi-owned co-operative focused on driving down input costs across the market and we know this is our role.
Making savings through greater operational efficiency is only a small part of our roadmap to success. We’re strengthening our business and using our scale – as you reward us with greater market share, we can do even more.
We’ve continued our three-year supply chain transformation and after year two, are seeing significant organisational and customer benefits.
The right product range – concentrating buying power – leads to price reductions.
In less than 12 months, we completed a business-wide range reset and roll-out to ensure we can meet the widest range of customer needs, while also providing us maximum buying power to support better pricing.
Lastly, due to range rationalisation, we had non–ranged product to clear. We offered customers great bargains across $20m in non–ranged / redundant stock. In FY23, we set aside an inventory provision to clear old stock after our supply chain range review revealed excess inventory. Over the last 12 months, we ran clearance sales on this stock, using the provision to cover potential losses. In the end, we sold significantly more than we expected, reducing the need for write-offs. Thanks for your support over this time!
We now have the processes and discipline in place to ensure we don’t end up with too much capital tied up in redundant stock again – a good thing for cash flow.
Optimising Farmlands’ supply chain is all about understanding customer needs and streamlining product delivery from suppliers to meet it - staying true to our roots as a buying co-operative. A great example is calf nutrition where we work closely with our sales teams infield and in branches to understand demand. We plan to supply ahead of demand and align our supply and production teams to ensure the right product is available when required on farm or in our branches.
We are always looking at how we can better source essential rural supplies with greater efficiency and at the best price, while continuing to deliver quality products. Direct sourcing means working directly with manufacturers either in New Zealand or overseas – reducing the number of businesses in the supply chain overall.
We successfully tested our ability to direct-source effectively – with pigtails and Farmlands-branded buckets. We learned that we could fill gaps in our supply capability, land products at a lower cost, provide our customers with greater choice and secure more competitive pricing.
AgStar is our first own-label range of affordable, direct-sourced agricultural chemicals, aimed at providing customers more choice and a better price. By removing third party suppliers we can give you more options for cost-effective crop protection solutions.
With much improved buying disciplines in place, the second key part of our transformation programme is aimed at improving our product distribution model.
In the coming year, we will:
Our Digital Farmer pilot (announced last year) has now been developed into an extensive rural supplies ordering and management solution called FarmlandsPRO.
Launched in June (at FieldaysNZ), FarmlandsPRO is an indispensable self-service tool for farmers and growers, as well as a service support solution to support our sales team and technical experts to better support their customers.
It also means that we have more time to discuss the big stuff on-farm when we visit, rather than focusing on processing orders. FarmlandsPRO is not about replacing TFOs and their support, it’s about freeing up our team to offer you more value and expert advice. To focus, with you, on productivity.
Important updates to the app will be available across the next few months, adding new personalised functionality, such as being able to request quotes and create and manage sales agreements, as we work towards the release of FarmlandsPRO 2.0 in 2025.
Download FarmlandsPRO now and see how it could help you and your business.
In January 2024, Andre Scheepers joined us as Chief Digital Officer, building the digital capabilities of the co-op.
Improving our digital capabilities is crucial for transforming our supply chain. Using real-time data and tools like FarmlandsPRO helps us build a more efficient co-op that serves farmers and growers at a lower cost.
Fern Energy, half-owned by Farmlands, has become the leading bulk fuel provider for the rural sector by offering better-value fuel solutions to our customers. Fern has generated over $647.4 million in revenue, $3.3m in Farmlands profit and a $2.75m Farmlands share of dividends – a significant increase from last year. This growth reflects more farmers and growers choosing to pay for their on-farm fuel through their Farmlands account – recognising the benefits of supporting a business they part-own.
Farmlands and Fern are working closely together to provide a strong fuel offer, alongside the other key inputs we provide. An example is our partnership with milk processor, Olam Food Ingredients (OFI). Many of OFI’s dairy farmers are also Farmlands shareholders, so they benefit twice by buying bulk fuel from Fern. They get a great price, and profits flow back into Farmlands, supporting their co-op’s ability to offer them better prices for their rural supplies. This partnership has helped fuel Fern’s expansion in the Waikato, where sales have increased by 36%.
Fern’s reach also extends to supporting rural communities in other ways, like the “Fuel for Schools” programme, which helps fund local schools, with $341,430 donated in the last 12 months. As Fern continues to grow and improve efficiency, its compelling offer will continue to expand its market share, bringing even greater value to rural communities.
For Farmlands shareholders, one of the biggest benefits is convenience. You can add your fuel costs to your existing Farmlands account, streamlining your purchases into one simple bill. Just call Fern at 0800 99 99 89, and they’ll handle everything for you.
Animal nutrition is our largest product category, and is essential for most customers. The industry is noticing our efforts, with positive momentum and collaboration from experts in animal nutrition.
In June, we acquired ruminant animal nutrition feed manufacturer, SealesWinslow, from Ballance Agri-Nutrients, creating New Zealand’s largest co-operative-owned animal nutrition business. Both co-ops agreed it was the right sale to the right buyer, at the right time, done fairly after we completed a comprehensive review of the business and saw just how well it stacked up financially and strategically. The main thing is that it kept an important part of the food production supply-chain within the ownership of Kiwi farmers.
SealesWinslow traded as part of Farmlands for the final month of the financial year. By now covering the entire nutrition value chain across the widest possible range of products, we’ll be able to adapt to changing customer needs and trends, providing diversification benefits that help keep our co-op strong.
From July 2023, customers were able to recycle empty NRM, McMillan and Reliance small plastic feed and seed bags at selected Farmlands stores through the Agrecovery Small Plastic Bags Stewardship Scheme.
SealesWinslow also joined, with their Calf Max 20kg and non-medicated 25kg bags now featuring the Agrecovery logo. In September 2023, Milligans Feeds signed up with Agrecovery so alongside our own brands NRM, McMillan and Reliance, the majority of our bagged feed products are now eligible for recycling.
We’re working to improve several areas so that we’re easier to do business with.
Previously, we managed magnesium demand by bulk ordering and storing it across New Zealand. In early 2024, we introduced direct-from-port-to-farm delivery with committed customer volumes. This new method resulted in a 72% uptake in direct-to-farm delivery.
Over time, this model will improve efficiency and lower costs. With FarmlandsPRO, you’ll soon be able to easily place and track more kinds of orders that can move directly from port to farm – meaning even lower costs to you.
This all adds up to more savings passed back to our farmers and growers.
We’ve been on a mission to revamp our retail operations and better support our teams nationwide. Our retail teams understand our vision and purpose and know how they contribute to improving the profitability and productivity of farmers and growers.
This effort is part of our business-wide focus over the year – to lay solid foundations within the business to ultimately deliver benefits to our farmers, growers and other retail customers.
Collaborating with our Learning & Development team, we’ve created new training opportunities to enhance our teams’ capabilities, and already our retail teams are engaged and appreciative.
Our Retail Level 3 and 4 certificates for store teams through the Retail Apprenticeship programme, has led to 100 team-member graduates who now have improved customer service and operational skills. In September, we celebrated the 62 graduates of our first-ever intake of the Retail Nutrition Champ Course. Through the five-month course a great deal of content was covered across a wide range of animal species.
Another major focus is on making customer transactions smoother and faster. We’ve improved processes to ensure customers can check-out quickly and get the information they need without hassles.
FarmlandsPRO is part of a larger strategy to make Farmlands more farmer-focused and to reduce service costs.
In the coming months, we’ll be organising and improving how we manage customer data to deliver more value. This is about understanding what each of our farmers and growers (and other customer groups) need from us and how they want to work with us. Ultimately, to make it easier to do business with us, through the right digital ecosystem – integrating data, engagement and shopping channels and customer need.
Our new digital capabilities aren’t about replacing our expert teams – they’re enabling them to spend more time with our customers, talking through their unique requirements and providing insights and ideas as needed.
We wanted to support our Hawke’s Bay customers, who are busy building their businesses back stronger after Cyclone Gabrielle, with a strong horticulture offer in this key region. Our existing site in Hastings was no longer fit for purpose, and we opened our new Farmlands Horticulture Hub which is already providing local support and expertise tailored to the unique needs of Hawke’s Bay horticulturalists. It’s a place for growers to get advice, a base for our Technical Advisers, and a distribution centre for agri-chemicals and horticulture products. We are receiving really positive feedback about our renewed presence in the region.
We’ve expanded our national horticulture team by eight new members since August. This investment boosts our capabilities and is already showing results. We are working more closely with citrus producers in the far-north, the glasshouse growing sector in Auckland, and horticulture producers in Canterbury – as conversion in the region grows.
We’re also nurturing the next generation of horticulture experts with the launch of a pilot internship programme for three interns for six weeks in regions like Bay of Plenty and Nelson/Marlborough, who shadowed our Technical Advisors and worked in-store. They provided valuable feedback on transitioning university students into technical advisor roles.
Building on this success, we’re extending the internship to 10 weeks, inviting a new batch of second-year students from Massey and Lincoln universities.
Our team of 11 Farmlands agronomists have been hard at work, laying down important foundations to enhance how we serve our customers. By collaborating closely with Farmlands TFOs nationwide, we provide seed options and advanced chemical solutions on-farm, designed to maximize yields. Our team also offers the latest advice on soil, fertiliser, crop, pasture and farm systems, including weed, pest and disease control.
This year, we’ve expanded our agronomy team and intensified our training efforts to keep up with the demands of New Zealand’s ag sector, through a new programme called AgronoME This initiative has significantly boosted our team’s expertise, allowing us to better support our agronomy customers.
Our technical experts’ advice and support are vital in helping farmers and growers adapt to changing economic and environmental conditions. We’ve organized two major training events to align with the key autumn and spring growing seasons. These sessions provided an excellent opportunity for our team to upskill and refresh their knowledge within various climatic regions like Taupo, Hawke’s Bay, Taranaki-Manawatu, Canterbury, Otago, the West Coast and Southland, where we worked alongside our suppliers to deliver comprehensive training covering all farm systems.
We introduced the ‘Shareholders Series’ discussion groups to address specific issues and deepen the knowledge we bring to our customers. The first session in North Canterbury focused on the do’s and don’ts of lucerne and dryland pastures, while the second series in the North Island tackled Californian thistle control, the benefits of fertiliser for spring, and summer crop options.
Another significant milestone was the launch of AgStar, a wide range of products that fit any system, further enhancing our offering. For the spring season, we’ve been encouraging customers to boost their balance by offering Mitre 10 rewards when they order their fertiliser with Ballance fertiliser, adding even more value to their purchases.
We use our Voice of Customer programme to help us understand customer satisfaction and gather valuable feedback. Our Over the Fence panel of over 1,300 shareholders is a vital source of regular feedback. We are regularly connecting with these groups to ensure customer feedback is being used to inform our decision-making.
Our Net Promoter Score (NPS), which reflects how strongly our customers support our business, increased from 38 to 42. It has continued to move upwards in the new year – achieving 50 in September 2024. Customers are starting to see the benefits of our strategy – for example we’ve seen a positive shift in customers being able to find the products they need in-store.
Our Customer team at Farmlands has been working hard to enhance the service and support we offer, aiming to make it easy for all our customers to do business with us. We’re making progress and already seeing improvements. Despite having a smaller team, we’ve achieved a 12% increase in our ability to resolve customer queries during the first conversation.
This year, we completed the introduction of a new process so customers can easily set up PINs for their Cards in-store. This gives you better security and a smoother experience.
It’s vitally important that all Farmlands Card users have a PIN on their card. This is for your safety and security. If you haven’t done this yet, please visit your nearest Farmlands store with your Card and ask to set your PIN. Please bring proof of identity with you – your New Zealand Driver’s License, passport or firearms license.
Creating casual customer sales growth, with a strong focus on nutrition, is very important. To achieve this, we launched Farmlands Community at the end of 2023, aiming to build closer relationships with casual customers and encourage them to shop more regularly. This initiative has been successful, with over 28,000 sign-ups by August 2024. Casual customers boost our buying power – supporting our ability to offer better value to farmers and growers.
The Card is coming into its own. With a record $1.4b in revenue with our partners, nearly $50m in customer rebates and over 6.2m Card transactions expected this year, it’s no surprise that 90% of shareholder accounts actively use their Card.
Partnering with companies like Briscoes to accept Farmlands Card online has boosted convenience and online transactions. Watch as we will be introducing more online partners in the coming months. We’ve enhanced Card security by allowing in-store PIN setup and are exploring next-gen security solutions.
Our relationships with strategic Partners such as FMG, Spark and Meridian mean that we can offer a comprehensive set of solutions that meet the key needs of farmers and their businesses. By collaborating closely with our Partners, we help rural businesses connect with key inputs and services like telecommunications, power and insurance – basically a one-stop package of the essentials for running a successful rural business.
Launching the new Farmlands Card app at FieldaysNZ was all about making it easier for you to use the Card. The app helps you find nearby Card Partners, access savings, rebates, exclusive offers and manage Card security from your phones.
More features are on the way, like the ability to see transaction histories, and touchless technology options.
If you’re not already saving time and money, download the Card app now and see how easy it is to use.
Our broader Card strategy remains focused on driving better offers and rebates from our Card Partners and continuing to ensure our Card provides a safe and secure shopping experience for our customers.
Our long-term partnership with The New Zealand Rural Leadership Trust (Rural Leaders) has been strengthened. We’ve worked together to build strong leadership in our food and fibre sector, with the skills, networks and confidence to tackle big changes in the sector.
We’ve been the Foundation Sponsor of the Century Farms awards for 19 years, celebrating multi-generational farming families who’ve shaped New Zealand’s agricultural heritage.
Farmlands sponsored the “People’s Choice Award” for Rural Life’s “Year of the Farmer 2023,” a campaign by the Otago Daily Times celebrating South Island farmers, and are continuing to sponsor this positive initiative to promote positive farming stories in 2024.
In June, we held our award-winning rural governance leadership programme To The Core with Silver Fern Farms Cooperative and LIC. The goal was to highlight the importance of governance roles in our co-operatives.
In addition, we have supported well over 100 community organisations and events through our store-level sponsorship programme and Tag Your Charity fundraising drive.
We want to show up where you are, our farmers and growers.
Tanya, members of the board and key Executives have met with several hundred customers in local communities from Te Puke to Southland, to hear what is important to them and keep them informed about how their co-op is becoming more efficient and easier to do business with.
We attend key Field Days events around the country as a way to connect with you and deliver great customer experiences. We’ve created spaces for customers and their families to relax, chat over coffee and snacks, ask questions and learn more about us. Most of our community sponsorship funding supports regional and store teams through backing local initiatives, events, clubs and organisations.
We introduced our first ‘Farmlands Village’ at National Fieldays 2024, showcasing FarmlandsPRO and the Farmlands Card app. We also returned to the NZ Agricultural Show in November, winning three awards: ‘Best Rural Trade Exhibitor,’ ‘Best Presented Site,’ and ‘Trade Exhibitor of the Year 2023.’
Hundreds attended ‘The Calf Experts’ roadshow sessions on calf-related topics, from colostrum to nutrition and health. We also held educational evenings for horse-owners, showcasing our equine products and services.
Farmlands will be attending upcoming events in 2025, to engage with farmers and growers and help them to get more from their co-operative.
At Farmlands, sustainability is a priority, and we take our environmental, social and governance responsibilities seriously.
Click below to find out more about our progress towards being a sustainable business.
At Farmlands, we aim to be a great place to work, even when times are tough. We’ve ramped up our investment in training, put a stronger focus on safety and wellbeing and boosted pay to recognise and reward our talented Farmlanders.
We’re committed to growing our own experts. By developing our teams, we’re enhancing the technical knowledge and skills within each area of the business. This is improving the advice and service we offer our customers and making a positive impact in our communities.
In 2023, we kicked off the AgronoME programme, a 12-month journey to train aspiring agronomists. With guidance from experienced agronomists, participants get hands-on workshops, in-field coaching and supplier accreditation. Programmes like AgronoME help us expand our team’s knowledge, provide clear career paths and increase our pool of specialists for our customers – and for the industry in general.
We’ve also launched Cultivate, a technical training pathway for our Technical Field Officers (TFOs). This programme, in collaboration with Primary ITO, leads to a Rural Services Level 4 certificate and is designed for both new and experienced team members. Cultivate is another part of how we’re working to grow technical expertise.
We’ve focused on making sure everyone enjoys working at Farmlands. With a host of new learning opportunities, we’re becoming a learning-centric organisation that values professional development. Here are some of the initiatives we’ve introduced to keep our team motivated and growing:
With 72% of our teams living and working in rural or regional communities, our goal is to retain and grow people passionate about rural Aotearoa. To support this, we’ve revamped our careers website and LinkedIn presence, and strengthened university relationships to encourage the growth of an agricultural and horticultural graduate pipeline.
We’ve also improved our internal recognition and performance programme. Shout-outs allow Farmlanders to recognise efforts and accomplishments across all business units, encouraging everyone to live our purpose and foster positive engagement and acknowledgement.
The health, safety and wellbeing of our team members and customers remain our top priority. We’re committed to making health, safety and wellbeing an integral part of everything we do, with everyone actively doing their part.
In February, we launched I Am Here, a global mental health movement with 850,000 members worldwide. The aim is to provide mental health and wellbeing training and resources for everyone at Farmlands, helping us look after ourselves, each other, our families, and our communities. Nearly 250 Farmlanders have already taken advantage of this training.
To build a culture where safety reporting is second nature and safety leadership is proactive, we launched a comprehensive safety reporting system in June. ecoPortal, the new platform, is easy to use, accessible from any device anywhere in New Zealand and has increased reporting activity and engagement.
We ended the year with a total recordable injury frequency rate (TRIFR) of 14. This was on par with last year, which was a positive result when considered alongside an increase in health and safety reporting.
Our turnover was $2.5 billion, a reduction of $78m, largely accounted for by a decrease in revenue from $808.5m to $740.3m, resulting from challenging market conditions in the agriculture sector.
Total gross profit increased by $11.8m compared to last year; however, correcting for the impact of the inventory provision across both years, gross profit would be $154.7m in FY24 versus $167.8m in FY23 with the movement aligned to the decrease in sales.
Operating expenses reduced by $7.3m despite inflation, delivered through improved operating efficiency and reducing discretionary costs. We achieved this without compromising on our commitment to look after our people and dedication to retaining and developing our skilled teams.
We have delivered an operating EBITDA of $20.4m, up $19.2m from FY23. Removing the impact of the inventory provision results in the true year-on-year movement as a profit reduction of $5.8m.
The stock clearance programme has boosted inventory health and also contributed to improved working capital of $15m. We’ve retained an inventory provision of $6.3m which will be used in FY25 as we complete the inventory clearance process.
Our pre-tax loss of $2m has improved by $25.6m from the previous year, largely due to the recognition of the inventory provision in the previous year and the profit gained on acquisition of the SealesWinslow business.
The net loss after tax of $14.3m is due to a tax expense of $12.3m resulting from an adjustment to previously-recognised tax losses and the timing impact of our inventory provision. These tax losses have arisen primarily through the accelerated depreciation relating to the implementation of our D365 Enterprise Resource Planning system created a timing difference between our accounting and tax profits. Although the business remains confident that tax losses will be utilised in future periods, we have taken a conservative approach and de-recognised tax losses purely for financial reporting purposes. It is important to note that this has no impact on our ability to benefit from historical tax losses to offset against future profits.
The early and hard work we’ve put in towards controlling our costs and inventory is paying off as we’re now generating more cash from our day-to-day operations, which is a good sign of financial health and efficiency. Cash from operating activities generated a net inflow of $22m this financial year compared to a net outflow of $5.1m in FY23, a $27.1m year-on-year improvement.
The SealesWinslow purchase was a strategic investment reflecting another way that we’re showing up for New Zealand farmers and growers. Acquiring SealesWinslow was an unmissable opportunity, and the price we paid reflected a mutual desire to keep SealesWinslow within New Zealand co-operative ownership, while offering us national scale and efficiencies. The investment was financed through our banking syndicate which saw the introduction of Rabobank, in addition to our existing banker ASB, to fund the acquisition. We have recognised a $5.9m increase in the value of the net assets acquired based on an independent valuation, further strengthening our balance sheet. The acquisition accounting for SealesWinslow is currently provisional with additional work to be done to finalise the fair value of buildings.
Our 50% investment in Fern Energy continues to be beneficial and cements the decision to consolidate the Farmlands Fuel and Southfuels businesses. Revenue growth and increased profitability delivered a share of profit of $3.3m with a dividend of $2.75m and we anticipate dividends increasing as Fern continues to grow. Fern Energy is the largest supplier of bulk fuel into rural New Zealand.
Shareholders benefited from $92m in upfront rebates and discounts across both our Farmlands Card and our rural supplies business, an increase of $1.4m vs the prior year despite lower revenues, illustrating our commitment to supporting farmers and growers during tough times by delivering the very best ultimate price for our customers.
Click below to view this year’s full Financial Statements.
As we’ve shared throughout this report, we’re very focused on reducing input prices and increasing value to our farmers and growers, as well as investing to strengthen Farmlands as your co-op – with our strength matched by a strong balance sheet.
We finalised an Equity Policy in September 2024 that offers shareholders guidance on the financial conditions under which Farmlands will consider paying a distribution to shareholders in the future.
We know asking shareholders for more capital isn’t the answer. Our strategy is to strengthen Farmlands’ balance sheet through retained earnings.
We’ve explored various models to ensure the co-operative’s longevity, ensuring sustainability over the next 60 years and beyond. As a co-op we have limited options to fund growth – these include borrowing, capital raising from shareholders and re-investing our earnings back into the co-op. Our goal is to retain profits to strengthen the balance sheet enabling us to make future investments that benefit your business.
| Equity Ratio | Distribution | Shares | Cash |
| Below 30% | 0% | n/a | n/a |
| 30-35% | 25% | 60% | 40% |
| 35-40% | 35% | 50% | 50% |
| 40-50% | 50% | 40% | 60% |
| Above 50% | Board discretion applied | ||
We fully expect to be profit-making again in the future and want to be responsible in the way that is distributed.
Farmlands has been working alongside farmers and growers for over 60 years.
We’ve faced challenges this year and expect more ahead. We have the right strategy and are committed to delivering it with your help. Our top priority this year is to ensure last year’s work translates into a better customer experience, with lower operating costs leading to lower on-farm prices.
We’re focusing on several key areas:
First, we’re improving product distribution by opening new distribution centres in Christchurch and Hamilton, a second regional hub, a Hastings retail and bulk store, and a new branch in New Plymouth. These will help us to offer better prices, products and stock availability, reduce costs and protect you from supply disruptions.
With a dedicated transport team, we’re enhancing logistics by leveraging our fleet assets and increasing utilisation. We’ve also updated FarmlandsPRO with new features like seed ordering. Our goal is for FarmlandsPRO to offer the best value on key inputs through the most cost-effective channel, lowering costs and passing on savings to you.
We’re enhancing the Card app to access more offers, rebates and Partner benefits. Strengthening relationships with key partners will mean more opportunities to use your Farmlands Card at more merchants, benefiting our co-op.
To appeal to lifestyle customers, we’re offering knowledgeable in-store teams and the right products at the right price. Our revamped e-commerce site for lifestyle customers launches in November.
We’ll maximise the SealesWinslow nutrition business, making the best use of our expanded national footprint. Diversification is key, catering to different markets with tailored products, increasing efficiency and resilience, and lowering the price per tonne. Our goal is to bring the best-value nutrition solutions to our farmers.
We’re also rebuilding our team’s skills by growing the experts you rely on for advice. Improving our operations is another focus, developing better rhythms to reduce our cost to serve. Serving more customers helps us leverage our underlying costs better.
In the next 12 months, you’ll start to see the benefits of our work. Thanks for your trust and support as we continue to improve the ways we support the profitability and productivity of NZ farmers and growers.
