Welcome

Kia ora - welcome to Te Whenua Tāroa Farmlands 2023 Annual Report.

Our annual report aims to provide our almost 80,000 shareholders with key information about our 2023 achievements as we deliver on our vision of being the number one buying group for Kiwi farmers and growers.

Achieving this vision relies on us listening to your ideas and feedback, changing how we do things to be a better co-operative, and building on the foundations built over 60 years of working alongside you.

Kia ora

I’m pleased to present our 2023 Farmlands Annual Report. I hope you’ll agree this is an honest and open take on the very challenging operating environment that you, as Kiwi farmers and growers, are in – and that we feel the impacts of in your buying behaviour.

I want to specifically mention Cyclone Gabrielle and how hard-hit many North Island communities were. I’m immensely proud of how Farmlands, supported by our customers, stood up during this time.

It’s been a year of ups and downs in global food and fibre markets. In the USA, a one-in-1200-year drought led to a surge in supply of grinder beef, while the Chinese market continues to pick up post-COVID, though not as quickly as we hoped, and Europe is grappling with cost-of-living challenges and a war, which continue to keep their demand flat.

At home, the economic climate has been tough for our farmers and growers, driven by high levels of inflation and the broader state of New Zealand’s agricultural sector, with lowered farm-gate prices and increased legislation on its way. These factors have cast a shadow over our financial performance.

The upside is that New Zealand continues to stand out because of our consistent dedication to producing exceptional grass-fed proteins, world-leading fibre, wine and fruit and a range of other great products. We’re trying not to get caught up in the race to the bottom for commodity pricing. Instead, the customers and consumers of the products you produce on your farm (using Farmlands inputs) are increasingly valuing the added benefits of verifiable measurement of farm production metrics and improvements in on-farm sustainability, animal welfare and preservation of biodiversity.

It’s now been two years since Tanya took the helm as our CEO and she has spent her time, with the support of the Board, building Farmlands’ resilience so we are best placed to manage our way through this environment.

Tanya and her team remain focused on the future and building Farmlands to be a very strong co-operative that’s well-positioned to support you. The recent announcement of plans to acquire SealesWinslow is an example of this future focus.

As a Board, we know that the transformation Tanya’s leading will include bumps along the way as new products, new supplier partnerships and new processes are bedded in.

We also know that there will be a market upturn, and that Farmlands will be better placed to be able to provide you with the essential inputs you need, at very competitive pricing, and be ready to grow when conditions improve.

Above all else, we’re here to back farmers and growers with the right products, expert advice and support, and to invest in all the rural and regional communities we’re part of.

Farmlands is an important part of a vital sector. New Zealand’s agricultural products reach consumers worldwide, from Dubai to London to New York, and it’s vital that we understand and cater to the needs of those responsible for producing them.

Transitioning to new ways of doing business can feel a bit like changing horses mid-race; it’s not always a smooth process.

We’re asking you to stick with us, because we continue to be here for you – and we know your success is what enables ours.

Ngā mihi nui
Rob Hewett, Chair

ROB HEWETT
Chair

Governance at Farmlands

Farmlands is governed by six elected shareholders and three independent Directors.
An explanation of how Farmlands is governed is available below.
Visit the Farmlands website for information and profiles on Board members.
CEO's Report

Kia ora

Firstly, I’d like to acknowledge the resilience and perseverance of our rural communities. This was so evident as we faced extreme adversity together this year.

New Zealand’s entire rural sector was floored by the sheer force of Cyclone Gabrielle. We continue to think about all those affected – our Farmlanders, shareholders, customers and the North Island communities who bore the brunt of this devastating cyclone. 

In response to this crisis, Farmlands got right alongside local farmers and growers by teaming up with Stuff and Federated Farmers to launch ‘Post Your Support’. This was a rallying cry to farmers, growers and all those connected to our land, enabling Farmlands to donate over $2.1 million to aid in rebuilding fences and growing structures across impacted regions. The idea behind the campaign was simple – kick off some swift action to enable faster recovery for farming and growing businesses.  

The last year has been extremely challenging for you all as you faced high interest rates, lower farm-gate prices, and increased compliance costs. How difficult the year has been and how quickly market conditions shifted is clear in our financial performance through the year. Up until Christmas, our planned growth trajectory continued building on the previous year as we had planned. We could see change coming and, like many of you, we had to move quickly to reduce spending and focus on the supply of critical rural supplies. On top of that, we then had to deal with the cyclone.

Part of our response has been the establishment of a smaller and more focussed Executive Team, a team of great people with the skills and commitment your co-op needs to build for the future. As we considered cost reductions, we diverted resources away from some future-focused projects where we could, ensuring investment could continue as planned in our core business and on-farm sales support to meet our customers needs.

At the same time, we continued to forge forward with transforming our supply chain and re-setting the core range of products that we sell. This multi-year programme of work is so incredibly important to our future and our ability to drive value as conditions improve, it’s an area that we cannot afford to slow down.  

We bedded in our new joint-venture fuel business, Fern Energy. Fern is an example of a smart partnership for the benefit of our customers. 50% owned by Farmlands means 50% of the profits of Fern flow back to support your co-op, ensuring your fuel purchases make a difference to how we can best support you and rural communities through Fuel for Schools. If you haven’t considered using Fern yet let me encourage you to do so, it’s easy and can be billed via your Farmlands account. You can contact Fern on 0800 99 99 89.

We’ve also worked to bring the manufacturing, ordering and external sales of our own nutrition brands together into one team to boost our presence in animal nutrition, as we plan to expand our nutrition business with the acquisition of SealesWinslow.

I’m the first to say that our financial results are not where any of us wants them to be. For the first half of the year, we were on-target against our plan and then the pressures we are all facing began to bite. We finished the year with a slight increase in revenue, while turnover remains relatively stable compared to last year. Some of the short-term investment required as part of our transformation, in the form of a required stock obsolescence provision, impacted our profitability.

Our result also includes profits made on the sale of our fuel business. We ended the year with a slight loss overall – which reflects one of the most challenging years in our sector in recent history.

Our focus now turns to the future as we continue to build Farmlands to partner alongside you as the number one buying group for Kiwi farmers and growers, ensuring we are all ready for when the cyclical nature of agriculture sees a swing upwards.

Ngā mihi nui
Tanya Houghton, Chief Executive

TANYA HOUGHTON
Chief Executive Officer

2023 performance highlights

2023 was a year where we needed to manage our way through an incredibly challenging environment to ensure we mitigated the long-term impact of the downturn.

Financials

$ 0 b
Turnover
$ 0 m
Revenue
$ 0 m
Net loss
$ 0 m
Shareholder rebates

Fern

$ 0 m
Fern revenue
$ 0 m
Dividend received

Customer

0
Shareholders
0 %
Increase in casual sales

People

0
Total recordable injury frequency rate
0
Weeks paid parental leave

Introduced rā whānau leave (paid birthday leave), kiwisaver and leave equity for returning parents, and financial support for Farmlands staff impacted by Cyclone Gabrielle

Community

$ 0 m
Raised for Post Your Support
0
Community charities supported
0 %
Reduction in carbon emissions against 2019 baseline

Financial statements

This year’s financial statements can be downloaded as a separate PDF.

Our reason for being

60 years of Farmlands

This year, we celebrated 60 years of Farmlands. That’s six decades of continuous support and investment in rural businesses and communities. We’ve been with you through thick and thin, and we’re gearing up for another 60 years’ of helping farmers and growers get it done. When you get down to it, our reason for being hasn’t changed over time – we remain 100 percent focused on being the very best rural supplies buying group for Kiwi farmers and growers.

Our Purpose

To be the go-to for everyone connected with our land

To be the number-one buying group for New Zealand farmers and growers

As mentioned above, everything that we do at Farmlands is focused on becoming the very best buying group for Kiwi farmers and growers – competitive pricing, the right products and advice, available at the right time. We can deliver on this promise while also supporting the needs of our lifestyle customers and attracting new customers to shop at Farmlands. We have made significant strides towards this within our business, keeping in mind the need to balance the needs of all customer groups.

Transforming our supply chain and product range

We are now into the second of a multi-year programme to reset everything around the products we sell – including how we buy and store product, as well as how we transport stock from our suppliers, through our network to you. It will result in considerable benefits for your co-op, and you as our customers and shareholders.

We have been rolling out our core range – a huge piece of work which sees us move from a state where we stock over 45,000 products to around 9,500 core products that account for the vast majority of our customers’ purchases. Rationalisation – while also supporting regional and seasonal requirements – dramatically improves our ability to forward-forecast, purchase the right volume, have stock available when required, negotiate the very best prices and direct source to improve margin.

Through our core range roll-out across our business we have seen a measured improvement in on-shelf product availability from around 60% to averaging over 90%. By improving our ability to manage our offers and products in stores, we have been able to introduce new ranges that are relevant and improve our offer in existing products for our customers.

  • Milwaukee power tools brand is an example of a new product range. They have a large range of rural-sector focused products – such as grease guns, trough pumps and fencing nail guns.
  • Blackhawk dog food, where we have now introduced a new everyday low-price offer.

We will have completed our core range roll-out across all stores by November 2023 and will see an increase in the benefits to customers over time as we improve the implementation of this new model across our network. Customers may have noticed an increase in clearance stock in some stores, as we reduce excess inventory as part of this process.

It’s also important to note that we will continue to support specialised local range requirements – considering regional and seasonal customer needs.

Launching All-In Deals

All-In Deals is a new way that we’re bringing to life co-op buying with market-beating prices across a range of products. Launched in January, it includes negotiating bulk-buy prices with our suppliers based on sale volumes. All customers that purchase the products get a lower price charged to their Farmlands account as more of the products are sold. The more we collectively buy the better off everyone is.

Our first All-In deals promotion was based on four key infrastructure products and the results gave us sufficient encouragement to continue with this initiative, even given the challenging economic climate we’re all operating in. Our second All-In Deals promotion, ran early in the new financial year, focused on a range of consumer products for farmers, growers and lifestyle customers. All-In Deals will be regularly offered in the coming year.

Our Farmlands Card strategy

We’ve seen an increase in the number of customers taking advantage of our Card offering, and now 90% of shareholder accounts are actively using their Card.

We are strengthening relationships with key Card Partners and will being able to announce some new and improved Card Partner deals and rebates early in the new year. The Farmlands Card is now widely accepted online – making it easier and more convenient for customers and we’ve seen a doubling of the number of online transactions.

We’re continuing to enhance the security and legislative compliance of our Card systems. With our new ability to set pins in-store and increased customer protection in relation to enforcing credit limits, customers can use their Cards with a greater sense of personal security. We have improved usability and inter-operability of our Card offer, including introducing enhanced real-time transaction monitoring, reporting and automatic invoicing for our Card Partners. Check out our Card Partner Directory below. You can save our Card Partner Directory to your phone to easily know where you can use your Farmlands Card. Find out how below.

Everyone’s welcome

We have begun to focus more on driving new retail and online customers to shop at Farmlands and this has been a growth area in the last year. We have seen a 15% increase in revenue from casual sales through a challenging year to generate $70 million in sales from non-shareholders all with strong margin.

Our retail stores in key lifestyle and provincial locations are the ‘front door’ of this strategy, and our new flagship store in Ashburton (which was launched in November 2022) has highlighted the potential growth opportunity in lifestyle and new retail customers.

Ashburton, our first new store in several years, has been designed to deliver to our core farmers and growers, while also providing a retail-centric customer experience for everyone. We have seen sales to casual customers more than double since the new store opened, and our shareholder customers often tell us they like the new format which offers new features like the dog wash.

Our online retail store is also an important channel for these customers, and we attracted 5,500 casual customers to our online store, buying primarily clothing and animal feed. We plan for this sale channel to grow to more than $10 million per annum in sales for Farmlands.

Connecting with our customers

Listening and understanding how our customers think, feel and act is central to how we learn and make decisions. Our Over the Fence panel, which now includes over 1,000 members, has become an invaluable resource for gathering insights, generating new business ideas and offering insights that have led to the development of new services like Digital Farmer. Combined with our Voice of Customer programme, we’ve received 3,600 survey responses providing feedback in the last year. Our teams are better-positioned and informed to create solutions in response to customer preferences.

We know our farmers and growers have choice as to where you purchase your essential rural supplies. We want you to know that everything we do is aimed at supporting your on-farm profitability.

Other customer groups, such as lifestyle and casual customers, are important to us as well. We look after these customers through great prices, expert advice and by having the stock they need in our retail and online stores.

We are upfront about the fact that the bulk of our time and resources is focused on better outcomes for farmers and growers. We focus on scale, excellent sales support and expertise, and product pricing and availability. We also focus on generating greater future shareholder returns for distribution and re-investment into areas (such as our planned acquisition of SealesWinslow) where we can improve our operations, our scale and, therefore, provide further support for farmers and growers, now and into the future.

A new on-farm support model

We’ve made a significant investment in strengthening our sales and technical teams with our mantra of backing Kiwi farmers and growers, under the leadership of our new Chief Sales Officer, Blair Robinson. This team is focused on being better equipped to understand and meet the evolving needs of our farmers and growers and maximise the scale of your co-operative for the future. 

Our Sales team is focused on shareholder solutions and better returns through great advice and commercial deals. This is how we’ll excel at identifying and providing the right opportunities for our customers and providing them with the products, insights and advice that will boost on-farm profitability.

Digital farmer

We launched a new Digital Farmer solution pilot to help transform how farmers interact with our services and products, by offering a tailored digital platform.  

We worked with customers to identify specific needs when dealing with Farmlands and created Digital Farmer to improve visibility of past Farmlands purchases, offer quick re-order options, support customers to easily review their bulk nutrition sales agreements and to track order history.

The full solution is still in its early stages and we’re continuing work to refine the application interface and its range of capabilities. Ultimately it will help our customers better manage their business by controlling costs and streamlining processes.  

To use the pilot, simply click on the Digital Farmer tile at the bottom of your myfarmlands.co.nz homepage.

Growing our nutrition business

Animal nutrition is a key growth sector for us as we work to provide the reliable on-farm, in-store and online product availability and advice our customers need. Nutrition is essential for every farm operator looking to maximise value and minimise the cost of producing world-leading food and fibre products.

We have:

  • increased our bulk nutrition offering in areas like specialised blends and precision-engineered pellets
  • increased our nutrition team to be able to provide more advice and expertise
  • secured better agreements with our suppliers for feed inputs
  • continued to focus on quality management throughout our production processes to continue to produce high-quality products for discerning consumers.

Farmlands plans to buy SealesWinslow

We plan to purchase SealesWinslow from Ballance Agri-Nutrients. If approved by the Commerce Commission, this purchase will enable us to expand our national animal feed business and to form an integrated animal feed business with three well-known and complementary brands –  NRM, McMillan and SealesWinslow.

The joining together of these brands represents a unique opportunity which supports our overall nutrition strategy and validates our commitment to delivering the best possible value for vital on-farm inputs.

We’ll have created a single nation-wide feed manufacturing and distribution business unit that will offer Farmlands and its customers the benefits of greater scale, operating efficiency and ultimately customer value. It will also ensure that the SealesWinslow feed mills stay in New Zealand co-operative ownership, so that local farmers maintain control of this critical part of our food production supply chain.

This is an example of us delivering on our promise to be the best buying group for core farm inputs. The purchase is expected to be completed early in the new year, following Commerce Commission approval.

NRM
McMillan Logo

Coming together for rural communities

We’re taking a fresh approach to the initiatives we support and events that we attend, to ensure our investment is supporting growth in the sector. In terms of sponsorships, we have focused on adverse weather events, mental health and wellbeing, and increasing technical and leadership skills in the agriculture sector.

Tag Your Charity is our major annual fundraising event through our retail stores. This year we raised $129,000 and this was distributed to I Am Hope as our national partner, as well as a large number of local charities chosen by our retail store teams.

Other key sponsorships included:

  • platinum partner of the Beef + Lamb NZ Awards
  • principal partner of Tohunga Tumāu
  • a partner of NZ Riding for the Disabled
  • foundation sponsor of the Century Farm Awards
  • sponsor of the NZ Sheep Dog Trial Association.

We also reset our major events strategy to ensure we attend key regional Field Days events around the motu. We are committed to having significant ongoing presence at National Fieldays, the New Zealand Agricultural Show and other key agricultural events, with a particular focus on creating a customer hospitality and advice space for our customers.

Visit the Farmlands sites at:

  • The New Zealand Agricultural Show: 15 – 17 November 2023
  • Southern Field Days: 14 – 16 February 2024
  • Northland Field Days: 29 February – 2 March 2024
  • Wanaka A&P Show: 8 – 9 March 2024
  • Central Districts Field Days: 14 – 16 March 2024
  • AgFest: 12 – 13 April 2024
  • Fieldays®: 12 – 15 June 2024
In alignment with Post Your Support, we also held a series of special events across Hawke’s Bay and the East Coast, including the Over the Fence community event in Napier and two A Night Out with Annabelle White events in Gisborne and Napier.

Post Your Support

February’s Cyclone Gabrielle was reported as one of the worst weather events in New Zealand’s history, leaving farming communities reeling with billions of dollars’ worth of damage. We knew we could do something to help and – with the support of Federated Farmers, Stuff and other partners – we launched ‘Post Your Support’, a campaign to help affected farmers and growers get back on their feet.

As New Zealand’s largest rural buying co-operative, we had the buying-power and supplier relationships and distribution network to make a real difference in replacing fencing and growing structures. Federated Farmers came on board to help mobilise farmers and fencing contractors to do the work, and Stuff used the power of its media network to reach Kiwis with the message to help via donations. It was an opportunity for every New Zealander to stand shoulder-to- shoulder-with those affected and help them get back on their feet.

Through Post Your Support we raised $2.1m in funds and distributed it quickly to impacted farmers and growers on the East Coast, Northland and Waiheke Island.

We also prioritised supporting our team members in cyclone impacted-areas with an immediate one-off cash support payment, and ensuring they (and their families and communities) could access emergency supplies including groceries, necessities, animal feed and water-tankers.

To the core 2023

Since 2019, Farmlands and Silver Fern Farms have been running an ‘introduction to governance’ course for aspiring directors in rural New Zealand. LIC joined the effort in 2021, recognising the value to shareholders and the importance of building a strong foundation for leadership for rural communities, as well as the opportunity to build succession within each co-operative.

The three-day To The Core course was held in Christchurch in May 2023, with participants gaining new skills to equip them to work in governance in their own rural communities. Participants came away commenting that they felt the experience added value to their businesses and future career development.

Farmlands’ new elected Director Will Clarke took part in the To The Core progamme before becoming Board Observer, then a full Director, showing how effective the programme is at creating a pipeline of well-qualified future Directors.

Looking to the land, looking after the land

We have continued to grow and better understand our role as guardian of the whenua (land) and our need to support all our customers, to deliver on their sustainability goals.

We remain focused on reducing the environmental impact of our operations. We began to measure our carbon emissions when we set our Scope 1 and Scope 2 emissions baseline in 2019 and achieved Toitū Carbon Reduction Certification in 2020. We achieved our reduction goals through our latest annual audit (completed in November 2022 and covering the period 1 July 2021 – 30 June 2022) and maintained our certification with a 23% reduction against baseline. We are also working to bring forward our assessment and certification in future years to more closely align with our financial year.

As a member of Climate Leaders Coalition and as we have matured our sustainability practice, we have developed Science Based Targets (SBTs) to measure our carbon emission reductions. So far, we have adopted SBTs for our short-term scope 1 and 2 Greenhouse Gas (GHG) emissions and reduction plan. This ensures we are aligned to the latest climate science and focused on limiting global warming to 1.5 degrees. Our SBT-based scope 1 and 2 reduction target is 46% by 2030.

We continue to focus on waste management and now have good data to base a reduction plan on, with us generating 980 tonnes of waste and with 25% recycled there is room for improvement.

This year we began the process of conducting our climate related risk analysis to understand the impact climate change has on Farmlands and our farmers and growers. We’re now set to understand what all the key risks and opportunities are in the areas identified and will start to develop our strategic response and mitigation plans.

To find out more about progress towards being a sustainable business:

Supporting our customers to recycle

Farmlands is working with Agrecovery to help Kiwi farmers and growers recycle their hard plastic containers at 23 of our stores across the country – and reduce the millions of tonnes of plastic packaging that enter the environment every year. Our customers can now recycle their small feed and seed bags from farms at 76 of our stores around the country.  

By purchasing Farmlands brands (NRM, Reliance and McMillan) and recycling now, the co-op’s customers are ahead of the curve in supporting the development of a circular economy.

Agrecovery’s customer registration and tracking system also means that farmers and growers taking part in the scheme will have evidence of their eco-friendly track record.

There is an opportunity to recycle more 250 tonnes of plastic each year from Farmlands’ manufactured products alone.

To participate in the programme, contact Agrecovery on 0800 247 326 or at [email protected]

Focus on Farmlanders

The health, safety and wellbeing of our team members and customers is always our first priority. With a well-established smaller leadership team in place, this year was the first of a three-year plan aimed at creating a culture where Farmlanders can thrive and feel safe and valued.

Diversity, inclusion and equity

Our shared purpose and values are the foundation of our culture. We need to know what our people think and feel to be able to create the culture we want and need to be successful.

Our first new Farmlands Heartbeat engagement survey provided clear and actionable insights that leaders can use to continuously improve our people experience across the co-op. We introduced a new framework for Farmlanders to understand and leverage their personal strengths and the strengths of others to drive better outcomes for all of us.

Our first Diversity and Inclusion survey provided us with valuable insight to who our teams are and what is important to them. The results of the survey will inform ongoing work to better recognise and celebrate the diverse talent in our teams and invest in initiatives that support inclusion and equity.

We are rural people too

  • 70% of Farmlanders live outside of our main cities.
  • One in five of us live on an operational farm or growing property
  • 20% are part of a multi-generational Farmlands shareholder family.
  • Farmlanders come from more than 23 countries.
  • We collectively speak 35 different languages.

Improved staff pay, benefits and support

We know it’s important to our shareholders that Farmlands provide fair remuneration and excellent employee benefits – particularly in the current cost of living crisis. We have increased support for Farmlanders and their families by:

  • Focusing on lifting pay for frontline teams
  • Introducing 10-weeks of full paid parental leave, along with two weeks for secondary carers
  • Launched rā whānau leave – paid birthday leave
  • Introduced Helping Hand Interest-Free Staff Loans
  • Provided one-off cash support payments to team members in cyclone-impacted areas

Health and safety

We are taking a proactive, practical and holistic approach to identifying and managing risk and enhancing safety and wellbeing across our co-op whānau.

At the end of FY2023, our total recordable injury frequency rate (TRIFR) was 14. We are encouraging a positive reporting culture and proactive safety leadership to reduce injuries and drive total recordable injury rate improvement.

Aligned to our commitment to safety leadership, consultation and communication at all levels of the co-op we have been working to implement a comprehensive online health and safety management system. This e-platform will make reporting easier and immediately visible. It will support our audit and assurance program, provide real-time safety data and notifications and support actions with meaningful analytics and reporting.

In support of the rural sector and community, Farmlands have joined other agriculture industry businesses in signing the Farm Without Harm pledge. Farm Without Harm is a commitment to reduce preventable harm in farming and to build a culture of care that prioritises the safety and wellbeing of farmers, their families and communities. 

Te Ao Māori​

E tū ki te kei o te waka, kia pakia koe e ngā ngaru o te wā.

Stand at the stern of the canoe, and feel the spray of the future biting at your face.

We continued our Te Ao Māori journey, with our aim to ensure our approach is grounded in humility and authenticity and a genuine desire to integrate Māori tikanga and mātauranga into our interactions with the world. Our goal is clear: to build lasting connections with Māori shareholders and agribusinesses through genuine understanding and meaningful engagement.

We’re offering selected Farmlands team, alongside our Leadership Team, the opportunity to delve into te reo and tikanga. As part of this, we’re offering our team access to a learning programme through Education Perfect. This is aimed at fostering cultural development and enabling us to provide even more value to our Māori customers and shareholders.

Te Whenua Tāroa – our waiata

Te Whenua Tāroa e mihi atu nei – Farmlands stand united

Ki a koutou e te iwi e – and we greet you all

Manaakitia – to show hospitality, to show respect

Āwhinatia – to give unconditional support

Aroha nui ki ngā hunga katoa – to all people

He tohu aroha nui e – this is the ultimate sign of love

Developing technical expertise from within

A key part of our people growth strategy is supporting Farmlanders to develop the key technical skills and expertise so desperately required by our sector, while also continuing to work for us. We have introduced two professional development programmes this year, both aimed at developing and creating career pathways as well as developing industry leaders.

AgronoME had its first intake of employees looking to develop into full-time agronomists over time. The participants are now six months into this programme and are involved in hands-on workshops, in-field fieldwork, and specialised courses in areas like precision agriculture and crop nutrition. A group of dedicated technical field officers began Cultivate – a new 12-month service and technical training programme, during which they’ll work towards the Rural Services Level 4 qualification.

We’re committed to creating career pathways for our retail teams and have created a Retail Apprentice programme consisting of two NZQA qualifications completed over 24 months. Unit standards have been aligned closely to the requirements of Farmlands to develop and measure core retail capabilities and support delivery of our ongoing supply chain transformation programme. Over 100 Farmlanders enrolled for this course and are working towards NZQA Certificate in Retail Level 3 this year.

We’ve also upgraded and relaunched our online learning platform – the Greenhouse – to support these and other learning requirements across our co-op.

AgronoMeLogo
CultivateLogo

As we’ve indicated, Farmlands’ financial performance reflects the extremely challenging market conditions and operating environment for our customers, particularly in the second half of the year.

We’ve made some conscious decisions to drive forward on our long-term supply chain and product transformation programme, and this has had a tangible impact on our year-end position. These decisions were made to continue to focus on our long-term growth strategy and the need to set Farmlands up to deliver greater value to shareholders and customers in future.

We combined our fuel business with Southfuels in August 2022 into a new joint-venture named Fern Energy. This means our financial statements are focused on our operational business (excluding Fuel) and Fern’s performance is outlined under Note 9 – Investments, in the Financial Statements.

Fern Energy – year one

In its first year of operation, Fern generated $630m in revenue and delivered a net profit $3.7m, despite the challenging operating environment. Farmlands realised a profit of $18.6m from the sale of its fuel business into the new joint venture and received $1.8m in net dividends from this investment. Dividend payments will grow as we realise greater efficiency from the joint venture, the Fern brand gets more established and grows market-share, and the economy picks up.

Our operating turnover remained stable, despite the challenging operating environment, at $2,541.8m and revenue increased by 2.5% to $808.5m.

Our supply chain transformation programme has provided a better understanding of our stock position and highlighted the need to introduce a significant one-off provision for stock obsolescence as we clear old and redundant stock lines. There has been a $20.8m increase in the provision, included in this year’s result to enable the rightsizing of our inventory and product offering, and to correct the long-tail of stock items we have because of historical de-centralised ordering and buying. We took the hard decision to make this provision this year.

Despite the revenue increase, gross profit was down 12.7% to $147.0m. This was due primarily to the increase in inventory provision coupled with a reduction in discretionary spend categories. Operating costs increased by 13.7% to $17.6m largely driven by investment in our people and our supply chain transformation programme.

This has resulted in EBITDA profit of $1.2m and a net profit after tax loss of $0.7m. Our loss from continuing operations of $27.5m is a decline of $36.2m from last year, a combination of our increased inventory provision and challenging trading conditions.

We also generated $90.6m in customer rebates this year – passed directly back on to our shareholders.

Financial statements

This year’s financial statements can be downloaded as a separate PDF.

Kia ora

Despite a difficult environment, we have a strategy that we know is building a stronger co-op for the future. What we have learned in the last year is that our growth trajectory will be bumpy, we need to show resolve by sticking with our plan for the long-term benefits it will deliver to our co-op, customers and shareholders.

Our most important priority is improving our supply chain – how we buy, store and move product to you. We have a plan to ensure support for all key on farm inputs. Our recent decision to purchase SealesWinslow is an example of this. We will build scale and efficiency for the benefit of our customers.

We will also continue to respond to the tough environment with a focus on providing you with price and product support. Balancing the need to focus on the short and long-term at the same time is tricky and takes careful navigation. Investment must continue on key areas that are important for the future.

To keep us focused on what we need to deliver for our customers now, as well as looking forward, we have introduced a rallying cry across our business: to be the number one buying group for New Zealand farmers and growers. This has always been and always will be the purpose of the co-op.

Over the next 24 months, this means winning market share in a tricky environment – fighting hard for our customers’ business. 

Like many of you, Farmlands is starting the New Year leaner.

We remain rock-solid in our commitment to stand by your side, working to build our shared success. We know market conditions will improve, and when they do, we will win together – as we always have.

Ngā mihi nui
Tanya Houghton, Chief Executive

TANYA HOUGHTON
Chief Executive Officer

Thoughts from elected Director Will Clarke

During the recent Farmlands Board election process, I heard customer concerns about whether Farmlands’ primary focus was shifting towards the lifestyle market, perhaps overshadowing our commitment to our core farmers.

I ran for the Farmlands Board as a hands-on farmer. The knowledge I have gained since joining the Board has confirmed for me that the co-op is 100% dedicated to delivering on-farm productivity and profitability. By providing value and support to the lifestyle market, Farmlands can leverage additional buying power and value created by these customers in a way that keeps improving what it can do for core farmers.

This year Farmlands is focussed on delivering on its promise to show customers tangible results, particularly with initiatives like its supply chain transformation. Improving pricing and ensuring that the right products are available to farmers and growers is paramount. Farmlands has always been and will always be completely focussed on lowering input cost pressures for farmers and growers, to support profitability.

Will Clarke

Our strategy for the coming year

We continue to drive forward with a clear purpose to be the “go to for everyone connected to our land”. This is underpinned by our mission to be the number one buying group for New Zealand farmers and growers.

This means making the right steps to be market leaders in the core rural supplies categories of nutrition, animal health, agronomy, horticulture and fuel.

In the next year we will be focused on:

  • Keeping farm input costs as low as possible, to improve on-farm profitability
  • Providing the right on-farm support​
  • Growing our technical expertise​
  • Transforming our supply chain to realise more value​
  • Continuing to develop the right partnerships – Fern Energy and SealesWinslow
  • Stocking the right products, when our customers need them​
  • Creating greater buying power through core, consistent product range