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Farmers investing more to improve productivity

Record sales for Farmlands Trading Society buck uncertain rural outlook

Farmers investing more to improve productivity

Hawke’s Bay-based rural retailer, Farmlands Trading Society, today reported record annual sales on the back of increased spending by farmers and a rural focus on productivity.

Farmlands Chief Executive John Newland said Farmlands achieved a net profit after tax of $4 million for the financial year to 30 June 2002 on record sales of $282 million and a $3 million increase in shareholders’ funds – equity – to $22 million. This compares with a $4.5 million net profit, sales of $265 million and equity of $19 million reported for the previous corresponding period.

Mr Newland said “the North Island wide farmer-owned ‘retail networkrural is thriving against a background of lower commodity prices and forecasts of an uncertain future because farmers are investing more to improve productivity.

“Membership grew by nearly 1000 during the year to 15,200, branch sales increased by $16 million and spending through the company’s charge card “Farmacard” increased 21 per cent to $34 million,” Mr Newland said.

“Farmers are spending more on their farms and more on themselves. Fencing sales rose 24% and animal health products by 26%, sales grew by more than $1m in farm chemicals, hardware, seed and dairying supplies,” he said.

“In a year when there has been constant talk about lower producer/export returns and falling commodity prices, farmers are not retreating.

“Their on-going investment strengthens farming infrastructure and our rural industry as they focus on more aggressive strategies for growth,” he said.

“Underpinning this is the NZ farmer's sense of self determination for gaining the best deal, and they trust Farmlands is working to reduce their supply costs.

“They are taking advantage of the company’s competitive pricing, the charge card benefits and its ability to meet their needs.

“The strong support for co-operative ownership is a traditional way of farmers doing business – never under capitalising, and funding growth from retaining a share in the profits.”

Last month, the company returned $2.3 million in bonus rebates and $2 million in its first bonus share issue. This saw some members receive a bonus rebate of up to $4500.

Mr Newland said “we wanted our members to share directly in the benefits of a very solid trading performance and reward the contribution they’ve given to our substantial growth.”

Looking forward, Mr Newland said he expects an exciting and challenging year as the company celebrates its 40th Birthday and looks to further position itself as a leading rural retailer.

“Supplier indications tell us our market share is increasing at a faster rate than the market is expanding,” he said.

The company has more expansion plans underway and is also relocating existing stores in Whakatane, Napier, Wanganui and Otaki.

A group of six Hawke’s Bay farmers established Farmlands in 1962 because they wanted access to cheaper farm supplies.

Today, Farmlands is one of New Zealand’s top 100 companies. It has 27 rural retail stores throughout the North Island and a team of 200 staff selling everything from electric blankets, washing machines and gumboots to stockfood, fencing gear and machinery. Through “Farmacard” members can also pay for their electricity, phone, fuel, insurance, groceries and liquor.

Joining Farmlands involves a $550 investment and membership is now open to everyone, including schools, community organisations and local authorities.

Farmlands will celebrate its 40th birthday in November.

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