Ravensdown invests in future as team focuses on farm environment planning
Ravensdown is gearing up for the growing demand for farm environment planning and investing in future capabilities. This ongoing investment in future on-farm performance meant the co-operative was unable to meet the previous year’s record profit performance, however last year did end with a satisfying and strong profit of $53 million from continuing and discontinuing operations, before tax and rebate.
The co-operative returned a total of $33 million to its eligible farmer shareholders including $16 million paid as an early interim rebate in June.
“We were right to view 2020-21 with cautious optimism. Our strong result was based on great shareholder support, a hard-working team and an effective strategy,” said Ravensdown’s Chair John Henderson. “Our shipping joint venture and long-term relationships with reliable suppliers proved extremely valuable as the supply disruption resulting from the pandemic impacted so many other industries. Along with sustained focus on product availability, we will continue to invest in the science, technologies and services that can help the agsector thrive into the future,” added John.
“Taking care of our own environmental footprint in terms of carbon emissions, asbestos removal, new stormwater systems and dust control, is a priority. In addition, we have been helping many more farmers accommodate upcoming regulation. The customer-facing team invested a significant amount of time adding to their expertise. The time spent on training in order to improve our ability to help farmers with their farm environment plans (FEPs) was four times greater than the previous year, despite only a 0.5% increase in training spend.”
Nearly $6 million was invested in R&D with a focus on the environmental benefits of nutrient use efficiency. Research concentrated on better soil testing for soil nitrogen to avoid over-application, coated nitrogen products that reduce losses to air or water and a HawkEye “heat map” that helps assure compliance with the new national N limit of 190kg/ha. The fertiliser industry as a whole reported a reduction of 8% in the supply of total manufactured nitrogen last year.
Thanks to the more precise aerial diagnostics and spreading technologies that Ravensdown has developed, fertiliser was not applied on 42,000 hectares of hill country farmland which had been identified as not in need of nutrients.
In terms of its own greenhouse gas footprint, Ravensdown’s core emissions reduced by 9% and is tracking well towards its target of a 30% reduction by 2030 (16% reduction against base year 2017/18).
“This is a strong result in a COVID-ravaged world and highlights our role in helping New Zealand earn vital export income through the efforts of Aotearoa’s hard-working food creators,” said Garry Diack, Ravensdown’s new CEO. “A better New Zealand depends on smarter farming - more than it ever has.”
“In the year ending 31 May 2021, the team worked incredibly hard to secure the flow of essential nutrients so that they were available to farmers and growers in the right amount at the right time. Rising shipping prices and risks of supply disruption in a world where global demand for fertilisers is increasing, highlights the value of all the effort to ensure nutrient availability.”
The growing efficiency with which farmers put nutrients to use was a win-win both for food production and the environment according to Garry. “After all, smarter farming is about minimising nitrogen and phosphate losses as well as optimising production.”
Revenue at $712 million was on forecast. This was slightly less than 2020 revenue (5%) as a result of the co-operative absorbing several global price rises for raw materials and commodities.
John Henderson explained how the co-operative was helping farmers adjust to a changing landscape. “As a co-operative, Ravensdown is here to listen and advise, not to tell farmers what to do or supply them with more products than they need.”
To those purchasing fertiliser in the year ending 31 May 2021, Ravensdown declared a total rebate of $30 per tonne with an interim early cash rebate of $15 per tonne already being paid in June. The balance sheet was strong with negligible net debt ($0.3 million), equity before rebate of 81% and an operating cashflow before rebates to shareholders of $56 million.
Investment in physical infrastructure increased to $31 million and asbestos replacement, which is so important to employees and neighbours, continued with $1.4 million spent this year. Completed stormwater and intake projects in Christchurch increased environmental performance and efficiency. The reduction which we had forecast in capex spend was controlled and salary and wage costs were contained due to a hold on pay increases and new headcount.
N-Protect (coated urea), which saw another record year, ultimately helps cut farmers’ greenhouse gas emissions from fertiliser. Soil tests at Ravensdown’s independently accredited laboratory rose by 36% and 11% more customers are using the HawkEye mapping tool that can help with nutrient decision making and compliance reporting. “Looking ahead, all these areas will be seeing increased demand and we expect to see growth in the agronomy services with products such as agchem and seeds,” said John.
“The landscape is changing in more ways than one and I’d like to thank all the team for their effort and focus as we look positively to the future,” concluded John.
The year at a glance 2020-21: numbers for 2019-20 in brackets
· Profit from continuing and discontinuing operations before tax, bonus share issue and rebate: $53 million ($67 million).
· Operating cashflow before rebates to shareholders: $56 million ($143 million).
· Equity ratios: 81% (77%) before rebate and 78% after rebate (74%).
· Rebate of $30 per tonne to be paid in cash by the end of August ($15 per tonne already paid in June) for fully paid-up shareholders ($25/t).
· Revenue: $712 million ($750 million).
· $31 million ($28 million) invested in infrastructure including stormwater improvements, conveyors, roofing and laboratories.
· $4 million invested in new technology ($5 million) and $6 million supporting R&D ($5 million).