South Island fertiliser co-operative Ravensdown is expanding its business in Australia.
The company last year moved into Western Australia and yesterday announced it was working with the Queensland Canegrowers Association to establish a branch of Ravensdown in the state.
Ravensdown chairman Bill McLeod said sugar cane growers had previously dealt with corporate fertiliser suppliers, but wanted a co-operative in their state after last year paying about 30% more for their urea than Ravensdown charged.
"It's early days yet, but we're talking to the growers about initially supplying a limited range of key products on a prepayment basis," he said in a statement.
"We plan to extend this to the full service Ravensdown model over a period. This approach would give us an immediate customer base with extremely low risk," he said.
Chief executive Rodney Green said in an interview that the 4000 Queensland cane growers used 150,000 tonnes of fertiliser a year, mainly urea and potash.
Ravensdown did not expect to capture all of that business, but Mr Green said the cane growers were talking to Queensland arable and dairy farmers about also supporting a co-operative fertiliser company.
Mr Green said the deal had been structured to protect Ravensdown's existing shareholders and the company's cashflow.
Cane growers have agreed to pay for their fertiliser in advance and to buy shares in the company over a two-year period instead of 17 years required for new shareholders.
"The capital coming in will be very good," Mr Green said.
He said the expansion would add value to existing Australia and New Zealand shareholders and gave the company access to a new market, sugar, which would complement its existing business in dairy, sheep and beef and arable.
Its West Australia business would contribute "a significant" profit to the parent company this year, he said.
Company overheads would now be spread over greater sales of fertiliser and the company would have more shipping and purchasing power and flexibility from buying more fertiliser.
Mr Green said sales had been hit this year by lower dairy farmer incomes and from soaring fertiliser prices last year, but he expected the market to recover.
Dunedin was benefiting from the company's expansion in to Australia.
Mr Green said a shipment of superphosphate processed at its Ravensbourne works was scheduled to leave Dunedin in the next few weeks for its West Australian clients.
"That's a significant benefit for Western Australia farmers but also for Ravensdown, because we get to utilise our Ravensbourne plant more, and also [it is significant] for greater Dunedin."
