New agricultural era dawns with cooperative partnerships

Greater unity in the entire agricultural sector is in the offing, with Fonterra Cooperative Group and Silver Fern Farms partnership to aggregate sea and land freight services under the Kotahi umbrella. Not only that, but Fonterra has purchased full control of rural services company RD1 from Canada’s Agrium.

“We are seeing some exciting developments across the entire agricultural sector,” says Bruce Wills, Federated Farmers President.

“There are significant cost efficiencies to be made in the supply chain and with freight especially. Instead of doing their own thing, it’s logical for our exporters and importers to cooperate on freight aggregation.

“I think it’s highly plausible that the Kotahi umbrella could extend to wool, horticulture, fisheries and wine. In effect the entire primary sector, which now accounts for some 71 percent of New Zealand’s merchandise exports.

“From the farmer’s perspective, a ‘NZ Inc’ approach to freight solutions means not just better market servicing, but the promise of savings reflected in producer returns.

“Greater collaboration on logistics was something that arose from the Red Meat Strategy. By aligning with the world’s largest dairy exporter, Fonterra, there are many positives for our exporters and importers alike.

“Continuing positive outcomes, Federated Farmers is pleased to see Fonterra exercising its right to buy-back 50 percent of RD1 from Canada’s Agrium.

“This ensures a highly competitive rural supplies market with full farmer owned cooperatives like CRT, Farmlands, ATS and now RD1. There is of course PGG Wrightson, Allied Farmers, Elders and other companies in the rural supplies market too.

“Knowing Fonterra, they would not have exercised their buyback rights unless the financial numbers made sense. From Federated Farmers perspective, assuring competition in this key market for farmers is a vital outcome.

“It also means instead of going into foreign control, RD1 is fully in the hands of New Zealand farmers,” Mr Wills concluded.