RD1 may offer farmers credit
Fonterra’s re-acquisition of rural supplies chain RD1 could lead to a new financial service for the dairy giant’s farmershareholders.
The farmer-owned co-operative has bought back the 50 per cent of the 57-store chain it sold to Australian rural supplies chain Landmark in 2006 and plans to review the business over the next three months to find new opportunities.
RD1 director and Fonterra’s commercial and strategy general manager Jason Minkhorst said a result of the review could be a new financial products service offering credit for in-store products and farm inputs such as fertiliser, fencing and farm equipment.
RD1 offered deferred payment terms to Fonterra farmer-shareholders but had not previously offered a finance service, he said.
The review would also include these deferred terms, which were particularly in demand at the start of the dairy season when cashflow was tight before milk payouts kicked in.
Fonterra was able to buy the stake back under the 2006 sale agreement which gave it a pre-emptive right if Landmark or its parent AWB was sold. AWB was bought by Canadian company Agrium in December.
Since 2006 RD1 revenues have increased from $394 million to $741m.
The re-purchase price could not be disclosed under the original agreement with Landmark, Minkhorst said.
RD1 was formed in 2002 with the merger of the trading store chains of the New Zealand Dairy Group and Kiwi Dairies.
The two companies, with the single-desk exporter the Dairy Board, merged the previous year to form the juggernaut Fonterra, now New Zealand’s biggest company.