Rural co-op joins the billion-dollar club

Photo / NZ Herald

Farm supplies co-operative Combined Rural Traders has become the latest Kiwi company to make it into the billion-dollar business club.

Turnover at Dunedin headquartered CRT increased 36 per cent to $1.1 billion in the year ended March 31.

The company's services include farm supplies, a charge card operation, fuel distribution, finance, livestock and real estate.

Chairman Don McFarlane said when a group of South Island farmers formed the co-operative nearly 50 years ago to reduce input costs, they had struggled to find suppliers and measured sales in the thousands of dollars.

"They would be heartened to see their dream has now grown into a billion-dollar company offering a full range of services to more than 25,000 shareholders," McFarlane said.

Farm supplies and a charge card business had being growing strongly, while fuel distribution made an important contribution.

The co-operative, which has 31 stores around the South Island and national fuel and feed businesses, would distribute the majority of its operating surplus of $8.4 million to shareholders as a bonus rebate, McFarlane said.

The co-operative during the year took over the brand licence for Challenge service stations and with that the supply of fuel.

Chief executive Brent Esler said growth had been helped by the Challenge fuel business, the acquisitions of South Canterbury-based Annett Grain and Seed and the Hokitika-based farm supplies business of co-operative Westland Milk Products.

"Inevitably there'll be more opportunities for acquisitions," Esler said

"The market is consolidating all the time and we are certainly very cognisant of the need to gather scale.

"We're not going to rest on our laurels, we're very committed to the idea that if we're not moving forward we're probably being overtaken by somebody so we certainly intend to be pretty actively pursuing growth continually."

CRT had secured the exclusive rights to the Gulf Oil brand for New Zealand during the year and after the balance date distribution for Australia and Pacific Islands.

"After some years of rapid growth in our fuel business, we were becoming increasingly frustrated at not having a competitive lube offer for our many rural and commercial customers," Esler said.

"Similarly in our retail FarmCentre business we had premium oil brands that were coming under pressure from lower-priced oils."

After evaluating a number of local offers the company decided to seek a brand that would give it a unique offer in the market, he said.

"We believe developing this brand is a very logical extension of our fuel business and that it will deliver significant benefit to all shareholders."

Gulf Oil distribution in Australia was the first overseas part of the business. "It's almost part of the inevitable quest for scale that where there's opportunities to leverage purchasing and things across the Tasman, it's certainly well worth considering," Esler said.

Most segments of agriculture were having a good time despite the high dollar, he said. "I think the overall trend will continue to be pretty positive but agriculture is still a reasonably volatile industry ... from climate to global events there's just so many things can impact on it."

CRT had so far managed to fly under the radar.

"Possibly it gets to the stage now people start taking a wee bit of notice of what we're doing," Esler said. "I'm not sure that's a good thing or a bad thing."

CRT
* Farmer co-operative.
* Headquartered in Dunedin.
* $1.1b turnover in year ended March, up 36 per cent.
* 25,000 shareholders.
* Services include supplies, charge cards and fuel.