Merger extends to e-farming

By PETER GRIFFIN

Yesterday's strong show of farmer support for the merger of New Zealand's two biggest dairy cooperatives has also cleared the way to join competing farming portals RD1.com and fencepost.com.

RD1.com chief executive Neal Murphy said the portals' management were going "full steam ahead" in preparing to combine their resources.

RD1.com's 27 "clicks and mortar" Anchormart stores and Fencepost's network of 22 Town and Country Agricentres will probably come together to give Global Co national retail reach.

But a portal merger is unlikely to be a smooth process. The two organisations work with different IT vendors, and base their sites on different back-end database systems.

Oracle-based RD1.com has had a very strong merchandising emphasis with its "i-store," offering thousands of products from farming equipment to computers and motor vehicles. Fencepost was developed largely using locally developed Jade Software, and has concentrated on providing useful farming information such as wool and livestock statistics, weather reports and veterinary information.

Mr Murphy said the plans to bring the technology of the two portals together had been considered for several months, but IT issues would arise.

"The portals are not entirely compatible and they have a dissimilar view of the market as well."

The merger will also present major IT issues for the owners of the portals, NZ Dairy Group and Kiwi Dairies. Both companies are large IT users and are believed to have more than 4000 computers between them.

The companies both employ Windows and Unix as their operating systems, but the NZ Dairy Group's sole use of Oracle for database management may create headaches for IT managers at Kiwi Dairies, which uses Microsoft SQL Server, PICK and Progress as well as Oracle.

And approval for any portal merger will also have to come from a handful of minority shareholders.

For RD1.com these include the ASB Bank, with 10 per cent, and New Zealand Post, with 8 per cent. Australian site farmshed.com.au and consultant group McKinsey and Co have interests in Fencepost.

Because ASB is the only banking sector representative investing in the farming portal model, plans to include online payment services and links to ASB's Fastnet and Securities services are likely to go ahead.

"I don't think in principle either of our minorities have any difficulty at all with it. Being part of a larger entity just means more farmers," said Mr Murphy.

But less clear will be the impact on the various IT vendor agreements that the two portals have been supporting.

RD1.com launched an exclusive program with Hewlett Packard in December, allowing farmers preferential prices for computers and internet access through a deal with service provider ihug.

A similar arrangement exists between Dell and fencepost.com.

IT consultant Doug Wilson said ensuring that each of the parties involved is happy with the final outcome would be a bigger barrier than IT compatibility.

"The issue with those two companies is they are not 100 per cent owned by the two dairy companies. Those two companies will need to sit down and decide how they are going to progress things."

Mr Neal said merging the portals would inevitably result in some consolidation, beginning at management level. The board of the new dairy colossus, which is expected to have revenue of $12.5 billion, will probably steer the future direction of the merged portals.

"The overall prize is there, which is 50 stores, over $400 million in revenues and the opportunities to stop duplicating spend on the net. I think we'll go for the prize."

A merged portal could deal a blow to major farming retailer Wrightson. The wrightson.co.nz site receives about 10,000 visits every week, but will face a combined user base of more than 12,000 people when Fencepost and RD1.com unite.

Links

The Farmshed

Wrightson