Tuesday, 09 November 2021 12:55

Rural retailer flags Covid-related supply chain issues

Written by Jessica Marshall

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Kevin Cooney, Farmlands chief operating officer says supply chain issues caused largely by the advent of Covid-19 will continue to be an issue for the foreseeable future.

Supply chain issues continue to be an ongoing issue for rural service provider Farmlands.

The co-operative released its annual results last week, reporting an $8.1 million profit on the back of $2.7 billion in turnover and $1.1 billion in revenue.

Farmlands shareholders, totalling over 75,000 nationwide, received $94.2 million in monthly rebates, discounts and loyalty redemptions over the course of the year.

Chair Rob Hewett called the result “a pass mark and a little more.”

“Our co-operative generally reacted well to supply chain issues caused by Covid-19 and managed stocks to ensure availability when products were needed. We strive to continue to do this in these unprecedented times,” Hewett says.

Kevin Cooney, the company’s chief operating officer – who was acting chief executive during the financial year – told Dairy News that the supply chain issues caused largely by the advent of Covid-19 will continue to be an issue for the foreseeable future.

“It is an issue, and it’s one that’s not easy to resolve,” Cooney says.

He says this is being seen in the increased prices for fertiliser and fuel in particular, but also in longer lead times for accessibility to key products.

“It’s also impacting the availability of key products.”

What that means for Farmlands customers, Cooney says, is that they need to start planning ahead.

He says that, overall, the results released last week were positive.

“It’s positive to have a profitable outcome, particularly when you consider that we are still transforming the business,” he says.

Cooney describes this transformation programme, nicknamed Braveheart, as “a big challenge” for the company and one that it can do better at.

The key aim of the transformation is to get back to having clarity in the core business, and to deliver that more effectively.

“It’s all about getting the right products at the right price to the right place or location for our customers,” he says.

“That transformation is working, but while the foundations are in place, focus is needed.”

He adds that one of the biggest challenges for the company have been its efforts to lean in and continue to be relevant in the face of big change.

“That’s about asking what role do we play in that change and looking at our shareholders and asking how do we support them?”

Farmlands new chief executive Tanya Houghton says the results provide an impetus for stronger results for the 2022 financial year.

“There have been plenty of exciting new innovations over the past year. We have a new online shop and our e-commerce platform has come a long way in a short space of time. This is vital, especially during lockdowns,” Houghton says.

“We have built our plan for this year around three things: safe and engaged people, unbeatable customer experience that earns trusted partner status with our customers, and delivering our budget.

“Farmlands has a committed team that want to bring more benefits direct to those that choose us to be their preferred provider.”

Featured

Milestone agreement on Food and Mouth Disease

Six livestock industry groups have signed a new agreement with the Government on how to prepare for, and respond to, a possible outbreak of Foot and Mouth Disease.

The deal, announced at National Fieldays, also sets out how the costs of FMD readiness and response activities will be shared between the Government and the group – made up of DairyNZ, the Dairy Companies Association, Beef + Lamb New Zealand, NZPork, Deer Industry New Zealand, and the Meat Industry Association.

The livestock sector partners will meet 40% of readiness costs, and 15% of response costs which are capped at $450 million. The Crown's reference exposure is $2.5 billion for responding to an FMD outbreak, but this could run higher in the very unlikely event of more than one outbreak during the term of the Agreement.

Biosecurity Minister Andrew Hoggard says an outbreak could cost up to $3 billion to eradicate.

“But doing nothing would be far worse - potentially slashing export values by $14.3 billion per year until it’s controlled,” says Hoggard.

“Through this agreement, we’re locking in a truly collaborative approach. Industry will contribute 40% of readiness costs and 15% of response costs - capped at $450 million - and in return, they’ll have a formal seat at the decision-making table.”

Hoggard says the agreement reflects years of work and a shared commitment to protecting New Zealand’s vital livestock sector.

“This is a significant and practical step forward for our national biosecurity system.”

DairyNZ chief executive and inaugural chair of the Foot and Mouth Disease Council Campbell Parker welcomed the signing.

“Biosecurity is a key priority for DairyNZ as it helps us to power more productive and resilient farms – with dairy farmers the biggest sector investors in the biosecurity system,” he says.

“Dealing with an outbreak of FMD would cost the livestock sector billions, and we want to be involved in deciding how those costs would be best spent.”

Beef + Lamb New Zealand chair Kate Acland says the wide sector support for this agreement was reflected in a clear ‘yes’ vote from sheep and beef farmers, following the high-profile voting campaign undertaken by B+LNZ over April and May.

“We needed their formal approval to sign the agreement, and our farmers told us they want to have a voice in decision-making about readiness and response activities and funding,” she says.

Dairy Companies Association of New Zealand executive director Kimberly Crewther says the agreement is a major milestone after over a decade of engagement to establish the foundations for partnership in addressing this most significant biosecurity risk for the livestock sectors.

“Recent overseas FMD outbreaks, including in Europe, reinforce the importance of getting to this point and ensuring government and industries’ combined resources, knowledge, and capability can be deployed in the most efficient and effective way to reduce risk and impacts.”

Deer Industry New Zealand chief executive Rhys Griffiths says the legally binding agreement gives the deer industry a seat at the table, which is vital for representing the voices of our farmers.

“Such representation is crucial, not just for the deer industry but for the wider primary industries and the channeling of farmer perspectives to government."

NZPork chief executive Brent Kleiss notes that pig farmers will have a seat at the table in planning and decision-making “so that our sector’s unique needs are understood and addressed as we shape a co-ordinated national response”.

MIA chief executive Sirma Karapeeva says the agreement has support across the agricultural sector and shows a clear commitment of both Government and industry to work collaboratively on FMD.

Sectors’ cost shares:

Dairy farming 41.85%  
Sheep and beef farming 19.89% 
Dairy processing 18.85% 
Sheep and beef processing 15.68% 
Deer industry 0.68% 
Pig farming 0.35% 
Other (goat, wool, livestock breeding, dairy processors not members of DCANZ and pork processors – Government holds liability for these) 3.02%

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