The big fertiliser co-operatives, Ravensdown and Ballance, have substantially increased profits in the 2022 financial year but reduced their rebates to farmers.
Directors elected to retain profits and strengthen balance sheets to face continuing volatility in commodity prices and supply chain challenges.
Ravensdown’s profit from continuing operations before rebate, bonus shares and tax was $95 million, compared with $52m the financial year before.
Ballance made $112m, up 77% from $63m in FY21.
Their rebates to farmers and growers will be $25/tonne from Ravensdown and $30/t from Ballance, down from $30 and $50 respectively.
Because of the rapidly rising prices of overseas-sourced fertilisers during the past year, the revenues of the co-operatives increased considerably.
Ballance went up from $897m to $1.195 billion, and Ravensdown from $712m to $922m.
Ravensdown chair Bruce Wills said it was one of the best-ever results achieved in a year dominated by volatile pricing and global supply challenges.
Total tonnage of fertiliser sold was 1.22m tonnes, slightly ahead of the previous year.
Ballance sold 1.583m tonnes, some 30,000t higher than in FY21.
Ravensdown said it had reduced product margins and returned a group margin percentage lower than FY21, in order to leave more cash in the hands of farmers.
It also carried over more fertiliser stocks to provide more confidence for farmers in spring.
Ballance claimed to have eased the impact of rapidly rising commodity prices on its farmers by $54m, along with the gross rebate figure of $37m, up from $33m the year before.
But it also retained $56m or half of the profit to “future-proof the co-operative as we transition to a low emissions carbon-neutral future for locally manufactured nutrients”.
Ravensdown chief executive Garry Diack said market volatility is not going away and the company needs capacity to capitalise on procurement pricing opportunities.
“We need to continue investment in technological support to reduce New Zealand’s fertiliser footprint.
“The need for a capital buffer for the increasing risk a co-operative structure faces compels a conservative approach to shareholder rebate for 2022,” Diack said.
Ballance chief executive Mark Wynne said his company had assured affordability in a global context and reliability of supply in reasonably challenging circumstances.
“Our long-standing and trusted relationships with our global suppliers helped to mitigate ongoing supply disruptions and the unpredictable price of raw material, product and freight.
“However, by far the biggest advantage we had was our strategy to focus on local manufacture.”