Elders tips more businesses to join its ag services networks

Elders, AIRR see ag players keen to join farm service networks

Agribusiness
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A new wave of farm services businesses is signing with Elders following its push into wholesale farm supplies

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Elders boss Mark Allison expects another wave of farm services businesses to join the big rural group's ranks in the wake of its expansion push into wholesale farm supplies last year.

The Australian Independent Rural Retailers Network, which includes eight warehouses, supplies wholesale products to about 370 AIRR member stores.

Those ranks have grown from about 340 back when the farm equipment, produce and crop inputs merchandising group agreed to the $187 million Elders takeover in mid-2019.

AIRR has plans for a warehouse in Tasmania which could see more retailer members joining the Elders fold.

The 180-year-old Elders is also continuing to grow its branch network as some agents break away from the Nutrien Ag Solutions group, formed after last year's $470m Landmark-Ruralco merger.

Elders boasts about 18 per cent of the total farm services market Australia-wide, well behind Nutrien with more than 40pc.

However, a Roy Morgan consumer research survey of about 1000 respondents earlier this year found the Elders brand the most trusted name in Australian agribusiness.

Elders rated at least twice as strongly as other well known rural brands volunteered, unprompted, by respondents including, Landmark, Wesfarmers, John Deere, CRT and Norco.

Among recent recruits to the AIRR team has been South Australia's YP Ag, a former CRT member described by Mr Allison as the sort of "blue chip" rural merchandising business likely to trigger a new wave of recruits quitting the Nutrien camp.

"We've had about 12 new members coming across from CRT to sign up to the wholesale group this year and we can see good growth potential in Victoria, NSW and Queensland," he said.

"We haven't lost any AIRR members since the business became part of Elders.

"AIRR has already exceeded our performance expectations with earnings before interest and tax of $21.9m and is highly likely to exceed year earnings we originally planned over a full year."

From Rockhampton to Dalby and Guyra, former rival operators are now trading as part of the Elders network after it spent a further $18m on business acquisitions in the financial year.

He said other potential AIRR members may actually find a better fit as part of the Elders' agency and store network, or within its horticulture business, Ace Ohlsson.

Mark Allison

Mark Allison

The NSW North Coast was proving fertile ground for new Elders/AIRR members who were previously aligned with Landmark and Ruralco.

During 2019-20 Elders added a further 417 staff to its payroll after buying new businesses or expanding its existing services.

Mr Allison said as part of the company's newest eight point plant it was to continue pursuing some "massive opportunities" to win more market share in new geographies and across all product and services areas.

RELATED READING:Elders profit bounces 80pc to $123m

About six potential takeovers are understood to be currently under consideration.

"We have a pipeline of acquisition opportunities, some of which are corporate, but it comes down to talking about the right numbers, locations and being sure they are the right cultural fit for us," he said.

Meanwhile, last month the company launched a branch incentive program enabling store managers to share bonus reward payments with staff as specific sales benchmarks are achieved.

"We looked at our competition in the market, which is invariably private operators and we thought this platform would drive the right private reward mentality in our teams."

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The story Elders tips more businesses to join its ag services networks first appeared on Farm Online.

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