One expands in rural merchandise the other closes

The announcement that Allied Farmers are selling or closing its rural service stores has brought protests from those who use their services. But is it realistic in todays competitive market to expect such local services used often only as a convenience?

Years ago the local bank closed and I like many others protested at the removal of this service, but sometime later in a phone survey I had to reveal that I rarely used the facility. I had replaced many of the services needed with online use and major decisions were enacted in the main branch or via a visit.

Are these the issues in question with rural merchandise where many purchases can be attained online, by phone or provided by mobile shops via agents with utes or vans? While it is just another service and employment lost in a rural town, are there better ways to achieve the same result? Will the local districts buy these shops to retain the services and distribute the profits back to the communities? Share your views on the loss of rural services.

One company is selling because the stores are not profitable.

Allied Farmers is selling or closing its rural stores after a review of options for the poorly performing business, the company said today. The divestment of the rural merchandising business aimed to improve profitability and allow Allied Farmers to focus on its rural livestock arm. The decision was made based on the recent and forecast poor performance of the stores in a highly competitive farm merchandising market, Allied Farmers Rural chief executive Steve Morrison said in Business Day.

Allied Farmers operate 14 rural supplies stores trading as Taranaki Farmers and King Country Farmers. Staff had been told and the company had begun negotiations with possible buyers. The divestment would enable the company to speed up its debt reduction.

And another has increased its shareholding in this competitive market.

Fonterra's re-acquisition of rural supplies chain RD1 could lead to a new financial service for the dairy giant's farmer-shareholders reports Stuff. The farmer-owned cooperative has bought back the 50 per cent of the 57-store chain it sold to Australian rural supplies chain Landmark in 2006, and plans to review the business over the next three months to find new opportunities.

RD1 director and Fonterra's commercial and strategy general manager Jason Minkhorst said a result of the review could be a new financial products service offering credit for in-store products, and farm inputs such as fertiliser, fencing and farm equipment. RD1 offers deferred payment terms to Fonterra farmer-shareholders but has not previously offered a finance service, he said.  The review would also include these deferred terms, which were particularly in demand at the start of the dairy season when cashflow was tight before milk payouts kicked in.

Fonterra was able to buy the stake back under the 2006 sale agreement which gave it a pre-emptive right if Landmark or its parent AWB was sold. AWB was bought by Canadian company Agrium in December.