Fight for rural market share

South Island farmer-owned co-op Combined Rural Traders is predicting a tougher year ahead as competition in the rural services sector heats up.

Its comments came after rival PGG Wrightson talked of encouraging evidence of confidence in the rural sector.

CRT - whose activities include farm merchandise stores, fuel, feed, seeds and credit cards - has reported a record year to March, with revenues 11 per cent ahead at $431 million and pre-tax profit ahead 82 per cent at $5.8 million.

CRT said it had performed well in a market where spending was slowing, but the current year would be harder in more difficult economic times, with gains only possible through taking market share off other providers.

CRT chief executive Brent Esler noted yesterday that PGG Wrightson had come through its merger, Elders NZ was planning to expand and Australian Wheat Board subsidiary Landmark was helping Fonterra's RD1 chain ramp up its offering.

"So there's plenty of competition out there. If spending's going to go back we have to grow," he said.

Esler expected rural supplies companies would have to compete on price and service to grow market share.

"There's strong demand from farmers for competitive pricing, for excellent service."

However, he also believed there was strong farmer support for co-operatives.

More than 1000 new shareholders were added to CRT's books during the past financial year. The 20,000-farmer mark was passed in May.

PGG Wrightson warned this week that tax-paid profits for the June year would be $3 million less than a forecast of $30 million.

It blamed some anticipated asset sales not going through and weather conditions during the last quarter.

However, there were a variety of factors - such as the lower dollar's affect on farm gate returns - that would be positive in the coming year.

It said there was evidence "of confidence returning to the farming sector".