PGG plants seed for growth

Hugh Martyn

Rural services company Pyne Gould Guinness has furthered its long-term expansion plans with the purchase of privately owned seeds business Agricom.

In April, South Island-based PGG appointed 10 new stock agents in the Waikato as part of a wider plan to expand in the North Island.

The move north was seen as part of a strategy to take on rival company Wrightson in its home territory.

PGG chief executive Hugh Martyn said yesterday the Agricom acquisition was less about geographic expansion and more about adding strength and growth potential to the group's seeds business.

He would not give the price paid for Agricom or its annual revenue.

Agricom is a wholesale business that develops its own proprietary seed brands. It has no retail stores.

"This was not one of those mergers where there was a great cost-cutting intent behind it," Martyn said. All of Agricom's staff of about 25 were expected to keep their jobs and the brand would remain.

Martyn said the purchase was driven by three things: "They've got some top-flight people, they have an excellent product pipeline and they have some good research relationships."

Unlike PGG, Agricom does not do its own research but has longstanding relationships with organisations such as AgResearch.

"We see the two businesses as highly complementary," Martyn said.

He said the Agricom purchase was different to other consolidation that had been going on in the rural services sector.

"The seed market is reasonably fragmented so, if we are going to create a world class seeds company, it needs to have a certain size to support that growth. The way forward with proprietary seed revolves around research and marketing."