Co-operative proves its value in drought

Extremely dry conditions and erratic stock flows combined to make it a challenging year for the Alliance Group and its farmer shareholders.

Alliance chairman Murray Taggart said extremely dry weather across most of the country in late 2017 and early 2018 saw the company maximise processing capacity to help farmers de-stock lambs and hold farm gate pricing.

Taggart told those at the cooperative’s annual meeting in Dunedin on December 18 that Alliance also assisted its shareholders by moving more than 1 million head of stock, all commission-free.

‘‘Sometimes it takes these extreme events to reinforce the wider benefits of a co-operative.

‘‘There was the inevitable hole in lamb supply once the drought broke and it would have been easy to back off capacity at that time and save costs.

‘‘The downside would have been restricted autumn processing capacity, just when our shareholders needed to reduce on-farm numbers to winter levels.’’

2018 was also a challenging year for beef with softening international prices slow to be reflected at the farm gate.

Taggart said demand for processing capacity soared in early autumn when Mycoplasma Bovis plus a delayed bull kill and cull cow kill all coincided.

‘‘It highlighted that in extreme events we will never have Southland sheep farmers Jason Miller and Jared Collie have been re-elected to the Alliance Group board.

The pair, who retired by rotation, stood for re-election and were successful as there were no other nominations at the cooperative’s annual meeting in Dunedin on December 18. Miller was first elected to the board as a supplier representative in 2007 and continued in that role until 2013 and was again re-elected in 2015.

He farms an 800 hectare sheep and beef farm at Southdown. Collie was also elected as a supplier representative in 2015. He operates a 1400 hectare sheep, cattle and dairy farm in Central Southland and is also a member of the Jeff Farm management board. enough capacity to accommodate everyone’s needs.’’

The board and management were committed to lifting the profitability of the company.

Taggart said the co-operative was determined to improve on the recent $8 million operating profit.

But, it took some comfort in the fact it was able to buffer farmers in an adverse climatic year by paying out an increasing portion of revenue to farmers.

With farmers experiencing strong farmgate pricing, the company decided not to make a profit distribution this year and instead continued to invest for the long-term prosperity of the business and shareholders.

The company also rewarded shareholders with 9.5 million bonus shares based on supply over the 2018 financial year.

Alliance chief executive David Surveyor said Alliance was delivering value to farmers over and above the price on the day.

‘‘We ramp up processing capacity to cover seasonal peaks, offer advance payments to committed shareholders, loyalty payments to platinum and gold suppliers and yield payments that recognise quality of supply.’’

The company was working hard to ensure the gains made so far were sustainable, investing Extremely dry conditions made it a challenging year for sheep farmers. Photo: DIANE BISHOP

in developing new markets and focusing on market-facing and added value projects.

‘‘It is clear there is potential to capture more value from the market, both for prime cuts and co-products.

‘‘Much of this work will require longer term investment, but we are convinced this prize is worth pursuing.’’

Surveyor said the company’s safety performance was a good barometer of underlying business performance.

Alliance’s Total Recordable Injury Frequency Rate reduced by another 34 per cent and excellent progress was made

upgrading processes around ammonia.

Significant capital investment saw improved traffic management and machine guarding, and new technology allowed the company to start replacing the remaining older bandsaws with BladeStop 600 series saws.

The company was also pleased with the progress of major capital works including a new $15.9 million venison plant at Lornevile near Invercargill, a new robotics primal cutter and processing room at Dannevirke, and investments in chiller management and the engine room at Lorneville.