The New Zealand Herald
Sheepmeat processor mounts roadshow to update farmer shareholders on strategy
Seeking to defend co-operative model
Alliance Group, the world’s biggest sheepmeat processor and exporter, has upped the ante with its farmer-shareholders by offering a sweetener to loyal suppliers, but chief executive David Surveyor says the overtures have nothing to do with developments at rival Silver Fern Farms.
Dunedin-based Silver Fern Farms has a roadshow under way to sell its farmer supplier members on a joint venture with China’s Shanghai Mailing Aquarius that will bring a cash injection of $261 million, making the co-operative debt free by the end of the year, and allowing the payment of a 30c-a-share special dividend.
Surveyor told the Herald that Invercargill-based Alliance, which has about 5000 farmer shareholders, was conducting its own roadshow to update farmers on its strategy and had doubled the usual number of meetings to 24.
In addition, the co-op was outlining a plan to reward those who were sole suppliers. He stressed the moves were not in response to Silver Fern Farms’ plans.
“People will absolutely question the Silver Fern Farms effect in what we are doing, but no, we can only row our own boat. It’s up to Silver Fern Farms shareholders to decide what they are going to do.”
Alliance is offering an extra payment of 10c a kg of lamb, payable quarterly, to those farmers who provide all their animals to the co-op.
“It goes to the whole issue of cooperative principles, and those principles are about looking after our farmer shareholders and respecting quality supply from our farmers,” Surveyor said.
“Where we have got shareholders who are committed to us, we want to make sure that they get recognised for being a shareholder.”
Surveyor said the increased number of roadshow meetings had been designed to be smaller and more intimate.
“If you are in a room of 200, people don’t always put their hand up,” he said, adding feedback so far had been favourable.
“Our decision to hold roadshows and increase the number of them in West Otago farmer and Silver Fern Farms shareholder Allan Richardson is to stand for a position as a South Island director for the national rural supplies co-operative, Farmlands. Richardson has been active in trying to get the Silver Fern Farms board to reconsider merging with neighbouring Alliance Group instead of accepting a cash injection from China’s Shanghai Maling Aquarius. fact is about getting back to cooperative principles. We are owned by farmers, for farmers, and so we need to be front and centre with them, listening to them, talking with them, and getting their views.”
Alliance revealed last month that it had submitted a bid for Silver Fern Farms before the company’s capitalraising process got under way and said it had considered joining forces with its northern neighbour several times over the past decade.
“We came to the conclusion that Silver Fern shareholders will decide on the joint venture proposal at a special meeting on October 16.
“With the current controversy being played out in public over the ownership of Silver Fern Farms, I think now is a critical time for farmers who are still actively involved on the land to step up and become involved in securing the future of the cooperative model in the rural sector,” it was not critical to us,” Surveyor said. “We’ve never been able to find a path that has made good commercial sense for everyone.”
Alliance is New Zealand’s secondbiggest meat company after Silver Fern Farms. Sheepmeat accounts for about 70 per cent of its business and overall, Alliance accounts for about 30 per cent of New Zealand’s sheepmeat production.
Commenting on market conditions, Surveyor said demand in the biggest market — China — had been Richardson said.
Farmers had “stood idly by” while a $2 billion business like SFF performed poorly for a number of years, Richardson said. “Farmers can’t afford to stand back while events like this happen.”
The North Island’s Farmlands merged with its South Island equivalent, CRT, in 2013.
— Jamie Gray slack but some pick-up was likely in the lead-up to Chinese New Year.
Prices in the important UK market were soft because the relative strength of the pound was encouraging growers to sell to the domestic rather than export market.
Surveyor, who was appointed chief executive last December, was executive general manager of Australian’s Laminex, a subsidiary of Fletcher Building. He has previously held posts with BHP in Australia and Bluescope Steel in Malaysia.