SFF director: Chinese the best offer
She was elected to the Silver Fern Farms board on a promise to keep the co-operative New Zealandowned; now Fiona Hancox is touring the country persuading farmers why Chinese company Shanghai Maling’s offer should be accepted.
‘‘Hand on heart, I feel we’ve tried to see everything. We’ve gone through a really robust process work with Goldman Sachs to find people domestically and internationally.
‘‘It’s been a huge job and this is by far the best offer,’’ Hancox said.
‘‘We’ve unanimously agreed this is the best thing for SFF and the long term wealth of our shareholders. That’s why I was voted on the board and that’s what I’ve got to. I’ve got family too and this has got to work for me and the next generations.’’
Shanghai Maling has offered to inject $261 million into SFF, in a deal that will see the Chinese company share ownership with farmers.
Shareholders vote on the deal on October 16.
Back in December 2014, Hancox said in the run-up to the SFF elections that farmers ought to ‘‘fight for control of their coop’’.
‘‘Foreign ownership would revert farmers back to being price takers,’’ the West Otago farmer said.
In expressing these sentiments, Hancox was endorsed by ginger group Meat in Excellence (MIE), which is adamant SFF should remain in New Zealand ownership.
At the time she proposed that SFF and the other major meat processing co-op Alliance Group should merge, controlling between 70-80 per cent of the red meat sector.
Former MIE chairman John McCarthy sympathises with Hancox’s situation. She is ‘‘between a rock and a hard place’’ because she has conflicting duties: a fiduciary one and a responsibility to those who voted her in.
He said the fiduciary duty was to prevent SFF from going into liquidation, which will happen as soon as the banking consortium propping the company up – consisting of HSBC, CBA, Westpac and Rabobank – calls time on their contracts.
‘‘The directors have a fiduciary responsibility ahead of that of their reform platform,’’ McCarthy said.
He said at some stage the MIEendorsed candidates would have to ask themselves if they were ‘‘conscience-bound to pull the pin’’ on their directorships.
Hancox has not made up her mind about her future on either remaining on the co-op or trying for the new SFF-Shanghai Maling board.
Meantime, Otago farmer Allan Richardson, who has led a group of SFF shareholders to force a special meeting to debate a merger with Alliance, said farmers should look past the short term gains.
The special meeting will also take place on October 16, after a resolution to accept the Shanghai Maling deal. The SFF board is recommending shareholders reject the resolution to debate a merger.
Richardson said shareholders have been presented with only one option, and that the deal would be used as a launching pad to significantly reduce Alliance’s shareholding.
Former National MP and Alliance shareholder Jeff Grant foresaw two scenarios.
Alliance might benefit in the short term because farmers with strong co-op sentiment might become suppliers to Alliance.
‘‘But if the investment is approved, you will have a very strong company competing in the same market without any debt. I tend to think it could be a large risk for Alliance,’’ he said.
Grant said that in a short term tactical ploy SFF may pay a premium to farmers but ‘‘why would the new SFF in the future pay a larger premium than anyone else to see the same product on the market? In the end everyone comes back to where the market value is’’.
NZ First Primary Industries spokesman Richard Prosser said the MIE’s Newco proposal would give SFF and the rest of the cooperative meat processing industry the additional capital needed so they remain 100 per cent owned by its New Zealand farmer shareholders.
He feared New Zealand would go back to being a simple supplier of bulk commodities with unprocessed carcases being shipped to China as they were once shipped to Britain.
SFF CEO Dean Hamilton said the company would have held more than 20 meetings before the October 16 vote. The mood at the ones held so far had been positive, with large attendances and relevant questions.
Opponents of the deal showed a lack of understanding of processing and marketing.
A significant amount of meat was already processed in China into products like hamburger patties, but the high value-added products were processed in New Zealand and would continue to be so.
‘‘The Chinese don’t have a lot of confidence in their own supply chain, and Chinese-processed products don’t have value,’’ Hamilton said.
Asked if the Chinese would in the future import carcases and process high value cuts in China with a Silver Ferns label on them, Hamilton said they could not legally pass them off as being a product of New Zealand.