PGG Wrightson needs 75% of Silver Fern Farms’ shareholders to support PGW’s move to take a 50% stake in their company. The vote will also determine how important shareholders regard farmer control.
Silver Fern farmers will be asked to surrender control of their company to a partnership with Wrightson, with the two partners each having four members on the board.
In September, the 9000 farmers will vote on the deal, with a 75 percent majority needed to allow the cooperative’s constitution to be changed.
A 75% majority is a big ask, but not impossible.
“The big question is: who are the natural owners of the assets – is it the farmers or is it others?” Meat and Wool NZ chairman Mike Petersen.
“We’re going to get answers now, from the vote the Silver Fern farmers have”.
Another question concerning Co-operatives Association chair Peter Macdougall is the impact on farmers’ incomes.
“This is a decision the members of the cooperative need to make. It comes down to how they believe they’ll be getting the best dollar for their animals, and to what extent they want to retain control of their cooperative business.”
“The same dollar can’t go in two directions,” he said.
If farmers are convinced the the new structure will increase earnings that might not matter.
“Farmer members will be interested to know how the cooperative can retain its cooperative status with PGG Wrightson holding half of the voting shares.”
The Cooperative Companies Act 1996 only allows for 40 percent of investor shares in a cooperative. PGG Wrightson is seeking a 50 percent stake in Silver Fern Farms, and offering to pay $220 million…
The meat industry has been dogged by the tension between seasonal supply of lambs and the market demand for year-round supply. The PGW strategy aims to provide high value chilled cuts 12 months a year rather than what happens now with 70 percent of sheep slaughter taking place between December and May.
That’s good in theory, but not so easy in practice for farmers who don’t have the feed to finish lambs in winter and spring. However, higher returns from the meat industry mean processors have to meet the market, and if year-long chilled cuts are what consumers want, farmers will have to find a way to supply it.