Alliance minding own business

Alliance Group CEO Owen Poole  says the company was not looking at merging with Silver Fern Farms because there was no proposal to do so.

He said that it was business as usual for Alliance in spite of speculation that a plan by PGG-Wrightson to invest $220 million in SFF would draw Alliance into merger talks. 

“We are working on our own strategy and we are going to talk to our shareholders about our own plans,” he said in an interview last week. Mr Poole said the PGG-W and SFF merger was the business of those companies.

“As far as Alliance is concerned, they’ve got to deal with their own shareholders.”

He had some reservations about the merger and the loss of farmer control, governance issues from having a corporate investor, the hybrid ownership model and outsourcing stock procurement.

All very valid concerns. 

Alliance experienced the hybrid ownership model when Freesia Meat Holdings was an investor, and Mr Poole said it was difficult reconciling conflicting demands.

“It was a good day for us both when the arrangement ended.”

Mr Poole said procurement was “a central pillar to vertical integration,” which he felt should not be outsourced to a third party.

If PGW is contracted to procure for SFF, what do their stock agents do when other companies offer better prices?

Alliance already operated an integrated model. In 1997, it launched Securing the Future, which introduced a genetics and breeding scheme to farmers to show the type of animals wanted by the market, based on consumer research.

It has also addressed capacity issues and recently introduced Via Scan technology, which objectively measured lamb carcasses and provided the information to farmers.

“This is not new. We’re extremely well advanced in all of this,” he said of changes proposed by SFF.

If Alliance is implementing the right strategy under its own steam, I’m yet to be convinced SFF needs PGW as a partner to do the same thing.

One Response to Alliance minding own business

  1. Ed Snack says:

    SFF needs PGG for the money. It couldn’t embark upon a modernisation and investment project for years because it is, in plain terms all but broke. It is bleeding support from Farmers, I mean, last year in the North island they have lost a lot of lambs because they were simply not liked enough.

    My admittedly biased diagnosis of the industry is that if the general level of management ability lifted beyond the very mediocre and the same people actually worked out that NZ isn’t in the 70’s any more as far as management practices go, then they would have a chance to move ahead. All the major players though are run by old school types who simply know everything there is to know about the industry, and woe betide anyone from outside who challenges them.

    Like

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