Silver Fern Farms is trying to spin the news that 87% of the respondents to its poll supported the call for SFF and Alliance Group to consider a merger.
But they got only 517 responses from the 15,000 or more shareholders of both companies. That doesn’t necessarily even mean 517 people voted because if you had several supplier numbers, as many shareholders do, you could vote more than once on-line.
Even if it was 517 individuals, that so few shareholders bothered to respond means the yes is a resounding no.
It’s also a vote of no confidence in SFF by its own shareholders.
SFF might have something to gain by a merger but it would be all risk with little if any reward for Alliance.
SFF made its first operating profit in years last year but hasn’t made a pool payout for at least five and its reduction in debt is due, at least in part, to the compensation from the failed merger with PGG Wrightson rather than good management.
Alliance by contrast has been making healthy profits and generous pool payments and has no debt.
The disastrous stock losses from snow in Southland and South Otago and rising demand for lamb will put farmers in a very strong position this season.
Meat companies will be seeking stock aggressively and Alliance’s far healthier balance sheet will put it in a much better position than SFF to pay for it.
Sharyn Price gave a very clear explanation of why SFF’s plan was flawed in All of a stew over lamb in Saturday’s ODT concluding with:
Farmers have a simple choice – build a historically profitable co-operative into something more powerful with further increases in equity and market clout, or create a clumsy, politically fraught co-operative that remains exposed to competitors.
Those wondering which to supply this season may want to keep in mind that after the last bad snowfall during lambing the weakest company – Fortex – collapsed.