Silver Fern Farms has reported a net operating loss of $31.1 million from total revenue of $2 billion.
. . . Chief Executive Keith Cooper commented that Silver Fern Farms operates in an environment where many outcomes are beyond the company’s control but materially impact on the business.
“Climatically we went into the 2011/12 season with ideal pasture growing conditions which meant livestock was held on farm for valid reasons. This resulted in markets being short of product versus historical supply patterns. Off the back of this, we saw global prices for lamb in particular, escalate to unsustainable levels, which resulted in a sharp fall in demand, and which then led to a significant decline in value. This market correction was subsequently reflected back to suppliers and, in turn, caused write-downs in inventory valuations throughout the financial year of circa $25.6 million. Through this period, Silver Fern Farms had to manage business continuity – supplying to customers and operating processing assets – which meant we had to compete for livestock at unsustainable prices which further contributed to the problem. . .
SFF wasn’t alone in facing these problems.
Strong competition for stock was good for farmers in the short term but bad for the companies.