Silver Fern Farms Chief Executive Dean Hamilton says the proposed closure is due to a significant decline in processing numbers over the last 10 years and the opportunity to now process the consolidated volume at its nearby Pareora site.
“There has been significant land-use change in Canterbury and Marlborough over the last decade and there are fewer sheep farms in these regions as they have made way for other uses such as dairy and wine. Higher returns from land-use conversion, and periods of drought in these regions have contributed to this decline in sheep numbers. While our beef processing volumes have risen significantly over this period, the lamb numbers available have steadily decreased.
“Fairton was consistently processing over 1 million lambs prior to 2010. Last season we processed under 500,000 lambs. This year that has continued to decline and we processed just over 325,000 in a six month seasonal operation.
“Whilst we believe the pace of land-use change has slowed considerably, we expect sheep numbers to consolidate around current levels rather than expand in the foreseeable future. It makes economic sense to consolidate this volume at our nearby Pareora site which has the capacity to process the combined numbers.
“Pareora is a large multi-species plant, an hour down the road in Timaru. Consolidating at one plant will provide a longer season with higher staff retention rates. We have recently invested $7m at Pareora to add to its capability.”
This will be tough on the hundreds of workers who will lose their jobs, and others who service and supply the plant and its staff.
But it comes as no surprise.
Sheep numbers have been declining for several decades but there is still excess capacity in meat plants.
Fairton’s closure isn’t the first and it is unlikely to be the last.