At least a couple of hundred people will lose their jobs when Silver Fern Farms closes its sheep and lamb slaughtering and processing plant at Belfast.
SFF chief executive Keith Cooper said the closure of the slaughter operations was the final instalment of its Project Rightsize for 2008, a programme which was designed to align processing capacity with supply, enhance financial performance, and re-position the business as a true marketing organisation under the Silver Fern brand.
It reflects the overall decline in South Island sheep and lamb numbers, which are expected to drop by an estimated 2.2 million units next year, as conversions in traditional sheep and lamb farming areas to dairy and alternate land uses translate into lower stock units.
Cooper said SFF projections were broadly aligned with Meat and Wool Economic Service forecasts that signal an overall reduction in livestock over at least the next three years.
There were also specific issues that make the slaughter processing operation at Canterbury less tenable. These include the requirement for capital investment in effluent management systems, environmental upgrading, and limited development options compared to other key sites.
“The proximity to residential zoning also contributed to the decision,” he said.
The processors boning room facilities would continue to operate as usual, as the company needed to retain its processing capability to meet increased demand for chilled product across the business, Cooper said.
Cooper said while no further closures are planned, all operations are subject to ongoing review based on site economics.
With this proposal, Silver Farm Farms would have reduced the number of full operating sites by six, with lamb capacity reduced by five chains.
Since February 2007 the company has reduced debt by $150 million.
“These decisive actions, coupled to the proposed partnership with PGG Wrightson and commitment of additional capital of $220 million, should now address the concerns Alliance had with a merger last year and create the opportunity for Alliance to recommence merger discussions,” Cooper said.
“This can only benefit suppliers to the two co-operatives.”
The admission that Alliance’s concerns over last year’s proposed merger is interesting but it doesn’ explain why SFF spurned Alliance’s mega-merger proposal this year.
As for creating an opportunity for Alliance to recommence merger discussion, It’s possible I’m not talking to the right people, but those I am discussing the issue are strongly opposed to PGW’s involvement with SFF and that would make a merger with Alliance less likely not more.