Michael Spaans joins Fonterra board


DairyNZ director Michael Spaans has been elected to the board of Fonterra.

Returning Officer Warwick Lampp, of electionz.com Ltd, has declared the final results of the 2013 Fonterra Board of Directors’, Directors’ Remuneration Committee and Shareholders’ Council elections.

Shareholders voted to re-elect incumbent Directors Malcolm Bailey and Ian Farrelly. They will be joined by new Director Michael Spaans.

Michael Spaans, aged 50, lives in Hamilton and farms at Te Aroha. Michael was a Shareholders’ Councillor from 2000 to 2008. Michael is currently a Director of DairyNZ and several other dairy sector companies.

Shareholders Scott Montgomery and Gerard Wolvers were elected unopposed as members of the Directors’ Remuneration Committee.

In the Shareholders’ Council elections, the following Shareholders’ Councillors were elected:

Ward 8 – Hamilton Ross Wallis
Ward 21 – Coastal Taranaki Vaughn Brophy

Both are new Shareholders’ Councillors.

In the eleven other Shareholders’ Council wards where elections were due, nominees were elected unopposed. The Councillors in those wards are:

Ward 3 – Northern Wairoa Penny Smart
Ward 6 – Hauraki Julie Pirie
Ward 9 – Morrinsville Malcolm Piggott
Ward 12 – Cambridge Kevin Monks
Ward 15 – South Waikato Ian Brown
Ward 18 – Otorohanga Duncan Coull
Ward 24 – Southern Taranaki David Werder
Ward 27 – Southern Manawatu Richard Syme
Ward 30 – Northern Central Canterbury Ange Ward
Ward 32 – Southern Canterbury John Gregan
Ward 33 – Otago Ad Bekkers and Ivan Lines

All successful candidates will take office at the close of the Annual Meeting on Wednesday, 27 November 2013.

Date won’t matter if Alliance won’t dance


The Meat Industry Action Group isn’t happy that Silver Fern Farms won’t be calling a special general meeting until October 7.

MIAG chair John Gregan said that date was too late.

“They (Silver Fern Farms) kept fobbing us off and it’s only now that we have a court order that they decide to set a date.” Mr Gregan said it was critical the meeting was held on or before September 8 when shareholders voted on the proposed partnership with PGG Wrightson because farmer ownership could be diluted to 50 percent.

However, Silver Fern Farms chairman Eion Garden said it was not possible to hold the meeting before or on that date.

“Our primary concern is the confusion that would arise around a vote on two quite separate issues.” Mr Garden also dismissed Mr Gregan’s concerns about farmer shareholding being diluted.

“He (Mr Gregan) doesn’t understand the constitution criteria in place,” he said.

“Any shareholder resolution has got to be passed by 50 percent of farmer shareholders.” Mr Garden said the Silver Fern Farms board would be in a better position to comment on the issues to be considered in light of the outcome of the PGG Wrightson partnership proposal.

He’s right. The outcome of the shareholders’ vote on whether to accept the PGW offer could effect how they view MIAG’s proposal so it should be determined before the SGM is held.

The Meat Industry Action Group’s 11 resolutions, which will be presented at the meeting, were focused on industry consolidation and forming a market-led national champion with 80 percent of the sheep meat industry.

The Alliance Group has agreed to hold its special general meeting on September 5.

However, chairman Owen Poole said at a meeting in Gore last week that he was prepared for a “Gunfight at the OK Corral”.

He described the resolutions as “unrealistic and highly prescriptive” and said they compromised the ability of board directors to act in the best interests of the company.

 If Alliance shareholders vote agains this at their SGM it makes the outcome of the SFF meeting irrelevant anyway.

It will take more than two to do MIAG’s tango. Alliance directors have made it quite clear they’re not wanting to dance with the other co-operative and if shareholders agree with them the dance will be called off.

MIAG has numbers for merger meetings


The Meat Industry Action Group has the shareholder numbers to force Alliance Group and Silver Fern Farms to call special general meetings and discuss a merger.

MIAG wants an independently-chaired joint working party to look at consolidation.

Group spokesman John Gregan said the proposed PGG-Wrightson purchase of 50% of Silver Fern Farms would have no impact on his group’s ultimate plan of creating an entity to handle 80% of New Zealand’s red meat procurement and processing.

The meetings were unlikely to be called until after September’s vote by Silver Fern Farms’ shareholders on the proposal to merge with PGG-Wrightson.

Alliance Group chairman Owen Poole said he had meetings planned with shareholders next month to discuss his company’s strategic plan and would not consider holding a special meeting until after those talks.

SFF chief executive Keith Cooper said the board would meet next week and consider the action group’s proposition.

Mr Gregan did not have any problem with delaying the special meetings, saying having them after the PGG-Wrightson-Silver Fern Farms vote would make the situation clearer.

A “no” vote by shareholders would add to the pressure to get the two co-operatives talking. A “yes” vote meant the industry still needed consolidation, he said.

The detail of the resolutions was still being worked on with the meat companies. Mr Gregan said another remit would try to ensure the committee reached a decision.

“It is all very well telling them to get around the table, but we need some teeth . . . we need to give the chairman some ability to make them toe the line.”

This presupposes the working party will conclude a merger is the best option. 

It also ignores the legal requirement for directors to do what is in the best interests of their companies so no matter what the working party concludes unless it is in the best interests of each company it will not be acted on.

Silver Fern Farms PGW Plan Not Silver Bullet


The proposal for PGG Wrightson to take a 50% stake in Silver Fern Farms is not a silver bullet for the meat industry and initial reaction to the concept isn’t very positive.

… yesterday’s announcement went down like a “cup of cold sick” with shareholders, who fear farmer-ownership of New Zealand’s largest meat company will be diluted.

Mossburn farmer Stephen Cullen said he was “bloody shocked” that Silver Fern Farms wanted to effectively sell its soul to outside interests and alienate itself from the rest of the industry.

Farmers feel very strongly about retention of farmer-control in the processing industry.

Meat Industry Action Group chairman John Gregan said he was “staggered” that PGG-Wrightson wanted, what he believed, was a controlling share in Silver Fern Farms.

“There’s no doubt the current structure is failing us, but the loss of farmer shareholding will be a sore point for some,” he said.

Mr Gregan believed it would be a “big ask” to achieve the 75 percent voter threshold required to advance the partnership.

MIAG has gathered proxies from SFF & Alliance shareholders to call a special general meeting of both companies aimed at getting the two comapnies together. I don’t know whether the proxies will enable MIAG to vote on the SFF PGW deal as well.
Federated Farmers Southland meat & fibre chair Martin Hall agreed the 75% would be difficult and farmers would have to dedecide whether they wanted to be an owner of a meat company or just a participant.

“I’m a bit angry about it. They (Silver Fern Farms) didn’t dream it up last month. It takes a long time to put together something like this.”

MIAG is meeting SFF chair Eion Garden today. One of the questions they could ask is: why SFF let the Meat Industry Taskforce waste time and money starting the process of developing an industry strategy when they SFF must have already been planning the deal with PGW?

Garden believes shareholders will support the initiative becuase of the immediate benefits.

The new board of SFF would decide on the use of the $220 million, but a sizeable chunk would go on the upgrade of existing processing plants, including the use of robotic meat-cutting systems developed between SFF and Dunedin’s Scott Technology.

“This industry is starved of capital.

It’s one of the fundamental reasons we don’t have strong balance sheets and strong profits on a long-term basis,” Mr Garden said.

He is right that lack of capital is a problem, but it’s not the only one. The drastic drop in sheep numbers has resulted in an over-supply of killing space so whether or not the deal goes ahead there will be more works closures.

The other problem is marketing and SFF & PGW say more money would be spent on researching customers and stronger branding of New Zealand meat. But they also say the money won’t be used for reducing debt and high debt is one of SFF’s big problems.

I haven’t spoken to anyone who is wildly enthusiastic about the plan yet but perhaps I’m talking to the wrong people. The ODT found a more positive reaction from Otago Fed Farmers meat & fibre chair Rob Lawson because it involved Craig Norgate.

I am cautiously optimistic. I can see some really positive things, and one of those is the business acumen of Craig Norgate and the PGG Wrightson team.”

Other factors the Merton farmer saw as favourable were the injection of $220 million from PGG Wrightson; the move to an integrated supply chain linking consumers with farmers; the potential for industry rationalisation; and the market focus the investment would encourage.

All these are fair points and there is no doubting Norgate’s abilities, nor his powers of persuasion. If he fronts a road show to sell the concept he may be able to change the minds of at least some of those who aren’t enthusiastic about it.

The loss of total farmer control of SFF was a possible concern, but Mr Lawson said farmers had to ask themselves what farmer control of the meat industry had achieved so far.

That’s a fair question but as Fonterra found when they tried to persuade their shareholders to open up the company to outside investment that farmers aren’t keen to lose control.

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