Farmer Owned Not Way of Future?

01/07/2008

PGG Wrightson needs 75% of Silver Fern Farms’  shareholders to support PGW’s move to take a 50% stake in their company. The vote will also determine how important shareholders regard farmer control.

Silver Fern farmers will be asked to surrender control of their company to a partnership with Wrightson, with the two partners each having four members on the board.

In September, the 9000 farmers will vote on the deal, with a 75 percent majority needed to allow the cooperative’s constitution to be changed.

A 75% majority is a big ask, but not impossible.

“The big question is: who are the natural owners of the assets – is it the farmers or is it others?” Meat and Wool NZ chairman Mike Petersen.

“We’re going to get answers now, from the vote the Silver Fern farmers have”.

Another question concerning Co-operatives Association chair Peter Macdougall is the impact on farmers’ incomes.

“This is a decision the members of the cooperative need to make. It comes down to how they believe they’ll be getting the best dollar for their animals, and to what extent they want to retain control of their cooperative business.”

“The same dollar can’t go in two directions,” he said.

If farmers are convinced the the new structure will increase earnings that might not matter.

“Farmer members will be interested to know how the cooperative can retain its cooperative status with PGG Wrightson holding half of the voting shares.”

The Cooperative Companies Act 1996 only allows for 40 percent of investor shares in a cooperative. PGG Wrightson is seeking a 50 percent stake in Silver Fern Farms, and offering to pay $220 million…

The meat industry has been dogged by the tension between seasonal supply of lambs and the market demand for year-round supply. The PGW strategy aims to provide high value chilled cuts 12 months a year rather than what happens now with 70 percent of sheep slaughter taking place between December and May.

That’s good in theory, but not so easy in practice for farmers who don’t have the feed to finish lambs in winter and spring. However, higher returns from the meat industry mean processors have to meet the market, and if year-long chilled cuts are what consumers want, farmers will have to find a way to supply it.


Meat Industry Disunity Scuttles Taskforce

29/06/2008

Disappointment but little surprise has greeted the news that the Meat Industry Taskforce  has disbanded.

Taskforce chairman Sir John Anderson said yesterday that consultant PricewaterhouseCoopers (PWC), which was commissioned to complete an industry analysis, could not get informed consent from all industry participants.

In addition, Sir John said that in the last week one company had announced it was withdrawing its support for an industry strategy, saying it was pursuing its own plans, making it impossible to compile a report.

Meat and Wool New Zealand (MWNZ) established the taskforce earlier this year to create a red meat industry strategy to address international marketing, supplier dynamics and processing.

Owen Poole who chairs Alliance Group said his company supported the taskforce and was disappointed it had failed. 

Mr Poole said the strategy could have been the catalyst for industry aggregation, and the fact PWC was going to seek contributions from farmers, meat companies and unions, would have produced meaningful results.

“I see it as a lost opportunity,” he said.

Silver Fern Farms chief executive Keith Cooper said he supported any initiative to create an industry strategy, but the taskforce never released its terms of reference, so companies did not know what it was trying to achieve.

Mr Cooper said Silver Fern Farms (formerly PPCS) was not the reason the taskforce failed.

“In regard to the Meat Industry taskforce announcement, from a Silver Fern Farms perspective, we were never asked for informed consent by PWC on the issue.”

The company supported any initiatives to improve supplier returns.

“Silver Fern Farms supported any initiative about reviewing the industry strategy or structures.”

Anzco chairman Graeme Harrison was also supportive but not surprised it had failed, given the reluctance of the four major meat companies to co-operate on industry issues.

“Unless the four companies were prepared to talk in meaningful ways, then it was never going to happen.”

While he had reservations about the size of regulatory and commercial hurdles the taskforce faced, he said it would have provided an important circuit-breaker for farmer confidence.

Mr Harrison said commercial reality would now play its hand and there would be change.

“Sooner or later, something will happen and it will be a commercial decision.”

The 07-08 season was a very tough one for sheep farmers with falling returns and steeply increasing prices for fuel, fertiliser and other inputs. The outlook for next season’s lamb prices is more optimistic, but even so they’ll be hoping that whatever happens in the industry happens sooner not later.


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