Not a problem?

04/06/2013

Turners & Growers, the fruit marketer controlled by Germany’s BayWa Aktiengellschaft, has bought the 30 percent in specialist producer exporter Delica it didn’t already own from managers for $25.8 million.

. . . Delica was set up in 1994 to sell citrus, cherries, asparagus and berry fruit. It formed a joint venture with Turners & Growers in 2007.

The purchase price entails $17.5 million upfront and four payments of about $2.06 million over the next four years. The company hired an independent valuer to give a valuation range for the business, it said.

Buying Delica is part of the company’s strategy “to grow its trading business ton and within Asia, further develop the global trading capability of Turners & Growers and to rationalise operating costs for the benefit of New Zealand,” chairman Sir John Anderson said in a statement. . .

I don’t have a problem with overseas investment but some xenophobes do yet there hasn’t been a peep about this from the usual suspects.

Is it that they see a difference between selling produce and the land on which the produce is grown, or is it the nationality of the purchases which means they don’t have a problem with this sale.


Rural round up

27/11/2010

Family’s living proof of sheep farming viability – Neal Wallace in the ODT writes:

Given the sheep industry’s well documented problems, labelling yourself specialist sheep farmers might not be considered the most inspiring of titles, but it is one the Alderton family wears with pride.

They are living proof sheep farmers can make money and be profitable by balancing business, animal and environmental factors.

The key, according to Ron Alderton, was attitude and determination.

Blunt chat puts station on new path – Jackie Harrigan in Country-Wide writes:

You would think it a brave man who told a new farmer-supplier with 30,000 lambs that his lambs weren’t really up to scratch.
That farmer might be tempted to tell the meat company to take a running jump – but to Ren Apatu, managing director of Ngamatea Station, 28,000ha of wild tussock and improved high-performance pastures on the Napier-Taihape road, the comment was a seminal moment.
“We thought we were pretty clever, with that number of lambs, but the meat company said, ‘If you give us lambs like last season we really don’t want them’ – and we really hadn’t heard that before,” Ren says.
Even more of a revelation was being taken into the chiller and shown his lambs on the hooks, next to those of other farmers.
“There were our lambs, about 16kg with a big fatty pack of meat on their rumps, hanging next to lambs at about 25kg with no fat on them.”
Being told “this is what we want and this is what you guys are giving us and if you want to be a part of it you need to supply what we want” was a wake-up call to Ren.
“We were told – ‘Our markets don’t want fat, they want meat; we want high yield as well – its good for us and for you’.” . .

Cleaning up afte Norgate may be expensive – Chalkie writes in The Press:

 Craig Norgate is well gone from PGG Wrightson, but tidying up some of the messes created during his tenure seems to be taking time – and may involve a reasonable bill.

Here’s what the progress card to date looks like:

1. New Zealand Farming Systems Uruguay exited – a good outcome, sold above book but below cost, with a bonus $4 million for the management contract and a $19.2m receivable debt owed to PGGW due to be settled.

2. Tim Miles, the former managing director put in place by Mr Norgate has been ejected – but at what cost?

3. Fixing up the half-cocked exit from the wool business and associated creative accounting – work in progress.

New chairman Sir John Anderson comes with one of the finest reputations in New Zealand business, and certainly there seems to be decisiveness around the board table in terms of the sudden and immediate resignation of Mr Miles, who was rightly or wrongly seen as Mr Norgate’s right-hand man.. .

 

Sustainability’s like ‘beauty’ – go on try and define it. Peter Kerr at Sciblogs writes:

Sustainability’s a term that’s a bit like ‘beauty’ – everyone knows what it is, but pinning down exactly what it is, is often in the eye of the beholder.

However, NZ agribusiness better start getting a better grip on the actuality of sustainability, or risk being marginalised by overseas customers and consumers according to KPMG.

In a recent agribusiness green paper KPMG lays out the current and emerging environment in our markets on the vexed issue of sustainability, with a second paper to focus on the practicalities of implementing such a supply chain approach.

The report contends that while the term has broad meaning, in essence it is about meeting the needs of today, without adversely impacting on the needs of tomorrow, and in balancing environmental, social and economic concerns in doing so. . .


Norgate’s last stand?

03/05/2010

The Press (not online) reports that Craig Norgate has given up on Rural Portfolio Investments, the parent company of Rural Portfolio Capital:

Norgate has essentially thrown in the towel on Rural Portfolio Investments . . . saying he cannot raise enough funds for the next dividend on the $60m of preference shares.

It is unlikely the preference shareholders will get the face value of that $60m investment back in the short term and the market has already priced in a much lower return.

The security for the RPC preference shares is 46.76m PGG Wrightson shares (which closed at 53c yesterday) and 10m NZ Farming Systems Uruguay (NZFSU) shares (41c) was well as $742,314 held in a dividend escrow account. . .

RPI and its financing subsidiary Rural Portfolio Capital are the investment vehicles for Norgate and the Otago-based McConnon family, and will very likely be wound down. . .

Norgate contributed to the McConnon family fortune when, as general manager of Kiwi Dairy, he bought Mainland Products from them. He’s now taken a large chunk of that away through his encouragement for them to invest in PGW.

He thought he could capture the rural servicing market by amalgamating Williams and Kettle, Pyne Gould Guiness and Wrightson. But farmers never bought into his plans and the combined market share of those companies fell from more than 70% to less than 50%.  PGW’s share price went from around $2. 80  two years ago to just 53 cents on Friday.

The decline of PGW provided opportunities for competitors Combined Rural Traders and new companies of stock agents set up by former PGW agents, including Hazlett Rural and Rural Livestock.

The only positives for PGW at the moment are the arrivals of Sir John Anderson as chairman of the company and former PGG general manager George Gould as a director.

One of Norgate’s biggest mistake was failing to gain finance for the purchase of 50% of Silver Fern Farms. While the financial meltdown has been blamed for this many farmers cannot believe how he ignored the fundamental basics of business which require securing funding before doing a deal.

His foray into dairying in Uruguay was big on promises but has yet to deliver. Share prices peaked at $2 and were at 41 cents on Friday.

From the outside, the investment in Uruguay looked simple. However, Norgate failed to take full account the challenges of farming in South America with language, cultural and political difficulties and a very different climate from New Zealand.

You only have to look  at the difficulties New Zealand companies have when investing in Australia, where at least the language, culture, banking and legal systems are similar, to realise that what works so well here might not  transfer easily to Uruguay.


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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