20 Mar 2013

Likely cost of red meat restructuring to co-ops flagged

10:06 am on 20 March 2013

The chairman of one of the country's two big meat co-operatives is asking farmers whether they are prepared to carry the costs of restructuring the fragmented industry.

Owen Poole of the Alliance Group attended this week's farmer meeting in Gore which strongly supported the renewed call for a major amalgamation of meat companies.

At the meeting 1000 farmers endorsed the idea of having a Fonterra-type structure for the red meat industry, resurrecting the concept of a dominant meat processing and marketing company, controlling at least 80% of the trade.

Many farmers are keen to see the two co-operatives, Alliance and Silver Fern Farms, start the process by merging.

The companies say they are talking to each other about an improved industry structure and others are also involved.

But Alliance chairman Owen Poole says farmers need to think about whether the co-operatives should bear the brunt of the consolidation costs.

He says there are significant costs in any amalgamation which should be shared across the industry, whether a farmer is a co-operative supplier or not.

Mr Poole estimates initial costs would be something in the order of $250 - $300 million.