1 Jul 2015

Support building for meat merger analysis

2:29 pm on 1 July 2015

A farmer group expects to get the support it needs by the end of this week to force a special meeting of Silver Fern Farms shareholders, it says.

The group wants the board of the co-operative to get some independent analysis done on merging with the other big meat co-operative, Alliance Group.

A parallel push is under way among Alliance's farmer shareholders.

It reflects farmer frustration at the low-key response by the two co-ops, to a report released earlier this year by the Meat Industry Excellence (MIE) group .

That identified gains of more than 400 million dollars over five years to be had from merging the two co-operatives.

Silver Fern Farms shareholders group spokesman Allan Richardson said it was close to getting the 5 percent support it needed from farmer shareholders to call a special meeting, and it was pleased a similar move was under way among Alliance shareholders.

"A very good report came out from MIE back in March this year and, basically, both companies have just kicked it to touch," he said.

"They've carried on, business as usual, and there are $100 million of savings tabled in that report and at a time when the industry is struggling, farmers are getting low returns, morale is poor, you would have thought they would have picked that up and gone through the figures and come out with at least a report to their farmer shareholders saying those figures are right or wrong.

"In the case we've got just now, I believe we've got one company saying the figures are basically rubbish and the other company saying they could be quite close, so I think all farmers are owed a report on exactly what those figures are and then they can make their own informed decision."

Sheep in the Wairarapa east of Masterton.

Sheep in the Wairarapa east of Masterton. Photo: RNZ / Alexander Robertson

Mr Richardson said there was some urgency about this because Silver Fern Farms was considering options to bring in outside investors to provide new funding of about $100 million to reduce debt.

A group of Alliance farmer shareholders is seeking the same commitment from that company's board to an independent cost benefit analysis of amalgamating the two co-ops.

Organiser and Southland farmer Jeff Grant said farmers were frustrated because the debate about merging the meat co-ops has been going on since about 2006, and nothing had happened.

"And that started with the proposal to look for an 80 percent consolidation of the meat industry. I don't think anyone's argued against consolidation since that point but the difficulty has always been how do you get there," he said.

"While this is not about telling the boards (of the companies) to merge, it is really saying let's look at the benefits and risks. And they may be in the synergies in three core areas - procurement, processing or marketing - and while a full amalgamation may be the ultimate outcome, that's not to say there aren't arguments for some of the sector to be in a joint venture."

Plant cut off

Meanwhile, Silver Fern Farms is trying to restore truck access to its processing plant at Waitotara, in southern Taranaki, after flood damage cut the only road to the site.

The plant was closed for maintenance before the flooding but was expected to open later this month to process lambs and calves.

Chief executive Dean Hamilton said there was a huge crack in the road and the only access was through neighbouring farm land.

The company was working with the Taranaki Region Council to get the road fixed by the end of the month or to gain access another way, Mr Hamilton said.

Stock from the surrounding area was being sent to another processing plant in Hawke's Bay while the Waitotara one was closed.

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