27 Oct 2010

Merger won't solve over-capacity - Alliance

9:22 am on 27 October 2010

The chairman of the Alliance Group says merging it and the other big meat co-operative, Silver Fern Farms, isn't going to solve the issue of falling stock supply and the industry's processing over-capacity.

Silver Fern has sent an open letter to the farmer shareholders of both co-operatives, asking them for their view on whether a merger should be investigated again.

Alliance chairman Owen Poole says his company's shareholders overwhelmingly rejected Silver Fern's last attempt to initiate merger talks two years ago and he doesn't doesn't think re-opening those discussions would achieve anything.

He says heavy losses in the recent spring storms will worsen the over-capacity problem that the meat industry already has, because of declining stock numbers.

He says Alliance has spent a lot of money removing excess capacity. More needs to be taken out, he says, and the industry view is that rests with Silver Fern Farms.