Meat co-op dilemma
Meat processor Alliance Group's cash-strapped farmer shareholders face a dilemma - either pour more money into the co-operative or risk losing 100% ownership and control.
“The weakening of market prices and global volatility over the year reduced group revenues but the value created from our strategy projects meant the cooperative was able to act as a buffer and absorb some of the impact on our farmer shareholders,” he says.
“We would have liked to have absorbed more and remain committed to finding ways to pay farmers more for their livestock.
“It’s important because as New Zealand’s only 100% farmer-owned major red meat co-operative, farmers are at the heart of every decision we make. Every cent Alliance Group makes goes back to the farmer or is invested for the benefit of the farmer-owned business.”
His comments come as Alliance Group announced a $9.8 million distribution to farmer shareholders on the back of an improved financial result.
The 100% farmer-owned cooperative has reported a pre-tax profit of $10.1 million for the year ending September 30, 2016, compared to a $7.9 million pre-tax profit last year. The result is based on a turnover of $1.36 billion.
Alliance Group will continue to invest in improving its operational performance, says Surveyor.
“This is already being achieved in a variety of areas including lowering our operating costs and improving productivity, automated measurement and cutting of the carcass, maximising yield, building our brands and matching products to optimal market opportunity.
“Investment in robotics within production and systemised planning solutions enabling efficient production runs are vital to making gains in processing. We will also be deploying further processing and packaging technologies that deliver efficiencies, lower running costs and enhance revenue opportunities.”
The company has also significantly improved its overall safety performance, which was a crucial part of the cooperative’s strategy, he says.
“The 43% reduction in our Total Recordable Injury Frequency Rate (TRIFR) means fewer people getting hurt in our workplaces, which is good for our people and our business.”
The company’s balance sheet remains strong with shareholders’ funds of $302.5 million (2015 $308.9 million) providing an equity ratio of 71%.
“Our loyal committed farmer-shareholders and our 5,000 employees deserve a lot of credit for the improved financial performance,” says Surveyor.
“As a cooperative, we owe it to our farmer shareholders to make greater strides to ensure we’re an attractive option for farmers and a place where people want to work.
“We still have a long way to go and our focus over the next 12 months will be diligently working on creating a better result for New Zealand’s best farmers.”
