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 group’s senior executives have been travelling the country on their annual roadshow, updating farmer meetings on Alliance’s current position, plans for the coming year and pricing forecasts.
Chief executive David Surveyor announced a plan to spend $54 million capital in the coming year, saying the group has an “incredibly strong” balance sheet, with core debt down from $41m to $20m.
He also said a bonus share issue would reward farmers with extra shares, allocated according to their supply of stock during the 2017-18 season.
The annual roadshow programme began in Dannevirke on October 2 and finished in Fortrose, Southland, on October 19. The co-op expected to reach about half of its 5000 shareholding farmers.
Speaking at one of the smaller meetings, at the Banks Peninsula Rugby Club, Little River, Surveyor began by emphasising the group’s strong focus on plant safety.
In the financial year 2014, one in eight employees suffered an injury, but now that ratio has improved to 1:36.
“We’ve got to get this business to zero harm,” he said. “Looking after our people is the right thing to do. We have made good progress, but there is still some way to go. We were unfortunately reminded of that by a serious accident at our Smithfield plant in March.”
Surveyor said an example of how safety makes money is a $2m project to take down and rebuild the Pukeuri (near Oamaru) beef chain during the off-season.
This is to address a “significant” safety concern, albeit one that had not actually resulted in an accident.
The chain has been rebuilt so as to increase safety and yield, he said.
He also emphasised investments in new technology to improve processing productivity and efficiency.
A feature of the presentation was a video of carcases on a chain at the Dannevirke plant being x-rayed to identify exactly where the meat and bones were located, so robotic cutters could then change their angle and position to maximise the yield from each one.
Surveyor said Alliance is shifting to phase two of its turnaround.
“You’ll see us investing more... to accelerate the whole issue of value-creation and capture in domestic and overseas markets, and you’ll see us building capacity and the capability of the company,” he told shareholders.
