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.
Supplier shareholders will receive a $7 million pool payment distribution- the first in three years. Last year the co-op reported an $8.4m pre-tax profit.
The result for the year ending 30 September 2014, based on an improved turnover of $1.46 billion, follows rising consumer confidence, the gradual recovery of the global economy, a growing demand for red meat products and improving market prices.
Alliance chairman Murray Taggart says the result and the outlook for the year ahead means the company is well placed for further growth.
“Good international demand and the ongoing development of new markets indicate positive signs for the year ahead. The 2014 year has been one of consolidation and our improvement in profit reflects our continuing focus on operating efficiently.
“Our pool surplus payment to our supplier shareholders, as a result of our improved earnings, shows we’re serious about recognising the investment that farmers continue to make in the co-operative and rewards their loyalty and support.”
Grant Cuff, chief executive of Alliance Group, says the company’s global markets showed improved demand and increased pricing.
“The global demand for protein is growing and we have made significant strides over the past year.
“The ongoing demand from China for lamb and mutton has underpinned global supply and pricing. This growth, coupled with the country’s rising population, increased urbanisation and the emergence of a middle class, means China is now our largest export market for sheepmeat.
“However, our traditional markets in Europe and North America also continue to show encouraging signs of recovery.”
Cuff, who stands down as Alliance Group chief executive next month, says the company is making steady progress in developing new markets such as India and Brazil to ensure the co-operative enjoyed a diverse mix of customers.
While strong pricing in North America for beef was expected to level off once Australasian supply recommences, higher cattle prices are expected to hold over the coming year.
Major importers of venison are regaining confidence on the back of an improved European game season. Overall, 2015 returns for sheepmeat and venison are expected to be at least similar to 2014.
