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 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.
Murray Taggart, chair of Alliance Group, says the past year had been challenging for farmers with difficult market conditions, but the cooperative had strengthened its balance sheet considerably.
“Global market prices have been at their most difficult in the last five years and any recovery in prices since May has been more than offset by the foreign exchange levels, in particular, the British Sterling and US Dollar,” he says.
“However, the weather conditions across the country have also became more favourable as the year progressed, which has provided a significant boost for our farmers.”
The cooperative’s business transformation strategy was resulting in tangible benefits that had exceeded expectations, delivering gains of $56 million compared to the budgeted $34 million, says Taggart.
“Our debt has reduced from $129 million to $41 million and we have no seasonal debt. We’re also working hard to gain a far deeper market penetration and to capture more value out of existing markets.
“Although we’re still in the early stages of a transformation, our strengthened balance sheet and a fitter business means we’re on track to take advantage of global opportunities as we continue to build a stronger, more resilient co-operative, for the benefit of our farmer shareholders.”
