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 meat co-op says the result was based on a record turnover of $2.2 billion and it will pay an $11.3m dividend to farmer shareholders. It will also pay out an additional $10 million bonus share issue of one share per qualifying stock unit.
Alliance Group chair Murray Taggart says it has been a positive year for the company.
“Our record operating profit reflects strong global demand for our products, a reward for our success in capturing greater value from our markets, the hard work and dedication of our people and our farmers’ passion for producing the world’s best beef, lamb and venison.”
Taggart concedes that Alliance had faced significant volatility during the year – including from the ongoing impact of Covid- 19, global supply chain disruption, labour constraints and inflationary pressures.
“However, our strategy and investment programme meant we were able to successfully navigate the challenges.”
He says the meat co-op ended the year with a sound balance sheet and reduced inventory levels compared to 2020-21 year.
Chief executive David Surveyor – who leaves the company next March – says the financial performance is the result of hard work and dedication from employees and support from loyal farmershareholders.
“Alliance Group continued to experience significant challenges around global logistics with poor vessel adherence to shipping schedules and high freight costs.”
He claims that significant investment in improving the co-op’s operational performance also contributed positively to the record profit result.
“We have invested across our plant network in recent years and this played a key role in significantly improving our performance. We’re already seeing gains from the new generation primal cutter and middles machine installed at our largest plant at Lorneville near Invercargill and our product quality and yield have improved across the board.”
Surveyor concedes that the disruption caused by the Covid- 19 pandemic, rising farm input costs, a wave of regulatory reform, extreme dry conditions and flooding in parts of the country meant farmers had faced difficult times.
“These events certainly tested the sector’s resilience and fortitude. However, it also showed the value of belonging to a co-operative. This year, we welcomed a record number of new shareholders to Alliance Group as more farmers recognised how the co-operative has their back during difficult times.”
Alliance’s annual meeting will be held in Timaru on December 15.
