SFF joins the slaughter
Meat processor and exporter Silver Fern Farms Ltd has joined fellow South Island-based meat company Alliance Group in reporting a big loss for the past year.
Silver Fern Farms isn’t responding to analysis which suggests its sheepmeat processing costs are the highest by some distance and that it is “one of the laggards” in beef too.
Dissecting the detail in the Meat Industry Excellence-commissioned report, Professor Keith Woodford says figures provided by report authors GHD indicate SFF’s sheep processing costs it $38.26/head – $6.17 more than Alliance and $10.01 over “industry cost leader” Ovation.
“No company can be competitive if it is at a $6 per head disadvantage,” writes Woodford in his blog (http://keithwoodford.wordpress.com).
While he says it has to be asked whether the costs are accurate, he also reasons that if the figures are not accurate, why would GHD risk its reputation by presenting them?
“Given that Silver Fern Farms processes over five million sheep per annum, it apparently puts them at a disadvantage of more than $30 million on their processing operations. That is a lot to make up through superior marketing,” says Woodford.
Nor does the problem appear to be one of throughput: looking at the three main sheep processors (combined market share 67% in 2013-14), SFF’s capacity utilisation was 49%, Alliance’s 46% and Affco’s 37%.
ANZCO and Ovation, with a combined market share of 17%, are at 51% and 53% utilisation, respectively, while the seven single-chain operators, with a combined market share of 16%, average 63%.
“So in terms of plant utilisation, small is indeed beautiful,” concludes Woodford.
In a follow-up blog on beef, Woodford finds “once again, Silver Fern Farms appears to be one of the laggards, but it is not there by itself....
“Instead, there is evidence that most of the companies have a mix of high cost and lower cost plants, with the best quartile of facilities having labour costs about 25% lower than the rest.”
Despite that and evidence SFF’s beef operating costs are similar to many other companies’, it is inevitable much of the focus will be on SFF, says Woodford. “This is the company that has been struggling the most, in part because of its sheep operations. It is also the company that is currently seeking $100 million new capital.”
SFF told Rural News it would not comment because of that ongoing and confidential capital raising process.
Woodford also recognised the sensitive timing of his commentary.
“If Silver Fern Farms cannot counter with data to show that GHD has got the numbers wrong, or that GHD is not comparing like to like, then the challenge to get investors has just increased.”
New Zealand dairy processors are welcoming the Government’s commitment to continuing to push for Canada to honour its trade commitments.
An educational programme, set up by Beef + Land New Zealand, to connect farmers virtually with primary and intermediate school students has reported the successful completion of its second year.
The Food and Agriculture Organisation of the United Nations (FAO) has welcomed a resolution adopted by the United Nations (UN) General Assembly to declare 2026 International Year of the Woman Farmer.
Waikato herd health veterinarian Katrina Roberts is the 2024 Fonterra Dairy Woman of the Year.
Trade Minister Todd McClay says New Zealand has no intention of backing down in a trade dispute with Canada over dairy products.
Horticulture NZ chief executive Nadine Tunley will step down in August.
OPINION: The new government has clearly signalled big cuts across the public service.
OPINION: Your canine crusader is not surprised by the recent news that New Zealand plant-based ‘fake meat’ business is in…