Friday, 21 December 2018 07:04

Value of co-op highlighted in challenging year

Written by 

Extreme dry conditions and the resulting erratic stock flows over the past year underline the value of a cooperative, Alliance farmer shareholders heard at their annual meeting this month.

Murray Taggart, chairman of Alliance told the meeting that the extreme and widespread dry weather across most of New Zealand late in 2017 and January-February 2018 saw the company maximise processing capacity to help farmers de-stock lambs and held farm gate pricing to support shareholders when they needed it most. 

Alliance also assisted its shareholders by moving more than 1 million head of store stock, all commission-free.

“Sometimes it takes these extreme events to reinforce the wider benefits of a co-operative. There was the inevitable “hole” in lamb supply once the drought broke and it would have been easy to back off capacity at that time and save costs.

“The downside would have been restricted autumn processing capacity, just when our shareholders needed to reduce on-farm numbers to winter levels. Clearly this would have been unacceptable for our farmers, so we stuck to our co-operative principles and ensured we were in a position to assist farmers to maximise the value of their stock.”

2018 was also a challenging year for beef with softening international prices slow to be reflected at the farm gate, he said.

“Demand for processing capacity soared in early autumn when Mycoplasma Bovis, a delayed bull kill and the cull cow kill all coincided. It highlighted that in extreme events we will never have enough capacity to accommodate everyone’s needs.”

The Board and management are committed to lifting the profitability of the company, he said.

“We are determined to improve on the recent $8 million operating profit, but we take some comfort that we were able to buffer farmers in an adverse climatic year by paying out an increasing portion of our revenue to farmers.” 

With farmers experiencing strong farmgate pricing , the company decided not to make a profit distribution this year and instead continue to invest for the long-term prosperity of the business and shareholders, said Taggart.

The company also rewarded shareholders with 9.5 million bonus shares based on supply over the 2018 financial year.

David Surveyor, chief executive of Alliance, said Alliance is continuing to undergo substantial change to transform the cooperative into a higher performing business. 

“The effects of this are becoming more obvious to our farmer shareholders as we are now able to offer more competitive farm gate pricing. This does not mean we will lead the pricing every day of the year, but it does mean that over the course of a year, returns from supplying Alliance will be better than can be achieved elsewhere.”

Alliance is delivering value to farmers over and above the price on the day, he said.

“We ramp up processing capacity to cover seasonal peaks, offer advance payments to committed shareholders, loyalty payments to platinum and gold suppliers and yield payments that recognise quality of supply.”

The company is working hard to ensure the gains made so far are sustainable, investing in developing new markets and focusing on market-facing and added value projects.

“It is clear there is potential to capture more value from the market, both for prime cuts and co-products. Much of this work will require longer term investment, but we are convinced this prize is worth pursuing.” 

The company’s safety performance is a good barometer of underlying business performance, said Surveyor.

“This year our Total Recordable Injury Frequency Rate reduced by another 34% and we made excellent progress in upgrading our process safety work around ammonia. Significant capital investment saw improved traffic management and machine guarding, and new technology allowed us to commence the replacement of the remaining older bandsaws with BladeStop 600 series saws.”

The company was pleased with the progress of major capital works including a new $15.9m  venison plant at Lorneville near Invercargill, a new robotic primal cutter and processing room at Dannevirke, and investments in chiller management and the engine room at Lorneville. 


» Connect with Rural News

More like this

Claims of trouble at Alliance

Big staff rumblings, safety issues and the likelihood of yet another poor result are claimed to be unfolding at the Alliance Group.

No issues for us

Alliance Group chairman Murray Taggart is somewhat perplexed by recent claims and denies the co-op has problems with staff turnover, plant safety or profitability.

Handpicked is judges’ top pick!

Meat co-op Alliance Group’s Pure South Handpicked 55 Day Aged Beef has won international honours in the World Steak Challenge for the second year running.

Meat company creates 35 regional jobs

Meat processor, Alliance Group is investing another $1.4 million in improvements to its Dannevirke plant as it seeks greater efficiencies in processing.

» The RNG Weather Report


New hort science scholarships 

A scholarship for up to five students each year, studying Massey University’s Bachelor of Horticultural Science degree has been launched by kiwifruit exporter Zezpri.


Taking farmers together on climate change

How we take the farming community with us and what trajectory we are on for climate change response is all open for discussion, says Dr Rod Carr, the new chair-designate of the Climate Change Commission.

High alert for stink bugs

Biosecurity Minister Damien O’Connor is warning travelling Kiwis to be vigilant as the high-season for the crop-eating brown marmorated stink bug (BMSB) is under way.


» The RNG Weather Report

» Latest Print Issues Online

The Hound

Chipping in

The Hound was intrigued to read an article recently, on the Newsroom website, that shows that Education Minister Chris ‘Chippy’…

I'm alright

This old mutt has been contacted by many concerned individuals about the role the former Synlait boss John Penno is…

» Connect with Rural News