Meat co-op seeks capital from farmer shareholders
Meat processor Alliance Group is asking farmer shareholders to inject more capital in order to remain a 100% co-operative.
Alliance Group chief executive David Surveyor says it will be the only major red meat cooperative in New Zealand and "our focus is on ensuring we make the right decisions to benefit our farmer-shareholders and increase their returns".
He points out that Alliance has a strategy in place which aims to create more value from the marketplace and improve the cooperative's operational performance.
"Over the course of our annual road-show, farmers are telling us they think it's important they retain ownership of the industry, they want to be in control of their destiny and their membership in our
cooperative fulfils this need.
"They also support the cooperative's purpose that every cent we make is either re-invested back into the business or delivered back to them."
Farmers will continue to have a choice of where they send their livestock, and as the major red meat cooperative in New Zealand, Alliance is an attractive option for cooperatively minded farmers, says Surveyor.
Silver Fern Farms (SFF) shareholders voted to accept an investment by Chinese company Shanghai Maling for a 50-50 joint venture. About 17% of SFF voted against the proposal.
Alliance acknowledged the vote saying it gives clarity to the industry but stated the cooperative's strategy to increase returns for farmer-shareholders was not reliant on the ownership structure of SFF.
"This is a decision that has been made by SFF shareholders. We will run our own race and we have a strategy that will deliver significant value to our farmers," says Surveyor.
"We have of course extensively evaluated the potential for merger with or acquisition of all or part of SFF just as they have no doubt looked at us over the years.
"In developing our own strategy, we reached the conclusion that SFF is not critical to the cooperative's plan to grow the business or deliver returns to our farmer shareholders.
"Our strategy aims to maximise returns to committed farmer shareholders by procuring, processing and marketing the world's best quality red meat products.
"As a differentiated branded seller we will capture this greater market value by getting better at matching our products and markets, continue our leadership in the development of new markets, create more efficient sales channels and invest more in new product development and packaging.
"The investment in SFF may be game-changing for them, but it is by no means game-changing for Alliance Group. Our model is about building a better business and creating value for our farmer shareholders."
The cooperative has received an encouraging response to its offer to committed farmer shareholders of a loyalty payment if they supply 100% of all their livestock or 100% of one species, Surveyor says.
