An agreement confirmed today between Silver Fern Farms and Lowe Corporation will see collaboration at a scale which is set to dramatically change the hide, pelt and rendering sector in New Zealand.
Silver Fern Farms has confirmed an agreement to sell the cooperative’s ‘Leathers’ Napier hide processing plant to Lowe Corporation and enter into a toll processing arrangement for the majority of the cooperative’s North Island hides and rendering. Lowe Corporation will also market all Silver Fern Farms’ hides, pelts and wool on behalf of Silver Fern Farms. Rendered products will continue to be marketed through the joint venture, Farm Brands Limited.
“It’s a smart strategic partnership where we are collaborating to avoid duplication and to create additional value for our farmers and shareholders in the sector,” says Cooper.
He says the sector is in need of rationalisation and this deal addresses that in the area of rendering, hides and pelts.
“At a company level, this agreement will see us optimise returns, reduce costs and lift our focus on our core business. At an industry level we have said the industry needs to work together to ensure it is sustainable and this partnership shows we are committed to following through with our intentions.
“Strategically, it brings about a natural fit for both companies. At Silver Fern Farms we will now be able to focus on food, while Lowe Corporation now has the scale they need to be experts in hides, pelts, wool and rendering.”
In 2013 the two companies established a toll processing agreement for North Island pelts. Lowe Corporation managing director Andy Lowe says the deal builds on that agreement and will help realise Lowe Corporation’s vision to become New Zealand’s leading company in the hides, pelts, wool and rendering sector.
“It is great to get this agreed. We are growing our business considerably with this strategic partnership. It’ll go a long way to realising our aim of being New Zealand’s experts in the processing and marketing of hides, pelts, wool and rendering.” Lowe says.
He says the deal allows the company to bring about a pooling of expertise and scale that will reinvigorate the sector.
“With the combined volumes and lower operating costs we will see much improved utilisation of assets which will be an ongoing benefit of the relationship. We will also bring on board skills in areas that round out what we offer.”
Cooper says staff at the Leathers plant were presented with the proposal earlier in the month.
“We received a positive response on developments from our people and from the union. That’s understandable as it’s an exciting development for the ongoing sustainability of this part of the sector with the scale and expertise involved.”
Silver Fern Farms will discontinue rendering in all North Island plants by September 30 this year and will outsource North Island rendering to Lowe Corporation and Wallace Corporation. Silver Fern Farms’ joint venture partner Farm Brands will continue to sell meal and tallow.
“The removal of the rendering operations from our North Island plants is in tune with customers’ expectations for modern food processing facilities. Both Lowe Corporation and Wallace Corporation are specialists in this field and will benefit from our volumes.”
- The sale of Silver Fern Farms’ Leathers plant has gone unconditional and Leathers will be acquired by Lowe Corp on 31st March 2014
- All SFF Leathers staff will be transferred to Lowe Corporation
- The agreement is the largest scale partnership across the hide processing and marketing and rendering sector in New Zealand’s recent history
- Lowe Corporation will toll process the majority of Silver Fern Farms’ North Island hides
- Lowe Corporation will market all Silver Fern Farms’ North and South Island hides, pelts and wool
- Farm Brands will continue to sell meal and tallow
- Silver Fern Farms will cease rendering on all North Island plants by 30 September 2014 and will outsource North Island rendering to Lowe Corporation and Wallace Corporation
Material supplied by Silver Fern Farms.