Chairing change

The leaders of two of the country’s largest meat companies, both farmer-owned co-operatives with a combined annual turnover of $3.4 billion, recently stepped down, heralding a new era for the meat industry.

Former Alliance Group chairman Owen Poole stepped down in September, after five years on the board and 15 as chief executive for the company. Silver Fern Farms’ chairman Eoin Garden officially steps down this month after 16 years on the board, the last six as chairman.

Over their time as chairmen and meat industry leaders, changes in land use, primarily caused by the move to dairying, has resulted in increased cattle and bobby calf numbers and fewer sheep. Combined with the sector’s inherent volatility and economic and climatic pressures, both companies have faced challenging times. Both have adapted to meet the changing environment.

Restructuring at Silver Fern Farms has seen a number of plants close, but has also seen a $67 million investment to rebuild, after a fire, the Te Aroha plant in the Waikato – currently the most modern plant in New Zealand (see Food Industry News February/March 2013) – and the recent re-opening of the company’s casings processing facility at its Finegand plant in South Otago to produce sausage casings for markets around the world.

Over the period of Poole’s chairmanship, a number of Alliance sheepmeat plants have also closed and the company has made significant investment to reconfigure processing capacity at other plants to meet the challenge of the changing environment. There has been a $15 million upgrade of the beef processing facilities at the Mataura plant. A new $50 million venison processing facility has been opened at the Smithfield plant and a new high-tech rendering plant has been built at at Lorneville to combine the operations of three Southland rendering plants.

2013: gain and loss

In early November, Alliance reported its results to the year end 30 September 2013 – a net profit before restructuring costs and tax of $10.9 million from a turnover of $1.4 billion. The company recorded a net profit after tax of $5.6 million– a turnaround from the $50.8 million loss in the 2012 year.

A few weeks later, Silver Fern Farms announced a net operating loss after tax of $28.6 million for the same period, from total revenue of $2 billion. This was largely attributable to the company’s sheepmeat operations, chairman, Eoin Garden says, adding that it has completed a two-year programme to work through the impacts of a sheepmeat market spike, then subsequent collapse from January 2012. Unsold sheepmeat stocks have now been cleared and beef, venison and co-products performed well over the period, he says. One-off external factors, such as the hold-up of product bound for China, were other notable factors in the loss.

New directions

During the two chairmen’s tenures there have been great advances and investment in science, innovation and brand re-positioning for the future for the companies.

Under Garden’s watch Silver Fern Farms developed a ‘plate to pasture strategy’ which saw increased focus on developing the Silver Fern Farms brand and premium value-added revenue streams.

The co-operative also partnered with Government through the Primary Growth Partnership to create FarmIQ in August 2010 – a seven year, $151 million investment in creating a demand driven integrated value chain for red meat, which links consumers with farmers. Its results are starting to come through now.

Alliance, the world’s largest processor and exporter of sheepmeat, has been involved in the Central Progeny Test, yield grading, reward for quality payments, deer progeny testing and extended lambing and docking trials as well as developing a commercial DNA test development validation.

Alliance has been busy with a refresh of its Pure South brand and has also seen strong growth in Asia, particularly in China over the past 20 years and has moved into Brazil and India, reducing its reliance on the traditional markets of Europe and North America.

Alliance Group’s new chairman is North Canterbury sheep and cropping farmer Murray Taggart, while Rob Hewett, Silver Fern Farm’s former deputy chairman, has taken up the mantle from Garden.

Over their time, Poole and Garden have seen great change in the industry, and the environment in which it operates.

The two new chairmen have big shoes to fill.

This article has appeared in Food NZ magazine (December/January 2013) and is reproduced here with permission.

 

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