Silver Fern set to battle dairy invasion

Relevant offers

Farming

Milk price inquiry to continue LIC earnings rise amid dairy confidence Another shot fired in milk price battle BayWa extends deal for T&G Optimism for booming sheep industry Possum fur prices boost industry BayWa lifts stake in T&G ahead of deadline Kiwifruit IP report 'will be released' Taranaki foreign farms buy-up nearer New guide changes what fish we put on the table

Silver Fern Farms' "Project Rightsize", in which about 1000 jobs disappeared, wants to get in good trim to battle the encroaching dairy industry.

Chief executive Keith Cooper said the savings from job cuts and reducing excess infrastructure were in the order of tens of millions of dollars.

Silver Fern had been busy since February 2007 reducing debt and staff, and recapitalising to enable it to drive up returns to farmers who are leaving for the greener pastures of dairy.

The company has cut back or closed operations at Belfast, near Christchurch, Burnside in Dunedin and at Silverstream, in Mosgiel, in an attempt to increase margins on processing and, with better marketing, drive up returns to the farm gate.

Mr Cooper said the move reflected the overall decline in South Island sheep and lamb numbers, which were expected to drop by 2.2 million units next year, as sheep and lamb farming areas were converted to dairying and alternate land use.

"We can't forecast accurately the future livestock supply in the South Island, [but] we're certainly putting in place some strategies and projects to improve farm returns to stop the tide or movement towards dairying.

"We'd like to think these initiatives will underwrite future sheep meat returns to our suppliers and avoid future closures."

Silver Fern was confident the market had turned in terms of prices paid for red meat.

"All lamb, beef and venison ex- New Zealand is very much on a surge in value. So, assuming that surge in value is delivered to a material extent on lamb values, we're pretty optimistic we'll see a slowdown in conversion of lamb and beef operations to other forms of land use."

Between August 2006 and now, the cooperative formerly known as PPCS says it has reduced debt by about $160 million.

It also had a programme to free up capital, having recently agreed to sell and lease back its Silverstream plant.

- © Fairfax NZ News