SFF gets to grips with changes

JOHN BISSET/Timaru Herald

LOOKING FORWARD: Silver Fern Farms production manager Bill Seyb shows farmer suppliers through the soon-to-be commissioned X-ray room for carcass assessment.

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THE meat industry merger plans may be on hold, but Silver Fern Farms is changing how it operates.

Its governance structure is up for review. The supply programme is being extended with locked-in future prices, and transport costs will be paid for by the processor. The former PPCS cooperative also intends to market itself as a global food brand.

Discussion in the Pareora plant yesterday saw supplier farmers accepting the need for change.

Chairman Eion Garden and chief executive Keith Cooper discussed possible governance changes as outlined under the proposed, but failed, partnership with PGG Wrightson.

Mr Garden asked for feedback on options such as a smaller board or a mixed board with farmer-elected directors, shareholder-appointed directors and independent directors. Another possible change was a shareholder council.

Mr Cooper said that with lamb exceeding $4.50 a kg, this season was better than recent ones. However, this was a consequence of supply and demand and the low New Zealand dollar. If suppliers and processors didn't change how they operated, a return to poor returns was inevitable. If nothing was done the industry would return to where it had been for the past three years.

"We urge you, don't think anything is solved because none of us has done anything to date."

The "backbone" plan was a future-supply agreement, especially for during the winter. This was to extend the season, reduce processing congestion and utilise capacity. It meant farmers could lock in prices for some of their livestock for up to 12 months in advance.

Farmers said that though year-long supply was good for marketing, keeping prime stock in winter wasn't easy.

Mr Cooper said meat had to be sold, branded to the consumer in smaller portions at higher per-kilogram prices.

Selling ready-to-cook meat, rather than whole legs, meant larger lambs were more desirable.

New standards had to be set in quality, traceability, sustainability, animal welfare and innovation.

Mr Cooper expected traceability would be introduced in markets and Silver Fern Farms needed to be ready to implement it. The X-ray carcass assessment, as was being installed in Pareora, would be an advantage if this happened.

It was announced that Silver Fern Farms will pay for cartage to the plant from the end of the month. Mr Garden said the move was for efficiency and allowed trucks to be filled. The system had run in the North Island for some time.

After the meeting suppliers John Macaulay and Neil Barton said farmers accepted there was a need for change in the industry.

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