Alliance Group investing $54m on plant upgrades to build on its performance

Alliance Group chief executive David Surveyor says the company will invest $54 million in capital expenditure.

Alliance Group chief executive David Surveyor says the company will invest $54 million in capital expenditure.

Alliance Group is investing $54 million on plant upgrades including the latest cutting technology over the next year.

The red meat co-operative is also improving its share structure.

Chief executive David Surveyor said the success of the co-operative's business strategy had placed it in a position to re-invest and continue to build its operational performance.

In addition to a dividend, referred to as a pool payment, the company will have a bonus share issue and reward farmer shareholders by increasing their shareholding in the co-operative. The level will be based upon the supply of lambs, sheep, cattle, calves and deer this season.

"Alliance is now a much fitter co-operative as a result of our focus on lifting efficiency and improving sales and marketing," Surveyor said.

READ MORE: Alliance buys Singapore marketing business Goldkiwi Asia

"We are making good progress against our key measures with a stronger balance sheet, improved profitability and better livestock pricing for farmers. We're working hard to ensure our improvements are sustainable through further investment, growing our value add [business] and building our organisational capability."

The co-operative was encouraged by its health and safety performance with its total injury rate improving by 42 per cent from last year.

"Looking after our people is the right thing to do. We have made good progress, but there is still some way to go. We were unfortunately reminded of that by a serious accident at our Smithfield plant in March."

As part of the strategy programme, the co-operative invested in technology and operational improvements, lifting processing and productivity across its plants, Surveyor said.

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That included new cutters for the primal cuts and technology for middle cuts at the Dannevirke plant, a range of investments to lift the recovery of "fifth quarter" products or co-products, including, offal, hides, and pharmaceutical products. The co-operative is also investing in better chiller facilities, in the Pukeuri plant beef chain and in packaging innovations.

The co-operative expected to make further gains as a result of last month buying Singapore-based marketing and sales company Goldkiwi Asia, which will be known as Alliance Asia.

"We are doing a better job of rewarding loyal shareholders. More frequent minimum price contracts are helping provide our farmers with certainty. However, there is still some work to do in this area and our prime beef performance needs to be lifted," Surveyor said.

Alliance is continuing to maximise the meat schedule price for farmers, he said. 

Meanwhile, James Ogden is retiring as an Alliance director at the end of his term on November 30 and will be replaced by Peter Schuyt.

Schuyt is an independent director on a range of businesses including Tatua Co-Operative Dairy Company, TSB Bank Ltd and Foodstuffs North Island Ltd. He has held senior executive roles at the New Zealand Dairy Board, Fonterra and the NZ Post Group. 

Alliance's national roadshow programme began in Dannevirke on October 2 and finishes in Fortrose on October 19.

 - Stuff

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