Press Release – Federated Farmers
The positive result from the Silver Fern Farms (SFF) proposal to reform its capital and governance provides a potential way forward for the meat industry. “While the turnout was disappointing at 42.24 percent, of those who did vote, three-quarters …
31 July 2009
Silver Fern Farms capital structure result, a step towards consolidation
The positive result from the Silver Fern Farms (SFF) proposal to reform its capital and governance provides a potential way forward for the meat industry.
“While the turnout was disappointing at 42.24 percent, of those who did vote, three-quarters backed the proposal. This reflects a strong mood for change in the New Zealand meat industry,” says Bruce Wills, Federated Farmers Meat & Fibre chairperson.
“For some time now SFF has looked at its business structures and concluded that the status quo was no longer sustainable. That led initially to an abortive merger with PGG Wrightson and ultimately, this conversion into a hybrid cooperative with tradeable shares.
“It must be recognised that this proposal has been bought about by necessity and the directors and management of SFF have taken the prudent step of strengthening and securing the balance sheet.
“While Federated Farmers firmly believes in the cooperative model, the all-important cooperative spirit has been absent from the meat industry for quite some time.
“What we are talking about is that the big meat cooperatives have been cooperatives in name but not spirit. The goodwill and trust that you generally see with Fonterra or Foodstuffs is reversed when it comes to meat industry cooperatives.
“SFF has made a big decision and 60 years of history is being turned on its head.
“No doubt there will be raw feelings among those who voted no and I genuinely sympathise with them. No one wants to lose control but farmer supplier shareholders will retain 60 percent of the voting rights and so hold the future of the company in their hands.
“If there is one concern I have it comes with SFF’s choice of trading platform.
“AFFCO is listed on the NZX and with an NZX listing comes close financial analysis and scrutiny. While I applaud the cost savings that will come by listing on Unlisted, it misses the synergy that would come with SFF and AFFCO being on the same market.
“What Federated Farmers yearns for is a mega meat industry merger to create one of New Zealand’s biggest companies able to deliver a unified market-led approach. What SFF has done is a potential second step down that path.
“While some of these decisions may be difficult in the short term, SFF shareholders have recognised the meat industry in New Zealand must change and are doing something about it,” Mr Wills concluded.