Store stock prices look set for a major correction, with many observers believing current values were inflated by plentiful grass and unrelated to prime stock prices. Store lamb prices have only recently started falling from about $2.20 a kg liveweight, while calf sale prices have started about $2 a kg liveweight, with many vendors receiving values similar to last year reports The ODT.

There appears little doubt a grass market has driven up prices, but agents and industry observers say that could be about to change, as the area experiencing dry conditions expands and autumn conditions start to bite.Sources say some farmers still have store lambs for sale while the dry conditions may force farmers who traditionally take calves through to spring to quit them at the autumn weaner sales, adding to supply pressures.

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Red meat industry reform continues to be elusive, what with Silver Fern Farms and Alliance still not talking and PGG Wrightson licking its wounds reports Rural News. Mergers are justified based on perceived synergies available to the amalgamated business but the reality is that they are usually driven by the desire to create short-term value for stakeholders and the creation of personal wealth for key players involved. The misnomer of supplier-owned cooperatives is that the underlying share value is immaterial. A farmer wishing to sell his shares in either SFF or Alliance will receive their original subscription value, well below any true net asset value (it remains to be seen what SFF proposes to its shareholders next month in terms of a different share structure).

Therefore value is in the supply contracts and the farmgate prices paid for stock through the rebate systems. The real driver for merging cooperatives is not share value but the synergies, improved market power and cost savings that could in turn improve supplier returns. While management at SFF and Alliance may have disagreed on relative business values in 2007-08, supplier shareholders should have been less concerned with share value. For it is only through efficient processing, procurement and well managed branded sales that farmers will ever see any sustained improvement in prices.

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Talley’s was planning to double the capacity of the South Pacific Meats processing plant at Awarua, Local Government Minister Rodney Hide said. In a speech to local government mayors, councillors and chief executives in Napier this week, Mr Hide said Talley’s was about to begin design work on doubling the capacity of the plant. However, when asked for comment this week, Talley’s said it was not ready to make a detailed announcement of its plans.

In emails to The Southland Times, Talley’s Fisheries director Andrew Talley confirmed plans were afoot to increase the South Pacific Meat plant’s capacity. The company was expected to make an announcement after final plans became concrete in the next few months. Mr Talley praised the Invercargill City Council, saying there was no better example of a proactive council encouraging business.”Again, motivated by the can-do approach in Southland, plans are afoot to increase the SPM capacity which will progress shortly. Good for all.”

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