Meat companies are bracing themselves for a late flurry of lambs as favourable growing conditions over most of the country create a grass market. Processing plants have been working short days because of the slow flow of prime lambs, but Silver Fern Farms chief executive Keith Cooper was confident the forecast number of lambs available for slaughter would be reached reports The ODT.

He said the abundant grass was affecting the flow of lambs from both store suppliers and finishers. There had been a noticeable increase in kill numbers in the past week, he said, and as autumn and winter drew near, farmers would be keen to quit their stock.”We do know stock will come over a period of time, but the risk associated with that is the influx of stock will not be in sync with markeplace requirements. It creates a production-driven model.”

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Silver Fern Farms (SFF) is in no-man’s land on its road to plate to pasture reports Rural News. “We’ve validated the strategy and we are making good gains,” chief executive Keith Cooper told about 100 shareholders who packed into the company’s AGM in Gore last week. But there is still a long way to go to implement the integrated supply chain strategy, and commitment and tenacity are needed to complete the transition from the historic procurement and processing focussed model, he says.

“We want to make our money by being smart, nimble and highly competitive… We are in no-man’s land right now.” Cooper says it is not the cooperative’s aim to be the biggest processor and it is “unfortunate” it is. As such, it has had no choice but to engage in the current lamb procurement battle, not just to fill processing plants but to meet customers’ orders for Easter.

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As cooperative Silver Fern Farms’  annual meeting looms its shares are trading at barely half the $1 issue price of last spring’s capital raising.
Last week a parcel of 16,562 changed hands for 54c/share following a deal at 50c on January 7. At 54c/share the company would be worth just $44 million. “Obviously it’s a very discounted valuation and it’s based on a very thin trade,” chief executive Keith Cooper told Rural News.

Since the shares were first offered on Unlisted on October 27, 60 transactions have seen 411,444 shares traded, 0.5% of the 81.4 million shares issued. The price fell rapidly after an initial transaction at $1, touching 50c for the first time in early November. The price recovered to 65c before hitting a low of 47c in December. Last week shares were being offered at 60 to 90c, with bids from 51 cents down to 20 cents. Whether the share price is a topic for discussion at the annual meeting in Gore next Wednesday will be down to shareholders. “There are no specific agenda items, no specific announcements, so it’s just an open discussion,” says Cooper.

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Silver Fern Farms has emerged from its 2009 financial year in buoyant mood, justifiably claiming a vastly stronger balance sheet and substantial progress towards the goal of transforming itself from traditional sales driven meat processor to market led food company reports Alan Barber in his blog. It is also pleased with the capital restructuring programme which reduces redemption risk, enables it to attract outside equity and provides the chance to trade shares, while introducing an enhanced governance structure.

 All these developments have happened in spite of global uncertainty, the collapse of the attempted sale of half the company to PGG Wrightson, and the obstinately high dollar. So under the circumstances, it’s important to do an objective assessment of just how strong the company’s operating performance was, whether the improved balance sheet can be sustained, and how achievable long term the transition to market led food company really is.

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In a press release Silver Fern farms announced they are to drive growth of lamb in NZ supermarkets with a  innovative range of cuts. NZ’s top quality lamb cuts that would normally be found in premium restaurants and European supermarkets will be available to local consumers ahead of Christmas as Silver Fern Farms shifts its focus into local supermarkets..

 As part of its strategy to capture value across the entire red meat value chain, Silver Fern Farms is forging a stronger domestic footprint with four key lamb products – boneless leg roast, loin fillets, rumps and stir fry – which will shortly be available in NZ supermarkets. It’s a major directional shift for the country’s leading procurer, processor and marketer which traditionally exports 95% of its product into more than 60 countries.

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Lambing is being blamed for a slow take-up of Silver Fern Farms’ cash issue.
The offer deadline is Friday, but as of late last week just 15% of the co-operative’s approximately 8000 eligible shareholders had responded reports The ODT.  Of that 15%, 60% had taken up the cash issue entitlement.  Silver Fern Farms  chief executive Keith Cooper said many rebate shareholders were in the middle of lambing which was diverting their attention from paperwork, but he expected interest to increase this week.

He said it was too early to say how much fresh capital would be raised, but company executives had earlier said they hoped for $80 million. Reminder notices had been sent out which should increase activity. Mr Cooper said the response at this stage was consistent with voting turnouts for SFF’s July shareholder meeting, which changed the constitution and paved the way for the capital restructuring, and Meat and Wool New Zealand’s recent levy referendum.

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A new player in the livestock trading business was a backwards step in efforts to shorten the livestock supply chain, Silver Fern Farms (SFF) chief executive Keith Cooper said yesterday. The South Island rural servicing co-operative, CRT, has four livestock agents in Tasman, West Coast, North and Mid Canterbury and has stated that within a year it hoped to have coverage throughout the South Island and lower North Island reports The ODT. Mr Cooper said he was astonished that at a time when farmers wanted aggregation, consolidation of marketing strategies and investment in the supply chain, a co-operative was adding another layer to it.

“One can only question the governance of a business which sees merit in a strategy which clearly adds no value, just cost, and will serve to further fragment the supply chain to market and the relationship with farmers and market, a key issue identified in the recently released Ministry of Agriculture and Forestry report, Meat – the future.” CRT chief executive Brent Esler CRT has described SFF’s reaction as “a storm in a teacup,” saying livestock servicing was a logical step for the rural servicing company to take on behalf of its co-operative shareholders. Mr Esler said CRT had bought Kinzett Livestock in Richmond and Alpine Livestock in North Canterbury and its four agents were now offering livestock services to CRT shareholders.

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A strengthening dollar exchange rate could spoil the party for what should be a second consecutive year of healthy returns for sheep and beef farmers. Silver Fern Farms chief executive Keith Cooper told farmers at a field day near Gore last Thursday that while prospects were bright, the exchange rate was closer to 2008 levels than 2009. While there was time for it to fall and not be disruptive, Mr Cooper said there was some nervousness reports The ODT.

Lamb prospects remained bright and European retailers were investing heavily in lamb, to increase its availability. Mr Cooper said while there was little likelihood retail prices would increase, equally, they should not fall. He said he was “relaxed and confident” about beef prospects, with prices cyclical but trading within a band both for manufacturing beef to the United States and prime cuts to Asia. Venison was causing some concerns. Venison was still selling but orders from European buyers were slow and it was vital prices were not pushed higher, he said. He urged farmers to think carefully about their kill profile because of that.

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Silver Fern Farms’ debt-burdened co-operative structure is no longer viable and the company needs an injection of money to survive, its chairman Eoin Garden says.  “For 60 years it has been a good business model. We had a debt-funded business. That environment has changed,” Garden told 30 farmers at a meeting in Christchurch yesterday reports NZX. The meeting was one of 15 planned across NZ to discuss a proposal to open SFF’s farmer share register to other investors and raise up to $128 million from existing shareholders. The move would effectively end the co-operative status of the company, but farmer shareholders would retain voting and board control. New shareholders would have weaker voting rights than farmers.

NZ’s biggest meat co-operative wants its farmer shareholders to swap their rebate shares and supplier investment shares for new ordinary shares, which could be traded on the unregulated share exchange Unlisted. Those shareholders would then be eligible to pay cash for two more shares at a dollar a piece. In a presentation to farmers, Garden and SFF chief executive Keith Cooper said the co- operative structure was no longer the ideal model. Garden said he knew many farmers were worried about the co-operative status being threatened, but he believed shareholders were getting confused about ownership and the business. “It’s not about losing control. We will lose control of the co- operative if we don’t put the capital base in place.”

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If sheep and beef farmers had any doubt about the need for a workable traceability scheme in NZ a trio of speakers at a recent seminar might have changed their minds reports Rural News. First, Agriculture Minister David Carter warned the 200-plus delegates at the Lincoln Sheep and Beef seminar that Australia would take ‘every possible opportunity to use to its advantage’ its equivalent of NAIT. He also noted that the Waiheke Island foot and mouth hoax highlighted NZ didn’t know who owned what animals and where they were.

Later in the day Silver Fern Farms chief executive Keith Cooper chipped in on the need for a national system. ‘We could, overnight, have a policy imposed on us [by customers] which we are not ready to be compliant with,’ warned Cooper. He said whatever traceability scheme is implemented it needs to be industry-wide with no free-loaders. Other nations are implementing schemes just to gain access to markets NZ is already supplying. ‘This is about market it access… It’s got to be viewed as an investment, not a cost.’

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