Deer numbers have fallen to levels last seen in 1994 as the sector continues to feel the fallout from record prices earlier this decade.The latest available census, done in 2008, showed a herd of 1.2 million reports The ODT. The kill this year was forecast to fall below 400,000, compared with a peak a few years ago of 750,000. Deer Industry New Zealand (DINZ) chief executive Mark O’Connor attributed the decline to farmers killing capital stock as venison prices fell, a situation from which the industry had yet to recover.

He believed there was a rebalancing occurring in the industry, and those farmers who remained carrying larger numbers of animals would be more productive. DINZ chairman John Scurr, of Wanaka, said the forecast kill was lower than the board would like, but that was a factor of supply and demand which was beyond its control. The sector had been hit by changing land use, and much of its traditional finishing country was now being used for dairying. That meant deer herds were being pushed into the high country foothills. This was despite deer farming being financially competitive with lamb finishing and wool and dairy grazing, he said.

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Silver Fern Farms has made a half-year loss of $14.3 million before tax from revenue affected by fewer lambs to kill and a high dollar, but believes it will make a profit by the year’s end reports Stuff. Revenue for NZ’s largest meat processor fell to $784.3m in its interim result for the six months ending February, $217m less than last year’s first half. However, the first half of the year is usually the worst trading performer as was the case in the 2008/09 season when SFF rebounded from a $16.5m loss to post a second-half $21m profit for a better year-long result.

After this season’s poor start its meat plants were running at full capacity in March and April and the co-operative has already recouped the losses of the first six months and is now in a profit position. Trading was complicated initially by farmers holding on to livestock from a good growing season in combination with low seasonal flows to stunt meat processing, with SFF having to wear the cost of plants performing under capacity. The co-operative has taken some comfort from retaining its market share as the meat industry adjusts to the national kill dropping by 1.5m lambs.

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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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Major meat processor Silver Fern Farms will expand into the premium lamb market in China on its own after a proposed partnership of processing companies collapsed reports Stuff. The partnership was to be modelled on the successful NZ Lamb Company joint venture in North America, but failed to get past the business case level.

SFF chief executive Keith Cooper has refused to reveal which company or companies pulled out of the consortium of SFF, Alliance and Anzco, but Alliance has since said the returns were unconvincing. He said there was no bad blood between the companies and the North American venture would continue unaffected, but SFF would now look at opportunities to develop its own brand.

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Meat processor Silver Fern Farms is working on replacement funding for an existing $75 million of bonds reports Business Day. The $75m tranche is due to mature in December and the meat processing co-operative is mulling options including a further bond issue or alternative funding from banks.

SFF had about $184.5m of debt at August 31. It needs capital or further facilities to help pay debt that is rolling over and to continue its farm-pasture-to-customer-plate marketing strategy. SFF’s previous capital-raising plan ended with a splutter rather than a surge with farmer suppliers only ploughing in about $22m of new equity, much less than originally envisaged.

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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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