Meat industry shareholder groups merge to push their case for reform

The two shareholder groups representing Silver Fern Farms and Alliance farmers have joined forces in a bid to encourage the two meat cooperatives to follow suit and work collaboratively.

Each shareholder group has separately gained the 5% farmer support needed to call special meetings of their respective cooperatives to try and force the boards to investigate the benefits and risks of a merger, though dates have not yet been set for either.

Alliance shareholder Jeff Grant says it is best to wait on the outcome of Silver Fern Farm's current capital raising before holding either meeting.

"If the capital raise changes the structure of the cooperative to a non-cooperative or leaves it in foreign ownership then it will be pointless having an SGM (special general meeting) at all," he says.

Silver Fern Farms suspended trading of its shares on the Unlisted exchange in late July while it tried to raise $100 million of new capital through investment bank Goldman Sachs. The company says the capital raise process is continuing, though it's understood from meat industry sources an announcement could emerge by the end of the week.

Mr Grant says it seems sensible to hold the Silver Fern Farms meeting first, followed by the Alliance one. He says the SFF board has indicated this will likely mean the SGMs will be held in late September or October but the timing is ultimately in the hands of the cooperative boards.

Silver Fern Farms shareholder Allan Richardson says there remains an opportunity for the two groups to work together over the next couple of months to continue encouraging the two cooperatives to find a pathway forward for farmer shareholders, which will give some confidence in the industry.

Mr Grant says the feedback from farmers shows they want the two cooperative chairmen to take a leadership role and agree in principle to consider strengthening their commercial relationship.

"In the end farmer shareholders have nowhere else to go to shape their industry. They have no ownership of the industry beyond the farmgate other than the farmer co-ops. The rest of the industry belongs to family corporates and commercial corporates who rightly will want to shape their own destiny.".

The response from Alliance, the world's largest processor and exporter of sheepmeat, has been to write to its 5000 shareholders saying it has been a difficult year for them and the board is working on a strategy to improve shareholder returns.

Chairman Murray Taggart says any special general meeting will be limited to considering the resolution that the board provide shareholders with a full analysis of the potential benefits and risks of an Alliance/SFF merger.

Even if the resolutions are passed, they are not binding on the meat processors' boards.

Both Mr Taggart and the SFF management have had meetings with meat industry reform group Meat Industry Excellence, which is pushing its plan for a new export meat cooperative that would park the debts of the two farmer-owned co-ops into a "bad bank" and the good equity into a "good bank."

MIE spokesman John McCarthy says they now have a better understanding of each company's position but SFF is hamstrung by the current capital raising while Alliance has no interest in an industry merger.

The MIE proposal is not dead in the water as they will continue to engage with the shareholder groups pushing for reform, he says

Mr McCarthy blames Agriculture Minister Nathan Guy for failing to take a strong stance on the need for change.

"Nathan Guy will go down in history as not being a strong leader for the agriculture sector. He's been missing in action on meat industry reform," he said.

(BusinessDesk)