The move is close on the heels of rival meat processor Silver Fern Farms closing its plant 80km up the road at Fairton in 2017 and last week proposing to cease operations at its Fairton pelt house.
SFF blamed the closures on low South Island sheep numbers.
While acknowledging declining sheep numbers are a challenge for processing companies, Alliance chairman Murray Taggart said the co-operative is committed to its farmer shareholders and the communities it operates in.
“Farmers invest multi-generational, not just the next season, and we as a 100% farmer-owned co-operative have got to do the same and that means investing in business, plants and markets.
“We are looking right across our plants at where we have bottlenecks, where we can gain efficiencies and better streamline processing.”
The Smithfield work includes installing more vacuum packaging, co-products processing technology and extending the secondary processing area to boost processing efficiency by up to 20%.
It is another step forward in the company’s transformation strategy and shows the benefit of a strong balance sheet, Taggart said.
“We are in a position to invest in our plants to support our farmers, our people and the communities we operate in.
“This reflects our commitment to strengthening our processing capabilities and maximising our operational performance across our plant network.
“As a co-operative we are focused on maximising the value created for New Zealand farmers and we remain focused on lifting the performance and productivity of all our plants.”
Smithfield is one of the biggest employers in Timaru with 500 staff at peak season.
Alliance is also spending $1m on a new value-add facility at its Lorneville plant in Southland.
It will significantly expand the scope of existing production by increasing the processing capacity of fresh and tempered lamb.
Alliance will initially target the NZ domestic market the British food service sector and China with the value-add products.
In June Alliance announced improvements to its Dannevirke plant that will increase capacity by 20% and mean jobs for 35 extra staff.
The project in southern Hawke’s Bay is due to get under way next month.
Alliance earlier this month underlined its commitment to rewarding loyal shareholders with a $4.5m distribution to farmers.
The quarterly loyalty payments were made platinum and gold shareholders who supply 100% of their livestock to Alliance.
The latest payment brings the total amount distributed so far this season to $13.5m.
“We reward their investment by ensuring that they are at the heart of every decision we make and recognise their consistent and committed supply with our loyalty payments.
“Every cent the co-operative makes in profits is delivered back to farmers or re-invested into the business to continue to improve our operational efficiency and ultimately lift returns to our farmer shareholders,” chief executive David Surveyor said.
Under the loyalty payments programme farmers get an extra 10c/kg for each lamb, 6c/kg for a sheep, 8.5c/kg for cattle and 10c/kg for deer.
Last season Alliance paid $14.6m in loyalty payments to shareholders.
