Prime beef and bull prices had to be lifted and Alliance needed to better manage the response to competitor price-movements.
The co-operative was recovering market share, increasing its number of supplier-shareholders and offering better livestock prices to farmers.
It was working hard to maximise its weekly schedule price as it tried to remain competitive.
More North Island farmers were becoming shareholders, attracted by yield contracts and associated priority processing.
The business had taken a number of steps to improve prices in response to feedback from farmers, he said in the annual report.
That included more minimum price contracts, which did not disadvantage farmers when prices rose.
A farmer survey showed shareholders believed Alliance was now focusing on being like a co-operative and doing a better job of rewarding loyal shareholders.
“However, our research also made clear that we have more work to do in building confidence around paying the best price over the long-term,” he said.
Alliance processed about seven million lambs and sheep, more than 200,000 cattle and about 90,000 deer a year.
It doubled operating profit to $20.2m in the year ended September 30 from $9.8m the year before.
Another $7.8m was secured in a one-off gain from the sale of the Makarewa venison processing site, making a total of $28.1m. A new venison processing plant was being built at Lorneville, Invercargill, for $15.2m.
Alliance set aside $11.38m for pool distribution to shareholders, up from $9.7m the previous year.
The after-tax profit was $14.4m compared to just $102,000 previously.
The group would have an extra $3.8m cash for reinvestment because that amount in shares would be issued to undershared farmers.
The pool distribution would be $1.80 a lamb, $1 a sheep, $10 a head of cattle, $1 a calf and $7.50 for every deer animal supplied.
“While we are doing a better job and providing some returns to farms we can do better,” Taggart said.
Alliance was a much fitter co-operative, more efficient, reducing costs, boosting capabilities and capturing more value from markets.
It had a wide range of short, medium, and long-term programmes under way to gain deeper market penetration and capture more of that value and was building a differentiated portfolio of products and a suite of premium brands.
A high-profile project was the food service initiative in Britain, aimed at high-end restaurants and hotels and selling direct to customers rather into wholesaling.
There was also an increased focus on the domestic market with the main Pure South brand in major restaurants and more resources put into Auckland.
The Lorneville and Pukeuri plants also supplied chilled product into China as part of this year’s six-month trial, which the industry hoped would lead to permanent access.
The group was also diversifying its venison markets to reduce the reliance on Germany, with good demand emerging in Britain and the United States.
There had also been considerable growth in demand from the premium pet food sector, improving the value of offal.
Alliance directors and management put a lot of store by balance sheet strength, with a 71% ratio of shareholders’ funds of $323m to total assets of $455m on September 30.
Operating cashflow for the year was $31.4m, down from $126.6m. Some of that reduction was because of higher payments to suppliers. Group revenue rose to $1.52 billion, from $1.41b previously.
