Saturday, March 30, 2024

Co-op’s job to encourage loyalty

Neal Wallace
Silver Fern Farms Co-op is encouraging loyalty among suppliers and incentivising those who aren’t shareholders to join.
Reading Time: 2 minutes

More details were released at the co-op’s annual meeting about how the company’s new structure would function now the operating arm of the business, SFF Ltd, was jointly-owned by Shanghai Maling and SFF Co-op.

In a move to create loyalty among existing shareholders, from this year those owning shares at a predetermined level would receive a rebate payment set by the co-op board from dividends from SFF Ltd.

SFF Ltd had a policy of distributing half its profits to its shareholders.

A patronage programme, also based on shareholding, would offer preferential killing space, access to value-add programmes such as Reserve Beef and Venison Global Retail and other company incentives.

Chairman Rob Hewett told the 30 people at the meeting the role of SFF Co-op was to appoint five directors to SFF Ltd, to build governance skill and capability, to maximise investment opportunities including developing supplier loyalty, to ensure agreements with SFF Ltd were being met and to manage the affairs of the co-op.

Speaking after the meeting Hewett said the co-op would not employ anyone but would contract expertise as needed.

Three of five co-op directors to serve on SFF Ltd would be farmer-elected and two independent. Those directors were Hewett, Dan Jex-Blake, Trevor Burt, Jane Taylor and Richard Young.

Earlier he described the last financial year as extremely difficult in which progress in operating efficiency and growing chilled and added-value products were offset by difficult market conditions and an unfavourable exchange rate.

Revenue was down 12% to $2.2 billion, despite maintaining its share of processed livestock, with the company reporting a $7.5 million loss after depreciation and interest and before impairment and tax.

That compared to a $30.8m profit a year earlier.

Hewett said all classes of livestock processed nationally last year were back 5%.

Chief executive Dean Hamilton said the unfavourable exchange rate was again hurting exporters even though markets for all species were favourable.

Shareholders asked several questions about foreign currency hedging and the sustainability of low lamb prices.

Hamilton acknowledged prices were low but said the only way to improve them was from the market, which it was doing through value-added products.

“We can only grow it as fast as customers allow.”

Branded and value-added sales grew 31% last year and December sales of branded retail packs in NZ were the highest ever.

It felt as though the meat industry was assuming responsibility for the problems of the sheep industry, given low wool prices, Hewett said.

The $267m investment from Shanghai Maling would provide capital to invest in developing branded product specifically in NZ, Germany, China and the United States.

Hamilton said he wasn’t reading the last rites on the Trans Pacific Partnership just yet but if it failed NZ’s greatest missed opportunity was improved access to the Japanese market.

And it could be another year before chilled meat protocols were established with China.

Looking ahead Hamilton said the company was making progress, management remained disciplined and SFF Co-op would benefit from a stronger capital base.

Total
0
Shares
People are also reading