Friday, March 29, 2024

QualityNZ key to India market

Neal Wallace
The covid-19 pandemic has been a glitch, but Alliance Group remains confident demand for red meat will make India the next China.
Reading Time: 2 minutes

Chief executive David Surveyor told about 50 shareholders at the co-operative’s annual meeting in Invercargill this week, that while Alliance is already an established exporter of red meat to India, its 10% stake in QualityNZ was a long-term investment in a market with enormous potential.

“QualityNZ opens the door, the opportunity to position product at the very high-end of the market,” Surveyor said.

“We’re making the investment not so much for the current generation but for future generations.”

The other shareholders in QualityNZ are former New Zealand cricketers Stephen Fleming, Brendon McCallum and Daniel Vettori.

Shareholders were also told that although Alliance is a member of the Strong Wool Action Group (SWAG), it is working on its own projects to find new uses for the fibre.

Surveyor declined to reveal details but says it is looking at unconventional uses such as whether wool can be turned into an edible form.

Earlier Alliance announced a $27.4 million profit before provisions and tax for the year to September 30, 2020.

With provisions of $19.9m to resolve the historic worker’s claim, that reduced the profit to $7.5m.

Chair Murray Taggart says the underlying profit was the best in at least 10 years.

Despite the challenging year, operating cashflow was a healthy $50m and turnover a record $1.8 billion.

He says Alliance faced four significant challenges during the year; a major price correction in China prior to Christmas, flooding in February which forced the closure of the Mataura plant, covid-19 impacting the Chinese market and then the virus creating a global pandemic.

“If ever there was a year when Alliance had to step up, this was it,” he said.

Taggart says they did.

Mataura was expected to be closed for a month after the flooding, but through the efforts of staff and contractors, killing resumed nine days later.

He was especially proud of the response of staff to the covid-19 pandemic.

From meat workers accommodating social distancing requirements, to sales and marketing staff finding new formats and markets, Taggart says everyone responded to the challenge.

Surveyor says earlier investment paid off during the covid-19 induced shutdown, enabling the business to be run remotely, while careful management of inventory meant year-end levels were at acceptable levels.

Alliance spent $45m in capital expenditure in the year under review and plans to invest a further $100m in the coming years on its two Southland plants, Lorneville and Mataura.

Resource consents are being renewed for Mataura but Surveyor says before such investment is made, Alliance needs certainty that consent terms were for a period that justified such expenditure.

Surveyor says discussions were progressing well with Environment Southland.

Asked by a shareholder whether Alliance is too reliant on markets in China, Surveyor says he was less so now, given the way the company responded to covid-19 by changing product formats and product diverted to new markets.

Russell Drummond, a Southland supplier representative since 2014, lost his seat on the board to Pat McEvedy, a sheep breeder, finisher and intensive arable farmer from Southbridge in Canterbury.

It was McEvedy’s second attempt to join the board, standing unsuccessfully last year against Taggart.

A chartered fellow of the Institute of Directors, McEvedy is a former councillor of the Selwyn District Council and on the Central Plains Water Trust.

Dawn Sangster, a director since 2011 and up for re-election, was returned and announced this would be her last term.

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