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Farming
www.guardianonline.co.nz
Co-ops urged to ‘come clean’ Co-operative meat processors Alliance Group and Silver Fern Farms have been urged to be transparent with shareholders about their own estimations of gains to be made from merging, and to independently test MIEcommissioned numbers if necessary. MIE chairman John McCarthy says estimates from work commissioned by farmers, recently published in MIE’s Pathways to Longterm Sustainability report, suggest a valuable opportunity to be pursued by both co-op boards on behalf of their shareholders. “If the co-ops aren’t willing to accept these numbers, we suggest they at least share with farmers any work or analysis they have done in this area,” he said. Mr McCarthy said that the numbers in the report weren’t MIE’s opinion but were the result of rigorous independent analysis. “If the co-ops believe there is no value to be captured here for shareholders, they need to explain why and on what
John McCarthy
basis they’ve reached this conclusion,” he said. “Shareholders in the co-ops can rightly assume there is a very significant value gain to be made on their behalf by their boards engaging. Surely $80-100 million per annum has to be viewed as commercial in anyone’s language. The caveat that any solution must be commercial must surely be crystal clear
to anyone by now,” Mr McCarthy said. He said that Silver Fern Farms had indicated the numbers in the MIE report were consistent with work the co-op had done. “Alliance, on the other hand, says they have different numbers, but won’t say what they are?” said Mr McCarthy. “It’s time to come clean with farmers and get everything
on the table so our boards can start engaging in a meaningful way.” There was mounting concern among farmers over the as-yet-undisclosed intentions of the Silver Fern Farms capital raising exercise, which appeared, at this point, to be only targeted at interests off-shore, he said. The status quo was costing farmers big time, and farmers were becoming impatient that their so-called industry leaders were not pursuing cost savings and consolidation benefits with more vigour. He said that MIE was heartened by the response to the analysis it commissioned using farmer funds via the Beef+Lamb levy. “It’s extended understanding among farmers, which is our key goal. I have to say that I have received some very strongly expressed feedback about lack of action by our leaders,” he said. “We don’t intend to stop, but in the end it is the commercial players who need to step up. We can ensure farmers know what’s going on and have the
information they need to exert pressure to shape the industry they want.” Mr McCarthy said he was confident that the Government would help facilitate reform when it was timely that they became involved. “Private companies, as Sir Graeme Harrison has so eloquently pointed out, have no incentive to enhance farmer balance sheets to the detriment of their own. Only through the co-ops can we effect the changes required. “This is major issue for New Zealand and I think the report has helped raise awareness even among our urban media, many of whom had no idea the sheep and beef sector is in crisis,” Mr McCarthy said. “Our second-biggest export industry is at a crossroads. The need for a balanced and profitable sheep sector is clearly illustrated by the downturn in dairy fortunes. “Whether we capture export value for our economy and for our farmers, or whether this value in the red meat sector goes offshore, is a major fork in the road.”