Alliance's Pure South cuts win gold
Meat co-operative Alliance Group has bagged four gold medals at the Outstanding NZ Food Producer Awards, achieving top honours for every cut entered.
Alliance Group has reported a pre-tax profit of $7.9 million on the back of challenging sheepmeat markets.
The result for the year ending September 30, 2015 compares to a $17.6 million pre-tax profit last year and is based on a turnover of $1.5 billion.
Murray Taggart, chair of Alliance Group, says after a slow start to the year, the final 7-8 months delivered stronger results, despite market turbulence.
The result comes as the cooperative begins implementing a new business strategy designed to maximise returns to committed farmer shareholders.
Taggart says the result underlined the difficult year for both the cooperative and farmer-shareholders with some parts of the country experiencing drought and others flooding.
"There was a considerable slow-down in key sheepmeat markets such as China and the UK," says Taggart.
"As New Zealand's largest sheepmeat processor, it will come as no surprise that the volatility of the sheepmeat market in particular has had a pronounced effect on our profit result.
"With a high proportion of our business in sheepmeat, we have taken a bigger hit this year, however our beef business has had a strong year on the back of globally higher beef prices.
"Despite weakening overseas markets, Alliance Group made the difficult decision to keep taking lamb and sheep from our farmer-shareholders, therefore reducing their exposure to the volatile markets and limiting the impact of continuing dry conditions.
"The alternative of reducing our processing would not have been in line with our cooperative principles and would have adversely impacted our farmer-shareholders.
"This is the unique difference in being a 100% New Zealand farmer owned cooperative, we look at things through the lens of what's important to our farmer-shareholders."
Taggart says the decision to continue taking stock led to a build-up of stock levels with a corresponding impact on cash flow.
"This inventory has since been sold through and our stocks are back within normal trading levels."
The company's balance sheet remained strong and provided a solid foundation from which to deliver the new strategy and improve profitability, he said.
Analysis by Dunedin-based Techion New Zealand shows the cost of undetected drench resistance in sheep has exploded to an estimated $98 million a year.
Shipping disruption caused by Houthi rebels in the Red Sea has so far not impacted fertiliser prices or supply on farm.
The opportunity to spend more time on farm while providing a dedicated service for shareholders attracted new environmental manager Ben Howden to work for Waimakariri Irrigation Limited (WIL).
Federated Farmers claims that the Otago Regional Council is charging ahead unnecessarily with piling more regulation on rural communities.
Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand for their products.
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