The bonus payment is the second instalment of a total bonus of $5.74/head or 31c/kg on average for supplies in the year ending September 30.
It is the first year for a number of years that the company has paid a bonus, reflecting a stronger company performance in 2013. Chief executive Richard Thorp told Rural News that while full financial results for the year ending September 30 won't be announced until the New Year – the annual meeting is in March – the company was profitable.
"We're pleased to be in a position to provide a return to our loyal shareholder farmer suppliers. The sector has seen difficult times and everyone in the supply chain has worked hard to get into a better position."
To qualify for the bonus payments Atkins Ranch Producers must hold 2000 shares in Lean Meats' subsidiary company Heavy Lambs Limited, which makes up 59% of the parent company.
Shares are privately traded at a negotiated price between buyer and seller. Thorp says 2000 shares at recent trade values cost $12-13,000.
At present 10-15% of Lean Meats' supply is through the producer group but that is building and Thorp says long-term he's like to see 45% of supply through the producer group.
"You could argue we're giving away margin giving a bonus back to the farmer but that's what we're setting out to do."
The strategy is to "allow the farmer to fully participate in the value chain," he explains.
"Our approach hasn't changed over the last 25 years: we have encouraged our farmers to be part of the value chain and they have stuck by us and this year we can now reward ARPG members with a return above schedule."
It's an approach that appeals to James Rogers from Koeke Estate, Taihape. He says the bonus is a timley windfall.
"It's been a tough time for farmers throughout the North Island and around Taihape - due to the drought we supplied lambs a bit lighter than we would have liked, but we're thrilled to be getting a return above schedule."
Rogers says he likes to be "involved beyond the farm gate in our industry" as a shareholder in the company he supplies.
"Our aspiration is that Lean Meats will be the "Tatua" of the sheep meat industry, enabling it to deliver superior returns to it's loyal suppliers and shareholders.
"It's exciting and it's great to have an outlet for slightly [lower] value cuts, which increases the whole value of the lamb."
Thorp says Lean Meats gaining export certification to China has opened a market with growing demand for lamb cuts. A seven week halt in deliveries due to a labelling glitch was cleared up before the financial year end.
"Our strategic direction for doing business with China is based on keeping it simple, building strong customer relationships and not attempting to be everything to everyone."
He's confident Lean Meats can continue to perform at similar levels to the past season – ie making a profit and paying a bonus – based on increased demand from China and sales of lamb primals into the United Kingdom, Europe and North America.
Over 40% of the firm's business remains in North America, where it has a further processing facility in San Francisco. China now takes about 20% of product and the balance goes to Europe and other markets.
Lean Meats has strengthened its sales and marketing focus with several new positions in New Zealand and the UK, including the 2012 appointment of Alister King as marketing manager and more recently Chris Balaam in London as UK & Europe sales and marketing representative.
To qualify for Atkins Ranch premiums lambs must have been grass-only reared with no antibiotic treatment. The firm's 2013/14 supply programme is available on www.leanmeats.co.nz
