As well as the ‘being over-paid’ issue, there is the excess killing capacity problem. The reality is lamb numbers are not there and the dairy industry will be around well into the foreseeable future. Drive into the rolling green countryside where lambs were once finished and the reason for radical change is obvious: meat has been replaced by milk.
The Alliance team of chief executive Grant Cuff and chairman Owen Poole had seemingly predicted areas of concern and the likely questions. They were prepared. In fact all they had to do was try to make the nice questions seem interesting.
Closing down or restructuring the present works are obvious options which have already begun with the closure of Sockburn and the inevitable wind-down of Mataura’s sheepmeat operation. Dairying does have cows and beef processing has been increased with a $15 million state-of-the-art plant at Mataura.
Cuff told the large Milton gathering of suppliers what most already knew: that the sheepmeat market was challenging and returns to suppliers would be back on previous seasons. The market was also heavily affected by the exchange rate. Two seasons ago when good export lambs were worth up to $140 the exchange rate was about US 44 cents; today it is US 82c.
Cuff said at the present exchange rate that same lamb was worth $90; in August it was worth $95. By Christmas it could fall to $85 if the New Zealand dollar continued to strengthen.
Although the exercise took out several chains Cuff assured suppliers there is more-than-adequate processing capacity. At Lorneville the eighth chain has yet to be used. There are also Saturday mornings and shift work if needed.
Most of the Mataura stock would be processed at Lorneville with some taken to Pukeuri depending on location. There were positions available at Lorneville for up to 260 of Mataura’ 350 employees, but the 60km drive from Mataura south each day is unlikely to attract much enthusiasm
With decreasing sheep numbers, procurement in recent times has become an emotive issue. The big cooperatives have emphasised the huge importance of loyalty. For most farmers there are different degrees of loyalty; to a great extent it depends on who offers the best deal. This season Alliance is putting money where once there were words. Procurement will recognise and reward committed loyal suppliers.
We suppliers will be classified – a bit like bank credit card holders –
and labeled ‘platinum’ (those who send 100% of their livestock to Alliance), ‘gold’ (100% of one species), or ‘silver’ (uncommitted but regular suppliers). All have to be Alliance shareholders.
Once fitted into our straitjackets and providing we are platinum or gold we will be eligible for the loyalty rewards. These include an advance up-front payment in October. The payment is $20 a head for up to 80% of the supplier’s export lambs. These monies will be recovered later on by Alliance at the time of processing or when store stock are sold.
The exercise allows the cooperative to lend funds to platinum/gold individuals at a time when farmers can often be a little stretched financially and at the same time as the Alliance coffers are well placed.
The pool retention (10%) will be dropped and 100% of schedule paid at time of processing. Terms and conditions will apply.
Owen Poole said the move sat well within the cooperative philosophy. Alliance had listened to suppliers and recognised commitment should be rewarded. This reinforced the mutual dependence of both parties and these changes are just the beginning.
Poole said changes were proposed in the selection of directors. This has to be done without compromising shareholders’ democratic rights. The changes will limit the time directors can stay on the board. To keep the board ‘fresh’ elected directors will be moved on after 12 years and appointed directors after nine years.
For me and my mates there was the sad announcement that Owen Poole’s tenure as chairman would end next year. However it’s reassuring to see his long-time protégé Grant taking on more of the glamorous stuff.
