In theory I am a strong advocate
of cooperatives as quite simply the producers are the shareholders of the
entity and as such you would expect everything to be done in the best interest
of the shareholder. However in reality I
am far from convinced this is the case.
My concerns in this regard have
again been highlighted by the official signing of the Silver Fern Farms (“SFF”)
Joint Venture arrangement with a Chinese company. Alliance Meats (“Alliance”), who I am a
shareholder and supplier of, have reiterated in their meetings, articles, weekly
emails etc that “we are the only cooperative left and as such the only one that
truly has the farmers’ interest at heart”.
I am paraphrasing here, but this has been a familiar marketing theme for
over 12 months now.
The problem is this in itself is
not a good enough reason to supply a cooperative. It would be if the theory holds true above,
but I am not sure that it is, a cooperative ALSO has to be good successful business that commands support and
loyalty of its shareholders through its business acumen, returns, integrity,
transparency etc
In a recent article Murray
Taggert (Chairman of Alliance) apparently said “Grand Farms wanted to process
more imported meat and was pushing more to an ‘up market’ level”. Grand Farm being the processing giant in China
that Alliance is looking to strengthen their existing relationship with (their
words not mine). I am sorry but isn’t
this the very thing that we don’t want (it was certainly one of my concerns
with the SFF joint venture): that we remain a supplier of whole carcases of
lamb/mutton. How does such an
arrangement whereby a company in china processes the meat, into presumably the
cuts the consumer wants (‘up market level’), extract more money for me the
shareholder/supplier of Alliance. The
added value is surely going directly to the Chinese company Grand Farms! I would have thought such an arrangement was
the antithesis of what most, if not all, meat industry commentators suggest
should happen if we are to extract more added value through the chain of supply,
so the farmer, in this case Alliance shareholders, received higher returns at
the gate.
Then on top of this Alliance has
now entered into a joint venture with the New Zealand Merino Company (“NZM”) to process and market merino meat
under the Silere brand. In my humble
opinion, this was originally simply a contract entered into by SFF with the
primary purpose to procure livestock. I
understand a premium was paid, which no doubt was ultimately cross subsidised
by other suppliers to SFF at the time.
I thought SFF may have actually
stumbled into a good thing here, as historically most would accept that merino
(or merino cross) and Southdown (or Southdown
cross) lamb is the best tasting meat (incidentally this to do with the fineness
of the wool translating into fine textured meat, something that any experienced
stockman will tell you, but I have yet to see any meat company do trials
on). However I was reliably informed by
an Alliance executive, in a general discussion some months back, that there
were major issues with Silere brand because the colour of the meat made the
marketing of it very difficult.
Logically if it was a great money
spinner, why would SFF give it up? The
cynic in me wonders if the premiums that I understand were paid by SFF for
Silere meat, which they now have no legal obligation to pay, and more
importantly no longer wish to pay because there is no money in it, is why SFF’s
partnership with NZM is now at an end.
Accordingly if any of these
things (if not all) of the above are correct, why have Alliance entered into
partnership with NZM to process and market this Silere brand. Moreover if Alliance pays a premium, because
again it’s back to the same old chestnut of procuring stock, then I for one will
be bloody annoyed at subsidising a brand and product which presumably has not
been a success to date.
I will continue to supply
Alliance, but I have to say that my loyalty is being seriously tested and realistically
it’s not far from being broken.
