Dunedin's Silver Fern Farms said 86 jobs at its Shannon
fellmongery would go after the sale of the facility to
Hastings-based Lowe Corporation.
The sale agreement means the Shannon plant will close and
Silver Fern Farms will toll-process its North Island pelts
through Lowe's Hastings facilities.
"We have been looking through a variety of options to create
efficiencies in the industry and our business and this is one
of them," Silver Fern Farms chief executive Keith Cooper said
in a statement.
"With forecasted lower lamb numbers we believe this
consolidation of pelt processing through Lowe Corp's modern
facilities at Tomoana will set us both up well for the
season," said Cooper, who along with others have complained
about processing overcapacity in the sector.
Lowe managing director Andy Lowe said the deal showed
leadership around collaboration in the sector.
"The gains we can make together out of this agreement should
see a healthier sector in the long-run," he said.
The partnership between the companies to toll process pelts
will bring efficiencies to the sector, despite forecast lower
Lowe's Hastings facilities have the capacity to increase
production and increase efficiencies.
Cooper said a support centre has been set up for the 86
people employed at Shannon, which is 15km northeast of Levin.
"While this is a positive from a business perspective, and
for the industry overall, it's understandably hard on our
people at the plant who worked hard, and it'll be tough on
the local community," he said.
Silver Fern Farms had been bringing in the majority of the
pelts to Shannon from its Takapau plant in the Hawke's Bay,
to process them and then transport them back up to the Port
of Napier for export.
"When operating at low efficiencies these transport costs
make the plant uncompetitive," he said. "This deal takes that
cost out of the equation."
Lowe Corp has plants throughout New Zealand, sourcing
material from both the farming and the wider food industry.
Silver Farm Farms, a farmer co-operative, is one of the
country's biggest meat processors.