Industry keen to study MIE report

Murray Taggart
Murray Taggart
Alliance Group is keen to continue discussions with Meat Industry Excellence to ''better understand'' a report which suggested extensive plant rationalisation throughout New Zealand.

When contacted, chairman Murray Taggart said the company had only had a quick look at the report, which was released on Tuesday night.

It referred quite extensively to a report by international consultancy firm GHD, which said closure of 13 sheep and six beef plants would result in savings of $215.5 million a year.

Alliance Group would like to understand how the report had ''come up with the numbers and assumptions they've made'', Mr Taggart said.

The company was also keen to look at what questions were asked in a survey of red meat farmers, he said.

The report said more than $400 million in gains were available over five years, from a merger of Alliance Group and Silver Fern Farms, and more than a billion dollars in savings could be realised from a rationalisation process that included the four largest companies - Silver Fern Farms, Alliance Group, Anzco and Affco.

Mr Taggart said Alliance Group always had the view there were only two ways to restructure the industry: either a commercial solution, or by legislation and it did not believe the latter would occur.

''Clearly, if the numbers were as compelling as what the report indicates, you would think there was a commercial opportunity there. We want to understand that,'' he said.

Rationalisation had occurred over the years on a commercial basis, with Alliance Group closing plants, as had other companies, he said.

Alliance Group's new chief executive David Surveyor said the company was always open to exploring ways to lift returns for its shareholders and improve the red meat sector in general.

On initial reading, the report identified a number of potential savings. However, there was limited detail on the data and assumptions which had been used to derive those savings.

The company would be interested to see the economic assumptions so it could determine what potential benefit the proposed changes would have for its shareholders and suppliers.

Silver Fern Farms chairman Rob Hewett could not be contacted for comment yesterday.

Beef and Lamb New Zealand chairman James Parsons said the report identified opportunities worth exploring to further grow red meat sector exports.

''Every single sector has the opportunity to do better. Even if the savings and gains are not as significant as the report claims, they are deserving of exploration, as we continue to grow the prosperity of the red meat sector and New Zealand.''

Meat processing companies, as the mandated commercial leaders, now had the opportunity to work collaboratively and realise those gains, if they were real, he said. While the Meat Workers Union supported positive initiatives that aimed to make the sector stronger, workers who did the processing work needed a voice as well, national secretary Graham Cooke said.

''Restructuring and consolidation are easy on paper, but workers, families and communities often end up paying the price.

''Our country is littered with closed freezing works and the dashed hopes and dreams of rural communities.''

The Government should ''show leadership'' by setting up a tripartite structure with industry players, including unions, so parties could work together on how to tackle the big challenges that lay ahead in the sector, Mr Cooke said.

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