SFF-Shanghai Maling deal support

Ross Hay believes a joint venture with Shanghai Maling is the best option Silver Fern Farms would...
Ross Hay believes a joint venture with Shanghai Maling is the best option Silver Fern Farms would be able to come up with. Photo from ODT files.
Ross Hay just wants to see change in the red meat industry.

Mr Hay, who farms at Herbert, south of Oamaru, is in favour of Silver Fern Farms' proposed joint venture with the Chinese food sourcing giant Shanghai Maling.

While he did have some reservations as to what it might mean in four to five years' time, at present the ''positives'' of the deal outweighed those longer term questions, he said.

The meat industry had been ''ticking along'' and, while there had been talk of change, nothing had happened and the status quo continued. That status quo was not working and he wanted to see change.

The Shanghai Maling proposal was the best option Silver Fern Farms would be able to come up with, Mr Hay said. No other New Zealand entity was going to come up with the $261 million the Chinese company planned to invest in the company, he said.

''At the end of the day, if we don't try something, what have you got? Just the same old same old,'' he said.

While there had been much talk about a merger with rival co operative Alliance Group, that was not going to happen, he said.

Those who did not like the proposal could shift and supply Alliance Group if they wanted to deal with a traditional co operative.

Referring to a move by some shareholders who are opposed to the joint venture and who are seeking a potential issue of new shares, Mr Hay said he was not going to ''fork out'' any more money to a co operative.

Shareholders needed to put some store in the fact it was a unanimous decision by the board, including those directors who had been endorsed by Meat Industry Excellence (MIE), which had promoted retention of farmer control of co operatives.

''To a certain extent, if they didn't believe in what was happening, they would have voted it down,'' he said.

Windsor farmer Jeff Cleveland believed it was time to have some faith in the Silver Fern Farms board. He felt there was a lot of ''scaremongering'' going on about the deal, but he thought there were ''a lot of positives''.

''I think they've come up with an extremely good deal for us under the circumstances. I think we've got more to lose by not doing anything than we have by giving it a go,'' he said.

His family had always supplied all their stock to Silver Fern Farms and that would not change unless there was reason to, Mr Cleveland said.

Farmers still had control - ''they are not buying our farm or our stock'' - and he believed Shanghai Maling provided a market and ''options at the other end''. Silver Fern Farms was also ''way ahead of the game'' with its own marketing, he said.

As far as providing quality products for the end consumer was concerned, Shanghai Maling and Silver Fern Farms ''aligned themselves pretty good in that respect'', he said.

He also thought it could be a good thing for Alliance Group, and hopefully there would be two strong companies in the future.

Omarama farmer Simon Williamson said the red meat industry was ''so badly broken'' that something needed to happen.

While he did have concerns about ''giving away'' the casting vote, he believed the proposal was a good thing.

The company would be governed by a 10 person board comprising five directors from Shanghai Maling, three farmer directors and two independent directors, and co chaired by Silver Fern Farms chairman Rob Hewett and Shanghai Maling president Wei Ping Shen.

Mr Shen would have the casting vote on the approval of the annual business plan, budget, financial statements, appointment or dismissal of the chief executive and determination of the chief executive's compensation arrangements, and in relation to the dividend policy and the value and timing of dividends.

Mr Williamson said it remained to be seen how Shanghai Maling intended to ''play out this game'' but other instances of Chinese ownership had worked well.

China's Agri Corp, which controlled PGG Wrightson, had been a very good partner for the rural services company, while Bright Dairy and Food, a subsidiary of Bright Food, had a stake in Mid Canterbury processor Synlait Milk. Shanghai Maling is also a subsidiary of the state owned Bright Food.

If they did not play it properly, then people did not have to follow them, Mr Williamson said.

Former Silver Fern Farms director David Shaw, who farms at Clinton, had concerns about aspects around the process, and also the timing of the transaction.

Mr Shaw was a director between 2006 and 2009, and then again from 2011 until 2013, when he was ousted, former MIE executive members Richard Young and Dan Deux Blake being voted on.

He believed protection for the co operative's farmers regarding the deal was neither appropriate nor sufficient and farmers had not had the information or opportunity to debate the issues.

Voting had been an ''appalling process'' on the part of the co operative, most farmers having received their voting packs only in the past week, he said. Voting closes at 10.30am next Wednesday unless shareholders voted at the special meeting in Dunedin at the end of the week on Friday.

He was a director throughout a ''tumultuous'' period, with the integration of North Island based Richmond, which was challenging, and some mistakes were made, he said.

The company was at a point now where it was forecasting ''a pretty good profit'' for this year and the profit forecast for next year was very good.

Over the past 10 years, the co operative had probably put about $18 billion into New Zealand farmers' bank accounts and many families' livelihoods depended on it, Mr Shaw said.

He questioned the need for ''the haste and the rush'', saying farmers had not been given a chance to debate the issues.

There was a viable alternative in the form of an issue of new shares, and farmers needed to have an opportunity and the time to examine the issue ''on both sides'', he said.

Ultimately, it was their choice how they voted but to make a decision based on poor information was ''ludicrous''.

Those pushing for the alternative proposal were trying to talk to as many farmers as possible to try to get them to look at the issue and understand what the options were, Mr Shaw said.

 

 

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