Alliance Group is getting back to its roots.
That is the emphatic message from chairman Murray Taggart and chief executive David Surveyor, both acknowledging the company had ''drifted'' a little from the co-operative principles.
There was now real clarity around its strategy - ''we know exactly where we're going'' - and it needed to start to deliver, Mr Surveyor said.
Since taking over as chief executive in late January, the newcomer to the meat industry has shaken things up at the Invercargill based co operative.
Some people were very stimulated by that, stepping up with new energy; it was inevitable that some would not be as energised by the change, he said.
Over the past months, he reckons he has met several thousand farmers. They seemed pleased the role went to someone from outside the industry ''with a fresh set of eyes'', he said.
He and directors have been on the road this month, meeting suppliers throughout the country, at the annual roadshow meetings which have been bumped up from nine last year to 26.
Generally, feedback was ''pretty good''. Farmers liked that Alliance Group wanted to be a co operative again but the real test was how the company delivered, he said.
Much of Mr Surveyor's time this year has been spent on thinking about strategy; the business model had not been delivering what it needed to.
He was ''highly energised'' by the task ahead; the board wanted to make change, employees knew there was a need for change, and shareholders had been very supportive.
The business needed to be lower cost; as costs went down, that meant higher livestock prices could be paid, those prices would pull through additional volume, as that came through there were margin benefits in the business, which could be used to continually improve the cost base.
The business had to be run so it was ''really lean and mean''. The company had to continually look at how to reduce costs and that was a never ending journey.
It was believed the company's cost base could be reduced by about $85 million. But keeping costs down was not enough, more value had to be captured in the market place, he said.
The world was changing reasonably rapidly and, if Alliance Group did not change with it, it would not dictate its future, someone else would.
More than 100 projects have been identified across the business and management's task was now to deliver. That was ''phase one'' of the journey, he said.
Significant traction had already been made in organisational capacity. Key appointments brought new capabilities, enabling the strategy to progress.
The company intended investing in the future of the business, spending about $125million over the next three years in marketing and operational parts of the business, all designed to make sure it stayed at the forefront of the industry, he said.
Alliance Group was 100% New Zealand farmer owned. It needed to maximise returns to farmers and it was a really important role of the company to help its farmers be profitable.
It wanted to be informed about things that were not right ''from today'' and make sure farmers were at the heart of every decision made.
''We want to listen to people, understand your expectations, we want to operate this business in partnership with you,'' he told farmers.
The company wanted pricing mechanisms that built trust and it knew that all its pricing had not done that, he said.
Pricing had been ''a bit of a black box'' so it was trying to ''demystify'' what it was doing, while also simplifying and trying to make it more transparent. From November 1, changes were going to be made to the pricing structure.
There used to be a model that those supplying 25,000 animals or more got a better price, which the company had not widely publicised. That figure was now going to be brought down to 10,000, he said.
The company wanted to recognise and reward commitment. Platinum or gold level suppliers would receive a 10c/kg premium quarterly.
North Otago's Mark Lawrence questioned why the 10,000 threshold could not be ''done away with'' completely but Mr Surveyor said the company had not generated enough wealth to do that.
In an ideal model, everyone would get the same price and over time, if the company could get rid of it, it would. But there was not enough money in the system to do it now.
Very large suppliers helped the company manage the shoulders of the season and ensured it was as efficient as it could be.
The company was trying to change the way it interacted with shareholders. It recognised it needed to do more around stakeholder management and public relations into the marketplace, he said.
Summing up the past year, Mr Taggart said it had been ''pretty tough'' for farmers in many areas, with some affected by drought and floods in other parts of the country.
Markets had deteriorated ''pretty quickly'' at times during the year. While beef was ''a bit of a star'', sheepmeat had been challenging. Profitability was down this year, although the company was still profitable, Mr Taggart said.
Mr Surveyor said beef was a standout and anyone with a beef business, particularly a large business, would have had a good year.
The beef story was ''really a US'' story. A question mark hung over what was happening with beef prices going forward. Prices were already softening a bit and it was a ''bit of an unknown''.
It had been a difficult year for sheep meat. Demand in China was down while the United Kingdom, traditionally the company's most important market, had been very difficult.
That was due to three factors: the pound versus the euro had been strong, United Kingdom kill numbers were up, and the United Kingdom equivalent of Federated Farmers had been very active putting pressure on major retailers so they would not take anything other than UK based product.
Significant drought issues in New Zealand meant the company's kill profile was quite different this year. Inventory levels had jumped up and the past few months had involved selling that down.
The company was now in a good space concerning inventory, but there was ''some pain'' in selling it down.
The forecast for the coming season was $100 for an 18kg lamb, although time would tell whether that was correct, Mr Surveyor said.
Livingstone farmer David Douglas was concerned about the company's move to 60 day terms of payment, saying it had to be very careful when it came to rural communities.
He cited the effects on the likes of trucking companies turning up to collect stock and, the next day, being asked to sponsor the local rugby team. Rural companies also provided employment in communities.
Mr Surveyor said the issue had perhaps not been managed as well as it should have been and there had been a ''fair chunk'' of feedback about it.