Financial incentives for suppliers

Alliance Group has announced new procurement policies, involving financial incentives, to "recognise and reward" committed loyal supply by shareholders.

Suppliers will be categorised into platinum (for 100% of all stock supplied to to the company), gold (100% of one species) and silver (regular supplier of a percentage of livestock each year).

An advance payment will be made in early November of $20 per head for up to 80% of lambs, available to platinum and gold suppliers. Payment will be recovered at the time of processing or on sale of store stock.

There will be fixed price options for lamb, beef and venison. Platinum and gold suppliers will be given first opportunity and silver suppliers might be eligible.

Pool retention (10%) will be dropped, and 100% of schedule paid at time of processing. Profit distributions at year-end will be made at the board's discretion.

The policies were "significant changes" to past practice and the company had listened to supplier suggestions. The changes were designed to "recognise and reward commitment to the company and reinforce our mutually dependent relationship", chairman Owen Poole said.

The move had already attracted some favourable comment, he said.

The advance payment for the coming year was for lamb only, although the company would look to extend it to prime cattle and deer next year, chief executive Grant Cuff said.

It will not be available to large contract suppliers.

It is for animals on-farm at October 31 and will not be available for December-January for someone purchasing store stock.

The company was uncertain of the uptake, which was why it was initially for up to 80% of lambs, and it would see how it went. Like suppliers, the company would be learning, with both the uptake and any issues that arose, Mr Cuff said.


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