Alliance shareholder vote
Central Southland sheep and beef farmer Andrew Cowie will reject a proposal to sell a majority share of Alliance Group, unless a deal can put every shareholder in the co-operative on an even playing field.
Mr Cowie said his family had been farming for more than a century in Otapiri and had been loyal to the Alliance since its arrival in the South.
"We’ve never sent a cattle beast, a lamb or a mutton anywhere else."
He was very disappointed by Alliance’s proposal to sell 65% of its business and leave farmers with "flimsy" shares, no-one would want to buy.
"We're losing all control."
With the information currently available on the deal, he would vote no to the proposal.
He held nothing against Dawn Meats as a business.
"It is just a terrible deal."
He believed Alliance had undervalued a lot of its assets and if the deal went through as proposed, Dawn Meats would be getting a majority share cheaply.
Information he needs to make a final decision on which way to vote includes if farmers would be shareholders of Alliance or Dawn Meat under the proposed deal.
Also under a new deal would all shareholders be treated as equals.
A frustration was Alliance currently paying more to some shareholders who could supply greater numbers of animals for slaughter, he said.
"It's gone on for far too long and I don't think that's right."
Alliance’s smaller shareholders had accepted lower schedule prices and reduced rebates and dividends to help the co-operatives navigate tough financial times.
"It is frustrating that the smaller shareholder always picks up the tab but never gets any of the benefits."
The Fonterra co-operative paid its shareholders the same price for it milksolids so why should the Alliance co-operative be any different for red meat, he asked.
"All successful co-operatives throughout the world, treat their shareholders equally and none of them get preferential treatment."
Unless Alliance could provide "concrete" information that all shareholders would be treated fairly under a new deal, he would vote no.
The board had shown a lack of leadership and proposing a sale of a majority share in the company was arrogance.
Declining sheep numbers, leading to overcapacity in meatworks, was an issue the board felt had "crept up" on them, when the national flock numbers had been falling for decades.
"This isn't a new thing. They should have been thinking and talking about this with other meat companies 15 years ago."
A yes vote would not solve any issues of overcapacity at its meatworks.
If shareholders vote no and Alliance needs to sell some plants, it could be a great result for the industry.
Board members regularly told its shareholders "we've got this, don't worry" rather than devising a solution that would work for the industry to move forward together.
"I have been so loyal because we have been told that it will get better, we have been told that markets are going to sort themselves out and everything is going swimmingly. We've been sold this dream for years."
Alliance’s recent balance sheets told a different story, he said.
Meat companies scrapping for livestock to process had increased commodity price for farmers but long-term, the over capacity had not bode well for the industry."
He believed the industry "missed a trick" by Alliance and Silver Fern Farms not merging when the idea was floated nearly a decade ago.
The meat processing industry, not just Alliance, needed to sort itself out, he said.
Alliance Group chairman Mark Wynne said a board aim was to increase the percentage of livestock processed directly from its farmer shareholders and decrease its reliance on third parties.
The preferred approach was direct livestock procurement, however, third parties had a role to play in filling gaps within the season, and particularly on the shoulders of the season.
“There are occasions when farmers cancel supply due to a sudden flush of grass growth, leaving plants fully-manned, but without animals to process. The fastest way to fill hooks is to turn to third party or volume suppliers."
In a declining livestock market, where farmers were trading between processors, the role of third parties was unlikely to disappear.
Alliance was comfortable with its processing capacity across its network, matched to the geographic location of its livestock flows.
