Silver Fern's Fairton plant to close as sheep numbers fall

Silver fern Farms chief executive believes sheep numbers will remain around current levels.

Silver Fern Farms, New Zealand's biggest meat company, plans to close its plant at Fairton in what is the first move to address its processing over-capacity since China's Shanghai Maling took control at the end of last year.

Sheepmeat processing at the plant has slumped in the past decade, reflecting a regional decline in sheep numbers, as land was converted to dairying and grape growing, the company said in a statement. About 500,000 lambs were slaughtered at the facility north of the Canterbury town of Ashburton last season from "consistently" more than 1 million prior to 2010, it said.

Silver Fern Farms told some 370 workers affected by the closure today but rumours had already been swirling and the New Zealand First Party issued a statement last week asking if closure was imminent. There would be potential transfer options to other plants in the region, the company said today.

"Whilst we believe the pace of land-use change has slowed considerably, we expect sheep numbers to consolidate around current levels rather than expand in the foreseeable future. It makes economic sense to consolidate this volume at our nearby Pareora site which has the capacity to process the combined numbers," said chief executive Dean Hamilton.

"Pareora is a large multi-species plant, an hour down the road in Timaru," he said. "Consolidating at one plant will provide a longer season with higher staff retention rates. We have recently invested $7 million at Pareora to add to its capability."

Silver Fern voted last year to sell a half stake in the business to Shanghai Maling for $267 million and the original cooperative of farmers now owns the remaining half stake, although Shanghai Maling has the casting vote on key strategic issues. The meat processor posted a loss of $30.6 million last year in what it called a "very challenging year across the industry".

The deal enabled Silver Fern to repay its debt, removing a threat from its banking syndicate to withdraw support. The company cut net debt to $107 million from $121 million a year earlier, and halved its finance costs to $14.8 million, it said in January.

The tie-up also enables it to tap Shanghai Maling's supply chain and parent Bright Food's wholesale and retail networks to distribute into China.

Hamilton said Silver Fern expects to have "230 available roles at our plants in Belfast and Pareora, as well as at Hokitika, and further roles at our sites around the country as the new season commences."

(BusinessDesk)


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What a shame

The purchase by Shanghai Maling will eventually kill Silver Fern Farms and leave the regional farmer exposed. All the Chinese are after is product so they will run the company at a huge loss by underpaying for product in NZ and taking the profit in China or in a tax haven.

But the farmer shareholders can only blame themselves - they let the company deteriorate over the years and many switched to dairying which may also come back to haunt them. Eventually the farmers will end up peasant farmers producing quality product to feed the Chinese market.

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Yes, I hope no one was really naive enough to NOT expect this to be another Dunedin Cadbury factory story.

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Or they are rationalising their plants so they can make the company more efficient and hopefully profitable

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If they don't match the market price for farmers, they will lose supply. Can't sell what you haven' bought.

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This is actually the problem with the industry and SFF. The market price is set by the market, not the farmer. No point buying something you cant sell for a profit

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This has to do with the rationalising of processing capacity due to a dwindling supply of livestock for processing.
It has nothing to do with the colour or country of some of Silver Ferns owners.
As someone said, if Silver Fern do not offer a competitive price for farmers livestock, the livestock will go elsewhere.
Doing away with any surplus/incompetent processing capacity should help them compete for farmers livestock. No??

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As the closest primary school to Fairton I have fond memories of a school trip there at the age of 6. We watched everything from stunning the sheep, cutting their throats through to the final product. Sad to see it close.

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What was the substantial and identifiable benefit to NZ that the OIO signed off on the sale to Shanghai Maling? Clearly it wasn't to create increased jobs for these locals.
Maybe Bright Foods Groups other subsidiary Shanghai Maling Aquarius have decided they can do a bit of business on the side with the six water consents attached to the site. Maybe this was the point of purchasing this site all along.
They've known NZ is stupid enough to give it's beautiful pure water away basically for free and they've seen their compatriots shipping it by the billion back to China, no worries.
Actually they all laughingly joke among themselves in almost disbelief about this absurd NZ government of inaction. They fondly call them the shrugging government with the big rubber stamp. The councils too, always too happy.
They can't believe their good fortune. NZ water going cheap haha, yes the NZ government always shrugging, always doing nothing and repeating, "nothing we can do, because no one owns the water".

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Well said when will the government and the OIO wake up that by selling "OUR" assets to overseas buyers such as China any promises made or thought are pretty unlikely to happen.

When is enough going to be enough? This government now and in the past has a huge amount of explaining to do and decisions to turn down overseas purchases by the OIO are simply lip service and PR exercises.

I shudder to think what will be left for our children and generations to come. They have turned much of their country into a waste land so the future does not look good for ours.

It is also interesting to note how by stealth other areas are being encroached upon. For example, the development at Karikari Northland saw areas snapped up after the initial purchase even to the fact that they have purchased the Top 10 Holiday Park and are now wishing to lease part of the local reserve.

Never known the Chinese as great campers and there are sufficient campsites at the end of the peninsula. Maybe they wish to house Chinese labour when they start to build the new development despite assurances that local labour would be used. It seems that the local decision makers have jade coloured glasses on since their trip to China.
[Edited]

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>"I shudder to think what will be left for our children and generations to come."

An inability to live securely in the land of their birth due to poorly managed housing outcomes, and a shattered environment with "swimmable" rivers.

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Listening to your comments anyone would think that NZ has become too expensive for it's own people to live in....Ah hang on.

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Why dont farmers get up in arms about Chinese owned Wrightsons or Japanese owned speights. I think they even think their Hiluxs are made in Timaru

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Are you serious? People like you scare me. Do you know how little water, water bottling uses compared to farming or processing? Last year only 9m litres of water was exported. One large travelling irrigator uses 22,000 litres per second. So the bottling industry is the same as ONE of these irrigators going for 409 seconds. ONLY 7 minutes!

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ALL commercial users, (pun intended), whether bottling as water, Coca Cola, or spraying all over land otherwise totally unsuitable for dairying should be paying a royalty per litre. The government isn't interested.
This could go some way to fixing the mess being caused to the NZ environment, and putting a proper value on a valuable NZ resource.

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Don't change the topic - your accusation was that billions of litres of water are already been shipped to China! Truth is 9 million litres.

By any chance you are a relative or Trump or worse, Mr NO Peters?

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Lamb, what's that? Oh yeah I remember, that's the meat every NZ family used to be able to afford to eat back in the day. Now days only the wealthy can afford it.

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And the farmers still cannot make decent returns from grazing sheep - go figure!

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Farmers returns are only 'not decent' when compared to the value of their asset. Maybe their asset price is too high? Or maybe they like it that way.....

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The good old days when we had lamb roast every week but never had chicken except at Xmas.Now it's the other way around.

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Truth be known, we really only had chicken because turkey was too dear. Easy to pretend it was turkey. Just don't tell anybody.

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You never see these stories on country calendar. Just the warm fuzzy stuff.

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