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Sheep farmers to pay the price – eventually

Key Financial Items – Alliance Group

By Joanne Marshall-Crack

The long-suffering sheep farmers of the south might have received a reasonable price for their lambs for the past couple of years but it seems likely that it was at the expense of their co-operative, if not ultimately at their own expense! 

Alliance Group today announced a loss in excess of $50m.

The number of sheep farmers, particularly in Southland, has been in decline for several years with many farmers citing the special deals that Alliance Group would do with some suppliers (but not others) as having a detrimental affect on client relationships.

In many cases “special dealers” have bought hundreds of lambs from Alliance suppliers each season only to sell them on directly to Alliance Group – usually with the lambs going straight for processing.

Ironically these “special dealers” have been in a position to pay the farmer more than the meat company’s schedule price on the day.

Now, possibly in an effort to gain some farmer loyalty the co-operative has introduced a new procurement scheme whereby farmers receive a part payment for a committment of supply.

Just today Alliance Group Chairman Owen Poole confirmed the company was also making changes to its procurement policies to reinforce its commitment to loyal shareholder/suppliers.

Many farmers, particularly those who have already changed farming practice, will no doubt find this attempt at encouraging farmer loyalty amusing at best!

Meanwhile, Alliance Group promotes itself as being the world’s largest processor and exporter of sheepmeat. It has also said there will be no distributions to shareholders this year.

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  1. Rachel says:

    I was talking to a real estate agent the other day (in Southland). He said that there were more sheep farms about to come on the market because farmers had had enough of the variable lamb prices. I don’t imagine that yesterday’s announcement by Alliance will make them want to stay in what looks like a dying industry.

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