The nation's biggest listed meat company, Affco, says there is little point in its spending more effort on a meat industry "mega-merger" until the two big South Island companies get their act together.
Waikato-based Affco had been expected to be part of a mega-meat company - along the
lines of giant dairy co-operative Fonterra - with a $5 billion annual turnover. But on April 18, Alliance Group chairman Owen Poole ruled out a meat industry mega merger.
He said an opportunity to lift farmer returns by up to $400 million had been lost, and blamed the nation's biggest meat company, the PPCS co-operative.
Poole said that support for the mega-merger had been obtained from four meat companies, but "PPCS was not prepared to commit to the proposed process or accept the likelihood that not all beef would be included".
Alliance and PPCS together account for 60 per cent of processing and exporting, with many farmers owning shares in both co-operatives.
Affco chairman Sam Lewis said his company applauded Poole for the original initiative.
"We believe strongly that a key to improving farmer returns is better marketing co-ordination between the major companies and further cost rationalisation."
But he had been disappointed an initial "good faith" agreement to suspend public debate on some elements of the process was breached.
Affco would press on with its own strategy to develop a broader food group concept for farmers to see the potential for benefits arising from a different model.
"We know that survival is for the fittest, not necessarily the biggest, and being fit in tomorrow's world requires us to be smart, adaptable and focused," he said.
- NZPA
