KEY POINTS:
Meat farmers could know within days whether processing companies are going to commit to a proposed mega merger, says Alliance chairman Owen Poole.
In February Southland-based co-operative processor Alliance proposed creating an entity with turnover of about $5 billion to manage 80 per cent of sheepmeat supply and with similar amounts for beef and venison.
"We need an agreement from all five [parties] within the next 10 days for this process to carry on," Poole said.
Poole would not name the five parties involved but these would likely include major players Dunedin-based co-operative processor PPCS and private companies Affco and ANZCO Foods.
Farmers had faced three years of low returns, some of which had been beyond control, including the strength of the dollar and drought, Poole said.
"But there are things that we can do both in terms of the market, the market returns and cost."
Companies had been engaging and sensible but before committing or not they needed some certainty of outcome, he said.
"They want to know that should they commit there'll be an entity at the other end of it to purchase their assets and or companies and that entity would have to be in the first instance PPCS and Alliance." However, there would not be a merger of the two co-operatives without the wider industry involvement.
"The five are in or it doesn't happen," Poole said.
A PPCS newsletter showed the company wanted the business planning done first followed by valuation, he said. "What we're simply saying is we think the valuation and the business plan development and finalisation should run in parallel," he said.
"You can't prepare a business case until you know what you're buying and what you're paying for it."
PPCS also wanted beef assets included in the entity, Poole said.
Alliance would know within the next few days the level of beef commitment but it certainly would not be all of it, he said. "So if that is another pre-condition then that's particularly unhelpful."
The Meat Industry Action Group has been critical of PPCS for a lack of urgency.
ANZCO chairman Graeme Harrison said they supported the mega merger concept "but we have an open mind as to our involvement".
