Ministerial approval of the Shanghai Maling Aquarius purchase of half of Silver Fern Farms will be welcomed by many within the industry.
After a long, drawn-out process, the two parties involved in this transaction will be pleased to be able to get on with finalising the formalities and entering into the new venture in January.
It amazes me how many people think this is the first major foreign investment in a New Zealand meat company but 'those in the know' have knowledge of other foreign investment within the industry.
This announcement comes at a time of challenging market conditions.
The predicted 700,000 fewer lambs to be reared this season, combined with non-favourable currency levels, will certainly force processors and farmers to manage their lamb production carefully.
The input of capital through the deal will enable the new company to forward its branded product programme, Plate to Pasture.
After doing the hard yards of the first five years, the new entity will now be able to up the progress of the implementation of this programme. These customer-focused programmes are the future of meat marketing with a focus on higher percentages of chilled product rather than frozen.
With the freeing up of chilled supply to China, this new arrangement can only benefit SFF's development into that market.
Having access to good reliable internal supply chains in foreign countries is vital to ensure the reliable supply of product to the consumer while maximising return. Failures in the supply chain will quickly undermine returns and brand security.
SFF's success will depend on strong leadership, because ultimately the farmers own the supply of stock.
History tells us that firms which fail to reward their loyal suppliers will pay the ultimate price.
- Rick Powdrell is Federated Farmers meat & fibre chairman
