Eoin Garden likens farmers' investing capital in their co-operative to the way they invest in their farms.
Every year, sheep farmers retain ewe lambs to replace ageing ewes in their flock, and he said equally, companies needed fresh capital to invest and remain profitable.
Unfortunately, farmers had not always seen
the need to invest in their meat co-operatives, usually because they were able to get their stock killed when needed and because debt funding was readily available from banks.
Times had changed, and Mr Garden said SFF needed a new capital structure to fund a new marketing model driven by consumer needs, new processing technology, and to reduce debt and lessen its share-redemption risk.
That structure allowed shareholders to exchange existing shares for a new class of ordinary shares, and to participate in rights and bonus issues, a move it hoped would raise about $80 million.
The changes also allowed for outside investment, but control of the company was enshrined in farmer-suppliers.
Mr Garden said it was about investing in the future of the company - financially and in technology such as x-ray scanning and robotic processing - and also about investing in an extension of their farm business.
"Those technologies are about reducing the cost and adding value to product through to the marketplace, about getting high yields, optimising returns for portions of the carcass. It is all about adding value and, on top of that, investing in the marketplace."
The debate about SFF's capital structure revealed some confusion.
"There was a lot of confusion between ownership and the need to recapitalise to make it profitable. The two are not necessarily the same.
You could have the smartest ownership structure to protect farm ownership, but if the farm was not well capitalised the next generation with access to ownership would not thank you for it.
- OTAGO DAILY TIMES
