Should meat companies be taking wage subsidies?

Photo / File

Independent economist Cameron Bagrie sparked a bit of debate on The Country yesterday when he suggested that meat companies should not be taking wage subsidies.

Bagrie had also vented his frustration on Twitter, slamming some while praising meat companies Affco, Hellaby and Greenlea for not taking the subsidy.

"They've looked at it within the bounds of ... what the spirit is of what that wage subsidy is trying to achieve" Bagrie told The Country's Jamie Mackay.

"That wage subsidy is out there to support businesses that are getting clobbered, that are effectively in lockdown" said Bagrie, who took issue with Silver Fern Farms and the Alliance Group making use of it.

"Are Silver Fern [Farms], are Alliance on lockdown? The answer is no. They're operational. It's business as usual. OK they're dealing with risks, commodity prices are down - but that's a business risk. That is not a taxpayer risk that the broader New Zealand economy needs to bear."

Listen below:

Alliance Group chief executive David Surveyor responded to Bagrie's claims in a statement released to The Country today.

"Like many businesses, we have been significantly impacted by the Covid-19 pandemic. Alliance Group is projecting at least a 30 per cent decline in our revenues over the coming months and we acknowledge the support the Government is providing to help us keep our people in jobs.

"In response to Covid-19, the co-operative has adopted a set of strict rules to ensure our continuing operations do not contribute to the spread of the disease.

"The physical distancing rule has reduced the processing capacity of our plants by up to 50 per cent, which means it is substantially more costly and inefficient to operate our network at a time when we would normally be at peak livestock volumes. This is compounded by the fact our plants have fixed operating costs. We are generating significantly lower revenues on the basis of production lost through Alert Level 4.

Alliance Group chief executive David Surveyor. Photo / Supplied

"We have saved almost 1000 jobs to date from an early season termination and secured 3800 others by continuing to safely run our plants, albeit in a far less efficient mode.

"Alliance Group exports approximately 95 per cent of our products, and demand in a number of markets has declined significantly through this period. For example, the food service sector has been significantly impacted with the closure of restaurants around the world.

"Our application for the wage subsidy was driven by our commitment to preserve our people's incomes and employment during this period. The application was supported by the Meat Workers Union.

"We will only use the wage subsidies in the way they are intended by government and therefore it is paid to our employees. If any part of the subsidy is not used for our people, we will return it.

"As a company, we are able to ensure that those working do not suffer an income drop while we are operating at a lower processing capacity.

"The subsidy is helping to preserve the employment of our vulnerable employees, especially those employees aged over 70 or with a serious underlying health conditions.

"We are among the largest employers in the regions where we operate, and this subsidy helps minimise the flow-on economic impact of lost jobs and reduced incomes to regional communities."

Independent economist Cameron Bagrie. Photo / Stuart Munro

Silver Fern Farms also responded to Bagrie's comments with the following statement:

"Silver Fern Farms applied for the Government wage subsidy. We wanted to ensure we could retain our employees through this time where our production levels have decreased by up to 50 per cent at some of our sites.

"This led to projected revenues being over 30 per cent lower during April than the previous year, which met the criteria for being eligible for the wage subsidy. We are aware of our responsibility to keep people in essential work. We thank the Government for making this mechanism available as it has assisted us in keeping people in essential work.

"We are tracking our revenues through this period to monitor our income against our revised forecast projections. We will review our application as we have greater certainty of operations and revenues through this period, and should we no longer meet the criteria we will reimburse funds received."

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