Proposal to shake up meat industry

Posted by James Ferre on 30th June 2008

Two leading New Zealand based primary producers have announced the signing of a heads of agreement with PGG Wrightson to purchase a 50 per cent stake in Silver Fern Farms.

PGG Wrightson, a rural servicing firm, and Silver Ferns, a meat marketing and processing co-operative, believe the deal will create an improved and more integrated supply chain. “There are very clear synergies, in terms of cost and performance benefits, that both parties bring to the table,” SFF Chairman Eoin Garden said. “An evaluation undertaken by PWC on behalf of the two companies has identified prospective short-term gains of more than $60 million per year, with longer-term financial benefits ranging up to $110 million per year.”

PGG Chairman Craig Norgate adds that the decision to acquire a 50 per cent stake has been made as a show of confidence in the industry.”There is clear growth in the global protein market, so we need to build a structure to ensure that there is a stimulus to investment in the meat industry on a par at least with dairy,” he said. “We see our investment in SFF as an important step towards consolidation of the industry, with the benefit of enhanced supplier returns through rationalisation, marketing integration and a move to an Annual Equity Value (AEV) share model.”