Sheep milking discussed

Owen Poole
Owen Poole
Meat company Alliance Group is investigating the merits of sheep milking to help its shareholders develop a new income stream.

Alliance chairman Owen Poole yesterday pulled few punches in defending the meat industry from claims it was in crisis and dysfunctional, but said sheep farmers were too reliant on income from meat due to low returns from wool, hence the investigation into sheep milking.

Yesterday, in Milton, he told about 110 shareholders that while the sheep-meat industry had come in for some heavy criticism for its lack of performance, prospects for sheep meat were bright due to a global shortage.

The retail price of lamb last year was at its highest, having increased 50% in the past five years, but those benefits were blunted by an unfavourable exchange rate.

He also dismissed criticism the industry was not innovative and progressive, saying Alliance used robotic technology and sold portion-control branded ready-to-cook products.

"It's not new," he said.

The industry had "challenges", including excess processing capacity, and he said it would be better off if there were 10 fewer plants across New Zealand processing sheep, beef and deer.

While no-one wanted to move first and be left with the costs of closing those works, Mr Poole said farmers could force the issue by committing their stock to one company.

If Alliance received 30% more animals, Mr Poole estimated it would have the same financial benefit to farmers as "a medium-size" aggregation of industry.

Chief executive Grant Cuff said the company would make a profit this year and make pool and dividend payments.

Based on current exchange rates, Mr Cuff forecast lamb prices in the coming season to be $4 to $5 a head higher than last season, mutton $10 to $12 and cattle $20 to $30 higher, and deer $10 to $15 a head lower.

Mr Cuff said the sheep-milking investigation was not a sign Alliance was about to build a milk-drying plant, but he said the meat co-operative was open-minded about its long-term involvement.

But, with sheep-milk powder selling for $10,000 a tonne compared to bovine milk powder at $4800, Mr Cuff said it was looking attractive and warranted further investigation.

Ewes would lamb three times in two years and farmers would still have the same stocking rate and the same number of lambs to sell to meat companies as they did now.

 

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