Farm Brands Ltd, a joint venture between Silver Fern Farms (SFF) and Modena Investments Ltd, owned by New Zealand company Landmark and Italian renderer Societa Azionaria Prodotti Industrali, will oversee the purchasing, production and marketing of meal and tallow with initial turnover expected to be $70 million a year.
SFF chief executive Keith Cooper said this was the first of several business initiatives the meat company was making to enhance returns from products other than lamb supplied to United Kingdom supermarkets.
"That is a big part of our business, but SFF is paying attention to products which are too often viewed as poor product lines," he said in an interview.
With expected sales of $70 million, meal and tallow was relatively small compared to SFF's $2 billion turnover.
But Mr Cooper said the move was about adding value to products to improve the contribution to the business.
"This entity is forecast to deliver meaningful improvement from that product range."
Farm Brands would buy meal and tallow on the open market, process and export it around the world and pay its shareholders a dividend.
New Zealand currently produced about 150,000 tonnes of meal and 120,000 tonnes of tallow a year.
Of that about 75% of meal and 90% of tallow was exported with meal sent to the United States and Europe for stock feed, and tallow primarily to Asia for soap.
Societa Azionaria Prodotti Industrali (SAPI) was one of the world's leading rendering processors and product marketers, and Mr Cooper said it would also contribute new processing technology and infrastructure to enhance the value of the products.
As part of that, Mr Cooper said Farm Brands would invest in upgrading and building new rendering facilities in New Zealand but the timeframe and extent of that investment was up to the new board.
The joint venture was also aimed at securing the future for tallow and meal.
In a statement, SAPI president Carlo Alberto Rinaldi said the move would ensure supplies for the company when EU production was falling and the industry faced stricter food hygiene standards, especially in countries where there had been outbreaks of bovine spongiform encephalopathy (BSE).
"There is every reason to believe also that New Zealand will eventually follow the international trend of requiring rendered material to be processed outside food sites," he said.
The joint venture would not affect SFF rendering department staffing levels.
Hugh Spence of Landmark has been appointed Farm Brands new chief executive, and independent SFF director Richard Somerville its chairman.
