Shareholders in Silver Fern Farms will this week hear details about a new capital raising proposal, expected to be in the form of a share issue.
The Dunedin co-operative meat processor and marketer signalled at its annual meeting in January that it was going back to shareholders for an undisclosed amount of money for, among other purposes, investment in its plate-to-pasture integrated marketing model.
The move also signalled continued restructuring by Silver Fern Farms (SFF), something its chairman, Eoin Garden, said the industry still desperately needed to do, despite high lamb prices which were artificially masking that need.
Mr Garden said a more favourable exchange rate was responsible for two-thirds of the higher prices farmers had been paid for lambs this season compared with last, but without a lower exchange rate, lambs that were worth $89 would have been worth $65.
He called for discussion and a commitment from other meat companies and farmers to renew efforts to structurally change the industry.
"There has been no strategic or structural fix that has delivered this season's improved return..
"Two-thirds of this year's gains are currency driven, with the remainder attributed to an improved market process, which I would suggest is principally driven by decreased supply."
Mr Garden said the meat industry needed to grab offers by Meat and Wool New Zealand to take a leading role in a pan-industry strategy, and the Government's offer to provide facilitation.
SFF was partway through restructuring its business, which had included reconfiguring its meat processing plants to match stock flow and stock type while also embarking on a new marketing strategy of finding new markets for meat and supplying customers with the type of product they wanted when they wanted it.
Mr Garden has previously spoken in support of a share issue, saying it ensured farmers retained control of the co-operative.
As part of last year's failed partnership with rural servicing company PGG Wrightson, SFF planned to replace rebate and supplier investment shares with a new class known as supplier shares. SFF also planned to attribute an annual equity value to those shares based on the performance of the company.
Management has identified the traditional $1-in $1-out co-op share structure as an obstacle to raising capital.
Last week's report on the meat industry by the Ministry of Agriculture and Forestry also identified the absence of capital appreciation in share value as a problem in raising capital.
It said shareholders might also be unwilling to to allow a co-operative to retain earnings if those retained earnings were not transferred to the farmer's balance sheet through an appreciating share price.
