The union and co-operative will meet next week in the hopes of coming to an agreement about redundancy for 100 staff of the lamb processing plant, New Zealand Meat Workers Union Otago Southland branch president Daryl Carran says.
The Employment Relations Authority ruled last month that Silver Fern Farms should pay out redundancy, which could total $3 million, to more than 100 employees who were not offered work last season, when no lambs were offered for processing at Silverstream during its usual working season, between about December 2013 and June last year.
The plant has not opened again this season and Silver Fern Farms is keeping tight-lipped on its future.
When asked about the future of the Silverstream plant, a spokesman for Silver Fern Farms said the co-operative and union were ''still in discussions'' and he could not comment further.
Mr Carran said he was doubtful the plant would reopen.
''I think that China taking heavy carcasses and full carcasses has probably, in my view, nailed [a coffin lid on] the prospects of Silverstream,'' he said.
Silver Fern Farms still wanted to maintain the right to open Silverstream when it saw fit, ''but it's the type of thing that has less and less credibility as time goes on'', Mr Carran said.
The plant had not opened this season and the union and co-operative could not find common ground on the redundancy of its workers, he said.
''We are still discussing options,'' he said.
''The aim [of next week's meeting] is to sort out the outstanding issues with the Silverstream workers.''
About 70 of Silverstream's 180 workers had been redeployed to Silver Fern Farms' Finegand plant and many of those were still working there, he said.
''The majority [of the remainder] have got employment elsewhere or are not doing anything at this point in time.''
Silver Fern Farms employment relations manager Gary Williams said discussions about the redundancy settlement between the co-operative and the Meat Workers' Union were ongoing and he was ''hopeful of a resolution''.
ANZ rural economist Con Williams said decreasing lamb numbers, overcapacity and decreasing profit margins had made business more difficult for New Zealand processors.
New Zealand processors were at a crossroads, where they could choose to produce specialty cuts or increase carcass exports to China and become a ''commodity supply chain''.
The decision made by processors would ''absolutely'' have a bearing on the sustainability of New Zealand processing plants.
''If you look at meat processing margins they have come down quite a lot,'' he said.
''They used to range 3%-4% and in recent years they have come in to 1%-2% and that's not sustainable.''
In 2012, Silver Fern Farms had to cope with negative margins, he said.
Lamb numbers had dropped from about 25 million to about 20 million in recent years and processing overcapacity remained a problem, particularly in the South, he said.
Silver Fern Farms reported a pre-tax profit of $1.8 million for the 2014 year.
It followed two difficult years for the co-operative, with $36.5 million and $42.3 million losses posted, in 2013 and 2012 respectively.
