Silver Fern Farms money raising a thinly veiled glossover of Richmond fiasco

You have to feel for SFF shareholders. Now CEO Keith Cooper is asking them to stump up with $128 million, apparently in the name of forward progress in the UK consumer market.

Their hard fought co-operative, designed to protect their interests is fast becoming what they term a 'hybrid co-operative'. The translation for that is a co-operative moving away from what it was designed for and if this share restructuring goes ahead you would have to assume that it is only a matter of time before outside shareholders gain some status in the company, even if Cooper is promising that won't happen now.

But why do the restructuring in the first place?

Overcommitment.

First SFF tries to wrangle the money out of PGG Wrightson, now it's talking all this lovely juvely touchy feely rubbish about needing to be a 'fully integrated market-led company'. Come on, it all looks a bit desperate and more than a little co-incidental in the light of the lack of cash injection from the failed merger with PGG.

Wouldn't it be fantastic if the PR doctors just for once let go of the spin and spoke the honest truth. In SFF's case the statement would read something like this:
"SFF would like to advise that it is charging farmers an extra $128 million in shares and will be trying to find outside investors as well, due to the balls up it made several years ago when those in charge decided that SFF should buy Richmond at all costs. Because of this SFF has been in the poo financially for some time and as you know PGG Wrightson didn't end up joining the party so you, our loyal shareholders will have to foot the bill. But don't worry...we won't sell your co-operative rights down the road just yet...after all farmers are our business...and consumers...flashy UK consumers..."

Farmgirl hopes that SFF farmer shareholders voice their concerns over the restructuring as it is more than a little flawed.

It's funny isn't it how CEO's and directors are paid to go into a company and grow the business and make it financially stronger, yet end up making it bigger and weaker...think US companies answering to DC at the moment. The NZ example in agriculture is not as far apart from that as we might like to think...

SFF boss smart in getting PGG to help pay for Rissington...

It's just a little too much of a co-incidence...Keith Cooper and Silver Fern Farms takes PGG Wrightson to the cleaners after Norgate reneged on a merger deal but says the livestock company are still the preferred option for an integrated supply chain partnership option.

Now SFF has cosied up to Rissington in a new deal by merging livestock and marketing staff from the North Island genetics company into SFF, to provide advice and knowledge to lamb suppliers wanting to produce lamb to SFF's contract specifications. In short Rissington will take the place of PGG Wrightson.

The two companies have had a working relationship for several years, with SFF processing lambs for Rissington Marks and Spencer contracts so you have to wonder if SFF was really interested in seeing through a deal with PGG in the first place.

And the $25 million pay-out settlement from PGG would come as a handy deposit on the new acquisition wouldn't it?

As Farmgirl has said before, Keith Cooper is one of the shrewdest CEO's in the country. Perhaps the Pork Board should entice him to jump ship...

SFF backtracking on idiotic ban of dogs in sheep yards

Since a belated maelstrom has buffeted its way through the nation's media regarding the Silver Fern Farm decision to ban sheepdogs from its sheepyards, SFF have been in damage control.

No, they say loudly. At no time did UK supermarket giant TESCO demand the removal of dogs because of the stress it may cause the sheep before it ends up in a British housewife's roasting dish.

But since SFF had removed dogs from all but three plants this season, management decided to "minimise the use of dogs from all sites".

What balderdash as the shepherds at the Fairton works in Mid Canterbury would tell you. Farmgirl has been told on more than one occasion that it was a word in the ear by the TESCO machine that led to the demise of the poor old dog.

But TESCO's big brother bark has made news worldwide as many overseas identify with the plight of the endangered Kiwi shepherd and the demise of his dog, and is apparently rather sensitive to any criticism.

It was no surprise then that SFF should jump quickly to dispel the story but in their haste they forgot to remember one thing - shepherds talk, they see, they hear what is being said when the big wigs come to visit their yards. They are not blind, deaf and dumb mutes who issue the odd whistle and yell 'Get up there Bob!'. So SFF's claim that they just idly decided to rid their yards of years of Kiwi iconic history, at a time when consumers are becoming so divorced from the reality of food production, just doesn't ring true.

And to add further salt into the wound the Otago Daily Times reported this week that surprise, surprise, Lincoln University bio-chemist Prof Roy Bickerstaffe found the dogs created no adverse affect on PH tender rating levels in sheep.

Farmgirl understands that yard requirements often dictate whether dogs are needed or not and has not problem with that but when it is so clearly being done because of supermarket pressure it is a worrying sign as to what we will have to kowtow to next in order to get out product into the market.

Federated Farmers Meat and Fibre Chairman Bruce Wills is naive to think this is just a 'storm in a teacup'. What it signifies is important.

This could be the beginning of a game of dominoes.

David and Goliath shall meet

And round three is about to commence now...Keith Cooper is swaggering to the middle of the ring as Craig Norgate adjusts his bloodied mouth gear.

But wait...Norgate's coach is advising him not to yell so much during this round, to keep his cool, to bide his time, to avoid the killer punch.

Already it's been a mighty battle with round one easily going to Norgate, who punched with one hand into Cooper's short pockets and took with the other...but Cooper's mental alertness has given him stamina, he puffed up his chest and delivered an almighty right hook, in the style of Holyfield to nearly knock Norgate out...but Norgate held on, was able to stagger back to his corner to be cleaned up and freshened for the next round.

So, one all at this stage...and now a change in the boxing rules...the two are going to sit down, pat each other's heads, suck their thumbs and let the adjudicator do the talking. Where will round three go? It's anybody's guess, but Cooper has that competitive gleam in his eyes, his pucker is up, his beef chops look firmer...

Further update on sheep dog ban in meat works...

Following the news last week that Silver Fern Farms is planning to ban all sheep dogs from meat work yards at the request of UK supermarket giant Tescos, Farmgirl has been told that Canterbury Meat Packers have been doing the same thing in Mid Canterbury for some time.

However, the move was not without ongoing costs as yards had to be redesigned.

One wonders if shareholders will be happy if SFF has to spend money on redesigning their yards as Farmgirl hears that many are old and will be difficult to shuffle sheep through without the use of our canine friends.

How much is that likely to cost?

Political correctness gone barking mad as UK supermarket bans use of dogs across Silver Fern Farm works

What the...?

The news today that UK giant supermarket Tescos has ordered a ban on all working dogs in the yards across Silver Fern Farm meat works is nothing more than animal activism gone mad.

Silver Fern Farms communication manager Brent Melville said last week's visit by supermarket officials has reinforced the need to phase out the use of dogs in sheep and lamb yards.

"Accordingly the company has committed itself to removing all dogs from all lamb sites by the commencement of the new season."

Bleeding hearts unite. The good old uninformed UK consumer has spoken yet again. Ignorant of farming practices they have shown yet again how dangerous their uneducated views can be.

A relation of mine told me a frightening story recently about a London boyfriend. This man had lived in London all his life and told her that he had never seen a vegetable in a garden and did not know that carrots grew in dirt. He was not an unintelligent man but it gives some context as to the continuing problems we are facing from that part of the world.

So divorced from reality are these consumers that Tescos have made an unreasonable demand to change a Kiwi way of life because they say it causes 'stress' to the sheep. Apparently humans yelling and rattling lumps of metal as sheep make their way through a yard does not.

Should Silver Fern Farms have accepted this demand or should they have used the international media to forward the Kiwi shepherd's case?

Although Tescos is important to Silver Fern Farms there is also an important principle at stake here, and if we say nothing and then announce the policy change backhandedly as the company have done, we are the losers.

At least give us a chance to fight our case and use this opportunity to prove to these ill-informed Brits that our Kiwi sheepdogs are as iconic as the meat itself.

Absolutely barking.

For more on the story go to http://www.ashburtonguardian.co.nz/

Lamb price news

My thanks to one of our readers who forwarded me these confirmed figures for Silver Fern Farm lamb contracts.

Here's what he said:

"$5.55- $6.22 for 21kg lambs, $5.10-$5.80 for 17kg lambs. $8.50- $10 for 50kg Venison. These are Backbone contracts I think through until 2010...more details Rural News page 4. I'm not sure of the time frames but see lamb is up 5c for next week's schedule."

It will be interesting to see what Alliance comes out with - but generally this is all good news.

Will Cooper's witchhunt be in the best interests of NZ agriculture?

The Press said it all yesterday with a bold headline proclaiming PGG Wrightson's capital value had halved in just one week as the company's market capitalisation was slashed to $175 million on Friday.
Hindin Greene partner Grant Williamson, of Hamilton, said that investors had lost confidence in the company particularly after the Silver Fern Farms debacle.
Now, as reported on this blog earlier this week, Keith Cooper - CEO of SFF, is determined to go after Norgate for a figure widely rumoured to be around the $140 million mark.
There is no two ways about this, PGG Wrightson is in trouble. It has high debt levels and a big investor (Pyne Gould Corporation with a 21.5% percent share) wanting out. As Williamson suggests in the article, getting new debt is near impossible in the current economic environment.
So, is Keith Cooper's stance in the interests of New Zealand agriculture at this time, and indeed his own shareholders? Many of those shareholders will be PGG clients and none of them will want to see the company go belly up.
PGG Wrightson is an important company and Cooper's desperation to save Silver Fern's and his own bacon could see it pushed to the brink.
Norgate was stupid to go unconditional on the deal with Silver Ferns without funding but is it even stupider to sink his ship when so many farmers could be hurt by those actions? Couldn't a softly softly approach and a little more patience serve both companies interests?
It's a tricky question, and one I suspect Cooper and his men won't give any consideration to.
It would be interesting to hear your views on this...

PGG in major financial trouble?

Business commentator David Hargreaves has written a damming article on PGG over the 50 percent bid for Silver Fern Farms when the company didn't have the finance to back it, and the subsequent financial problems the company has found itself in.

David finishes by stating that Craig Norgate may be getting 'that call' from John Key soon.

The writing, as they say, might be on the wall...

Read the full article here: http://www.stuff.co.nz/4851777a1865.html

Source tells Farmgirl of $120 lamb contract

UNCONFIRMED REPORT:

Good news for lamb farmers today with a source telling Farmgirl that he has a Silver Fern Farms farmer contract for $6 a kilogram. This would suggest that the Federated Farmers figure of $150 a lamb may not be that unrealistic after all.

If you have had a similar contract or can confirm these figures or give us a heads up on Alliance winter contracts please let us know!

Keith Cooper hints at $200 million compensation from PGG

Craig Norgate can consider himself well and truly spanked and sent to the little boys' corner following the rejection of a pithy $10 million compensation offer for the failed partnership deal with Silver Fern Farms.
On the Farming Show yesterday, Silver Fern Farms CEO Keith Cooper hinted that up to $200 million might be more in the ballpark. Of course they won't get anything like that but some commentators believe PGG could be forced to pay well over $100 million.
Cooper said the value of the transaction had been clearly articulated at around $200 million and this was now lost.
"It can't be substituted with a new deal so we have got to come to a consensus as to what those damages are and quite simply they are vastly different to the $10 million dollar offer by PGG."
Norgate is finding out the hard way that Keith Cooper is not a man to be messed with. In a scathing attack on how PGG has conducted itself through the negotiations he said it was 'a little unusual for one of the parties to take negotiations into the media, particularly as they are a publicly listed company with other disclosure requirements.'
Ouch...you could feel the blow landing on Norgate's chin as Cooper's stance caused an immediate decrease in the value of PGG shares and his broad hints at how much the settlement may cost the company will only continue this downward trend.
Norgate is learning fast that playing chicken with the big boys isn't so much fun after all.

To listen to the full fascinating interview with Keith Cooper go to: http://www.farmingshow.com/