Focus on sheep returns

DUNEDIN - South Island meat processor Alliance is switching its emphasis from debt reduction to better returns for producers.

Chief executive Owen Poole told producers that the Alliance equity ratio was now between 58 per cent and 60 per cent, a substantial improvement on the less than 20 per cent of the early 1990s.

The 60 per cent equity ratio was adequate and allowed for a buffer against adverse changes in the industry.

The company was aware that sheep and beef numbers were falling as farmers switched to other land uses, such as dairying, forestry and horticulture.

It was now essential that sheep farming was made profitable to encourage producers to remain in the industry.

If the New Zealand dollar stayed in its present band, lamb producers should, on average, receive an extra $3 a head compared with last season. This was unlikely to be enough to reverse declining sheep numbers.

The reconfiguration of the Alliance plants recognised that livestock numbers were scarce, and it also needed to bring efficiencies into processing plants.

New technology was being tested at the Sockburn plant and successful innovations would be brought into other plants.

- NZPA