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Latest Responses (this topic): 18 Nov 2007: Joanne Marshall-Crack, Mokotua 18 Nov 2007: Paul Stirling, Ohai 30 Oct 2007: Grant Cuff - Alliance Group

Alliance Group and Dairying

15 October 2007

Ironically, in the mail today arrived the "depressing" Alliance update offering no hope to suppliers (that I could find).

Also in the mail a pamphlet from Dairy Trust seeking suppliers and offering competitive payments and no share requirements!!!

I bet there are plenty of sheepfarmers this morning thinking again about dairying or selling.

The calculators will be out - as will the real estate agents.

You've got to wonder that Alliance is not actively wanting to get rid of suppliers?

Continuing with "special deals and third party traders" is just the icing on the cake.

I feel that special deals are equivalent to us smaller suppliers subsidizing those who should be able to support themselves.

How many smaller suppliers does Alliance have to lose before it remembers they are the backbone of company.

And, why should we supply a company that treats smaller suppliers like second-class citizens?

We're not alone in this view - our remaining sheep farmer neighbours (and these are dropping like flies) are also looking closely at who they will supply this season.

- Joanne Marshall-Crack and Darrin Crack - Farmer/writer & Farmer

30 October 2007

Our response your email dated 15 October 2007 follows.

Returns to sheep farmers are currently too low and must be improved. Shareholders should be confident that if any company can identify and address the necessary issues to improve returns, then it is Alliance.

For many years our industry has operated under a model which proposes that competition between meat companies at the farm gate will lead to best returns. In our view, such a fragmented model does not always produce the best returns and over time has created issues such as over-capacity and the third party arrangements.

For Alliance to cancel its few volume arrangement whilst the environment remains unchanged would be commercially irresponsible and result in lower returns to all shareholders. Alliance understands and agrees with shareholders' philosophical objections to volume arrangements. The key to eliminating them, however, is to obtain the same guarantee of supply from all shareholders and suppliers.

Alliance is leading the way toward this objective through the introduction of a quality and loyalty contract this year which was also discussed in the "Update." Alliance is committed to phasing out third party arrangement by changing the environment that makes them necessary.

It is ironic that Dairy Trust is raised. This is a private company competing directly with the co-operative Fonterra. Fonterra has publicly stated that it will now pay more to its suppliers farming near a competitor's factory than to their average supplier because of this competition. Suggesting Dairy Trust as a comparison is completely at odds with a co-operative concept. Alliance Group faces even greater competition within our industry.

Alliance and its shareholders are rightly proud of their company, which we believe has provided the best returns to sheep farmers of all the major meat companies over the past five years. In recent times there has been much public acknowledgement of the company's infrastructure in the market, sound financial position and operational efficiency. This position has been achieved because Alliance has always faced up to issues and addressed them in the best interest of the company and all shareholders.

18 November 2007

If Joanne Marshall thinks that getting rid of volume deals is going to fix the meat industry she needs to wake up. Alliance at there road show explained this clearly and people still don't get it. Also she is very naive to think no other companies have these. Lets praise Alliance for some of there positive initiative and sink the boot into some of the real trouble makers.

Also she wants to find out how many farmers are prepared to leave there cooperative (fonterra) and supply private company Dairy Trust.