July 1, 2008

New Zealand agricultural service company PGG Wrightson (PGW) will acquire a 50 percent stake in meat processor Silver Fern Farms (SFF) for NZ$220 million (US$167.2 million) under a partnership proposal.
 

Under the partnership proposal, PGW will provide access to advisory and other services inside the farm gate, and procurement for prime and store stock. SFF will provide its processing capacity, technology and expertise in logistics, marketing and branding.

The aim is to create an integrated supply chain and lift the earnings of meat producers in New Zealand, according to PGW.

PGW Chairman Craig Norgate said, "There is clear growth in the global protein market, so we need to build a structure to ensure that there is a stimulus to investment in the meat industry on a par at least with dairy".

PGW said short-term gains would come in the form of NZ$60 million (US$45.6 million) per year, with long-term financial benefits ranging up to NZ$110 million (US$83.6 million) per year.

Under the proposal, the purchasing operations of SFF and PGW will be integrated.

The two companies are targeting completion of the partnership in time for the start of next season, in October 2008.

Silver Fern Farms is New Zealand's largest meat processing and marketing company, producing 35 percent of New Zealand's beef exports.