Silver Fern Farms On Track for Best Performance Yet

photo credit: Silver Fern Farms

Silver Fern Farms is on track for the fifth year of sustained profit, said chief executive Simon Limmer.

The 2021 profit is tracking ahead of budget, and stakeholders said it was the best the company had performed in the last decade.

The annual results announced in March showed a $65.4m after-tax net profit for the year ending December 31, 2020 - its second-strongest result in the last decade.

The performance was a shout-out to the whole business during times of uncertainty, and particularly for the supply chain team whose performance co-chairman Rob Hewett described as exceptional.

The offshore market demand for New Zealand grass-fed red meat remained strong, but the problem was getting it there, said Hewett.

Limmer added that the issue was not going away, and shipping reliability is about 20 percent of what it was 18 months ago.

The global disruption to the supply chain has been a real challenge for the company, be it the availability of containers, ships to load containers, uncertainty about the course of the ship, when it would arrive and when it would be unloaded.

The other serious impact in the coming year would be the cost; in the last six months, shipping rates had increased by approximately 50 percent.

On the bright side, the joint shipping venture Kotahi, established by Fonterra and Silver Fern Farms nearly a decade ago, was still strong.

Another prominent issue was labour, which was forcing the company to think differently about its operations. However, investing in automation was not an overnight fix, said Limmer.

Hewett said there were also issues inside the farm gate and in New Zealand, dealing with legislative requirements coming in full force.

Silver Fern Farms' job is to bring farmers as many consumer-focused competitive offers as it possibly could to mitigate potential land-use changes and was committed to doing that, he added.

Limmer said market access was critical for Silver Fern Farms. He said New Zealand had become isolated in the last few months and needs to get back out there and rebuild relationships.

Silver Fern Farms had to continue working had to ensure the wellbeing of its people and the productivity of its plants.

Group marketing and innovation manager Nicola Johnston said the future was full of challenges but potentially even greater opportunities for the company and its suppliers.

The rising Gen Z demographic was one factor fuelling the changing industry.

Climate change was at the top of their list, alongside wanting brands to stand for something.

Conscious consumption would reach new heights, and movement was happening in regenerative agriculture. Technology was going to augment people's lives, and data was the new oil, she said.

The food industry would become unrecognisable to its former self, with more change expected in the next decade than in the last 50 years, and there was an opening for Silver Fern Farms to secure its success.

Consumers are becoming more conscious about how their food was raised. They care about soil health and emissions and are starting to question farming intensity, carbon footprints, biodiversity, water quality and sustainable food systems.

Over three years, the company has observed a growing movement in regenerative agriculture across its markets, and Johnston believed it was shaping up to answer consumers' concerns.

Consumers may not necessarily fully understand regenerative agriculture, but many large players are stepping up to educate them. Major multinationals, such as Walmart and Nestle, have committed to the initiative and are reworking the footprints of their suppliers.

Johnston said there was an opportunity to leverage the platforms regenerative agriculture and created and tell a deeper story about how Silver Fern Farms is different.