Farmers told to look at new works

Press, 15 June 1979, Page 8

Farmers told to look at new works

Canterbury farmers should now turn their attention to the establishment of a new freezing works of their own in the province, according to the chairman of the Meat Board, Mr C. Hilgendorf.

He said this in commenting on remarks made recently by the Associate Minister of Finance, Mr D. F. Quigley, at a meeting in Christchurch.

Mr Hilgendorf said that no fresh moves had been made by the board to the Government over the possible purchase of the Kaiapoi works for farmers.

The Minister of Finance, Mr Muldoon, recently declined to allow the board to re-open negotiations over the purchase of the works using meat industry reserve account funds, which are farmers’ own funds.

Mr Hilgendorf said that in the light of the decision the board was concerned about the control of these funds.

Mr Hilgendorf said that the Government’s refusal of the Meat Board’s request was not of a request to buy Kaiapoi at $7 per share, as that offer had lapsed many months ago. It was the board’s request “to re-open negotiations with the principal shareholders to buy at a sum of less than $7 per share.”

The refusal was by the Minister of Finance and not by the Minister of Agriculture (Mr MacIntyre), who has supported the application and been most helpful all along. The value of the freezing works under the present curious economic circumstances was not primarily in its ability to make money out of the processing operation. Its real value was that the owner had access to meat, and particularly lamb, and this could be assured in no other way. For example, Vesteys had recently renewed their lamb killing facilities in Hawke’s Bay at a cost of S3OM odd. In no way could this show an immediate profit purely as a processing operation.

But even at about S4M or $7 per share Kaiapoi was reasonably priced, said Mr Hilgendorf. Some years ago, at a time when money was worth more, both of the principal shareholders had offered to buy each others shares at about that price. Kaiapoi was not, of course, an ideal works, said Mr Hilgendorf, but it was not as small or as run-down or as incapable of extension as some of the critics, who had not seen it, thought. Any falling behind in maintenance over the last few years was due to the Government’s unwillingness to make up its mind. The dilatoriness of the Government in making a decision about Kaiapoi had also seriously delayed the board’s plans for expanding its work on the improved presentation and packaging of lamb. With the present ample cattle killing capacity in the South Island, the fact that Kaiapoi had no cattle kill might be an advantage rather than a disadvantage.

In the 25 years that the board had administered the meat industry reserve account Mr Hilgendorf said the only loss had been made when the Government of the day, with a rather heavy hand, persuaded the board to lend money to establish a freezing works in the Chatham Islands. Nevertheless most of the money that the board had lent had been to establish enterprises, for which it would not have been likely to be able to raise money through normal channels. Most of these fertiliser works, freezing works etc, had been a resounding success and all had been profitable. “I believe that this is the real value of the reserve account,” he added.

Mr Quigley, said Mr Hilgendorf, might be less concerned than other farmers by the fact that prices for livestock in Canterbury and Otago were appreciably less than in most parts of the country.

“My only advice to Canterbury farmers is that they can now start to work towards the establishment of a new works of their own. This admittedly may be a long term project. In the first place

Otago farmers are already working along these lines and so are likely to be first in the queue. In the second place, with present killing capacity in Canterbury it will be harder to prove that this should be increased than in Otago.”