New works set lowest fee

Press, 5 March 1987, Page 2

New works set lowest fee

By

HUGH STRINGLEMAN

farm editor

The Fortex Group will begin export lamb slaughtering at its own singlechain works near Ashburton today and will charge the lowest killing and processing fee in Canterbury. The works are designed to kill up to a million lambs a year, with a double shift five days a week, and will significantly reduce the number of lambs available in the northern South Island for the other larger meat companies.

The single-chain works, which can kill lambs, adult sheep or goats, have cost less than $lO million to add on to Fortex’s existing lamb and venison processing plant at Seafield, near Ashburton.

A new workforce of 47 has been employed and it is planned to increase the kill up to 3200 lambs a day within the next two months before going on to shift work, about 6000 a day the whole year round. The general manager of Fortex, Mr Graeme Thompson, said yesterday that the co-operative company would continue to kill at 11 other South Island freezing works. Partly so that Fortex suppliers killing at other plants would not be disadvantaged, the company has decided to introduce a two-tier killing charge at Seafield which will be $6.55 a head for lambs plus 22c a kilogram carcase weight, called the premium reserve deduc-

tion. This 22c a kilogram will go into a fund to benefit all Fortex suppliers by way of premiums at the time of kill at Seafield or elsewhere. In effect this money would be pooled and paid out at some time during the year as processing premiums, said Mr Thompson.

The alternative of setting a flat rate killing charge at Seafield which was $3 less than the next lowest charge of a competitor would result in a clamour to get stock killed at the new works.

The gross killing charge at Seafield will be $9.50 for an average lamb of 13.5 kilograms, compared with $9.57 at the Stevens Group works, $10.06 at C.F.M.-P.P.C.S., and $10.19 at Waitaki International plants. Also, Fortex is able to charge the lowest Ministry of Agriculture inspection fee, of 40c a lamb this season, because it has fewer inspectors, and it has incorporated the portworks charges in its killing fees. With this sort of policy, plus the co-operative’s track record in passing back marketing premiums above schedule, Fortex seems assured of being able to attract its projected million lambs annually for killing at Seafield and this will definitely put greater pressure on the multi-chain works in the province.

Several chains have closed early this season and companies have been

paying large premiums to try to attract throughput. Canterbury was, without the addition of Seafield, the most competitive area for meat companies in New Zealand and many North Island farmers are envious of the premiums being offered. That competitiveness has now been further enhanced by the opening of the new plant and the concurrent introduction of two new “Fortex prime” grades of lamb which remove some of the penalties for overfat production and raise schedule returns.

The prime two grade will be 16.5 kg to 20kg carcase weight, up to 15mm GR and pay about 150 c a kilogram, rising to 180 c in November.

The prime one grade will be 20.5 kg to 25kg, up to 15mm GR fat cover and in the price range 160 c to 195 c (peak in November).

These prices are significantly more than the present schedule prices of PX 144 c, PH 123 c and TH 108 c, the grades which are’ all absorbed in the new Fortex specifications.

Fortex will also offer a guideline premium over schedule of $4 a head on all main lamb grades during October and November when killing at Seafield.

Its total package will be very attractive to South Island farmers and will probably result in offers by other meat companies to try to retain their production levels.