9 Oct 2017

Alliance Group invests $54m in technology

11:48 am on 9 October 2017

New Zealand's second largest meat company has unveiled a $54 million programme of capital expenditure for the next year.

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Alliance Group said it has made significant investments in technology. Photo: RNZ Cosmo Kentish-Barnes

The money would go into better technology, and was being funded from improved efficiencies and cost savings at the Alliance Group that were achieved over several years.

The group's chief executive, David Surveyor, said the money would be found from within the company accounts and did not need a rights issue, nor would it increase debt materially.

He attributed the ability to do this to improvements in the company.

"Alliance is now a much fitter co-operative as a result of our focus on lifting efficiency and improving sales and marketing," Mr Surveyer said.

"We are making good progress against our key measures with a stronger balance sheet, improved profitability and better livestock pricing for farmers."

As part of the strategy, Alliance Group said it made significant investments in technology, including new primal cutters and middles technology at the Dannevirke plant, and a range of investments to lift the recovery of so-called fifth quarter products.

These are offal and other parts of a beast, recovered after it has been quartered, which can be treated to provide protein or for use in various industrial processes.

There would also be investment in chiller performance, and the Pukeuri plant beef chain.

Alliance is a farmer-owned co-operative, whose chief rival, Silver Fern Farms, recently had a big injection of Chinese capital.

But Mr Surveyer denied this investment was driven by competitive pressure from Silver Fern or anyone else.

"We have got to row our own race and run as quickly and effectively as we can."