Payment secure with Dairy Meats

For Immediate Release 10 June 2002

Payment secure with Dairy Meats

Dairy Meats NZ Ltd is reassuring dairy farmers of security of payment for bobby calves following a number of meat companies reporting losses and several stock and meat company collapses in recent months which has left many farmers out of pocket.

Chairman Bill Baylis says suppliers to the cooperative are protected in the case of a meat or stock company collapse, because ownership of calves is always retained by Dairy Meats.

"Our cooperative takes ownership of calves on pickup from the farm gate and we retain ownership of the calves as livestock, and all the resulting products," he says. "Processing takes place through a third party meat company on our behalf, and these companies handle the stock on a 'toll processor' basis. At no stage does ownership of the stock or products ever pass to any of these companies, and nor is there any transfer of risk."

The toll processors used by Dairy Meats are Affco, Alliance and CMP.

Mr Baylis says the collapse some years ago of Weddel Crown is proof of the security of the toll processor system.

Weddel Crown was a toll processor for Dairy Meats and when it went into receivership, Dairy Meats was able to show that all the bobby calf livestock and processed product in the company's freezers and elsewhere belonged to the cooperative, and that ownership had never passed to Weddel Crown. The outcome was the Dairy Meats suppliers continued to get paid.

In fact an arrangement was reached with the Receiver for Weddel Crown to continue to process Dairy Meats' bobby calves as being in the best interest of all concerned.

Mr Baylis says Dairy Meats' balance sheet reveals that it is in a strong financial position, and that is reflected by the fact that for many years it has not had any borrowings, other than normal seasonal borrowings.

"As a 100 percent farmer-owned and controlled cooperative, Dairy Meats always operates well within its own financial capabilities and always pays out in accordance with returns from the market place," he says. "Therein lies the basis of our security and our assurance of payments."

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