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Proposed Closure Of Oringi Sheepmeats Facility

www.ppcs.co.nz

13 May 2008

Proposed Closure Of Oringi Sheepmeats Processing Facility

PPCS is proposing to close its Oringi sheep and lamb processing facility near Dannevirke.

In a briefing at the Oringi plant today, PPCS Chief Executive Keith Cooper said the proposed closure was part of the company’s right-sizing programme, aimed at aligning the company’s processing capacity to current and projected livestock availability.

“Today we began a consultation process with our employees and their representatives at the plant. A final decision is expected within the next fortnight once that process has concluded.

“We understand that this news is unwelcome for our employees, their families and the Dannevirke community. The decision follows a careful review of our sheep processing operations, livestock trends and industry processing capacity.

“This is an industry that is suffering from poor returns and the threat of alternative land uses, and PPCS must and will continue to make hard decisions to give security to the business and its farmer-shareholders going forward.

“In the event that PPCS Oringi closes, we will make every practical effort to assist our employees through the change and where possible offer alternative employment at our other processing facilities where vacancies exist,” he said.

The proposal to close PPCS Oringi, which employs 466 staff, reflects the trend of declining sheep numbers and increasing sheep processing capacity in the North Island during a period of sustained strength in the New Zealand Dollar.

“Over the next three years, sheep numbers in the North Island are expected to drop by more than 500,000, while in the past two years industry processing capacity has been increased by an additional two million head, in the main by Alliance in Dannevirke and CMP in Marton.

“We emphasise that the proposed closure is no reflection on the commitment and skill of our people working at PPCS Oringi, however the actual cost of production at the site was not competitive or sustainable.

“Under the Rightsize programme we are evaluating the future of operations across the business and applying a best practice model that will deliver an economic and quality

ENDS

Company profile:

_ PPCS is a leading New Zealand added-value meat exporter, which has operated from its head office in Dunedin since 1948

_ This year, in its 60th year of operation, the name for the company will change to Silver Fern Farms Limited, part of a strategy to be a fully integrated marketing Company

_ It is responsible for around a third of New Zealand’s sheep meat and beef exports and around half of New Zealand’s venison exports

_ PPCS has nationwide processing coverage and employs about 9,000 staff in the peak of the processing season

_ It is a 100 per cent farmer-owned co-operative with about 20,000 farmer suppliers.

_ It has an annual turnover of approximately $2 billion

_ PPCS operates around a core tenet: to market quality New Zealand consumer products to the world by meeting the requirements of the end user, and to retain the resulting profits in New Zealand

_ PPCS has an international marketing network across the United Kingdom, European Union, the Middle East, Asia and the United States.

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