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Ingham's talks up investments as Victorian growers fear for contracts

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by November 9, 2016 General

Chicken meat farmers contracted to Ingham’s are upset they may bear the brunt of $200 million dollars in cost cutting.

It follows the public float of half the chicken processor on the stock exchange this week.

Of the 225 farmers contracted to grow chickens for Ingham’s, two in Victoria have found their contracts have not been renewed, according to Victorian Farmers Federation Chicken Meat Group.

“We’ve had two farmers terminated,” group president Allan Bullen said.

“One in particular — a lady from China who bought a farm for $2.5m with 18 months of the contract to go.

“The farm is up to standard, and she was led to believe by Ingham’s Victoria that she would get another five-year deal.”

Competitor Baiada is closing up in April, so she doesn’t have that option.

But Ingham’s chief executive Mick McMahon rejects the suggestion the contract was terminated.

“There’s been a fair degree of misinformation out there, which we’ve been limited in our ability to respond to, through the prospectus period,” Mr McMahon said.

“Ingham’s must be one of the biggest investors into rural and regional Australia and that will continue.

“We’re growing our business across Australia and New Zealand and we’re supporting new contract growers.

“We’re the only chicken producer where all our farms are RSPCA accredited.

“The issue really for Victoria is that the chicken industry is growing significantly in South Australia, in NSW and Queensland.

“Ingham’s is investing over $275m into South Australia, and $100 million into Queensland.

“Ingham’s is the largest producer in Victoria, we’re committed to continuing in Victoria, but the industry needs to face up to some of those competitive realities in other states.”

He outlined Ingham’s expansion underway in South Australia:

  • Breeder farms and a new feed mill near Murray Bridge
  • Doubling the hatchery and breeder farms near Monarto
  • More contract growers
  • Processing

In Queensland, investment includes:

  • New breeder facilities
  • Contracts with more growers in south-east Queensland and northern New South Wales
  • Expanding processing in northern New South Wales.

The domestic market is oversupplied with chicken meat, and supermarkets are discounting BBQ chicken.

Ingham’s said that was not affecting their bottom line.

“Ingham’s and the chicken industry is benefitting from the fact that it’s the cheapest protein,” Mr McMahon said.

“The discounts are funded by the retailers and it allows us to sell more volume.”

Rabobank analysis found if poultry meat is to grow by 3.5 per cent over five years, it has to find exports, although Ingham’s is cautious.

“There’s very much an opportunity in high-end retail, hotels and restaurants in Singapore and Japan, and the Middle East,” Mr McMahon said.

“We’re building carefully towards that, not going to export significant amounts for the next three years, but we are positioning our operation to drive high-end exports over time.”

Ingham’s floated on a bad day, during the worst jitters of the stock market over the US election and post Brexit, but Mr McMahon said the result was very good, with the demand for new shares outstripping supply.

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