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Sanford confident about aquaculture after buying Pacifica

Wednesday 26th January 2011

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Sanford says it has a strong position in aquaculture after buying Pacifica Seafoods and two initiatives with partners will help the industry grow.

Sanford's acquisition of Pacifica Seafoods' Greenshell and Pacific Oyster business for $85 million last year combined the two biggest industry participants.

"Leadership roles are not easily achieved or sustained and while such a role may become ours, the primary task ahead is to set and act by example and to influence and reconcile the best long-term and wider interests of the industry with those of the many individuals for whom mussel farming is the primary interest," chairman Bruce Cole told the annual meeting.

He said aquaculture was an important, if not essential, complement to the company's wild fishing interests.

Managing director Eric Barratt outlined two developments in aquaculture which the company is expecting government approval for in the very near future.

The first is a plan to domesticate and selectively breed New Zealand shellfish, particularly greenshell mussels in partnership with Sealord, Wakatu Incorporation and the Government.

Selective breeding has been successful in industries such as dairy, beef, sheep, fruit, vegetable and wine, Barratt said.

Sanford will invest $13 million in a seven-year programme to develop a hatchery and life-cycle breeding families to supply spat on a commercial basis to the industry. The New Zealand mussel industry currently uses wild caught spat.

"We are very confident that this programme will have significant economic value to the partners with the selectively bred mussels being able to achieve improved prices through better quality, greater yield and faster growth."

Sanford will also invest $9 million over six years in a primary growth partnership with Sealord and Aotearoa Fisheries that will more selectively harvest desired species and sizes.

"The successful outcome of these two projects will result in a significant enhancement to the value of our products and provide a very significant return on investment over a long period of time," Barratt said.

Commenting on the outlook, he said it was likely that the company would again see a stronger performance in the second half of the year than the first half of the year, taking into account the closure of the company's Havelock plant for the first three months of the year and only four months of the Pacifica acquisition through to the end of March.

Cole assured shareholders that the board had considered the issue of debt before purchasing Pacifica.

"Pressure is now on board and management to achieve agreed debt reduction programmes as well as critically assessing the real relevance to Sanford's future and earnings of some existing long term assets and activities."



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