One of New Zealand’s prominent red meat companies has returned to profitability after experiencing financial setbacks in recent years.
However, Silver Fern Farms is facing challenges related to the suspension of exports to its crucial Persian Gulf markets.
The company, which operates 14 meat processing plants across Aotearoa, posted a post-tax profit of $29.1 million for the 2025 financial year. This marks a significant recovery from a $21.8 million loss the previous year and a $24 million loss in 2023.
With seven international locations, the company credits the nearly $51 million turnaround to strong global demand for red meat, strict cost management, and deferred investments in projects like factory automation.
Temporary Suspension of Persian Gulf Exports
The company’s adaptability is being tested by the ongoing conflict in the Persian Gulf, affecting various primary sector exporters.
Silver Fern Farms had been exporting 12% of its lamb and up to 5% of its beef to Gulf states via the strategic Strait of Hormuz, targeting key markets such as the United Arab Emirates and Saudi Arabia.
When hostilities erupted in late February, 140 containers were en route to the Middle East.
Chief Executive Dan Boulton stated that most containers were rerouted through alternative ports, although some still awaited necessary documentation at the port, and some products were redirected to other markets.
Boulton mentioned that production for the Middle East was paused until there was greater clarity.
“When the conflict began and issues arose, we decided to halt all production until we had a clear understanding of our options,” he said.
“Production will gradually resume once we are assured of stable supply chains in that region.”
Boulton said the company is collaborating with supply chain partners like Kotahi to maintain product flow to this vital region.
He is exploring innovative solutions to continue supplying the region, including air freight options and rerouting via the Mediterranean Sea and the Suez Canal.
“Although this involves a longer transit time, our priority is to continue serving our customers,” he added.
“This will incur additional costs, which we are discussing with our customers.”
Ensuring Livestock Supply Amid Tight Margins
Boulton acknowledged that 2025 was a challenging year due to low livestock volumes.
“Despite achieving excellent results, margins remain tight,” he said.
In recent years, the company has implemented cost control measures, including reducing full-time positions and seasonal layoffs across its facilities.
Boulton noted that tighter supply and high procurement costs have strained the company’s ability to operate plants efficiently, explore investment opportunities, and maintain processing margins.
“We have had to adjust capacity intermittently, restructure shifts, and extend seasonal layoffs,” he explained.
“These steps were necessary to lower operating costs in light of livestock numbers.”
Meanwhile, farmers have been receiving high prices for their stock, but Boulton anticipates that farmgate prices may decrease slightly.
“As market conditions evolve, some of the retained value will remain in processing to allow reinvestment in the sector and market,” he said.
“I don’t foresee a substantial drop in farmgate prices due to long-term demand, just a slight adjustment as capacity aligns with supply.”
The company secured new commercial partnerships, and revenue rose by $409 million from 2024, surpassing $3 billion this year.
Livestock numbers decreased by 6% in 2025, and the first quarter of this year saw an 18% reduction in beef and a 12% reduction in lamb, according to Boulton.
He expects many livestock to be deferred, leading to a busy second quarter.
Additionally, the Silver Fern Farms Co-operative reported earnings of $14.2 million for the 2025 financial year, recovering from a $10.9 million loss the previous year.
