Our Businesses

From years of processing and sales experience, IFL determined that the most lucrative, yet underserviced, lamb market was in North America. Where only 40% of the lamb consumed was produced domestically.  The strategy was to build a footprint in North America to develop year-round supply of both domestic and NZ lamb and control production, processing and marketing in both NZ and domestically.  The goal was to become a major, fully integrated, domestic player in the North American lamb industry and “pull in” IFL NZ product. Selling to ourselves in North America rather than to third party traders.  The seasonal production in New Zealand from IFL fit perfectly in the international season differences with North America by filling the lower lamb supply periods there when NZ is in peak lamb supply.

The first step in the strategy was to build a significant sheep breeding flock.  Sheep farming in North America is essentially a cottage industry with scattered and inconsistent lamb supply for development of proper processing and marketing.  In conjunction with a Canadian partner, Canada Sheep and Lamb Farms (CSLF) was formed in Manitoba, Canada. This initial partnership included 3,500 Rideau Arcott ewes which were developed by Canadian Government researchers to have maternal genetics with ability to breed year-round, producing multiple lambs and rearing those lambs to weaning.

The next few years were spent building the Canada flock by acquiring land and developing large scale breeding and lamb growing facilities in Manitoba.  Progress on CSLF development and growth was continually reported each year to the Mangatu shareholders as the breeding flock grew as projected with IFL shareholding of CSLF growing to exceed 80%.

The merger of CSLF and the finishing and processing assets was completed in August 2018 resulting in the formation of the North American Lamb Company (NALCO). Ownership was structured at 50% for CSLF (IFL) and the merger partner. IFL to acquire a majority shareholding and control over time.  Thanks to the merger, NALCO became the largest vertically integrated sheep business in North America.

During this time NALCO was awaiting bank funding to build two important breeding facility projects that were required by early 2019 for lambing ewes. Funding was held up by procedural issues losing a full year due to the Canadian winter where earthworks and building is not possible. This put lamb production for finishing and processing behind by more than 12 months as well as incurring additional costs for feeding non-productive ewes that were being held up from entering the breeding cycle.

Covid-19 hit in early 2020 and the world went into total shutdown. Limiting labour and management ability to travel and function as normal. By the end of 2020 feed grain prices (sourced to feed our livestock) had increased by 25%, the start of a significant upward trend of costs. Feed making up 50% of the cost of maintaining a breeding ewe and 70% of finishing lambs.

By April of 2020 the first of the two new breeding facilities was completed with the second completed in July.

The Covid lockdowns and subsequent issues continued to rage on.  Drought in the Canada spring of 2021 caused a major spike in the price of livestock feed as grain prices continued to increase as well. By late 2021 both grain and forage prices had increased by more than 50% from the levels prior to Covid.

With the new facilities operational, NALCO continued to make production gains.  For the year ending October 2021 over 30,000 ewes lambed with close to 60,000 lambs were bred.  Lamb mortality was however much higher than forecast, particularly in first time lambing ewes.

In February 2022 the Russia/Ukraine war escalated. This gave another significant increase in feed prices particularly feed grains which more than doubled in price from mid-2020. Farm labour and other input costs were also steadily increasing as well.

Production continued to increase and by the end of July 2022 30,000 ewes had lambed since October 2021 a 22% increase over the same time the year previous resulting in increasing lamb production.

Lamb inventory on the finishing facility from May 2021 onward showed continued improvement in numbers on hand which were now all sourced from NALCO breeding farms in contrast to significant third-party lambs purchased in past years.

Processing numbers were as forecast and the plant operation was viable because of the lamb supply from NALCO, otherwise reliance on the third-party lamb supply made this operation questionable.  The meat sales results that were achieved confirmed the large lamb price difference between Canada and NZ – a significant opportunity confirmed for the Group.

Unfortunately, the continual increase in lamb production could not keep pace with the rising costs of production resulting mostly from world events and no relief in sight.  All in all, by early 2022 the cost of producing a finished live lamb to processing was now more than 50% greater than forecast and nearly three times more expensive than the cost in 2018. All this resulting in large losses which could not be solved by sales price, production or other solutions.

The large forecasted losses for future years, and the subsequent multimillion dollar cash investment required to continue, was not supported by the NALCO shareholders.  As such the IFL Board and the Mangatu Committee of Management deemed the continuation of the Canada venture to be unviable and made the painful decision to exit the total Canada business in the most efficient manner possible.