Red meat sector 'absolute challenge'

Silver Fern Farms chairman Rob Hewett at home on his Manuka Gorge farm. Photo by Sally Rae.
Silver Fern Farms chairman Rob Hewett at home on his Manuka Gorge farm. Photo by Sally Rae.

Amid challenging times for New Zealand's red meat industry, there have been changes in the guard at governance level recently at the country's two largest co-operatives. Silver Fern Farms' new chairman Rob Hewett speaks to agribusiness reporter Sally Rae about the challenges and opportunities that lie ahead.

Rob Hewett is well aware his new role is going to be an ''absolute challenge''.

Amid decreasing sheep numbers, calls for industry restructuring and his own co-operative's unprofitability, the new chairman of Silver Fern Farms knows the road ahead is not going to be easy.

But the South Otago farmer is also optimistic about the future and excited to take on such a pivotal role in the industry.

The opportunity to chair a co-operative such as Silver Fern Farms - which represents more than 16,000 farmer shareholders, operates 23 processing facilities throughout the country, and employs more than 7000 staff in the peak of the season - did not come along very often, he said.

The red meat industry - particularly sheep meat - had always been challenging. But he believed there were also many opportunities.

''When it boils down to it, being a protein producer in the global environment is a good space to be in,'' he said.

A seventh-generation farmer, Mr Hewett (45) originally hails from North Canterbury and now farms a 960ha sheep and beef property in the Manuka Gorge.

After leaving secondary school, he completed a BCom (agriculture) in economics and an MCom in marketing at Lincoln University.

At that stage, he was keen to get into exporting and had an eye on a job with the Meat Board or the Dairy Board.

After graduating, however, Mr Hewett joined Shell in a marketing role, first spending three years in Christchurch before transferring to Wellington.

He had a stint in Shell's HR and then moved into its retail head office in Wellington, before shifting to Melbourne, running a supply chain for the company's retail business across the Asia-Pacific area.

What he learned during his time with Shell had stood him in good stead in the red meat sector and the retail experience he had gained with the company was still coming in handy, he said.

It was all about focusing on the consumer, the timely delivery of product and developing different supply chain solutions for different countries, he said.

His next move with Shell was going to be Singapore, Bangkok or London and, as by that stage he was married with a young family, it was time to think about doing something else.

The Manuka Gorge farm was bought in 2002 and the family moved back to New Zealand, Mr Hewett continuing to work for Shell from the farm for a year.

There was then a three-week hiatus between working for Shell and starting a consultancy business with a friend, using the skills learnt at Shell. The farm was of sufficient scale to employ a labour unit, allowing him to undertake his off-farm work.

That consultancy work kept him interested in an area in which he had been so intimately involved, while the revenue was useful for developing the farm.

In 2008, Mr Hewett was elected a farmer-director of Silver Fern Farms, having ''always had a hankering'' to do that sort of thing.

But he had always thought he would wait until the farm was in order and the children were older before pursuing the idea. Also, while he had always been interested in farmer politics, up until then it had been from a distance.

Then came a phone call from retiring director Robbie Burnside, who said Mr Hewett had been recommended as a possible successor.

Mr Hewett was not immediately sure about it - he already had so much going on and the consultancy business was ''flat out''.

But after much thought, he decided it was too good an opportunity to pass up. So while his foray into such a role was not unplanned, it happened much earlier than he had expected, he said.

He had enjoyed his five-year tenure on the board thus far, the scope, scale and complexity of the business being fascinating, he said. It was also a chance to do something that was meaningful and useful.

His predecessor, Millers Flat farmer Eoin Garden, had led a great team and his challenge primarily was to replicate that so the platform was there for the co-operative to develop.

Any of the farmer-elected directors could perform the role of chairman and he was ''humbled'' his peers around the board table had seen fit to put him ''in the spot''.

His job was to live up to their expectations as well as those of the co-operative's shareholders. Running the business so that it met the farmer shareholders' expectations was always going to be a challenge ''because farmers want different things''.

Silver Fern Farms was a co-operative and that had special meaning for farmers but, at the same time, it was a commercial business and it needed stock, so stock also had to be sourced from non-shareholder suppliers.

Ideally, every supplier would be a shareholder, but the reality was that the company had to deal with both, he said.

For a food manufacturing company such as Silver Fern Farms, there were exciting times ahead and real opportunities.

The business had to focus on affluent markets and provide what those customers wanted.

''We have to understand the consumer and deliver on their requirements,'' he said.

And if you delivered what the consumer wanted, then price did not become a big issue, he said.

Farmers needed to understand that the business they were in did not stop at the farm gate; it went all the way to the consumer, and it was the consumer who was the most important.

The farmer could be the best farmer around, but that became irrelevant if they were producing something that the customer did not value, he said.

New Zealand needed a strong red meat business and it had to get the most that it could out of the marketplace for the products it sold, otherwise it was never going to compete with other land-use options.

Mr Hewett believed the company's strategy of developing strong branding was the ''only way to go''.

For example, among the burgeoning Chinese middle class, brand awareness was ''phenomenal''.

He believed New Zealand's red meat products could fall into the same space as luxury brands such as Louis Vuitton.

Care also needed to be taken to spread risk and not to concentrate too much on a single market such as China. The company's profile needed to be spread across different markets.

New Zealand - known globally as a good test market - was being used as a test case and the Silver Fern Farms brand resonated well in the domestic market, Mr Hewett said.

He believed the red meat category had not been well represented with brands previously and Silver Fern Farms had spent a lot of time ''getting the story right and getting out there''.

Much was going on in the industry that was good and it needed to be remembered that, in the year just gone, the third highest lamb price on record had been achieved.

He spoke of Silver Fern Farms' new eating-quality grading system, the first of its kind, which used a scientific process

to ''absolutely predict'' the taste and texture of a steak.

There have been recent changes on the board of Silver Fern Farms, including the arrival of Richard Young and Dan Jex-Blake, both former Meat Industry Excellence executive members.

Mr Hewett said the interests of Silver Fern Farms and Meat Industry Excellence were broadly aligned. The board was a team and needed to work as a team. That did not mean to say that everyone had to agree, but there had to be a unified view at the end of the day, he said.

His role was to ensure the board operated as a team and everybody got an opportunity to contribute, he said.

Getting out and talking to farmers would continue, to explain the company's strategy and why it was important that everyone ''all pull together''.

Wearing his farmer's hat, Mr Hewett did not believe that there was a choice in that. It did not matter where you went around the world - where there were many small producers, the only way to maximise value was to club together.

''We need, as individual farmers, to own our processing capacity,'' he said.

A challenge in the industry at the moment was getting farmers to join the co-operative, which was ''absolutely the right structure'' for them.

When it came to industry restructuring, there was ''no question'' that processing capacity needed to be rationalised and everyone needed to play a part in that, he said.

The challenge was that the red meat industry had 20-odd export licences and various ownerships, each with competing requirements and priorities.

It needed an industry solution and working together was the way to develop one.

Mr Hewett often spoke to Alliance Group chairman Murray Taggart - ''at this stage, it's probably more about getting to know each other'' - and a merger between the two co-operatives was just one of various options.

If the rest of the industry expected the two co-ops to pay all rationalisation costs, that was unfair as it was an industry problem, he said.

Mr Hewett was disappointed the idea of tradeable slaughter rights had not been adopted as he believed it had many benefits.

Another issue the industry had not yet addressed was its recapitalisation. There was no question it was undercapitalised, he said.

Silver Fern Farms was the farmers' company and it was great if shareholders were passionate about and interested in what was happening, he said.

The company made a point of engaging with shareholders in different forums and he hoped shareholders would ''engage with us as well''.

Mr Hewett also chairs the Clutha Development Trust and he had become passionate about the Clutha district, he said.

''It's been good to us and it's a great place. We just need more people to understand that and want to live here.''

Agriculture was very important to the district and always would be; there was also a burgeoning tourism business and plenty of other opportunities. The challenge was to get young people back in the district to stay.

With his various commitments taking him away from the farm so often, he had made changes to the business to allow him to spend more time off-farm.

He has a farm manager and recently employed a Telford graduate.

''Essentially now, I'm the special projects guy,'' he said, laughing.

Any relaxing time tended to be jumping on the quad bike with the dogs and going for a look around the farm.

He quipped that ''chasing kids around sports paddocks'' seemed to be his main recreational activity, which he enjoyed.

''We're a mad-keen sports family, rugby in particular.''

- sally.rae@odt.co.nz

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