25 years ensuring farmers' best deal

It was a natural progression into agribusiness politics for Peter Macdougall.

In developing the 4500ha Millers Flat property, Minzion Station, with wife Geraldine, Mr Macdougall said fertiliser was his greatest input cost, so it was in his interest to ensure he was getting the best deal from his supplier.

He had a reputation as a question asker at Southland Co-operative Phosphate Company annual meetings, so former chairman the late Bill Walker in 1984 invited Mr Macdougall to stand for the board.

Twenty-five years and several company structures later, Mr Macdougall (68) retired from the board of Ballance Agri-Nutrients last year.

His retirement ended a career that thrust the former stock agent into the midst of farmer politics and business mergers.

Mr Macdougall brought a thoughtful and practical view to the board table.

He is considered in what he says and his concern and empathy for his fellow man obvious.

In 1984, there were two fertiliser co-operatives in the South Island - Ravensdown Fertiliser Co-op and Southland Phosphate - and three in the North Island - East Coast Fertiliser, Bay of Plenty Fertiliser Co-op and Fernz.

Mr Macdougall said Southland Phosphate was being squeezed by the much larger Ravensdown, losing market share in Otago and Southland, and struggling to fund repairs and maintenance on its plant.

An approach by Ravensdown to take over the company was not viewed as friendly.

"At one of my early board meetings, two Ravensdown directors spoke to the board and said Southland should merge with Ravensdown, and if it didn't, we would be pushed into Foveaux Strait.

"Two other directors on the board, Charlie Smaill and Brian Hore, said they didn't accept threats and I hate water anyway," Mr Macdougall recalled.

The proposition did not add up.

Canterbury farmers were paying $26 a tonne more for single superphosphate than those in Southland and the southern directors feared their shareholders would pay for Ravensdown's battle for market share in the North Island.

"It is important to have two competitive co-operatives on the input side of a farming business," he said.

By 1992, Mr Macdougall was chairman of the renamed Southfert and made an approach to Bay of Plenty Fertiliser Co-op (BoP) to cement further existing working relationships.

Those initial approaches were rejected, but on a subsequent rainy Sunday morning, Mr Macdougall received a phone call from the BoP chairman, the tone of which prompted him to fly to Tauranga the next day.

A joint venture was rejected and the conclusion reached that a merger was the best option.

Mr Macdougall said it was a real win for southern farmers, giving them access to the urea from the Kapuni plant in which BoP then had a 30% stake, and preserving competition.

But when the proposed merger was announced, Ravensdown countered with a hostile takeover, with the ensuing battle lasting 18 months and only settled by a ruling from the Commerce Commission.

Mr Macdougall was driven by a belief a merger with BoP was correct for shareholders because it preserved competition and encouraged the companies to invest in research and development.

But the battle was unnerving for the Millers Flat farmer, taking him into the unknown corporate world and involving lawyers, threats of legal action and disturbed sleep.

It taught him a salutary lesson about managing co-operatives.

Southfert had a large number of dry or inactive shareholders who eyed the cash on offer and risked swinging the final vote.

Mr Macdougall said the lesson he took from that battle was the need for co-operatives to have an accurate and current shareholder register.

"Redemption is only a risk to a co-operative if there is a big percentage of dry shareholders," he said.

With the Southfert victory in 1996, BoP went into expansion mode, and today the renamed Ballance Agri-nutrients and Ravensdown dominate, with market share alternating between 49% and 51%.

The year of the merger, Mr Macdougall faced director elections and was returned with a higher majority, endorsement, he said, of shareholder support for his stance.

His support for co-operatives was unwavering, and it was a business model he would like extended to the banking sector.

Mr Macdougall is chairman of the New Zealand Co-operatives Association and said co-operatives undersold themselves by not promoting the fact they were locally owned.

While working to keep fertiliser prices competitive, Mr Macdougall remains aghast at what he sees as a lack of leadership in managing the exchange rate at a level which allowed the productive export sector remained competitive.

Looking ahead, Mr Macdougall said the big issue facing the fertiliser industry was security of supply.

Canadian potash and sulphur producers have merged their marketing arms to create single sellers, but the fact remained that New Zealand fertiliser use was small on a global scale.

New Zealand fertiliser manufacturers need to form alliances with raw material exporters to ensure they have continued access, he said.

Back on the farm, Peter and his wife Geraldine have gone into partnership with son Dougal.