Silver Fern Farms chairman Rob Hewett acknowledges it has been a big year.
After working through a capital-raising process, the Dunedin-based company announced in September a proposed 50:50 joint venture with Shanghai Maling, China's largest meat processor.
While the transaction did not need shareholder approval, either by law or by company rules, the company decided it wanted buy-in from farmers.
Mr Hewett, who is the Otago Daily Times Business Leader of the Year 2015, fronted shareholder meetings throughout the country before a special general meeting in Dunedin.
At that meeting, votes in favour of the proposal were 82.2%. Shareholder approval was also received by Shanghai Maling, meaning the final hurdle to overcome is regulatory approval in both China and New Zealand.
But the enormity of the year - a landmark one for not only Silver Fern Farms but also an outcome that will probably change the face of New Zealand's red meat industry - was not something Mr Hewett dwelt on.
‘‘When you're in the middle of the transaction, you're just doing it. You're focused on the detail ... it's just about getting it done and what's in the best interests of the company. It's been a good year for the company and I'm very happy with where we are,'' he said.
While the hard yards would continue as the new structure was bedded in, there would be a change in focus.
Over the past 18 months, there had been a strong focus on changing the way the company did business, and the capital-raising process.
Now it had secured the $261million that Shanghai Maling planned to invest, there was a move to a more strategic, longer-term view - ‘‘in terms of in-the-trenches firefighting, we aren't doing as much of that now'' - and that was where governance should be.
Mr Hewett was proud of what had been achieved but he was also at pains to point out that it was not all about him; it had been a team effort.
‘‘This is all about the team. The team has brought this together.''
But there is no denying that his leadership has been strong and effective, selling the deal to shareholders and helping move the company from vulnerability to financial strength.
He is effusive in his praise of chief executive Dean Hamilton, who, he says, has been ‘‘outstanding''.
Mr Hamilton joined Silver Fern Farms as chief strategy officer in April 2014, following more than 20 years in corporate finance and investment in both New Zealand and Australia.
He took over the top job from Keith Cooper after the latter's surprise resignation in October that year.
A nomination for The New Zealand Herald Business Leader of the Year was a ‘‘real feather in his cap'' and an acknowledgment Mr Hewett believed was overdue.
He had been instrumental in developing his team, ‘‘galvanising the business'' and turning it around, and adding to what Mr Cooper had done in terms of the strategy around Plate to Pasture.
‘‘The change that Dean's put into the business has been a very beneficial one for the company. It was in train but [he's] really grabbed it by the scruff of the neck.''
The board of directors had also been very good and Mr Hewett saw it as his job to get the best out of that board.
‘‘I don't believe in heroic leadership where the chair sets the scene and everyone follows. My role as chair is to get the best out of everybody.
‘‘When you look at what Dean's done with management, he set very clear goals for the business. We oversee that at governance level.
‘‘My job's really been gathering the board and making sure we're all contributing and then facing shareholders and talking to shareholders about why we're doing what we're doing.
‘‘Yes, it has been a big year, but everyone's been shoulder to the wheel on this and it reflects really well on Silver Fern Farms. This isn't about me.''
Mr Hewett was confident from the outset that shareholders would support the Shanghai Maling proposal but he was gratified with the extent of the positive vote, saying it was bigger than he thought it would be.
Last year, Silver Fern Farms posted another improved financial result. Reported profit for the year ended September of $24.9million, up from $0.5million in 2014, and operating profit of $86.9million, up 28%. Net debt was down from $288.6million to $120.9million.
Asked what he had to say to those that might have questioned the need for the joint venture, given that improved performance, Mr Hewett said:
‘‘We did need to do it.‘‘We needed to inject equity. Yes, we've had improved performance and we had an outstanding result, particularly in terms of debt reduction ... the return to profitability and the return on our capital employed is a step in the right direction, but not where we want to be.''
A large part of the Silver Fern Farms business was still commodity and, while the company wanted to minimise that, it would still be a significant part.
‘‘If the commodity market goes against us, we're only one year away from a bad result again. Where we were, we had to focus on debt reduction, which meant we weren't prioritising our capex programme.
‘‘We were just doing what we needed to do, as opposed to what we wanted to do, and we certainly weren't paying dividends or rebates back to shareholders.''
Without the Shanghai Maling deal, it would still be in that process for a number of years. He likened it to being on a farm, focusing on paying the bank back but not putting fertiliser on - ‘‘eventually, it catches up''.
‘‘The opportunity in China was just so profound, it was a no-brainer. We did need to do it. We wanted to get away from the edge of the cliff. If a big gust of wind ... we could have gone back to where we were. We wanted to be away from it, and we are now.''
He was confident Overseas Investment Office approval would be granted ‘‘because this is good for New Zealand and good for the regions where our 7000 employees work''.
The company's position, post-transaction, would be one of financial strength. It also had a ‘‘hugely privileged'' entry point into China, with a partner that directly owned nearly 8000 retail stores and supplied a further 60,000.
There would be no other meat company in the world that had that sort of access potential to China, he said.
‘‘It sounds twee but there has been a meeting of the minds. They want our product, they want the New Zealand story, they value our brand and want to bring that to life in China, using their distribution infrastructure. We value their market and their capital.''
Once the regulatory process was concluded, Mr Hewett was looking forward to ‘‘bringing it together''.
‘‘We've got a series of goals that we need to meet and that's what we're going to do.''
It was the biggest transaction in the meat industry ‘‘probably ever''; it was also the biggest agriculture transaction for several years and, in general commercial terms, one of the biggest.
‘‘When you reflect on that, the metrics around the financials, it's a big outcome. On a number of different measures, when you look at it financially, culturally, the impact domestically on continued employment, it's been a big transaction.''
Silver Fern Farms was ‘‘acutely aware'' of the responsibility it had for its 7000 employees around the country, usually in areas where there were not that many employment opportunities.
He also pointed out that it was still a co-operative. Farmers own 50% of Silver Fern Farms.
Mr Hewett was a firm believer in co-operatives and put as much of his business as possible through them.
Last year, he was also elected a director of Farmlands Co-operative, a company he has had a long-standing interest in, and he saw it as a ‘‘nice balance'' with his Silver Fern Farms role.
It was a big part of his own business and he saw the directorship as a chance to add value. He possibly had an even better skill set for Farmlands than Silver Fern Farms, given his background in fuel and retail, he said.
‘‘And my farm manager said, ‘don't need you back on the farm, go and find something else to do','' he said, laughing.
Originally from North Canterbury, Mr Hewett, a seventh-generation farmer, now farms a 960ha sheep and beef property in the Manuka Gorge.
A Lincoln University graduate, he embarked on a 12-year corporate career with Shell, including running a supply chain for the company's retail business across the Asia-Pacific area, based in Melbourne. Post-Shell, his farming career was complemented by his own consultancy business.
He was elected to the Silver Fern Farms board in 2008 and was appointed chairman in December, 2013.
Any farming duties these days tended to be work that was not time-sensitive. One particular interest was doing silviculture work, as the property had a large amount of forestry. As well as the smell of pine, he liked nothing better than scaling a tree.
‘‘If I'm not in a suit, I tend to be up a 6m ladder with a pruning saw in my hand.''
With about 170ha of trees, the time was coming when pruning needed to be done.
‘‘Getting up a tree is one of those jobs you cannot afford to think about anything else but the job. Because, if you don't, you end up with fingers coming off,'' he said.
He did not tend to do much stock work on the farm, as he was not often there, but he could still pick up a handpiece if necessary.
‘‘I've got a great manager and I couldn't do what I do if I didn't have him. He's very important to my personal business; ultimately, he's very important to Silver Fern Farms and the development trust as well.''
Closer to home, Mr Hewett is chairman of Clutha Development, a non-profit organisation that had some ‘‘nice runs on the board'' in terms of the cycle trail and work with agriculture, particularly around water.
There was also a project, in conjunction with the Clutha District Council, around living and working in the Clutha district that had good uptake from employers.
‘‘Bottom line, we want people that work in Clutha to live in Clutha, where we can do it,'' Mr Hewett said.
Outside all those commitments, he did not have much spare time. When he did, the father-of-three tended to be ‘‘on the edge of a sports field somewhere, watching kids''.
When Mr Hewett received a call several months ago saying he had been nominated for the Deloitte Top 200 Chairperson of the Year, he thought someone was pranking him. Again, it was all about the team effort, he said.
He was a finalist and the title was won by Joan Withers, from Mighty River Power and TVNZ, who was a ‘‘very deserving'' winner, Mr Hewett said.
But it was gratifying for Silver Fern Farms to be recognised. It was interesting, as co-operatives had not really been recognised in that forum before yet were a ‘‘big part of what New Zealand is''.
It was an Otago-domiciled company with a long history in the region. It was inter-generational: some farmers had shares they had inherited from their fathers and grandfathers.
The business had a great brand, of which he was very proud, and employees were equally passionate about it.
‘‘Our catchphrase is ‘Inspirational Food Created By Passionate People'. That's exactly what it is,'' he said.
Issues remained in the red meat sector. There was no doubt the overcapacity issue that had been plaguing the industry for the past 20 years was still there and that needed to be dealt with, he said.
Silver Fern Farms' balance sheet, post-transaction, would give the company the ability to do something with that.
‘‘Previously, our focus has been more short-term than that. We need to get back to a profitable position to be able to invest in the future.
‘‘With the balance sheet we're going to have ... we will have the ability to make strategic decisions around capacity.''
That did not automatically assume closure. The company regularly reviewed where its livestock flows were coming from.
That might mean beef or sheep meat configuration changes being built into its plant network. There was always going to be change.
Dry conditions on the South Island's east coast would bechallenging for farmers this season and there was a challenge for processors to support shareholders through the process.
Silver Fern Farms was killing as much stock as it could, when there was demand for killing space, but it also operated in the international marketplace, Mr Hewett said.
Demand for sheepmeat at the moment was relatively subdued, given what was happening in offshore markets.
The company was very aware of the need to help shareholders out and it would do that but it also had to balance those two things.
‘‘We don't want to get into a position where we've got a huge inventory overhang because we can't sell it. That's the balancing act,'' he said.
Mr Hewett was still happy on the board; the challenge for him was ‘‘just looking forward''. That included succession, which was a large focus.
‘‘From a governance point of view, we need to make sure we've got successors in the wings to come in and take over.
‘‘That's around development of governance skill sets amongst our constituency, identifying candidates with potential from among our shareholder base and developing that potential so they are ready to go when the opportunity arises.''
''That was what Silver Fern Farms' governance development scholarship was about. Nominations will be from February to April. Ultimately, where I want to end up when I leave Silver Fern Farms, because I won't be around forever, is that we've got a deck of potential governors for the business that can step in and run with it, and we're developing that now.''
At the moment, the company had ‘‘fantastic'' independent directors and a good skill set among its farmer-elected directors.
‘‘We've got huge plans this year and gas in the tank and we're really looking forward to it. I hope we get the opportunity to be up for business of the year in the future because, if we are, it validates our strategy. It validates what we're doing.''
The Hewett file
Rob Hewett
• Age: 46
• BCom (agriculture) in economics, MCom in marketing from Lincoln University Farms
• 960ha in the Manuka Gorge
• Elected to Silver Fern Farms board in 2008; appointed chairman in December 2013
• Elected Farmlands Co-operative director in 2015
• Chairman of Clutha Development
