Farmers need direction: Hewett

Recently elected Farmlands chairman Rob Hewett. Photo: Gregor Richardson
Recently elected Farmlands chairman Rob Hewett. Photo: Gregor Richardson
Otago agribusiness leader Rob Hewett was recently elected chairman of national rural supplies and services co-operative Farmlands. He talks to business and rural editor Sally Rae about his latest governance role. 

A few years ago, Rob Hewett made a conscious decision to put as much business through co-operatives as he could — because he believed in them.

As a sheep and beef farmer in the Manuka Gorge, rural supplies and services co-operative Farmlands was a big part of his own farming business.

While arguably best known for his leadership of Silver Fern Farms, Mr Hewett always saw himself being more of a fit with Farmlands than any other company.

That came about through his previous background with Shell and the retail and supply chain from working in oil across Asia-Pacific.

Just over four years ago, Mr Hewett was elected to the Farmlands board and last month he took over as chairman after incumbent Lachie Johnstone decided not to seek re-election.

North Island-based Farmlands Trading Society Ltd merged with South Island-based CRT Co-operative in 2013, the merger one of the largest transactions in New Zealand that year.

Farmlands, which has 70,000 shareholders, announced an operating profit of $8.4 million this year, while revenue was $1.1 billion.

Mr Hewett said the business was "going OK"; its business transformation programme Braveheart — its single biggest capital project spend — had just gone live.

That would add value to what shareholders did on their farms and allow insightful conversations based on real data.

For the "next frontier", he believed, was going to be making sense of a lot of data to get to the nub of opportunities.

As a business, Farmlands "yesterday" was good at delivering what farmers wanted five years ago.

But what needed to be thought about today was what they would need five years from now and often farmers did not know what that would be.

So a company like Farmlands needed to help them to do that and also become a bit of a "thought leader" in that space.

Change was coming to agriculture, whether around water or carbon, and farmers were "punch drunk" and feeling bruised.

They had previously been held up as the "salt of the earth", the "pillars of society" — "that’s what New Zealand is" — but were now getting "stuff chucked at them" that was not justified, he believed.

The rural-urban split divergence was not good, yet agriculture was going to be a large part of what New Zealand did for a very long time — "and we’re bloody good at it".

"It would be useful for our urban cousins to have a bit more appreciation of what goes on so they have an informed decision. That doesn’t mean they should not give farmers their view — at least it’s an accurate view," he said.

Broadly, farmers wanted direction; they wanted to be shown and told what to do, along with the path to do it.

There was uncertainty out there and companies such as Farmlands needed to help fill that gap, while the whole wider eco-system in the sector also needed to work together, he said.

Mr Hewett had insight into a few different sectors and all were fundamentally facing the same issues, he said.

It was about how to interact with suppliers and shareholders to deliver a future that was going to be operating something very different from what it had in the past.

Mr Hewett was not against trees — he was passionate about trees but abiding by the premise of "right tree, right place" — but if nothing was done, then farmers would plant their farms in trees, he said.

The default setting would be "this is all too hard" and he could see why people would do that.

Unity was needed across all sectors, whether dairy or meat, wool or horticulture, together telling New Zealand’s good story to the world.

More meat or more milk was not going to be produced so it was about extracting more value out of the consumer by producing what they wanted.

Information was going to be a key enabler; some of those activities would be able to be monetised and a premium received while others, like full traceability, might well be the price of "staying in the game".

Despite the challenges, Mr Hewett said it was also an incredibly exciting time for the sector. And when it came to employment opportunities, agriculture had not been seen as a "sexy" option.

But looking at the future and all the technology coming and the type of people that were going to be needed to analyse and manipulate data to get good results and then implement it, it was "hugely bloody exciting", he said.

Change was constant and there had also been change around the board table at Farmlands, with a change to the structure and composition of the board.

He had been there only four years but he was the second-longest serving director as there had been much rejuvenation. A third independent director had been appointed while there were still six farmer-elected directors.

But fundamentally, its game had not changed; it was about getting the right product on the farm at the right time at a good price.

Asked his thoughts on co-operatives, given the recent difficulties faced by the likes of dairy companies Westland Milk Products and Fonterra, Mr Hewett said every business model had its challenges.

With co-operatives, there was an issue around raising capital and that was something that had certainly affected Westland — which was sold to Chinese dairy giant Yili Group earlier this year — and Silver Fern Farms. Both of those issues, for those companies, had now been fixed.

That issue was something Farmlands was very mindful of; if a company operated as business as usual, then it was fine, the challenge arose when there was an opportunity that required funding — "and the tank hasn’t got any gas in it".

All businesses needed to have the ability to address that, particularly with regards to co-operatives, and, periodically, needed to review capital structures.

When something like the Westland sale happened, it was a timely and salutary reminder. Others could not afford to ignore it — "and we’re not".

Farmlands was what Mr Hewett called an output co-operative; farmers procured fuel, products and services.

It was not like Silver Fern Farms, Fonterra or Alliance Group where farmers relied on those businesses for those income.

And in those businesses, farmers took an intense interest and were "not backwards" in saying how they were feeling.

While some people saw governance as a duty, Mr Hewett saw it as "something quite interesting" and agri-governance was an area he was intensely interested in.

Earlier this year, he stepped down as chairman of Silver Fern Farms Co-operative although he remains a director of Silver Fern Farms Co-operative and is co-chairman of Silver Fern Farms Ltd.

That was all part of a succession plan that had been put into play and he would step down from Silver Fern Farms at some stage in the near future.

Mr Hewett was on the board of Turners and Growers, the listed fruit and vegetable company whose majority shareholder was German co-operative BayWa, and Pioneer Energy, which was owned by the Central Lakes Trust. He recently came off the board of Hilton Haulage.

He enjoyed all the companies he was involved with, saying they were good people doing good things — "and it’s interesting".

His farm was still his "happy place" when he had the opportunity to be home, but he was usually "driving a desk" when he was there. "That’s just the nature of the beast."

 

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