Seeking profitability, fair returns

Herbert farmer Jo Hay says stress on farmers is real as they battle a variety of issues including...
Herbert farmer Jo Hay says stress on farmers is real as they battle a variety of issues including drought. PHOTO: PHOEBE HAY
Voting is open for Silver Fern Farms Co-operative’s 2024 director election. Business and rural editor Sally Rae talks to the two southern candidates to find out why they are standing.

Directors are responsible for setting the co-operative’s corporate governance and strategic direction. Silver Fern Farms Co-operative owns 50% of Silver Fern Farms Ltd, in partnership with Shanghai Maling.

There are two spots on the board as both Rob Hewett and Gabrielle Thompson retire by rotation at the upcoming annual meeting on May 8. Mr Hewett, a prominent South Otago agribusinessman, is not seeking re-election while Ms Thompson, from Mid Canterbury is standing again.

Adrian Ball, from Tirau, who is a current board-appointed farmer director, is seeking election by shareholders, along with newcomers Jo Hay (Herbert) and Jason Smith (Waimumu).  Voting closes at 3pm on May 1.

"Ultimately shareholders require a dividend on their investment."

Herbert farmer Jo Hay wants to see consistent returns to Silver Fern Farms shareholders that reward them for their loyalty and supply. To do that, the company must run profitably, she said.

"I have watched our company morph into a very profitable business that has made considerable investments in both capital expenditure and in market, this has been necessary.

"However right now in business across the country, from the government to our own farm businesses and everything in between the theme is efficiency. Silver Fern Farms is no exception, we need to trim the fat off the bone.

"While I understand this is happening within the company now, it is how the margins are managed moving forward that determine how quickly it responds to the challenges it is facing and returns to profitability", Mrs Hay said.

While there were many reasons behind her decision to stand for election, the big one was that she was a proud third-generation shareholder supplier who was passionate about the co-operative and the industry and she was concerned about profitability for the sector and what it meant for land-use change.

Mrs Hay felt she could add value to the board as a hands-on, grassroots sheep and beef farmer who would advocate for shareholders. She also had governance experience and training and was "a listener and a questioner who will constructively challenge".

Mrs Hay and her husband Ross farm a 270ha partly-irrigated property at Herbert with their three school-age children. She is on the board of the North Otago Irrigation Company, a trustee of Meat the Need and a steering committee member of North Otago Sustainable Land Management.

She was the recipient of the Institute of Directors’ Otago-Southland branch Emerging Director Award last year and she was also a member of the inaugural Silver Fern Farms emerging development group which gave her insight into both the co-operative and the operating company.

Mrs Hay acknowledged that "times were tough" for farmers at the moment and, coupled with dry or drought conditions that many people were facing, stress on farmers was real.

"As a farmer exposed to markets and weather extremes, I understand the issues it brings intrinsically. Farmgate returns are low, costs are high ... it’s tough out there. I want to acknowledge that is a thing", she said.

Shareholders needed a return for their investment and they needed good farmgate returns — "both of these are not there at the moment".

"I’m determined to do what I can and influence in the way I can to bring profitability back."

Processing of stock in a timely manner was still a key issue, she said.

While the industry faced challenges, there was also a need to capitalise on opportunities ahead.

She said she had a future-oriented mindset that was strategic and committed to sustainable growth.

She supported the strategies of the co-operative and the operating company, saying "I think we are on the right track", while also acknowledging that the current situation was also part of a commodities cycle.

Waimumu farmer Jason Smith feels there is some disconnect between the Silver Fern Farms Co...
Waimumu farmer Jason Smith feels there is some disconnect between the Silver Fern Farms Co-operative and farmer suppliers. PHOTO: SUPPLIED

Accurate, timely info needed to weather storm

'A spade's a spade with me.'
Waimumu farmer Jason Smith said he was not scared to ask questions nor ask for them to be quantified.

Mr Smith and his wife Debbie farm a sheep and beef finishing operation near Gore, comprising 917ha along with a 53ha lease block. They are aiming to supply 60,000 stock units this season.

He is standing for the board of Silver Fern Farms Co-operative to be an advocate for farmers and help create "a positive, proactive approach for all shareholders to succeed".

Weak balance sheets within most sectors of agriculture, global volatility, oversupply of cheap protein and less than ideal climatic conditions throughout most of New Zealand had created what he described as the perfect storm.

To help mediate some of that from a farming perspective, farmers needed accurate and timely information from Silver Fern Farms.

"We need good business decisions from management along with meaningful strategic goals from the board to enable suppliers to make calculated decisions for their business", he said.

Mr Smith felt there was a disconnect — an "us and them" — between farmers and the co-operative, possibly created somewhat by the current tough times. More connection was needed between the two "to keep things moving ahead".

"We just need some good clear and timely information from Silver Fern Farms.

"The information I get pretty much is yesterday’s news", he said.

Mr Smith, who is the third generation to farm in the Waimumu district quipped the board position was probably the first job he had ever applied for.

It was a big decision and one he had been mulling over for the past 12 months. This time last year, predictions were for about $8.50-$9kg a lamb. "Everybody got it completely wrong, [and it] cost us dearly", he said.

The turning point was attending company roadshows where he felt farmers "got brushed over" and he was disappointed to be "told nothing".

He and his wife left feeling disheartened, he said.

He felt they had the sustainability model "pushed down our throat" and that was another thing that he wanted to see quantified.

"For Joe Bloggs farmer sitting at home, spending money to do it, it needs to be shown where the benefits are.

"I do believe most shareholders are already farming in a sustainable manner.

"If we can prove that sustainable model works and we are getting more for our product, let’s empower our people with that information."

Mr Smith has been farming for 36 years in his own right.

He and his wife have four adult children who either work in trades or are studying at Lincoln University.

He previously chaired the Te Tipua School board of trustees and had been an active member of Pioneer Rugby committee along with Southland Boys’ High School rugby as chairman and committee member.

He is the Pioneer senior rugby coach and the role taught him some valuable life skills such as how to create a successful team environment to ensure the common goal was achieved.

"Rugby has enabled me to meet a large network of people who farm or are reliant on farming for a living.

"With this and constant communication with agents and farmers while purchasing stock, I feel I have a broad sentiment of how shareholders and farmers are feeling", he said.

Looking forward to the next season, the full implications of reduced stock numbers due to forestry and climatic conditions could seriously impact processing and profit margins.

"We need to be proactive to retain stock and attract new suppliers.

"To achieve this, we need to be market leaders at both sides of the farm gate", he said.