Farming iwi plans business a century ahead

16:00, Oct 26 2012

No-one knows how long the people of Aohanga Incorporation have occupied their land on the wild Wairarapa coast.

Their hapu, Te Hika o Papauma, has continuously owned the 7300 hectare Owahanga Station, 100 kilometres south east of Dannevirke, since well before European times.

Consequently they are long-term thinkers, and it was not surprising when in 2000 they sat down and wrote a 100-year business plan.

As their farm consultant says, the business is "no show pony" - with a 12.5-kilometre coastline, the steep property is exposed to the vagaries of coastal weather and infested with scrub and gorse.

However, it is about to turn its first profit in many years, thanks to some serious restructuring of the balance sheet and a move into more appropriate land uses.

Aohanga has sold other properties and put the funds into its home block, got into the carbon-trading market, and set aside a 2500ha block of regenerating indigenous forest under the Department of Conservation's Nga Whenua Rahui fund. It also has honey and forestry businesses alongside its traditional pastoral farming operation.


It is a finalist in this year's Sustainable 60 business awards. Typical of Maori organisations, Aohanga see themselves as the kaitiaki, or guardians, of the land. "The reality is it will never be sold," says chair Mavis Mullins.

The 100-year plan represents four 25-year negotiations with DOC and three exotic forestry rotations. Aohanga elders had been fearful that all their good work would be forgotten when they were gone, so the incorporation decided to "build a plan that helps to recognise that, communicate that, so that people don't forget", Mullins says.

"It's given us almost permission to do things a little bit differently using a longer-term ruler."

The wider New Zealand business community can learn a thing or two from this kind of approach, says professional director and forest management expert Chris Karamea Insley, who was a Sustainable 60 judge.

Today's consumers are highly aware of the need to balance social and environmental concerns with economic prosperity, but "businesses per se I think are really being dragged kicking and screaming through regulation by government forcing [them] in a certain direction".

Indigenous businesses generally don't need dragging because looking after future generations is part of their DNA, he says.

Masterton agribusiness consultant Chris Garland has been advising Aohanga for 10 years and admires their stance. He is now working with other Maori incorporations and "they all think pretty much the same way".

"It's always good making the contrast between that philosophy and the more traditional profit-minded philosophy."

There is an awful lot of capital tied up in New Zealand farms which has to be serviced, and this has led to short-sightedness, he says.

In comparison, Aohanga's approach will cost them in the short term. They are investigating more environmentally friendly fertiliser methods and the jury is out on how effective this will be, Garland says. Meanwhile, they are rationalising which blocks to retire and which to retain for pastoral use.

"It's quite likely further areas will be retired in the short term which will obviously affect profit, but in the long term it will probably be the best scenario for that class of land."

Business New Zealand chief executive Phil O'Reilly says a 100-year business plan is almost unprecedented.

Though it's not uncommon for businesses to take an extended view around long-lived assets such as hydro dams or roads, Aohanga is unique in that its "long-lived" assets are people.

However, this is changing. Though formal business plans are still around one to five years, "increasingly we're finding traditional Pakeha-type companies thinking further out in strategic terms, but typically they're 25 years - that's quite a stretch for most companies," O'Reilly says.

"What's driving it I think is a better understanding by managers and boards about the inter-relationship between the traditional company and external issues like successful communities or the environment."

Insurance company Sovereign needs to think long term because of the very nature of its business, chief executive Charles Anderson says. The longest outstanding policy on its books is now 92 years old.

That focus on longevity has been demonstrated in the last two to three years by its involvement in sponsorships and community projects around the future wellbeing of Kiwis. It supports Youthline and Conservation Volunteers, and recently launched the Sovereign Wellbeing Index in partnership with AUT.

Along with that it screens its investment portfolio to ensure it is not invested in harmful businesses, and considers its own environmental footprint.

"We really do see our longer-term sustainability credentials as informing our brand. If you do not recognise that in general consumer buying behaviour is now influenced by your credentials in the environmental space, then I think you are going to have a very rude awakening at some point.

"You can't build a good business in a failing society."