Retiring Fonterra director looks for new challenges

GERALD PIDDOCK
Last updated 05:00 20/08/2014
Jim van der Poel
Fairfax NZ

SHUT THE GATE: Jim van der Poel is standing down as a director of Fonterra after 12 years.

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Jim van der Poel has lived and breathed Fonterra for more than a decade.

But after serving on the board of the country's biggest company for 12 years, the Waikato farmer will step down as a director at Fonterra's annual meeting in November.

A board member since 2002, van der Poel was immensely satisfied with the role he played in Fonterra's development over the past decade.

But it is the people he worked with that he will miss the most, he said at his home south of Hamilton.

"I've worked with some fantastic people and made some lifelong friends in the process and had the opportunity to be part of the critical decision making process through the formation of Fonterra, then through the early years of Fonterra and playing my small part in what it is today."

Van der Poel said it was the right time to retire.

The co-operative was stable. Chief executive Theo Spierings and chairman John Wilson had established themselves and the co-operative had developed good momentum.

"When I analysed it, it seemed the right thing to do for Fonterra."

Van der Poel was up for re-election this year and his decision gave other potential candidates the opportunity to consider the role.

Being a director required will, drive, competency and capacity.

It meant making big decisions with imperfect information on behalf of Fonterra shareholders.

"You are playing a governance role, governing over a business that's charged with creating value - both value in the milk price and value in the business itself."

It had been a huge commitment and and priority in his life over the past 12 years.

"Fonterra dominates your diary. It takes precedence and there are some family events you miss because you have got a Fonterra commitment."

He acknowledged his family and wife Sue, who accommodated that commitment.

"They worked around me and I'm hugely grateful for that."

It was a role he took extremely seriously because Fonterra had 10,500 shareholders relying on him and the rest of the board to make good decisions on their behalf.

"Their income relies on you, their family's wealth and income relies on you and their investments rely on the decisions you make," he said.

Van der Poel was also mindful of the impact the co-operative's actions had on the wider dairy industry because Fonterra effectively set the milk price.

He was conscious that the board needed to give farmers good signals so they knew where the milk price was tracking, particularly if it was headed down.

This is because every day farmers were making decisions based on the information given to them by the board.

That was where the GlobalDairyTrade also placed a critical role, he said.

"The better information we give them, the better decisions they make."

New Zealand's food quality and safety image added value to Fonterra's milk and ensured New Zealand product was sought after and would often fetch a premium above similar products produced by other countries.

"We're in the privileged position now where we never have to worry about whether we can sell all of our product or not. We can always sell it, and then it's just a matter of supply and demand and where the product is."

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The board determined the milk price based on GDT events and made an "informed guess" at what those events are going to do up until the end of the season, he said.

Demand and growth for dairy was still strong globally. What had changed this season was there was more product in the market which had weakened demand.

"The main factor here is that globally, there is a lot of milk in the world. Milk growth has outpaced demand and there is a slight oversupply."

He believed the co-operative was in good heart, despite the drop in prices this season. It was on the way to becoming a truly global dairy company thanks to its brand reputation, reach and ability to participate in the huge growth that was coming for dairy.

"I honestly believe that its best years are in front of it, not behind it. It's got such a unique and fantastic position globally."

One of the biggest issues he tackled during his time on the board was the pushing through of Fonterra's capital restructuring that saw the creation of Trading Among Farmers.

The board began with the objective that farmers retained control and ownership of the co- operative, but it needed a mechanism that did not put the co-operative's capital at risk but still meet the conditions of the Dairy Industry Restructuring Act.

"There was a lot of work involved, but in my view we came up with a very good solution."

Van der Poel believes TAF will not last forever.

In the future, the co-operative would have to evolve again as it outgrows that capital structure.

The low points were the food safety scandals that hit the co-operative including Sanlu in 2008 and last year's botulism scare, he said.

Being involved in a food company meant operating in an environment that was never perfect.

"You are doing your best in the environment you are operating in and you are trying to create value on behalf of your shareholders and every now and again you get caught in a situation where something goes wrong."

When that happened, the co-operative's behaviour and actions were important.

"If you take those two with hand on heart, I think you can say we did exactly what was the right thing to do and we did what was right."

The co-operative learned a lot and was a much better entity because of it, he said.

He has also witnessed a shift in attitude among farmers towards their environmental impact. In Fonterra's early years, farmers viewed the co- operative's role as collecting their milk only. Environmental stewardship was an area inside the farmgate and not in the co-operative's brief.

"That's changed," he said.

Farmers began to get caught out by the new rules introduced by regional councils and approached Fonterra for help.

Once farmers knew what was required and understood why it was required, farmers would make changes.

That could take time because of the costs involved.

"Generally people are prepared to go here and as they upgrade their systems, they sort it out."

Farmers attitude towards environmental compliance had also changed.

The biggest critics of non- compliant farmers were now other farmers.

"That's a great place to be because the farmers that do make the effort then see that as a business risk to everybody."

The van der Poels got their start in the dairy industry as sharemilkers, milking 120 cows on a farm at Mangapiko, west of Te Awamutu.

It was 1980 and he had just married Sue.

"That was our first role and we scratched a little bit of equity to try to get our first herd and we got started and it evolved from there."

They bought their first farm in 1988 and through his career won a number of industry awards including the AC Cameron Award, 2002 Nuffield Scholarship, Sharemilker of the Year and the Dairy Exporter Primary Performer Award.

Today the van der Poels have farming interests in the Waikato, Canterbury and the United States.

This year he made the National Business Review Rich List for the first time, ranked 149 on this years list of 169 and worth $70 million.

"We have always grown and invested and worked hard, we have also had the privilege of working with some really good people," he said.

Some of those business partnerships had lasted for years.

He was adamant it was still possible for young farmers to achieve farm ownership.

"It's not easy, but it's never been easy. Good, smart guys can still make it and young people are still coming through the system."

Todays pathway was more varied than the traditional 50:50 sharemilking route.

Equity partnerships and other ways were becoming increasingly popular and that was part of the dairy industry's evolution.

"The pathway still exists, the opportunity for young guys to enter the industry, develop the skills and become part of the ownership structure - those opportunities still exist."

The growth in their own dairy business along with the high profile he had established in the industry saw him shoulder tapped for governance roles.

He was then asked to stand firstly for the NZ Dairy Group board and then later the Fonterra boards during their first elections in 2002.

Van der Poel believed prior governance experience was critical for any farmers considering taking on a directors role because it gave them an understanding of the principles around governance, he said.

"I think there is a risk when people who haven't had governance experience step straight into the board of Fonterra because it is such a large entity."

Farmers needed to consider those factors when voting on who should be on Fonterra's board.

The notion of just being a farmer never entered his mind because it was in his personality to keep pushing himself.

"I like to challenge myself. I have always been like that and I like pushing the boundaries.

"I've always tried to step outside my comfort zone and challenge myself and I think you grow as a person when you do that."

He has yet to decide what he will do once he steps down.

He is fortunate to have great staff and partners in his business and was not needed in the day-to- day running of his farms.

But his next new challenge would be waiting out there.

"I'll look for something else.

"It's not in my personality to sit around and do nothing."

- Waikato Times

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