Ex-Fonterra chairman pushes red meat unity

JOIN TOGETHER: Former Fonterra chairman Henry van der Heyden believes New Zealand's red meat industry needs more unity.
JOIN TOGETHER: Former Fonterra chairman Henry van der Heyden believes New Zealand's red meat industry needs more unity.

The red meat industry's fragmented structure needs changing, says former Fonterra chairman Henry van der Heyden.


Henry van der Heyden's top five insights for a better red meat sector:

1) Red meat needs a collective vision

2) Lacks leadership

3) Needs to take a "NZ Inc" approach rather than a co-operative/ company approach

4) Identify the opportunities and reason them against the risks. Question why rather than why not

5) Farmers take control of their own destiny

"With this dysfunctional structure in red meat, so much land is going across to dairy which I think is the wrong thing for New Zealand because it comes down to competitive land use. It's fundamental.

"The difference between dairy and red meat industries is the structure. We still have a fragmented industry and the scary thing is it's the same issue with Australia's dairy industry and they are trying to consolidate it."

Van der Heyden, who holds several chairmanships and directorships since leaving Fonterra governance, said his comments were meant in a positive light.

"My interest in it is around NZ Inc and what's best for NZ and that agriculture and particularly pastoral agriculture is the backbone of the NZ economy and having a really strong NZ red meat sector complements the NZ dairy industry and we can't have a one trick pony."

The model to follow was to achieve size and critical mass in the overseas marketplace, he said.

The veteran dairy leader sees the red meat industry in the same position as the dairy sector before it was grouped into Fonterra in 2001.

The difference is that some of the major meat companies are privately run whereas dairying was dominated initially by many co-operatives before merging mostly into Fonterra's large co-operative.

Van der Heyden said this could still be achieved in the red meat sector as sheep and beef farmers could decide who they sell their livestock to and control their own destiny.

He said it defied logic that farmers were not taking a stronger position, especially as they owned major co- operatives Silver Fern Farms (SFF) and the Alliance Group.

While dairy farmers have shareholdings in meat co- operatives from selling culled cows and male calves, van der Heyden believes consolidation should be driven by sheep and beef farmers as they have more at stake.

He said it made sense for SFF and Alliance to work together, but this was not the end game and the widest majority was needed to create as close a single unit as possible.

This view is shared by the farmer-led Meat Industry Excellence (MIE) reform group which has targeted the co-operatives moving closer together for the first steps of industry change. To achieve this several MIE leaders have stood down from the group to stand for the director elections for both co-operatives.

The group supports Fonterra director John Monaghan also finding a position on the Alliance board. Monaghan, a dairy and beef farmer, was not accepted as a director candidate because his shareholding was considered too small.

Since then a resolution was proposed asking for him to be appointed as an independent director, to be decided later this month at the co- operative's annual meeting in Dannevirke.

Van der Heyden said he supported the work MIE was doing and integrating the co- operatives was the right model for farmers.

He said any board needed qualified people with capabilities and Monaghan did not get to Fonterra without a strong understanding of the global marketplace, co-operatives and business models and management.

"That's a decision they have to make, but I think he would bring a lot to that board."

Van der Heyden's directorships include Auckland International Airport, Rabobank, and Foodstuffs North Island.

The Press