The culture of caring
Wealthy, healthy and free – a M-aori trust breaking all norms.
Tauranga-based Ngai Tukairangi Trust is this country’s largest M-aori grower of kiwifruit with 100 hectares of Gold and 25ha of Green – making it one of the top five growers by area.
With production building up to 2,000,000 trays annually the trust sees itself as an exemplar for other M-aori growers to follow. As a formal entity it’s been in operation for more than 30 years. Just seven years ago it was valued at $30 million but today it’s worth more than $126m and the figure is rising.
“When an entity gets to be worth around $35m it’s usual practice to evolve to an accepted corporate structure model,” said its chair, Ratahi Cross. “We’re heading up to $150m and we’re still a M-aori trust board. When people say ‘M-aori trust boards can’t work’ that’s not true because we epitomise that they can.”
Ngai Tukairangi’s ancestral lands are set on the sheltered and sunny Matapihi Peninsula in Tauranga-Moana’s harbour, but last year saw the significant addition of four orchards in Heretaunga, Hawke’s Bay. Those 60ha of Gold more than doubled the size of the trust’s kiwifruit operation, but it’s not stopping there. Members are investigating the procurement of orchards in other parts of the world with Ratahi saying that in Central Italy’s Latina region, 50ha is currently selling for around $2m. “Latina has a favourable climate for kiwifruit and the employment relationship between the Italian government and the industry is healthy,” he said.
“There are good incentives to be growing there and Zespri will allow conversion to G3 for free.”
Trust representatives visited Italy in September for an exploratory tour and met with the Italian owners to discuss options regarding leasing land as a solo entity or in joint ventures with locals. Ratahi said a Northern Hemisphere operation would be good to enhance Zespri’s G3 stock on a 12-month basis, rather than current the six-month period. That would meet its vision to supply all year round, and the location is right at the doorstep of European markets.
The trust is long-term investor in kiwifruit so has to look at the higher yielding operations, which are more expensive to buy. Its Hawke’s Bay purchase was not cheap but the ability to convert the four operations into premium orchards would be achieved more rapidly.
“It would not be unrealistic for us to expect an income of around $8m a year off the Heretaunga orchards which is fantastic earning,” he said.
Back at headquarters in Tauranga, this purchase allowed orchard manager of 30 years, Colin Jenkins, to become general manager. Newly-employed, Andrew Wood took over the Matapihi operations and Richard Pentreath was given the senior orchard manager job in Hawke’s Bay.
The hapu was, in a way, born out of fire. Ngai Tukairangi’s ancestors, based where Tauranga’s CBD is now, fled a bloody
massacre by Hauraki-based tribes more than 100 years ago. The survivors swam across the harbour to the safety of the Matapihi Peninsula.
About 100 years ago the hapu decided to build its own economic base with large marakai (gardens). As well as feeding their own people, these entrepreneurial growers traded around the Bay of Plenty and became reasonably wealthy.
“We were good at both growing and utilising what we had,” he said.
“This peninsula was our only land so we had to turn it into something good.”
A quick jump to the 1980s and Ratahi’s forebears realised with their dairy farming activities that urbanisation was heading their way and their land could easily be rezoned residential. They began researching other options.
“Bear in mind the land’s ownership had been fragmented anyway, after being split by the Native Land Court’s decision to parcel out 10ha lots to families,” he said. “Our forebears knew that this fractious practice could create loss of land in situations where outsiders would offer money and end up taking all the best spots.
“Many decided to join their blocks together again and create a good industry that also safeguarded against the loss of whanau land.”
Chinese gooseberries, as they were then known, had more potential to safeguard the land, rather than being an actual income earner.
“We didn’t think it was a great money spinner but it was a way of covering our land with greenery to stop urban sprawl – that’s why we went into kiwifruit.” At the time, the Government’s Department of M-aori Affairs subsidised M-aori to grow kiwifruit, so like everybody else at the time, they grew Hayward and ploughed through some pretty bad times.
“Basically, New Zealanders did not know how to grow kiwifruit,” he said.
“We were stumbling around in the dark – producing some really good fruit – and some really bad fruit. We were the first M-aori grower of kiwifruit in the country, and the first to grow Gold. Unlike our competitors who grew big solely to maximise their returns, we grew big because we just wanted to keep the land covered.”
Ratahi said the secret to Matapihi Peninsula’s production is the land’s geothermally-heated and rich volcanic soil, high sunshine hours and abundance of water. But the trust didn’t escape industry downturns and was $2m in debt back in the late 1980s.
“My mum and the older people had a really scary time,” he said.
“They were frightened but we had nowhere to go – we either stuck with kiwifruit or pulled it out, which would have us paying back the millions out of their pensions and widows’ benefits, only to spend the rest of their days in debt.”
Around that time, something of a saviour in the form of a young, eager and determined orchard manager, Colin Jenkins, came along and implored the trust to give him a go. After 30 years, he’s as progressive as he was then with Ratahi describing him as a perfectionist with phenomenal ideas.
“He’s just what we needed,” he said.
“Without even knowing, Colin was the forerunner of good management in the kiwifruit industry. Everything he ever did, and still does, is top level. People come here to copy us and get Colin’s advice, right down to whether you cut or crush the tips off buds.”
The trust quickly bounced back and the mountain of debt was repaid within 10 years. By the 2000s, the group was earning healthy income and profits accumulated in the bank. “M-aori are conservative, especially about spending money; they’d rather see it in the bank, so our balances just grew and grew,” he said.
“We had several million just sitting there. We were equity wealthy but poor in business because we didn’t see ourselves as investors.”
Knowing things had to be turned around, a former chair, Mahaki Ellis, declared the trust would start spending, but he remained cautious about taking higher risks. The first big spend was the purchase the Huka Pak plant at Mt Maunganui. This involved 19 other M-aori trusts that had always struggled to get their own fruit into packhouses. Ratahi said M-aori growers are unique in that they are early start growers because the only land they hung onto when it was divided up was the ‘sunshine land’, ideal for growing early product.
“In those days packhouses were all about mates,” he said.
“You took care of your mates first and everybody else next – volumes were built that way. So we decided to build a packhouse for a maximum of five million trays. We were only about two million trays so we had to look for partners.”
One of Ellis’ clever expansion ideas was to sell Huka Pak to Seeka and by doing so, pick up a shareholding.
“This enabled early start growers to access post-harvest facilities all at the same time because Seeka had a wide variety of packhouses from Te Puna to Te Puke,” Ratahi said.
“Instead of having to line up a Huka Pak, they could all get in at the same time.”
Huka Pak has 16 percent of Seeka’s shareholding, making it the largest NZ shareholder. “So overnight, M-aori became the largest shareholder of the largest kiwifruit grower and the second largest post-harvest operator in the country.The Seeka shareholding also provided a dividend that our shareholders never got before.”
The shareholding guaranteed Huka Pak a seat on Seeka’s board, which expanded Ngai Tukairangi’s influence through
the post-harvest sector and represented a huge growth phase during Ellis’s tenure. His passing eight years ago was the opening for Ratahi who is the trust’s longest serving chair to date, over which time it’s made $100m.
“It’s not too bad, eh? It’s a really good story.”
OWNERS – NOT BENEFICIARIES
The board and management are proud they do things differently and have core principles that guide every decision. The trust has 1650 shareholders and the whole hapu numbers around 5000. The over-arching priority is whanau – the trust is operated as a family-run business, and the care and stewardship of whanau interests and assets are handled with the utmost care. It’s all about respect.
“We don’t call our people beneficiaries – they’re the owners,” said Ratahi.
“Even if you are 0.001 percent shareholder, you’re an owner. You’re a multi-millionaire and this is your business. All I want for our people is to feel great about themselves and they’re allowed to be because they own this.
“They can say to anybody, as a fact, that they own a $125m business, which in turn owns the largest share of a $300m business, the ninth largest shareholder in Zespri, which is a $600m business. Those are mine – I own them!
“They don’t need to disclose they may be a shareholder of only a few shares. Irrespective of the amount of shareholding you have, you share the goodness that’s in there – that’s the biggest gem.”
The board is not one to make rash decisions and knows its whanau’s eyes are watching every move. The one day of the year that any board should be fearful is the annual meeting, Ratahi said, “because within our family, if they’re not happy with you, they will replace you”. “If the majority of my family said to me, ‘Ratahi, I’ve had enough of you, it’s time you stepped down’, I would stand down immediately because that’s the power there.
“Every single one of our whanau should know how this business works because they’ve got to run it the same way. We are guided by M-aori Tikanga, which is based around collective strengths of customs, ethics, thought, energy, and wairua – our spiritual collectiveness. These drive us, and they drive our success.
“There’s nothing better than making money and having your family smile at you at the annual meeting,” he said.
“It’s got nothing to do with money, it’s about being acknowledged as being ‘a good guy’.”
Ratahi couldn’t be prouder of his board which includes; Dr Riri Ellis, deputy chair, Carlo Ellis, who manages the M-aori Advisory Group for the Tauranga City Council, Josh Te Kani who is head of operations at Te Runanga o Ngai Te Rangi, Ngawa Hall, who works for Te Puni Kokori as a regional manager, and Helen Te Kani and Neil Te Kani. Ratahi describes Neil as a great stateman of kiwifruit for M-aori, with a wealth of knowledge. His father, Wipirera Te Kani, was a former trust chair and respected leader.
“I’ve got a board of fantastic leaders, and because of those fundamental values we have, we actually get on with the job, even though as individuals, we’re really competitive – and that’s a good thing,” he said.
“As an individual on our board, you present your ideas but everyone will test those ideas. We thrash them out, and if it’s not good, we’ll throw it out, no matter who you are. I could have an idea, but if it’s rubbish, it’s rubbish. You’ve got to have robust debate going on.”
Being a family is the magic that makes it work, he said.
“Like all families, when brothers and sisters are around the table and we scrap like anything. But around our board table, if we all decide that something’s worth buying, we all pitch in.We do that more often than not, and that makes the difference.”
One of those great leaps of faith and confidence was the Heretaunga purchase and it remains one of this country’s largest orchard purchases.
Ratahi admits the trust went into Hawke’s Bay with some trepidation. A number of board members were initially
“Its Hawke’s Bay purchase was not cheap but the ability to convert the four operations into premium orchards would be achieved more rapidly.”
“Ratahi’s team doesn’t believe being so open is giving away secrets, but that its tried and tested pathways to success are things to share to boost development elsewhere.”
opposed to the purchase because it represented a huge extension of the trust’s equity-debt ratio, and created a risk portfolio comprised totally of kiwifruit. The majority championed the fact they were a ‘kiwifruit family’ and didn’t grow anything else, with the crop making up 92 percent of its business.
And the trust had a huge impact during Psa’s darkest hours when it decided to buy the old Baylis orchard on No. 3 Road, Te Puke. “When Psa hit everybody wanted to sell their orchards – you couldn’t give them away. However, that’s when we went out and purchased, even in those places nobody wanted to touch.” Ratahi remembers former Zespri chief executive, Lain Jager, admitting the purchase halted a lot of flight from the industry. “That made people stop and think, ‘hang on a minute – why are they buying up orchards and still investing in the industry?’” The trust lost all its old Gold, but with money sitting in the bank, entire orchards were replaced with G3 immediately.
So why did the trust buy more orchards at the time?
“Sometimes, business is about the toss of a coin,” he said.
“Before the toss, you chose which side of that coin represents a certain path.
“Bear in mind that Green really wasn’t that affected by Psa and we had a lot of Green. Orchards we were looking to buy were Green, and it looked hardy, so Green got the head side, while Hort 16A got the tails side. New Gold strains were in development but we thought Green was still a good fruit.The coin toss came up heads and we went with it.”
“It was a “survival event for us,” he said.
“We did nothing else but kiwifruit, we knew that Gold was no longer good but Green would sustain an income.
“Unlike mainstream kiwifruit growers, we weren’t reliant on kiwifruit being our number one money earner. As owners we had incomes of our own from working elsewhere. “Owning the business as a shareholder meant we weren’t the only owner who had to have all the worries and pains of Psa. As shareholders, we distributed that burden and that’s a big difference too. In a trust situation, you’re more likely to survive than an individual orchardist.” Ratahi believes M-aori can become a colossal player in the kiwifruit industry. Older orchardists will retire in the foreseeable future and their licenses will become available and exportable to places such as the East Coast. He predicts licences will be released at a lower rate than their current sale price because many smaller orchards will be sold rather than handed-down. “Who wants to buy 2ha, which is probably in a little pocket surrounded by larger orchards?” he asked. When owners finally have to sell because of age, buying and transferring the licences to bigger blocks makes operational sense. Otherwise those lots may cut out the kiwifruit and establish newer, high-yielding and intensive crops requiring
less space, such as blueberries.
EAST COAST POTENTIAL
Ratahi reckons there’s about 2000ha of excellent land available for horticulture on the East Coast. It has a climate which guarantees early start harvests, usually at weeks 1012, plentiful water, well-drained rich soils, a grower-friendly climate and high sunshine hours.
“We don’t need to overcome the land-owning issue, but what is needed is the development of local hapu to become productive managers of their own land in kiwifruit,” he said.
“We can do that by showing them what’s happened here.”
Many East Coasters, owning assets with a collective of value of $800m, have visited the Matapihi orchards to learn how the trust has achieved its success. Ratahi’s team doesn’t believe being so open is giving away secrets, but that its tried and tested pathways to success are things to share to boost development elsewhere.
“That can only be good for you, which can be great for NZ,” he said.
“We’re not talking about individual wealth here, we’re talking about collective incomes. If you develop say $1 of orchard, downstream it’s actually worth about $3 in economic footprint. A change of mindset is needed. These people can become wealthy, but they’re thinking they’re poor.
“An economic foundation is about what you eat, how your food is produced, how shelter is provided to you – in short, the choices you can make.”
Ratahi calls it the battered people syndrome, where it becomes ‘I deserve to be bashed’.
“I get a lot of flak about this from my own people who say, ‘you’re negative, that’s not who we are’. That is who we are and I’m not afraid to say that.”
Thousands of children have been educated by the trust.
“The shareholders are told they can’t get paid $50,000 but they can create a $50,000 family member through education,” he said.
“We tell people they might not be able to get money, however, the trust can allow families to source money as an income through education, health and sports grants.
“There are those who earn lots of income because they have many shares, through to those with minimal shares, but they all have families who don’t have any shares, and we’ve got to be able to support those people as well.”
The trust also allows for beneficiaries of owners to source funding for health needs such as hearing-aids, glasses and mobility chairs.
“We aspire not only to become a source of income for our major shareholders but to be a source of health and wellbeing for our small shareholders and non-shareholders, so that everybody can share the wealth,” he said.
“And those who deserve a bigger chunk of the money get what they deserve. It’s their right to – that’s the way business is.”
GROWERS ARE ALL ONE
He believes other growers have respect for what the trust does.
“Growers, whether they know it or not, all deep-down feel horticulture is a family-oriented business,” he said.
“Irrespective of what one does in horticulture, be it pumpkins, blueberries, or kiwifruit, that same family concept is natural and embedded. When we talk about M-aori growers or European growers, there’s actually no distinction. This is an industry where everyone will help each other. “But M-aori become culturally sensitive when we’re dealing with external sources. When M-aori are dealing with other M-aori who are not in kiwifruit, we have a different way of behaving. And the same goes when Europeans deal with any other culture outside their industry.”
The trust is a big fan of the single-desk model.
“A single desk provides uniformity of quality, of bargaining power and of management – from vine to plate,” he said
“If anybody tells me they’ve got a better plan, then I’d like to see it because I haven’t seen one yet.
“One of our passions is seeing Zespri’s success – I liken Zespri to a very vicious wife. She’ll protect her children and her household and for most people, that’s a good thing. But if you’re at the bashing end of it, you shouldn’t have been trying to take her house down.” Zespri has much to thank M-aori growers for, said Ratahi. They were the most stable group during the bad times with strength in their connectedness as they were all related and did everything together whereas most other growers were working for themselves.
“The biggest chunk of growers united together were actually the M-aori growers, and people have forgotten this,” he said. When Zespri share options were offered most M-aori growers didn’t buy new shares because they didn’t see the sense in it, however, Ngai Tukairangi did.
“We’ve been with Zespri since the beginning because we felt that Zespri was our baby,” he said.
“Others may have a different view but that’s our story and we like it. With M-aori, when you create something, you’re the last people out the door. When people say, turn the lights out, we are usually the people who turn the lights out. We don’t leave anything behind.”
ANZ Head of M-aori Business, David Harrison, left, and Ngai Tukairangi chairman Ratahi Cross. Photos supplied.
Harvest time – and itʼs all go at the Matapihi orchards. General manager, ColinJenkins and trust chair, Ratahi Cross, have a deeprespect for each other. Picking time during 2017ʼs harvest at Matapihi.
Where it all began – a birdʼs eye view of Ngai Tukairangi Trustʼs Bay of Plenty orchards. Photo credit Zespri. Staff from left, Andrew Wood, Reina Dickson, Colin Jenkins, Amanda Ngatai, with Ratahi Cross.
Ngai Tukairangi trustees, from left; Joshua Gear, Riri Ellis, general manager, Colin Jenkins, administration manager, Reina Dickson, Carlo Ellis, Ngawa Hall, Ratahi Cross and Helen Te Kani.
Good orchard practices are found everywhere at the trust’s operations.