Farming leader still in driving seat
Opportunities abound in the agricultural sector, according to Anzco chairman Sir Graeme Harrison. Gerard Hutching reports.
THE beach, bach and beamer syndrome – could it be the New Zealand disease? ‘‘Well, it’s one of them,’’ laughs Sir Graeme Harrison, referring to the typical New Zealand entrepreneur who reaches a certain level of success and is content with the ‘‘three b’s’’.
‘‘That’s what some people aspire to and that’s fine. But if we want to be competitive we need some driven people – the country doesn’t need too many of them but if we can get enough . . .’’
There seems little danger of Harrison succumbing to the national malady. At the age of 66, and after decades leading meat exporter Anzco, he has announced the establishment of a professorial chair at Lincoln University.
Funded by Harrison, the new position’s title is ‘‘professorial chair in global value chains and trade’’. The successful applicant will be appointed for five years, with the likelihood the chair will be renewed for a further five. Harrison has first right of refusal to the appointment.
New Zealanders are not often given to endowing universities with personally funded professorial chairs. Although common in the United States, they are rare here, especially in the agribusiness field. Massey has two, and Lincoln used to have one.
A professor of agribusiness at Waikato University, Jacqueline Rowarth, says one reason for their rarity is the low numbers of wealthy New Zealanders. The salary for a professor would start from $150,000, she says.
Harrison says the appointee will have to know about trade and have an understanding of New Zealand’s place in world trade. He or she will need a ‘‘unique set of skills’’, in the words of Lincoln’s vice-chancellor Dr Andrew West.
‘‘As well as carrying core academic responsibilities, we see the appointee becoming a leading spokesperson on global trade, particularly around the challenges facing New Zealand’s agricultural exports,’’ says West.
Harrison does not view the appointment as a sinecure.
‘‘I’m looking at it for longer than five years but the reason it’s five [initially] is that you only commit if it’s performing,’’ he says.
Commitment and performance could be bywords for Harrison’s own approach to business.
On receipt of his knighthood in 2011, Harrison spoke proudly of how he and The Warehouse founder Sir Stephen Tindall had been the only two people of his generation who had built a business worth more than $1 billion out of nothing.
But for a period – especially at the beginning of his career – Harrison was somewhat of a prophet without honour.
Originally off a midCanterbury farm, he studied at Lincoln before joining the nowdefunct Meat Producers Board as an economist in the early ’70s. One of his thankless roles was to administer the supplementary minimum price scheme for the Muldoon government, resulting in lamb export numbers peaking at 39 million in 1984-85.
‘‘The subsidies were stupid. The Meat Board was the producer board that opposed them the most, while Federated Farmers were contradictory. The Muldoon government didn’t want to introduce structural reforms to agriculture,’’ Harrison says.
He welcomed the end of the subsidies by the 1984 Labour government, but was unhappy with the ‘‘cold turkey approach’’ it took, believing there could have been less disruptive change.
AFTER 10 years with the board, in 1984 Harrison started the Asian New Zealand Meat Company as a sheepmeat marketing company for the farmer-owned Meat Board, with $350,000 set-up capital. It targeted Japan, which was the largest importer of New Zealand sheepmeat at the time.
‘‘It was a big step, the first foreign company of any scale to take on the Japanese system. It’s still the only player today which is foreign-based, that imports and distributes everything it sells.’’
Profitable from ‘‘day one’’, Anzco set up processing plants in Korea, taking Kiwi sheep carcasses, cutting them and repackaging them for Japan and Taiwan. ‘‘At one stage we had five plants in Korea, but they were abandoned when Korea got foot and mouth disease and our product got incinerated – that cost us a bit,’’ he recalls.
In 1991, Japan liberalised its beef market access, marking a change for Anzco from exporting sheepmeat to predominantly beef.
Two years previously it had created a joint venture with leading Japanese meat company Itoham Foods, establishing Five Star Beef at Wakanui, in midCanterbury.
The largest commercial feed lot in New Zealand, and the single largest supplier of chilled beef exports, Five Star Beef houses up to 20,000 angus steers at any one time. The cattle are fed grain to produce tender, marbled meat.
Long before New Zealand exporters had woken up to the fact that one of the keys to business success in Asia is personal relationships, Harrison had fostered close ties with investors.
‘‘The normal way you go to the markets is either to capital markets to raise money on the stock exchange – but we don’t do that in New Zealand because it’s hard to show public stable earnings with the gyrations of the dollar and the ups and downs of commodities.
‘‘Or you find investors. I’m a New Zealand entrepreneur who got access to Japanese capital. I
Sir Graeme Harrison. found Japanese investors who have stuck all the way through from 1990s – they’ve been in for the long ride and they’ve done well,’’ Harrison says.
He takes satisfaction out of the fact that subsidies have progressively lessened, even in the EU. The biggest problem today is non-tariff barriers to protect domestic industries.
As an example, Anzco has four manufacturing food plants approved for the EU, US, and Japan but not for China because the Chinese will not sign a protocol recognising manufactured foods.
‘‘So we can get in frozen beef and lamb, all commodity stuff, but when you want to go up the value chain we haven’t access. We produce cooked beef, with our major market Australia, and there are significant opportunities in China but no access.’’
Harrison wants to see a younger generation eager to take up careers in agriculture.
‘‘The family farm is going to be on a larger scale so they have to have a more managerial approach to their business. The days are gone when you could be fit and didn’t have to think too much. You can buy the technology to do some of those physical jobs but you need the smarts.
‘‘Beyond the farm, we are in a world where there are greater niche opportunities, more market segments. You’ll find opportunities for medium-sized companies willing to take some risk and get the rewards as well. We need people who will be driven enough to put in the years of hard work to get there.’’
As debate about whether meat companies should merge resurfaces, Harrison’s experience with running a farmer-owned company informs his present-day view.
‘‘The family farm is going to be on a larger scale so they have to have a more managerial approach to their business.’’
MEAT co-operatives do not operate anywhere outside Europe, he points out. How does he rate the success of Fonterra and Zespri, both monopolistic single sellers?
‘‘The dairy industry and fruit are perishable, they have to be harvested at specific times. With meat there’s no imperative – farmers can walk it around the paddock, if it’s wool it can stay in the back of the shed, you don’t have to kill on a particular day and so the people who dictate the terms of how the industry works are farmers.
‘‘The biggest cost is livestock and the processors are middlemen, who have no control over the most important part of their business – livestock flows, except when there is a drought and there’s no supplementary feed.’’
With no intention of retiring, Harrison aims to be a force on the agribusiness scene for some time yet.