in a fix
cropping plans
Farmers in Southland’s Waituna catchment face a tricky future. page 7
Timely tips from a field day on Hawkes Bay farmer Andy Barrett’s property. page 26
Rural NEWS
vets’ rep New NZVA president Gavin Sinclair flags key issues.
page 33
to all farmers, for all farmers
September 6, 2011: Issue 499
www.ruralnews.co.nz
Farmer control vital in co-ops SUD ES H K I SSU N
OPENING UP cooperative equity to investors usually signals the beginning of the end of total farmer control, says Australian farmer and businessman Wally Newman. Newman is deputy chairman of Cooperative Bulk Handling (CBH), owned by Western Australian grain farmers, and was in Wellington last month to speak at an education seminar run by the New Zealand Cooperatives Association. He told Rural News toying around with structures has been disastrous for many Australian farmer co-ops. Most are now fully owned by investors. Investors see co-ops as “ripe plums on a tree ready for easy picking”. Incentives that drive corporatisation include success fees for lead consultants, executive bonus shares, prospect of increased
director fees and equity distribution to current co-op members. Capital raising is also a tactic. However, once investors have their foot in the door, things begin to Wally Newman change. “Investors seek better returns than what they would get from the banks... this means growers are no longer in the equation. Directors work for investors.” Newman is aware of concerns around Fonterra’s proposed TAF (trading among farmers). While unable to offer advice to Fonterra farmers, he says 100% ownership and control is critical. “As soon as equity goes out of the system, that’s the beginning of the end.” He points to Australian listed company Wesfarmers, which started in 1914 as a farmer co-op for the Western
Capital raising myth NEWMAN says it’s a myth that co-ops find it difficult to raise capital for growth. Since 2000, CBH has debt funded its expansion plans. It has bought seven flour mills in Asia and has invested $A175 million in Western Australian rolling stock to help growers transport grain to mills.
“We have borrowed against our balance sheet, against our assets, without any problems.” He also rubbishes claims that co-ops are not viable. “Look at Fonterra,” he says. “In fact, co-ops are so viable the corporate world can’t wait to get their hands on some of them.”
Australian rural community. Listed on the ASX in the 1980s, by 2001 it had become a publicly listed company with over 450,000 shareholders. Newman says Wesfarmers is a successful company but shareholders, not farmers, enjoy huge dividends. Over time farmers were pressured into cashing in shares, eroding their control. “You will hardly find a farmer 30 years or younger who would know about Wesfarmers and its history.” The Australian Wheat Board (AWB) was owned by wheat growers until 1999, when it became a private company. Last year it was acquired by the Canadian firm Agrium. CBH toyed with the idea of issuing A and B class shares 10 years ago like AWB. Newman, who joined the board the same year, led farmer opposition, resulting in CBH remaining fully owned and controlled by farmers. “Today we are the only growerowned grain handling and marketing organisation in Australia. We were the largest grain exporter from Australia in 2009-10.” If CBH had listed it would have introduced external shareholders into the business. No external shareholders means growers remain the sole beneficiary, he says.
Tahr get chopper culled An explosion in the population of tahr on Erewhon Station, Canterbury, was brought under control last week with a helicopter hunting operation. Runholder Colin Drummond says he hasn’t allowed many trophy hunters into the steep, mountainous country where the tahr live for 18 months and as a result numbers had risen sharply. “When there are only a few around they’re more of a grazing animal and they don’t do too much harm but once the numbers build up and those little groups join up you can get 60 or 70 in a herd and they can do tremendous damage,” Drummond told Rural News reporter and photographer, Tony Benny. Introduced by early European settlers, Himalayan tahr find the central to page 3