SFF election heats up

 Six years ago, backed by the Meat Industry Action Group (MIAG), Herstall Ulrich ousted then chairman Reese Hart. Now, current chairman Rob Hewett has to seek re-election as his three year term is up, as does Ulrich.

They face a challenge from large-scale West Otago farmer Fiona Hancox, who is backed by today’s equivalent of MIAG, Meat Industry Excellence, so it’s possible the chair could be ousted again.

However, this time the ginger group has said it is not seeking to unseat the chairman, so unless shareholders ignore MIE’s missive, it’s effectively a Hancox versus Ulrich battle for the second seat up for re-election on the board.

Ulrich acknowledges that’s the way he sees it too and while he was elected on an industry reform ticket, he doesn’t believe his time is up.

“At the outset I said I thought three terms [as a director] is the ideal. It gives you time to learn the complexities of the business so you can have a significant input but not become stale.”

He also points out industry reform wasn’t the only ticket he stood on six years ago. “I stood on two things, and most people forget the second one, which was the one I spent more time talking about and that was generating consumer pull. It is what Silver Fern Farms now calls Plate to Pasture. That’s alive and well and getting traction in the market place. I believe that’s the bit that’s going to change the industry.”

The case for consolidation of the sector is still strong from a processing and procurement efficiency point of view, he adds, but he now questions whether building scale would strengthen New Zealand’s market position, as he and his MIAG colleagues once believed it would.

“Look at Fonterra and dairy prices today. Value add is where we have to be.” That said, he believes the ideal meat industry structure would be to have one large farmer owned cooperative processing most stock and running a strongly branded, consumer focussed marketing strategy.

“Are we going to achieve that in the near future? I don’t know. [Alliance chairman] Murray Taggart has made it very clear he doesn’t want a bar of it. We’re probably just as far off achieving structural change as ever…. MIE says time is running out and I don’t totally disagree but you’ve got to have a willing partner.”

Ulrich adds he knows Taggart reasonably well. “So if we were to get into talks that background of a solid friendship and collegial relationship would be useful.”

He also points out he has cooperative merger experience through his time as a director of CRT predecessor, Greenfields.

Another possible reason why shareholders should vote for him, albeit a minor one in comparison, would be to retain a regional spread at the board table, he says.

“If I lose, we would have three southern South Island directors, and two North Island. Even though we got rid of wards there is still a small case for a geographical spread… it does help understand shareholder thinking.”

Reflecting on Silver Fern’s 2014 result, he says the cooperative has “just come out of a couple of years with poor results”. “We managed to turn it around this year but only just. With the interest we’re paying that’s not surprising.”

He’d like to see the $100m of capital SFF is seeking to raise to reduce that interest cost come from shareholders but even though sheep and beef farmers are “maybe a little more profitable and attitudes have changed” he doubts the full sum could be raised from farmers.

“We are fundamentally a hybrid [cooperative] now anyway,” he notes.

The key to keeping control of such a cooperative is a strong constitution and Silver Fern Fars’ is just that, he adds.