Are these issues inter-related? Quite possibly.
In this writer's opinion, there is nothing inherently wrong with corporate farming. However, it is a fact that part of the attraction of selling food produced in New Zealand to overseas consumers, is the perception from overseas, that the food has been grown free range and sustainably by New Zealand farmers who have farmed the land for generations. The unfortunate Crafar saga highlights, among other things, two issues. Firstly, that New Zealand families can and do achieve significant scale of farming operations; secondly, that if things go wrong, or there is no succession planning during the founder's lifetime, then bidders for these scale businesses will most likely be corporates and/or overseas interests.
Is this a problem for New Zealand? I don't know, but problem or not, it seems likely that without good planning and good leadership, many rural businesses that achieve scale, will not have a succession arrangement with the next generation, at least as one exit option when it becomes time to exit the business. On this subject, it does seem a shame there are such limited opportunities for Kiwi mums and dads to be able to invest in one of our greatest industries, although the new offering that has just entered the market, via Craig's Investment Partners, Pastoral Dairy Investments, could be an answer. Time will tell.
The prospect of dairy farmers needing a licence to operate was behind the warning given by Sir Henry. The need to lead change, rather than have legislation "force us to change", was his message. Decoding this, it was a call for more leadership in the important (to consumers) issue of sustainability and "clean" farming".
Kerry Ryan, in "The Ryan Report" (Dairy News, June 2011), in the writer's opinion, identifies a fundamental reason why some leadership styles work over the long term, and perhaps are more robust and able to include the next generation, than are others. He identified the difference between "the transactional" (more functional) leader and "the transformational" (more of a mentor) leader. He also points to the reason why successful leadership is a challenge for all business owners, when he says "striking the right balance in these aspects of people management is as much an art as it is a science."
Commentators regularly suggest a number of farming businesses that have achieved scale and/or success during the lifetimes of the current founders, could with the right planning, patience and vision, become even more successful business enterprises, by involving the next generation. It is no secret the key to this is good leadership and perhaps the key to that is cracking the formula to achieve the right balance between science and art, as suggested by Ryan.
This and other similar issues are canvassed in our Special Report "The Family Business – Five Keys to Success". For a free copy, email This email address is being protected from spambots. You need JavaScript enabled to view it.
• Owen Cooney is a partner in law firm Cooney Lees Morgan. Based in Tauranga, he specialises in family business and commercial property investment advice.
The above information is general only and cannot be relied on as specific advice. Contact your advisor for specific advice before taking any action.
