Sunday, March 3, 2024

OFF THE CUFF: Time to rip up the rulebook

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Regardless of the election outcome on October 17, we are going to have a new government for the next three years.
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As a primary sector, I believe this gives us three years to rip up the current structure, as it is a flawed and broken model.

As farmers, we need to make drastic changes to ensure our industry has a long and prosperous future and stops being the piñata that politicians love to pound.

The time has come to build an organisation that represents all farmers on every level, is governed by farmers, respected by all and funded by many. This organisation would create pride amongst its members, create a vision that is world leading and guide and educate politicians to have a better understanding of what it is to be a farmer.

We don’t have to look very far for a great example of what can be achieved. Across the ditch, the National Farmers Federation (NFF) was formed in 1979 as “the single national voice for Australian farmers” and “brought together the many disparate organisations of the day.” Sound familiar? The Australian NFF represents 33 separate organisations across the continent and across all aspects of the farming sector. Most importantly, their board consists of eight members, who all have active interests in farms that are either family-owned or multi-generational. In other words, the most important and powerful farming organisation in Australia is governed by farmers.

So how do we Kiwis do this? For this recipe to have a hope of success the main ingredient is courage. Courage for our ag leaders to recognise that the status quo is not good enough for our farmers, courage for our industry organisations to agree unashamedly to working together to make this happen and courage from our farmers to speak up loudly so their voices are heard and their opinions and ideas valued.

When it comes to funding agricultural organisations, there is a lot of money floating around already that could be far more efficiently used to build something similar to the NFF. Levy organisations, farmer co-operatives, rural advocacy groups, primary sector businesses and farmers themselves could all contribute financially to create such an organisation. 

It starts with looking at our current situation with a magnifying glass to understand some of the inefficiencies. I will use the example of Beef + Lamb NZ because they represent the industry that I am involved with as a sheep and cattle farmer. I would also like to add as a disclaimer that I have served B+LNZ as an associate director, which is an unpaid 12-month position. This was an experience that I valued greatly that also highlighted to me the quality of the staff representing our industry though B+LNZ.

But this is about efficiency. Their annual report for 2019 shows that the total income for that financial year was just over $39 million. Of that amount, just over $29m comes from levies received from sheep and beef farmers. This income is then obviously used to fund all their financial activities on our behalf as levy payers.

Now, I understand that being based in Wellington is an expensive place to do business and that staff need to be paid accordingly. But their 2019 annual report also highlighted that 40 staff in that financial year earned in excess of $100,000. From a staff of just over 100 by my count, this equates to nearly 40% of staff earning in excess of $100,000. I am not saying that is right or wrong, but I will say there are many farmers who would chew off their left leg to earn that sort of money.

And then there is the governance.

Directors for B+LNZ earn $34,000 plus an extra $16,000 for being a director on the NZ Meat Board. This equates to $50,000 for the six elected-farmer representatives who have far more skin in the game than many of the staff that work in any primary sector organisation in Wellington. This also pales in comparison with the likes of Fonterra, which admittedly is a co-operative, but whose directors earn a base fee of $175,000 and have 6,354 staff members earning more than $100,000.

As a general assumption across the sector, it would be fair to say that farming directors are paid peanuts compared to many of the staff in the companies they are tasked with providing governance for. This is a model that to me is flawed, and until it is corrected, we are doing nothing but restricting performance in our sector.

Another great way to streamline wastage in the industry would be to limit the number of governance positions a person is allowed to hold within the primary industry. The example I would like to use to highlight this problem is OSPRI, the organisation which manages both NAIT and TBfree. Their annual report from 2018-19 shows that there were just five directors sitting around the board table, but between them they were involved in 42 other entities as chairs, directors, shareholders, consultants or trustees. I understand the need for some directors to be involved in farming entities in these positions. But here’s an idea to improve the industry: let’s limit the governance positions that one person can hold within the primary sector to just one. This will have a twofold advantage: firstly, those elected will have a sole focus on serving their industry more efficiently and secondly, this will free up many positions for others looking to step into governance positions.

The primary sector has invested millions in professional development programs and there are some incredible talents within the industry that would serve well around the board tables. And, we would need the cream of the governance crop to sit around the board table of any new national farming organisation. 

I realise there are a huge number of moving parts that would be needed to create such an organisation, and there would be many challenges along the way. But if we want to continue our farming businesses successfully into the future, we need to be bold with our thinking and courageous with our convictions.

The future is ours for the taking.

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