Thursday, March 28, 2024

Milk was in his family bloodline

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Retiring DairyNZ chairman John Luxton will leave a big hole in the industry-good organisation. The inaugural and so far sole chairman since foundation in 2007, Luxton has a long record of national, regional and industry governance but he preferred to “slip away quietly”, he told Hugh Stringleman.
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DairyNZ won’t let its foundation chairman John Luxton retire without fanfare at the annual meeting in Morrinsville on October 13.

The veteran politician was standing down after two terms as chairman and foreshadowed his last year as a Tatua Co-operative director.

He would continue as co-chair, with Tukoroirangi Morgan, of the Waikato River Authority, formed in 2011 to fund and co-ordinate the clean-up of the catchment.

It had distributed $22 million to 141 projects across the region, about 100 of which were ongoing.

Luxton’s involvement in industry-good governance pre-dated the formation of DairyNZ by the merger of Dairy InSight and Dexel in 2007.

He had been on the board of Dexel, the research and consultancy provider, since 2003.

Dairy InSight was mandated to collect about $50m annually from the dairy industry commodity levy, determine where it was to be spent and call for applications.

Much of the money went to Dexel each year, after the single-largest expenditure through the Animal Health Board on the TB-Free New Zealand strategy.

“The separate funder and provider model was standard practice when Dairy InSight and Dexcel were set up on the formation of Fonterra,” Luxton said.

“But there was significant overlapping in their mandates and the boards couldn’t agree on different spending priorities.

“Federated Farmers mediated a merger and I was asked to be foundation chair, firstly of NewCo and then DairyNZ after its first elections.

“We have successfully put up Chinese walls and employed three investment managers to provide a robust, contestable structure.

“Research work is purchased outside the organisation, from AgResearch and the universities and our biggest chunk of expenditure goes to OSPRI for the TB-Free work.

“It has been a personally very satisfying involvement and I can leave knowing that the NZ dairy industry is still headed in the right direction and that DairyNZ is contributing very well to the impetus.”

The six-yearly levy vote in 2014 returned a pleasing 82% approval from those who voted, which was two-thirds of all dairy farmers.

“That was a very good result compared with previous levy votes,” he said.

NZ still had one of the lowest cost structures in world dairying and DairyNZ had a very good team of people dedicated to further improving the competitiveness of NZ dairying.

But did he expect more grumbling from dairy farmers now the dairy levy was 1% of the forecast milk payout?

“It has been a personally very satisfying involvement and I can leave knowing that the NZ dairy industry is still headed in the right direction and that DairyNZ is contributing very well to the impetus.”

 

John Luxton

DairyNZ

 

“We continue to get positive feedback from farmers and I think most farmers appreciate that any industry should be spending that sort of money as a proportion of its revenue.”

In any organisation culture trumped strategy and Luxton was prepared to vouch for a very good culture at DairyNZ, for which he credited chief executive Tim Mackle and the senior management.

Now aged 69, Luxton served five Parliamentary terms in the National Party, for the electorates of Matamata and then Karapiro and finally as a List MP between 1987 and 2002.

He replaced his father Jack Luxton who did 21 years or seven terms for Piako and Matamata from 1966 to 1987.

His ministerial portfolios included energy, housing, Maori Affairs, police, commerce, industry, fisheries, lands, customs and agriculture, mostly under fellow dairy farmer Jim Bolger as Prime Minister.

But even that long Parliamentary service was overshadowed by his, and his family’s record at Tatua.

He was a director for three separate terms, 1978-80, 1983-90 and 2001 to the present. He was also chairman from 1985 to 1990.

The Luxton family had supplied Tatua for 95 of its 100 years.

Grandfather A J Luxton was a director from 1922 to 1951, the last five years as chairman, and father Jack was on the board from 1961 to 1978.

The family still had two Tatua supply farms with more than 1000 cows.

But Luxton said his non-Tatua milk supply interests were in fact larger, especially to Fonterra from Waikato farms.

He also chaired an iwi farming operation that supplied Open Country Dairy, had supply links to Westland Milk and was one of the founders of Open Country Cheese and Kaimai Cheese.

That begged the question, what dairy industry model was the best, in his opinion?

The Tatua co-operative was extraordinarily successful by investing continuously in adding value to a relatively small volume of NZ milk.

“If Fonterra did that, the output of speciality products would be very quickly commoditised.

“We operate in one of the most-protected sectors in the world, with only 7% of total milk traded openly.

“New Zealand supplies just one-third of that 7%.”

The Trans Pacific Partnership trade reform negotiations were extremely important, Luxton said.

Both the Canadian and Japanese dairy industries were half the size of ours but they were coming under considerable pressure to lift trade barriers.

“Already we are seeing emergency imports of dairy products to Japan to satisfy demand.

“The US industry is five times the size of ours and because it actually is a bigger exporter than NZ in the TPP area, the US should really back dairy reform.

“Ultimately reform will prevail,” he said.

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