Given the requirement for farmers to reduce greenhouse gas emissions and address freshwater quality Farmlands needs to help its 70,000 shareholder-owners make those adjustments and that means supplying advice, services and technology they will need in the future.
“Farmers want a road map and hope and we are moving the company from being very good at providing something farmers needed five years ago to provide things we anticipate farmers will need five years from now.”
That could include collecting and processing data then advising and providing solutions for farmers but the focus will always remain on adding value for shareholders inside their farm gate.
Earlier this year Hewett replaced Lachie Johnstone who retired after 19 years on the board and was its chairman since 2003.
Hewett’s elevation coincided with a change to the board structure with the number of directors reduced from 10 to nine.
It now has three shareholder directors from each island (previously four) and three independents, up from two previously.
Hewett says the change reflects the mix of skills needed to run a complex business such as Farmlands and while farmers have strong governance attributes they can lack skills in information technology, supply chain management and retail.
The board personal has changed with Hewett, who has been a director for four years, the second longest serving.
A key cog in Farmland’s renewed strategy is the newly installed Braveheart IT system, which replaces five legacy systems variously used by the co-op since the 2012 merger with CRT.
Farmlands’ capital structure is sound but will be reviewed to ensure it is sufficiently nimble to allow the board to make the most of opportunities, he said.
Meeting new environmental regulations is the greatest challenge facing farming since the economic deregulation of the 1980s and, like then, Hewett believes farmers can and will adapt.
“It looks like we are at peak cow and peak meat. The challenge as an industry is how we create more value when, at the very least, we are maintaining production.
“That means we have to be tracable, responsive, verifiable and validate our systems to consumers overseas and that means validating our nutrient levels and our carbon emissions. It is a whole lot of measurable data requirements.”
Meeting those requirements will be costly and the skill will be to monetise at least some of those costs through extracting premium prices.
Consumers are changing and some of the views they have of agricultural production are not applicable to NZ.
Earlier last year he was part of a Future Food delegation to Holland where he met a 23-year-old vegetarian social media blogger who has 250,000 followers.
Among her causes was a push for Holland to have an annual meat-free week.
Her view was driven by opposition to grain being used to fatten stock for human consumption.
It is seen as inefficient, especially on land suited to arable, and the grain should be used for human consumption.
So NZ is caught up in that consumer perception about the use of grain as stock feed, revealing an ignorance of our all-grass system.
“It is apparent that we have a compelling story about our pasture-based animal production system that needs to be told.”
Farmlands has changed in recent years and Hewett says investments such as FarmIQ, in which it is one of four shareholders, are strategic to provide a tool to assist farmers meet the environmental challenges.
The decision to quit its livestock business reflected the low barrier to entry and competitiveness in the sector while the recently minted partnership between its real estate arm and Property Brokers reflects the reality another entity could do a better job.
“Real estate, it’s the first thing and the last thing a farmer does, but other companies do it better.
“We are not afraid to partner with them.”
Hewett believes collaboration will become more common and provided it removes costs and adds value, he asks why not?
The future for companies like Farmlands is to focus on the areas it is good at.
“We don’t have to be good at everything and we can’t be good at everything but we pick the things we excel at and do it and partner in other areas.”
The co-operative model for farmer servicing business is still relevant but shareholders need to nurture and look after it, he says.
