Co-operative ethos vs pioneering spirit

By Jacqueline Rowarth

New Zealand is full of tensions featured in the media and people's minds. The arguments between economy and environment, and rural and urban, are directly relevant to farm operations, affect overall profit and increase blood pressure. But it is the often unacknowledged tension between the pioneering spirit and the co-operative ethos that might be doing the most damage.

Pioneers build businesses. They take risks, invest time and energy. Recent coverage on 'burnout in SMEs' (small and medium-sized enterprises) makes the point that running a business can be addictive. People are 'deluded into thinking the business cannot survive without them'. For farmers it is often true ... they are the original entrepreneurs and they establish businesses to earn profit and for the challenge. There can be spill-over effects for society. The farmers who give up their time for school boards, charities and local societies, for instance. But when times are tight people have to decide whether a dollar or an hour will give greater returns invested in their own business or off-farm in the industry or society.

In contrast, co-operatives work on mutual benefit for the members and play a significant role in rural businesses. The co-operative structure has given bargaining power and economies of scale allowing investment in research for the benefit of all members.

Both of these factors benefit farmers who are not co-op members - the spill-over effect.

Tension can arise in a co-operative when members of the governance board are thought to be acting more as pioneer/entrepreneurs than for the co-operative's good.

It is a least in part for this reason that many boards have executive directors, brought in from outside. Good governance requires rigour of debate involving participation from people with diverse backgrounds and hence experience and knowledge. Bringing in a high performer from outside, to cover a gap in board knowledge and bring a different perspective, assists with governance. This is particularly important when a co-operative is limited by geography or product, giving only a small pool from which to elect directors.

Another source of tension, however, is when the pioneer/entrepreneur leaves the co-operative and sets up a new business.

The general New Zealand way is to praise the pioneer until the new business becomes a tall poppy for criticism. This has been highlighted by George Adams, outgoing boss of Coca-Cola Amatil, pointing out that the Kiwi 'love to hate' relationship with big business is damaging.

The damage done to the original co-operative is difficult to calculate, but the strength of the dairy industry last decade in comparison with the meat companies gives a clue. Results from Jess Bensemann's master's research with Massey University has shown that less than half of lamb producers are committed to one company. Internal competition undermines global possibilities. In contrast, most milk producers in New Zealand supply Fonterra.

New Zealand has over 4.45 million people; the rest of the world is over 7 billion. Without strong co-operatives, New Zealand farmers are peasants. Lachlan McKenzie, ex dairy-chair, has been vocal on this point.

The current strategy for new dairy companies is to guarantee that the payout will be higher than from Fonterra, but each new company, unless it has been developed on a point of difference such as an added-value product, undermines Fonterra's ability to achieve a 'fair' milk price.

The strength of the co-operative is in its members. They share the benefits and the risks, so when something goes wrong the impact and damage is spread. Of most importance in a small country, co-operatives give producers strength in the global marketing challenge.

Perhaps it is time for a new era where pioneers think co-operatively as well as innovatively. With the economic benefits for the individual, the industry and the country that would follow, farmers would be able to do more of the fencing and building of stand-off pads and animal shelters that is required to protect the environment. This would decrease the urban concerns, and so tensions would decrease. The only people that might then have a challenge would be media...

- Hamilton News

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