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Home / Business

What agribusiness CEOs are saying - Lain Jager

NZ Herald
24 Jul, 2013 05:30 PM4 mins to read

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Lain Jager has been appointed chief executive officer of Zespri Group Ltd.

Lain Jager has been appointed chief executive officer of Zespri Group Ltd.

Lain Jager Zespri

Zespri CEO Lain Jager believes curing New Zealanders of their property addiction is vital to improving export competitiveness.

He says the increase in the New Zealand dollar robbed growers of 45 cents a tray last year and will trim a further 15 cents from returns this year. He puts the appetite for the currency down to the risk premium on local interest rates demanded by international investors because of the country's high deficit.

"The only way to address that is New Zealanders saving and investing more in the productive sector rather than housing."

Jager says the kiwifruit industry is getting back to its feet after the vine-killing disease PSA decimated gold-growing orchards in 2010.

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Four thousand hectares of the new resistant Gold3 variety is now in the ground but it will be several years before full production.

A shortage of fruit is bolstering returns which for last season's crop reached a decade-high of $4.62 per tray.

After a rocky year, which included the marketer being smacked with a $10 million fine from a court in China which found a subsidiary guilty of smuggling, Jager has set the top three goals for Zespri for the coming 12 months:

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• Recovering gold kiwifruit volumes after the impact of PSA

• Maximising value for the 2013 crop

• Developing strong visibility of third party competitive varieties.

His third priority taps into Zespri's business in China, rapidly shrugging off the smuggling scandal and is growing between 10 and 20 per cent a year.

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Zespri is looking to China's kiwifruit resource - the world's largest - to plug that supply gap and take advantage of new varieties.

"Given the amount of plant material up there and the amount they are putting into breeding programmes and simply the scale of the place and the idea that they are being bred in China and being grown in that environment for all of those reasons it is of interest."

Zespri has a different model in mind to the contracts it has with growers in several European countries. Instead of owning the varieties it will license them from breeders and contract local orchards to grow the fruit "We expect China will not just be a big consumer of kiwifruit it will be a big producer and exporter as well. The question is can we partner with Chinese growers and owners of new varieties that come along?"

Keith Cooper Silver Fern Farms

Like many CEOs in the Mood of the Boardroom survey, Keith Cooper lists China as his company's biggest growth opportunity in the next five years. But the head of the Dunedin-based meat exporter is wary of grasping the opportunity too firmly.

He says the recent hold-ups at Chinese wharves underline the risks in what is now this country's largest market for sheep meat. "We have been dealing with Europeans for a long period - we have to learn about how other cultures operate and ensure that we are responsive to that."

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Cooper says Silver Fern has "three or four things on the go" in China that would expand the traditional commodity business to include premium cuts of meat supplied directly to top-end restaurants and hotels.

After a difficult couple of years for the meat industry, Cooper's top three priorities for Silver Fern in the next 12 months are to:

• Restore profitability

• Implement IT solutions

• Work on the company's global supply chain.

The big four companies' most recent full-year results revealed collective losses of $200 million, and Cooper admits restoring profitability won't be easy. "We are not investing in the market enough to create value and therefore it is a pretty unhealthy situation to be in."

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Cooper is a strong advocate of sheep and beef farmers upping their meagre investment in the industry.

He would also like to see farmers commit livestock to meat companies through supply contracts.

Like many of his primary industry peers, Cooper laments the strength and volatility of the NZ dollar as the biggest impediments to the country's export competitiveness.

"Volatility creates another challenge to manage. If we are buying in one market and selling in another and the exchange rate moves in the middle we essentially could have bought wrong."

But like his CEO peers he is short of remedies, preferring to leave that to economists and politicians.

Cooper cites skill shortages among his top half dozen domestic economic headwinds faced by the meat industry which, by its seasonal nature, finds it hard to hang on to workers.

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He would like to see government backing for a scheme employing meat workers on farms during the off-season to provide them with a full year's work while also helping plug a looming shortage of hands as farmers themselves become much older.

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