KEY POINTS:
Craig Norgate has been a key figure behind the most dramatic changes in the business of agriculture in the past decade.
And he's not done yet.
Norgate, now 43, was one of the driving forces behind the consolidation of the dairy industry which culminated in the creation of
Fonterra - now the country's largest company with a turnover of $13.9 billion in the year ending May 2007, and the world's biggest dairy exporter.
More recently, as chairman of rural services company PGG Wrightson, he has turned his attention to the ailing wool industry, with plans to combine most of PGG Wrightson's wool business with grower co-operative Wool Grower Holdings.
Norgate hopes to get about 80 per cent of farmers to join in. "The reality is that wool's a broken industry," he says. "For a lot of farmers the wool cheque hasn't covered the shearing cost."
It's not just the wool on the sheep's back that has Norgate's attention. He is also keen to see a revamp of the meat industry, which he describes as a disaster. After a proposed meat industry mega-merger collapsed in April, clients have been pleading with Norgate to get involved and he says PGG Wrightson is probably ready to take direct action (see page 14).
The statistics reveal wool's problems: wool fibre exports were worth $655.1 million in the year to June 2007 - down from $1.25 billion in 1995.
The new company will buy PGG Wrightson's wool operations for a net $46 million and will include all PGG's wool assets except for its shareholding in the New Zealand Merino Company.
PGG Wrightson will hold up to 40 per cent of the new entity, depending on how many other organisations get involved, and the door is open to anyone, including marketers, exporters and processors.
At the moment, there are simply too many players in an industry not making money, says Norgate.
"It's just incredible the number of mouths that have got to get fed off the sheep's back, literally."
Norgate is not strong on detailed strategic plans, which he says constrain people and are wrong from the day they are written.
"For me it's about direction," he says.
"It's about understanding what's going on in the world and where the opportunities are and where the challenges are and what might evolve, being able to see around corners a little bit ... and therefore being in a position to act very quickly."
New Zealand Merino Company is a joint venture with Merino Growers Investment and Norgate wants to replicate its success in the strong wool sector.
A video promoting a new "ethical" merino wool category, called Zque, best sums up the vision. Brands of substance are the new heroes, the video says, it's time for a new revolution and for ethics in action.
Words appear on screen - "natural", "unique", "intelligent" - while in the background the Tracy Chapman song Talkin' 'Bout a Revolution makes its point.
"Basically it's tapping into high-end consumers, not just in developed countries, now even in your big cities in the developing world, that are pretty much price ambivalent and are far more focussed on, I guess, the ethics of what they're buying, what they're eating, what they're wearing," Norgate says.
"New Zealand Merino in particular is just an outstanding success story of how we've been able to take what is essentially just wool off the sheep's back and turn it into a very high-value-added fibre that is indispensable to its customers."
Customers, whether fashion brands such as Untouched World or high-end manufacturers in Milan, can scan a barcode and see the farm that produced the wool.
"The value of that ... when you've got the traceability, you've got the quality systems, you got the integrity of the product, you've got the integrity of the farming systems, so things like mulesing (cutting away skin from a sheep's rear end) that are a real issue with Australian wool, New Zealand Merino ... we're just not going to do it," he says. "That's the future of New Zealand agriculture."
Talkin' 'Bout a Revolution seems an apt song choice for Norgate.
He now wants to reposition strong wool to focus on the high end of the flooring market, and expects it to be a long game.
Merino took seven years to come round and it will take at least five years to make significant progress in strong wool, but eventually it will be possible to scan the barcode on a carpet and see on the internet the farm which produced the wool.
"It won't be an any old wool carpet, it'll be a New Zealand Romney wool carpet."
While Norgate has a reputation for speaking at machine-gun speed, he is not so much quick as nimble in conversation, able to quickly impart truckloads of information.
Being nimble should come naturally to Norgate, who played on the wing during his time in Taranaki.
Where many businessmen hang trophy artworks on their office walls, Norgate hangs rugby memorabilia. He is an avid fan, and with two sons who play the sport, watches maybe three or four games each Saturday.
The meeting room in his central Auckland office includes an All Blacks shirt signed by the team captains from 1946 to 1999, and an England shirt signed by the 2003 World Cup winners - trophies bought at charity auctions.
To wind down Norgate hits the gym, and he looks to be in good nick.
After leaving Fonterra in 2003, Norgate formed Rural Portfolio Investments - a joint venture with Otago's McConnon family - and made a move on struggling North Island-based rural services firm Wrightson, buying 13 per cent then launching a takeover bid for 50.01 per cent of the stock. After initial resistance, Fonterra agreed to sell into the offer.
Having secured a foothold in the sector, he then moved on rival firm Williams & Kettle. Once Williams & Kettle was in play, it took only 15 minutes in a board meeting for Wrightson to decide to act, he says.
Fonterra and another rural services player, Pyne Gould Guinness, had joined forces to seek a cornerstone holding in Williams & Kettle, but Norgate and Wrightson moved quickly to outbid them.
Much of the success of the Williams & Kettle takeover hinged on Sir Selwyn Cushing, who with his family owned 19.9 per cent of the company. Cushing's decision to sell ensured the takeover's success.
Norgate is a dealmaker, says Sir Selwyn. "He's a lateral thinker and he's very dedicated in achieving his aims and objectives," he says. "He's not frightened to roll his sleeves up and get on with the job."
Cushing is now a director of NZX-listed PGG Wrightson.
After Williams & Kettle came Pyne Gould Guinness itself, and in July 2005 a merger was proposed and recommended by the boards of both companies.
"The reality is, it [industry consolidation] all happened in a hell of a hurry," Norgate says now. "We didn't have a specific plan to kick things off in that sort of order, we just had a sense that that's how it could evolve."
The Norgate revolution is not limited to these shores: PGG Wrightson has set up NZ Farming Systems Uruguay to develop dairy farm operations in that country, and the company was floated on the stock exchange in December.
The Norgate strategy of not being constrained by plans but knowing the direction you want to move in has seen NZ Farming Systems grow quickly - it is already five times the size that was envisaged 18 months ago.
The company recently said it had bought another 4400ha of farmland in Uruguay, taking its total holding to 36,300ha.
Nimble feet have seen the company take a strong position. "As soon as we saw the soft commodities boom starting we were able to accelerate the land acquisition programme, get ahead of what was going on in the market and position the company to be a lot larger than what was originally intended," says Norgate.
A tough winter in Uruguay last year meant there were plenty of cattle up for sale - cheap, skinny cattle. It was an opportunity and the company took it.
"That came at a cost in terms of production for the season just gone but the reality is we sit here now, we've got the cows that are in great condition and really looking forward to the 12,000 or so we'll be milking next year."
Norgate see NZ Farming Systems as an example of bundling up Kiwi farming systems, knowledge and skills and giving people elsewhere a chance to exploit them.
"I can think of multiple opportunities to do that across the New Zealand primary sector," Norgate says.
"The reality is that we should have several international businesses derived out of the primary sector in New Zealand."
It is fundamental for New Zealand agriculture to look abroad, he says.
"For dairying, for example, any value that sits in New Zealand quickly gets reflected in land price, so to get a good return on investment on a cash basis you've got to be doing something more than that.
"We've got to take our systems and processes and technology and exploit it around the world."
NZ Farming Systems chairman Keith Smith says Norgate has a deep understanding, passion and dynamic vision for the rural sector.
"A very quick and intelligent mind, very good with figures and an understanding of people relationships," Smith says.
"In my view we've only seen a little bit of Craig's vision in this area."
Norgate's strategy of understanding the opportunities and having the flexibility to move quickly has characterised his career.
At only 29, he became chief executive of Kiwi Co-operative Dairies and through a series of acquisitions and mergers saw its revenue rocket from $300 million to $4 billion.
"It's just how it happened to be honest," Norgate says. "You make your own luck a little bit by being able to motivate teams to do great things but at the end of the day I had some opportunities you just sort of shake your head about."
Eventually there were only three big players left - Kiwi Co-operative Dairies, NZ Dairy Group and the Dairy Board.
Legislation enabling Fonterra's creation was passed, the three merged and in 2001, at the tender age of 36, Norgate became the dairy giant's first chief executive and the best-paid executive in the country.
Through his career, he says, "others thought I was ready so you just did it and you make lots of mistakes but business is about making mistakes ... it's about whether you realise you've made a mistake and what you do about it that matters."
After his initial two-year contract as chief executive ended, the board took the reins from Norgate and handed them to current chief executive Andrew Ferrier. Norgate, who has racked up close to 50 mergers or acquisitions, had consolidated himself out of a job.
At Fonterra it was Norgate who asked for a two-year contract. "Knowing the politics, whilst I would have liked it to have been extended, I didn't expect it to be."
Norgate is also a director at Sealord Group, whose chief executive, Graham Stuart, was previously chief financial officer alongside him at Fonterra.
"You know when he goes to bat for you, you're going to win," Stuart says. "There's times when you get a little despondent and things and he's got a lot of positive energy and he will see ways out, he will solve problems that look pretty insurmountable otherwise."
After Fonterra, Norgate could have gone to the US and worked for a large organisation or stayed in New Zealand.
"The choice became pretty easy because I really hadn't been around for my kids ... I'd been busy," he says.
Norgate now spends about half his time working for PGG Wrightson and the rest on other interests, which have included helping out at the Taranaki Rugby Union and sitting on the board of Aotearoa Fisheries.
"Yes, if I'd gone to the States I might have stayed in an executive role but I knew enough about me to know that that wasn't going to be healthy."
Norgate's next move after Fonterra didn't have to be in agriculture, but it did not take long for him to realise that was what he knew and loved.
"You go and talk to farmers in a woolshed out the back of Hokitika on a great day and there's just no better place in the world," he says.
"I've been driven by wanting to make sure that it [agriculture] is still as important to this nation in 20 years time as it is today and I think it will be - passionately believe it."
Food crisis? Give it time and it'll sort itself out
Rocketing food prices have sparked international headlines but they don't amount to a crisis, says Craig Norgate.
There have been 30 years of cheap food. "I think people have always known that, at some point, with population growth and income growth that there needed to be a tipping point.
"The reality is, that era of cheap food is gone and people should get used to it."
A huge structural adjustment is under way, driven largely by the number of people in developing countries now able to consume foods which are more like those eaten in the developed world.
"While the impact of high food prices on those developing countries at the moment is a major issue, the reality is that with their rate of growth in incomes it's really a two- to three-year blip before the old growth in GDP per capita actually catches up to the difference in food prices."
Norgate says the world's food problem will sort itself out. "To the extent that it doesn't, then what will solve it will be genetic modification and that is reality.
"It was always going to become mainstream once the world realised that it couldn't feed itself with conventional methods.
"In most cases, it [genetic modification] is about speeding up what happens naturally over a period of time anyway."
However, science cannot run unchecked and New Zealand, in particular, needs the right to choose. "The only way we're going to have the right to choose is if we own the technology. If we let somebody else develop it, we'll have no choice."
The only way that developing countries can improve the situation of those in poverty is by letting them trade with the world.
Meanwhile, New Zealand can benefit from the current situation, because, under World Trade Organisation rules, subsidies in Europe and the US restrict their ability to export. "So our best outcome, in my view, is slow change."
CROWDED CV
* Born: 1965, Hawera
* 1983-85: Massey University, Bachelor of Business Studies, Accounting and Finance
* 1985: Maori Affairs Department
* 1987: Lowe Walker
* 1988: Lactose Company
* 1991: Joins Kiwi Co-operative Dairies
* 1994: Chief executive, Kiwi Co-operative Dairies
* 2001: Chief executive, Fonterra
* 2003: Sets up Rural Portfolio Investments
* 2004: Takeover of Wrightson
* 2005: Takeover of Williams & Kettle
* 2005: Merger with Pyne Gould Guinness to form PGG Wrightson
* 2007: Float of NZ Farming Systems Uruguay
* 2008: Wool business merger planned with Wool Grower Holdings
