Kicking up the dust down at the ranch

By Philippa Stevenson

Between the lines


Don't take your eye off the meat industry. It's offered some of the best dust-ups in town and could do again.

Passions have risen in Hawkes Bay where South Island farmer co-op PPCS recently raised its stake in shareholder-owned Richmond, got its own chairman, Jim Pringle, on the northern company's board and also helped oust the sitting chairman, farmer Sam Robinson.

Parochial Hawkes Bay farmers, who had won previous battles against the southern incursion, were out-manoeuvred and are now licking their wounds and plotting revenge.

In another twist, Richmond's new chairman is former Ernst & Young senior partner Bob Croker, the erstwhile saviour of the National Maritime Museum in Auckland.

Mr Croker is on the board courtesy of Peter Spencer, large-scale meat industry investor and toilet paper magnate, who not only owns 12 per cent of Richmond but also 20 per cent of rival Affco.

Not surprisingly, farmers are concerned about conflicts of interest and wonder how much progress a firm can make under a leadership with such tangled interests.

They also fear that the company will start paying lower South Island prices for their stock without regard for their higher costs.

Mr Croker will have to win their confidence to retain their all-important supply of stock - a bit of a task for a non-farmer who is also that most suspicious of things to those on the land - an accountant.

A meat company is nothing without stock. No supply and a grandiose, stainless-steel plant suddenly turns from asset to liability.

Enter Affco. There is nothing surer than the other big North Island company wanting to capitalise on farmer disaffection to enhance its own throughput.

But it will also have to move cautiously to avoid getting too much of a good thing. It won't want to totally destabilise Richmond and face the consequences of being virtually the sole survivor.

Affco is also worth watching.

Its chief executive, Ross Townshend, formerly of the dairy industry, has used many a management practice from that sector to slash costs.

Stock transport now runs more like a tightly controlled milk-tanker fleet and the best practice Affco 1 programme has a strong resemblance to the World Best aims of Townshend's former employer, New Zealand Dairy Group.

But after the cuts must come the profits and Townshend knows that is the next thing on his plate.

He told last week's annual meeting that if a livestock buyer was looking at Affco it would be graded not quite prime beef but putting on condition.

The same could be said for the whole industry - but for how long, given the tensions?