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Home / Business

Big cheese sees bright future for dairy

By Malcolm Burgess
28 Apr, 2007 05:00 PM6 mins to read

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Wyatt Creech, former Deputy Prime Minister, is now chairman of the Kaimai Cheese Company. Photo / Sarah Ivey

Wyatt Creech, former Deputy Prime Minister, is now chairman of the Kaimai Cheese Company. Photo / Sarah Ivey

KEY POINTS:

A taste for wine and cheese might go hand-in-hand with a career in Government, but dairy entrepreneur and former Deputy Prime Minister Wyatt Creech has taken his interest in life's finer things a step further than most.

From the Waharoa offices of speciality cheesemaker Kaimai Cheese - which
Creech helped to found and whose board he chairs - the former National Party MP for Wairarapa reports with pride that its just-concluded float has been so popular it had to be extended by $1 million to $6.4 million.

In all, the "heavily oversubscribed" IPO has attracted $11.7 million and Creech - who with other directors has invested around $3 million - is now in the process of "sending back the cheques".

All this, he says, reflects a burgeoning desire to invest in dairy.

Increasing competition, high commodity prices, the beginning of the end of Fonterra's exclusive dairy export quota rights and global opportunities afforded by the Australian drought have boosted the sector's appeal.

Although the buzz around Kaimai is now what keeps Creech "busy as a bee", it is just the thin end of the agricultural wedge for a man who counts the co-founding of dairy exporter Open Country Cheese in 2004 and the establishment of Martinborough vineyard Palliser Estate in the 1980s among his achievements.

All of which book-end a career in the halls of power, the latter years of which coincided with the regulatory rumblings that would prompt the dairy consolidation that produced Fonterra.

Although Creech, 60, insists Kaimai, with its boutique emphasis, is too peripheral to compete with the dairy giant, he says the addition of new players - including through the diversification of meat processors into dairy - can only be beneficial.

"The fact that there's been some competition has galvanised some real action in the dairy industry and that's a good thing.

"It reminds me very much of the wine industry in that, as New Zealand got a better reputation for producing better wines and the fact that there were a number of labels there, people's interest in the industry [grew] and you had some choice."

While Open Country - which Creech co-founded with five friends including fellow National MP John Luxton - will supply Kaimai with raw materials on a "strictly commercial" arrangement, Creech says his energies are now largely devoted to Kaimai, which he emphasises is very much a different business.

"I have got concerns that people were seeing it [Open Country] as just me - that was one of the reasons I wanted to step back. But at the same time I was also interested in the specialty end of the market."

Even so Creech, with his political pedigree, remains Open Country's man in Wellington when need be, especially in a year so crucial to the future shape of the dairy export landscape.

"I do some odd items for Open Country. [One of them is monitoring] how the regulatory regime is working. And I think they think it's logical I do that because I was there when a lot of those regulations were being drafted and the policy for them was being thought about, so I've got a fairly good idea of the background of what they were meant to achieve."

In that job he scored a Commerce Commission victory against Fonterra over its transport charges for supplying milk.

"Fonterra were wanting to charge the national average price for all milk no matter how far they carted it."

Although Open Country won that battle, Creech is keeping a watching brief as the Regulations Review Committee deliberates on the legal definition of the word "retentions" and what that means for the price paid by Fonterra customers.

"We believe the prices you pay for milk should be the price that milk costs.

"In our view, including the capital profits from the sale of assets as if they were part of the milk price distorts the milk price and was never intended by Parliament."

Creech is also clear on the outcome he is seeking from the Government's review of export quota allocations, 90 per cent of which are controlled by Fonterra. "I think the quota should be fairly distributed between all producers. That was the intention in the first place ... that it lasts for a finite period and after that it be distributed to benefit the dairy industry in New Zealand.

"And that's what the [Dairy Industry Restructuring Act 2001] says."

Monopolies, believes Creech, are "the worst form of commercial organisation".

"They will always assert they're doing a good job, [but] competition is healthy for business - it keeps everybody on their toes."

While acknowledging his 14 years in Parliament - nine as a Cabinet minister and a stint as Deputy Prime Minister - were rewarding, he wonders how much the experience impacted on his ability to do business, suggesting instead he was commercially inclined anyway.

"In the commercial world you gain a real, in-depth knowledge in a particular area, whereas in politics you tend to have a pretty superficial knowledge of a very wide area.

"I don't think everyone that's been a politician is necessarily the commercial sort, but that was the type of person I am."

And his resolve never to return to Parliament can only strengthen in the face of what he sees as a rosy outlook for dairy, even if our fortunes come to some degree at the expense of drought-stricken Australia, with whom we share "the bulk of the traded dairy products in the world".

"I don't think anybody in New Zealand feels anything except regret for the Australians and the suffering the drought is causing; it's just a reality of the fact that because of the drought they're not producing the dairy products they normally would.

"Although by the same token there's been quite a lift in the value of the New Zealand dollar; most of the time the one has just been cancelling out the other."


Wyatt Creech

* Kaimai Cheese chairman, Open Country Cheese director.

* Age: 60.

* Born: Oceanside, California.

* School: Primary school in Masterton; secondary school in Wanganui.

* University: Diploma in Sheep Farming, Massey; BA in Political Science and International Politics, Victoria.

* Former National MP for Wairarapa and former Deputy Prime Minister.

* Married with three grown boys.

* Interests: Playing guitar (folk, traditional and bluegrass) and reading.

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