Farmer control crucial to co-op

Dairy farmers need to ensure they retain the power in Fonterra, Tom Sturgess told SIDE delegates during a rapid-fire keynote address crammed with top management morsels. "˜Individual farmers need to be able to get together and vote out directors and pay out the management contracts. If you can do that, then you've still got the power. I'm not saying you have to, but you need to be able to"¦ "˜There are lots of fairly clever ways to fix the balance sheet at Fonterra without farmers giving up the power.' Sturgess admits he is no expert on the cooperative reports Rural News. However, he has an impressive track record of multiple chairmanships in the US and now Australasia. His Lone Star Farms' 11-farm, 150,000 stock unit sheep and beef business in New Zealand has been built in 11 years and 30 property transactions. Under-performance and cash generation potential are his key purchasing criteria but substantial lakefront and coastal acquisitions promise capital gains should he sell. No purchase is debt financed and every dollar invested is expected to generate a dollar's cashflow. "˜We've spent an unbelievable amount on fences, stock, fertility and fecundity.' While he says his farm managers are "˜extraordinary people' and his job "˜is to take away their excuses for failure', he believes dairy farmers' ability to grow and harvest grass makes them the best operators in NZ. "˜All the things you do, we are really crappy at and we're one of the best [in the sheep and beef sector].' Another great dairy farmer attribute is the willingness to do what they believe is right, regardless of what others think. "˜A sheep and beef farmers' worst fear is embarrassment in front of a neighbour. I don't sense that in you guys.' Sturgess says farmers should let banks have "˜have their five basis points' on interest rates but make sure something is negotiated in return. Good judgement is "˜absolutely a learnable skill' and mistakes are "˜a gold mine if you go back and understand what went wrong and learn from it.'Great people management is a must as the detail of things said is soon forgotten but feelings generated are lasting. Honesty is essential."˜A breach of honesty is a red card. Everything else is forgivable.' Symbols are powerful tools. "˜How many of your dairy sheds have pictures of your people?'Risks need to be quantified but managers should avoid "˜getting hung up on measuring everything precisely' and focus where gains can be made.Monitoring staff performance is key. "˜People don't do what you expect them to do. They do what you inspect.'