Chief Executive’s Report to 2016 AGM

Chief Executive’s Report to 2016 AGM

By Craig Presland.

It is a pleasure to present my CEO Report for Cooperative Business NZ after nearly four months in my role and after having travelled around NZ meeting with most of our Members. For those who hosted me thanks again for your warm and kind hospitality.

To recap, we were first registered in March 1984 as the New Zealand Agricultural Cooperatives Association with our name changed to Cooperative Business New Zealand in November 2012. Looking back over NZ Co-operative News articles written over 100 years ago the NZ co-operative sector has a very long and proud history. Rather than reflect on the past however I would like to focus more on the next 12 months and beyond, as well the bigger picture in what are turbulent and uncertain times globally.

With NZ co-operatives contributing almost 15% of GDP, given a collective annual turnover of over $NZ 43 billion, we form a large part of the NZ economy across a wide range of industries. It has become clear however that we need to advocate for the co-operative business model, and all of its strengths, more strongly so that New Zealanders become more aware of the benefits and strengths in conducting business under the Member ownership model.

We all need to advocate collectively ie. our 56 Full Members (two having been added since balance date), 16 Individual Associate Members (six having been added since balance date), and six Honorary Members.

A big part of my role is to lead that advocacy. In that regard the recently approved Auckland and Massey University research study, “The Co-operative Economy of NZ” will provide us with targeted and in depth analysis of the co-operative sector in NZ and its importance economically, socially and environmentally. Businesses that are sustainable and long-lasting as we will see later this evening with our Enduring Service Awards, 22 of our current 56 Full Members now having reached the 25 year anniversary mark, seven having reached 50 years, five having reached their 75th anniversary and another three now over 100 years in providing outstanding and enduring service to New Zealanders. Organisations which have prospered while showing extensive support for local communities and care for those in need along the way.

I would like to mention three of these organisations who place great importance on social responsibility, each being a finalist for our Co-operative Business of the Year award later tonight.

Firstly we have Foodstuffs South Island with its Foodstuffs Community Trust which in 2015/16 provided almost half a million dollars in educational, community and hardship, and earthquake grants to South Island residents. Students who have needed funding to get through their tertiary studies. Young people who have had a tough start in life and who need assistance with their own personal development, for example via Outward Bound, otherwise with via paid work experience and mentoring. Well done Foodstuffs South Island!

Secondly we have Fonterra with its Milk in Schools national programme which is now in its fourth year. 140,000 kiwi primary school kids being provided with a 200 ml carton of Anchor lite milk every school day, this now involving just over 70% of NZ’s eligible schools, with Fonterra then arranging the collection and recycling of the cartons afterwards. An initiative designed to connect dairy farmers with local communities as Fonterra lives its purpose of aiming to be the “world’s most trusted source of dairy nutrition”. Well done Fonterra!

And finally Farmers Mutual Group who, since June 2015, have designed and funded their own “Farmstrong” programme in conjunction with the Mental Health Foundation supporting NZ’s farmers who require assistance so that depression and illness are successfully turned around into wellness and good health. A critical support service to our farmers, many of whom are going through tough times financially.

In addition, in October 2015 FMG became the principal sponsor of the NZ’s prestigious Young Farmer of The Year award, while it has also developed an extensive Rural Crime Prevention Guide in conjunction with NZ Police and Federated Farmers, 7,000 copies having been provided to NZ’s farmers and almost 1,000 downloads from its website. Concern and support for NZ’s farmers. Well done FMG!

We look forward to finding out who the winner of our Co-operative Business of the Year award is later this evening.

Moving on I would like to thank those 11 Members who contributed to the funding of our university research project titled “The Co-operative Economy of NZ”, which commenced earlier this month, and will be used to raise awareness and understanding of the co-operative sector and business model both publically and politically. It is great to have Dr Elena Garnevska from Massey University, who will be leading this research project, here this evening along with her chosen PhD student who will conduct the research.

Once the report is completed we will be seeking funding support from our government with a view to having this targeted towards increasing the scope and quality of our services as an industry body. After listening to Member feedback in recent weeks this falls within three main areas:

  1. Stronger advocacy so that understanding and awareness of co-operatives and the co-operative business model improves across the NZ business sector as well as publically.
  2. More frequent and targeted governance and leadership training within the co-operative business model, including a more regional approach aligned to local universities.
  3. More networking opportunities including discussion groups leading to better co-operation amongst co-operatives.

Having the Deputy Prime Minister speak at our Annual Awards Dinner later this evening will be a step in the right direction.

When considering things globally there is widespread conflict and uncertainty at present with increasing acts of terrorism in Europe, the decimation of Syria and resulting mass exodus of refugees into neighbouring countries and Europe, widespread turmoil in the Middle East, attempted political coups such as that which we have just seen in Turkey, the upcoming US elections and Britain’s exit from the EU, the latter in particular likely to have a more direct impact on NZ and its exports. In the background we have the United Nations working away to deliver upon 17 Sustainable Development Goals, these including the following in relation to economic sustainability:

  • Decent work conditions and economic growth
  • Sustainable businesses and communities
  • Responsible consumption and production
  • Industry, innovation and infrastructure
  • Peace, justice and strong institutions

It is widely accepted that the co-operative business model is that which is best placed to support the UN in the achievement of these goals. A business model that is based on economic, social and environmental sustainability. Co-operatives who through their long term endurance and successes over decades and centuries are able to offer stable employment for people, including over 43,000 jobs in NZ at present and over 250 million jobs globally. Jobs that are critical to social well-being.

Looking more widely Cooperatives have their own Members (customers, clients, suppliers, staff etc) now totalling over 1 billion globally, while here in NZ we have three co-operative financial institutions which have over 350,000 Members (customers) between them ie. Co-operative Money NZ, The Co-operative Bank and Rabobank. That’s almost 8% of all Kiwis.

Such Members within the co-operative sector, whether they be suppliers, customers or staff, who all benefit from the strength of the co-operative business model and the relative certainty that it provides, for example co-operative businesses not closing down, products and services provided over the long term by trusted organisations and brands, job security and decent working conditions, fair and reasonable employment terms and conditions, and gender equality.

What does all this mean? While our geographical remoteness is welcomed given current conflict in the world it presents us with challenges in terms of overseas trade competitiveness and this, along with our small size (ie. limited local market), has resulted in the need for kiwis to be more innovative which is often talked about in the media. In addition however, we need to be more co-operative.

Kiwis working together more effectively sharing resources and information, combining procurement requirements so that better prices are negotiated, and avoiding the duplication of services eg. support services across similar organisations within both the public and private sectors. We need to work smarter.
We have one of our Members which has always been innovative and co-operative and that is the largest organisation in NZ in terms of size, Fonterra, with current revenues of over $NZ 18 billion pa, the world’s fourthh largest dairy producer and the world’s largest dairy exporter.

An organization whose fortunes have a very wide ranging flow-on effect across other NZ organisations and industries and one that is critical to the success of NZ business. An organisation that is going through some difficult times at present through an over-supply of dairy products globally, weak prices and a relatively strong NZD. When we look back however to its origins in 1871 we will see many fluctuating market cycles that our dairy industry has been through and yet it has survived and gone on to prosper through these. In my view the strength of this organisation, and industry, has been due to 3 key factors:

  • NZ’s dairy companies, and now Fonterra, have always remained co-operatives over the years so that they are Member-owned and controlled, Members being suppliers of milk.
  • The single seller model that has operated with the NZ Dairy Board, and now Fonterra, so that there is only one contact (or option) for overseas buyers when seeking to purchase NZ dairy products.
  • NZ’s natural advantage in growing lush grass in a relatively clean and pollution-free environment.

Let’s look at some examples of Fonterra’s evolution over the years, from the old to the new..…

To conclude I would like to thank you all sincerely for your support by being Members of Cooperative Business NZ. We have a business model that works with co-operative businesses remaining strong over the long term resulting in greater job certainty for people as well as the continued supply of trusted and respected products and services. I have not heard of many established co-operatives in NZ closing their doors over the years, and decades, due to them becoming commercially unviable. What we must now do is advocate more strongly, and the proposed university research project will help here, grow our Membership base and raise our level of funding so that we are able to provide our services even more effectively.

We are going to need your continued support for this by remaining Members of Cooperative Business NZ and by encouraging other businesses to do so.

Thank you.