The Country 26/08/25: Mike Petersen talks to Jamie Mackay

Scales Corporation's chairman (and former chairman of B+LNZ, Special Ag Trade Envoy) has reported a 50% increase in earnings and net profit in the first half of the year, and directors have lifted their guidance for full-year earnings to between $45 million and $50 million. Petersen says the horticulture division reported excellent performance in part due to long-term strategic investment in apple varieties suited to Asian and Middle Eastern markets.

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Episode Transcript

Speaker 1 (00:00):
Mike Peterson, here's my run sheet with all my information.
I'm surrounded by paper. I'm choking in paper here. Chair
of Scales Corporation these days, as I said, former chair
of Beef and Lamb New Zealand Special Agricultural Trade Envoy,
where's has worn many hats, still wears many hats in
New Zealand agriculture. Hey, Mike, a big announcement from Scales yesterday.

(00:21):
You're doing very well. My Scale shares a nearly worth
five bucks thanks to you and Andrew Borland.

Speaker 2 (00:29):
Well, you know, we're very pleased that your small investment
is progressing well.

Speaker 1 (00:33):
Very small investment. I wouldn't mind some Fonterra shares at
the moment they're at six bucks.

Speaker 2 (00:38):
Well, and he's equally, being a Fonterra dairy farmer is
going to deliver a pretty good return in some stage
by the end of the year, So you're right, Jamie.
Look there's a lot of buoyancy around at the moment.
And look we're pretty pleased with the way Scales Corporation
is taking along a really good result in horticulture. Our
pet food ingredients business is nice and steady, and our

(01:00):
logistics business links at all, and so it's been a
very very solid first six months. We're pretty happy. But look,
it's not just me and Andy Borland. There's a team
of people and a whole lot of really good people
working in the business. It's delivering these results.

Speaker 1 (01:15):
Now you're vicariously sort of taking credit for what Fonterra
is doing. Now you reckon they're following the blueprint set
by Scales.

Speaker 2 (01:23):
Well, we actually have, particularly in our pet food ingredients business.
We are ingredients supplies to pet food manufacturers and I
guess there are some parallels with Fonterra because we've made
the decision not to compete against our customers and we
think that's a far better place to be for us.
We supply the big pet food manufacturers in the world

(01:46):
like Mars and Nesle and even ze Wee likes of
Zee here in New Zealand, but we don't sell retail
brand pet food and we think that's a really good
place to be and it certainly gives you a really
strong partnership between your self as an ingredient supplier in
the manufacturer that's selling to consumers.

Speaker 1 (02:05):
And that's exactly where Fonterra is heading. By getting rid
of its consumer brands and just being in the ingredients business.
How much of the scales portfolio is out and out horticulture.

Speaker 2 (02:20):
Our horticulture business is a significant part of the business,
but we sort of have a couple of aspects to this.
Horticulture is quite set heavy and then the pet food
ingredients business is light, so there's more capital tied up
in horticulture. The return on capital invested in horticulture is
lower than pet food and logistics. But we see ourselves

(02:44):
as a diversified fund in the agribusiness space, and we're
always looking for opportunities to grow and expand within our grabusiness.
But it's a different model. We think it helps the
investors by having three leaks to that store.

Speaker 1 (03:01):
How positives or our apples.

Speaker 2 (03:03):
At the moment, it's pretty exciting. Having said that, it
has been pretty challenging over the last few years, and
we only need to look back to twenty twenty three
recycling Gabrielle with Hawk's Bay, where most of the apples
in New Zealand are grown. It was a pretty tough
time and it has been challenging with the cost of

(03:24):
labor going up, and it's been particularly hard I think
for some of the smaller grows just to keep their
orchards viable. But last season was a very good crop,
excellent growing conditions with good fruit size, and it's actually
paid off well in the market. There's still a portion
of the crop to sell, but we've got really good

(03:44):
demand through particularly Asia, through the Middle East and hopefully
to India shortly for our apples. They are highly sought
after and we're pretty excited by what's ahead of us.

Speaker 1 (03:57):
You're still paying a tariff to get into India.

Speaker 2 (04:00):
Yes, fifty percent tariff there Jamian. Hence, we've been pretty
active at working with the government to progress that free
trade agreement and look, we're really hopeful we can get
some relief there because the Indian market would be a
huge opportunity for us with apples. Likewise, if we managed
to open up South Korea, which we effectively can't get

(04:21):
access to, and made it easier to get to Japan,
those three markets alone would transform the apple sect overnight.

Speaker 1 (04:28):
You're born and bred in Central hawks Bay. I know
you missed out on your big Ruetanifa water scheme. You're
looking at another one. Would that open up all that
area for horticulture? Would that be a good apple growing region.

Speaker 2 (04:43):
Absolutely, Jamie. And I'm part of the group that's actually
driving the Tookie Tookie Water Security project, and that is
about providing the opportunity for high value food production and processing,
particularly in the rocktowner for Planes and right down the
length of the Toktookie River. And there's no doubt, Jamie.
The reality is if you wanted to put an orchard

(05:04):
in place in the rotannel of for planes right now,
you could not do it if you haven't got access
to a water consent and existing consent. There are no
new consents being issued. The catchment is overallocated, and hence
our desire to try and store some water before it
flows to the sea so we can actually provide water
when it's required.

Speaker 1 (05:24):
Are your days because you are a former chair of
Beef and Lamb New Zealand, are your days on the
Lambing beat now done? Mike Peterson? That is past tense
in your life.

Speaker 2 (05:34):
That is past tense, Jamie. I have to admit with it.
That's past tense. And it's a beautiful day in Hawk's
Bay today, and I know that there are going to
be a lot of people out there enjoying this weather.
But Hawks Bay. You know, we're probably reasonably dry at
the moment, and I think there's a bit of a
country that's just getting a wee bit nervous about what
the spring's going to hold. So it's been great lembing

(05:56):
weather that there's been a really good drop of lambs
on the ground, and look, I think that's really great
for farmers, but I think people are still looking for
a bit more rain before spring comes.

Speaker 1 (06:07):
I was doing a thing with Shane Jones on Friday
night and I was in his are the whole night.
He's got to build some more dams. He's up for that,
and he's got to build some more four lane highways
that'll make New Zealand great again.

Speaker 2 (06:18):
Mike, absolutely, Jamie and we have been talking to Minister Jones,
and look, he's a strong advocate and supporter of what
we're trying to do here, so and look, he just
wants to get on with it. And it's refreshing to see.

Speaker 1 (06:31):
Mike Petterson, thanks for your time. Mike Peterson out of
Central Hawk's Bay there, chair of Scales New Zealand Company,
doing very, very well.