January 27, 2025 • 7 mins
This high-profile and long-standing agricultural consultant has numerous governance roles in the primary sector. He works with many farming clients covering the sheep, beef, deer, and dairy sectors. Today he runs the ruler over the performance of some of our leading agricultural companies and farming co-ops. His analysis makes for interesting reading.
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Episode Transcript
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Speaker 1 (00:00):
You get some interesting emails in this job. Got one
last night from a guy by the name of Will Wilson.
He said, good Jamie, we haven't met whoever. I do
regularly listen to you on the countries. I travel around
New Zealand in my agricultural consultancy role now coming up
to forty five years. While based in the North Island,
I do work with numerous farming clients in the South
(00:21):
Island as well, covering sheep, beef, a dare sector as
well as the dairy sector. Will Wilson, the interesting thing
about you is that you came back after your brief
Christmas break and you decided to run the ruler over
the performance of our leading agricultural companies and co ops
in this country. It'd be fair to say you got
(00:44):
interesting results. Shall we start with the star of the stable, Fonterra.
Good afternoon, by the way.
Speaker 2 (00:51):
Good afternoon, Jamie. Yes, ye look at the unfolding I
guess of Fonterra and the current reported financial all for
the last couple of years. I mean, just what a
what a really good picture of what I think has
been a strong developing governance and management team and and
(01:12):
of course based underneath that is clearly is clearly they've
got a very strong strategy and focus on what they're
looking to do. And the focus is in fact the key.
And look at what the results are coming through it
with that business.
Speaker 1 (01:26):
Yep, you're not you're not so glowing in your praise
of Sinley. Mind you you wrote this or did this
report at the beginning of the year. Of course, in
the past five days, Sinlay share price has gone up
forty percent. You did your report at forty two, it
was finished yesterday at fifty eight. It's a company that's
not out of the woods yet. I suggest, no.
Speaker 2 (01:47):
I don't think it is. And you look at the
balance sheet issues that they've got, which is which is
of concern, and then I guess they're forte into into
the North Island and it looks like that's been really
quite quite an issue for the business. The increase of
the share price. Hopefully that is being seen as a
(02:08):
reflection of their reporting and their results improving. And you'd
like to think so on the basis of what's going
on internationally in dairy returns.
Speaker 1 (02:18):
Look, I want to have a look at the two
big meat co ops, Silver Fern Farms, versus the Alliance.
The Alliance Group problems are well documented. Shareholders funds have
dropped from four hundred and fifty million to two hundred
and eighty eight million in the past couple of years.
You describe the Alliance co Op as high risk and
poor performance, whereas with Silverfern Farms you're saying they've got
(02:41):
a strong balance sheet and they are an average business
average in this sector.
Speaker 2 (02:47):
Yeah. I think in the comments for the silver firms,
average in the sector really does reflect that it was
a difficult year for both businesses in the sector for
twenty twenty three twenty four in particular, and I think
silver firms have managed themselves through that pretty well. And
of course they do have a strong balance sheet from
which to be able to handle a year like that,
(03:08):
and we've seen plenty of those over the years, Jamie,
where we get those really tough ones and the guys
have to fight for very dollar they're getting. By contrast
with Alliance, I mean there is real difficulty there with
their working capital position. It's poor. It puts it at risk.
And I guess really from a from a supply perspective,
(03:33):
from farmer supplying to a business with a very very
poor working capital. They do have to be conscious of
that there is risk.
Speaker 1 (03:41):
Okay, those are the industry processing and marketing companies. Let's
have a look at the business service companies and I'll
have to whip through these, and I'm just going to
do a very brief synopsis. L I see you're saying
really good company. I guess that's reflected in their recent
results PGG Rights and you're saying very average business, which
is better than you can do. For farm lands. You're
(04:02):
saying not profitable, poor performing company. When it comes to
the fertilizer co ops, balance Agra nutrients, no profit or
very low profit, very average business. Ravenstown gets somewhat more
of a positive report average business in this sector. I
put it to your will without having dalving too deeply
(04:23):
into all of those that doing business in the rural
servicing sector in recent times has been tough business.
Speaker 2 (04:32):
Oh it has, it has, and look that's not been critical.
Again when we look at the impact of the twenty
three twenty four year that's come through into these financials
for the service sector, you know it's been tough work.
And we know when things get tough on farm that
the checkbooks go and of course, the impacts are particularly
(04:54):
on the fertilizer companies on their turnovers does result and
you know we do turnover, which are ca impacts on
their impacts on the ebitdas and the ability to be
able to actually keep the things really strongly and profitable.
They were profitable, however, both those companies. The one that
does worry me a little bit is farm Lands. It's
(05:16):
got a very weak balance sheet, it's got a very
very low level of work in capital and as a
service business. That is a real concern.
Speaker 1 (05:27):
Hey, well, look, sorry coming over the top of you again,
but I am short on time. I just want to
finish on your last segment you had to look at.
That's the land ownership or farming segment. And I want
to take a particular look at Parmu the artist formerly
known as land Corp. There's a lot of talk out
there that we should be selling it. You've described Parmu
poor business strategy, poor governance and management, poor performing company.
(05:51):
Why the hell have we got it?
Speaker 2 (05:53):
Yeah, it's a very good question. And I mean again,
you do look at the strong for the balance sheet
and the return from what we're expecting out of that,
and I guess The other thing that really does disappoint
you a little bit around the underlying farming performance within
that enterprise. You know, in the twenty three twenty four year,
(06:14):
of course, the last while well at twenty six million
million dollars, thirty eight million of that was after it
received from carbon sales. If we take the carbon strategy
or component out of that business, for example, and you
know it might be a bit unfair because it might
be becoming a core of their business, we take that out,
(06:36):
the underlying performance from their livestock businesses.
Speaker 1 (06:38):
Way for go woke, go broke. Some would say, hey,
Will Wilson, I could chat to you all day, haven't
got time to do so, but this is really interesting analysis.
We're going to try and put this up on our
website and people can have a look at your analysis
of our leading agricultural companies. Been great to catch up,
and thank you very much for listening in this game.
Well every listener is a president. Thanks for your time
Speaker 2 (07:01):
No worries, kitch your letter, Jamie
You get some interesting emails in this job. Got one
last night from a guy by the name of Will Wilson.
He said, good Jamie, we haven't met whoever. I do
regularly listen to you on the countries. I travel around
New Zealand in my agricultural consultancy role now coming up
to forty five years. While based in the North Island,
I do work with numerous farming clients in the South
(00:21):
Island as well, covering sheep, beef, a dare sector as
well as the dairy sector. Will Wilson, the interesting thing
about you is that you came back after your brief
Christmas break and you decided to run the ruler over
the performance of our leading agricultural companies and co ops
in this country. It'd be fair to say you got
(00:44):
interesting results. Shall we start with the star of the stable, Fonterra.
Good afternoon, by the way.
Speaker 2 (00:51):
Good afternoon, Jamie. Yes, ye look at the unfolding I
guess of Fonterra and the current reported financial all for
the last couple of years. I mean, just what a
what a really good picture of what I think has
been a strong developing governance and management team and and
(01:12):
of course based underneath that is clearly is clearly they've
got a very strong strategy and focus on what they're
looking to do. And the focus is in fact the key.
And look at what the results are coming through it
with that business.
Speaker 1 (01:26):
Yep, you're not you're not so glowing in your praise
of Sinley. Mind you you wrote this or did this
report at the beginning of the year. Of course, in
the past five days, Sinlay share price has gone up
forty percent. You did your report at forty two, it
was finished yesterday at fifty eight. It's a company that's
not out of the woods yet. I suggest, no.
Speaker 2 (01:47):
I don't think it is. And you look at the
balance sheet issues that they've got, which is which is
of concern, and then I guess they're forte into into
the North Island and it looks like that's been really
quite quite an issue for the business. The increase of
the share price. Hopefully that is being seen as a
(02:08):
reflection of their reporting and their results improving. And you'd
like to think so on the basis of what's going
on internationally in dairy returns.
Speaker 1 (02:18):
Look, I want to have a look at the two
big meat co ops, Silver Fern Farms, versus the Alliance.
The Alliance Group problems are well documented. Shareholders funds have
dropped from four hundred and fifty million to two hundred
and eighty eight million in the past couple of years.
You describe the Alliance co Op as high risk and
poor performance, whereas with Silverfern Farms you're saying they've got
(02:41):
a strong balance sheet and they are an average business
average in this sector.
Speaker 2 (02:47):
Yeah. I think in the comments for the silver firms,
average in the sector really does reflect that it was
a difficult year for both businesses in the sector for
twenty twenty three twenty four in particular, and I think
silver firms have managed themselves through that pretty well. And
of course they do have a strong balance sheet from
which to be able to handle a year like that,
(03:08):
and we've seen plenty of those over the years, Jamie,
where we get those really tough ones and the guys
have to fight for very dollar they're getting. By contrast
with Alliance, I mean there is real difficulty there with
their working capital position. It's poor. It puts it at risk.
And I guess really from a from a supply perspective,
(03:33):
from farmer supplying to a business with a very very
poor working capital. They do have to be conscious of
that there is risk.
Speaker 1 (03:41):
Okay, those are the industry processing and marketing companies. Let's
have a look at the business service companies and I'll
have to whip through these, and I'm just going to
do a very brief synopsis. L I see you're saying
really good company. I guess that's reflected in their recent
results PGG Rights and you're saying very average business, which
is better than you can do. For farm lands. You're
(04:02):
saying not profitable, poor performing company. When it comes to
the fertilizer co ops, balance Agra nutrients, no profit or
very low profit, very average business. Ravenstown gets somewhat more
of a positive report average business in this sector. I
put it to your will without having dalving too deeply
(04:23):
into all of those that doing business in the rural
servicing sector in recent times has been tough business.
Speaker 2 (04:32):
Oh it has, it has, and look that's not been critical.
Again when we look at the impact of the twenty
three twenty four year that's come through into these financials
for the service sector, you know it's been tough work.
And we know when things get tough on farm that
the checkbooks go and of course, the impacts are particularly
(04:54):
on the fertilizer companies on their turnovers does result and
you know we do turnover, which are ca impacts on
their impacts on the ebitdas and the ability to be
able to actually keep the things really strongly and profitable.
They were profitable, however, both those companies. The one that
does worry me a little bit is farm Lands. It's
(05:16):
got a very weak balance sheet, it's got a very
very low level of work in capital and as a
service business. That is a real concern.
Speaker 1 (05:27):
Hey, well, look, sorry coming over the top of you again,
but I am short on time. I just want to
finish on your last segment you had to look at.
That's the land ownership or farming segment. And I want
to take a particular look at Parmu the artist formerly
known as land Corp. There's a lot of talk out
there that we should be selling it. You've described Parmu
poor business strategy, poor governance and management, poor performing company.
(05:51):
Why the hell have we got it?
Speaker 2 (05:53):
Yeah, it's a very good question. And I mean again,
you do look at the strong for the balance sheet
and the return from what we're expecting out of that,
and I guess The other thing that really does disappoint
you a little bit around the underlying farming performance within
that enterprise. You know, in the twenty three twenty four year,
(06:14):
of course, the last while well at twenty six million
million dollars, thirty eight million of that was after it
received from carbon sales. If we take the carbon strategy
or component out of that business, for example, and you
know it might be a bit unfair because it might
be becoming a core of their business, we take that out,
(06:36):
the underlying performance from their livestock businesses.
Speaker 1 (06:38):
Way for go woke, go broke. Some would say, hey,
Will Wilson, I could chat to you all day, haven't
got time to do so, but this is really interesting analysis.
We're going to try and put this up on our
website and people can have a look at your analysis
of our leading agricultural companies. Been great to catch up,
and thank you very much for listening in this game.
Well every listener is a president. Thanks for your time
Speaker 2 (07:01):
No worries, kitch your letter, Jamie
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