The Muster- Laurie Margrain: Open Country

Laurie Margrain is Chair of Open Country and gives an update on the current milk season.

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Episode Transcript

Speaker 1 (00:09):
Welcome back to the muster. Laurie Margrain is chairman of
Open Country. Joins us this afternoon as we get through
the calving season.

Speaker 2 (00:18):
Truth be known, down here in the south. Laurie, good afternoon.
Always good to catch up.

Speaker 3 (00:22):
Nice to talk to you, Andy. Always very keen to
have a chat.

Speaker 1 (00:27):
It's been an interesting spring down here in the south.
You guys will know all about that. I suppose around
the country, though, how's the feeling at the moment?

Speaker 3 (00:35):
Well, are you talking on the rugby front or are
you talking as far as the dairy industry is concerned?

Speaker 1 (00:39):
We'll talk on rugby at the end of the interview
because you've got some interesting stats of harbour for this
year I want to touch on, but I think just
in a rural sense.

Speaker 3 (00:47):
Yeah, no, look, the milk flows for the period, the
first period, the weakest period of the year or lowest
period of the year for milk production, That's the June
to September. They are up, but I hesitate to put
too much store by that. These are the lower milk
flow months, and being up or down a few percent

(01:08):
is neither here nor there. Clearly, there's some climatic issues
or weather issues affecting the south. You'd expect those to
manifest themselves in some milk production negativity down there, but
it's not currently doing so, but I'd expect they would.
Around the country, conditions are pretty good. We've had enough

(01:29):
rain when we want it. We've had enough sunshine when
we want it. Taranaki, Manawatu, Waikato, King Country, Bay of Plenty,
all pretty good. I guess now the main focus is
on the supply-demand matrix and ensuring that whatever the variabilities
the world's providing, the volatility around the world is not

(01:51):
interfering too much in the supply-demand which currently is pretty
well in balance.

Speaker 2 (01:57):
Carving will be well through up north now, I'd imagine.

Speaker 3 (02:00):
Yeah, pretty well done, I would have thought. Well, in fact,
not pretty well done, totally done. Carving up here is
probably mid-July, mid-July on at the peak. Well done. Into insemination,
I guess, very shortly, October. Well, soon. Yeah, I mean,
the season's well advanced, and I don't think there's a

(02:21):
lot of negativity there. other than ongoing concerns for on-farm costs, Andy.
So that doesn't go away. But otherwise, the mood's pretty positive.

Speaker 2 (02:30):
Yeah, you're talking about a break-even point.

Speaker 1 (02:33):
Well, a lot of farmers, depending on who you talk
to and what structure their base and their payout are on, Laurie,
possibly around the mid $ 8.

Speaker 2 (02:42):
40 was the.

Speaker 1 (02:42):
Mark I've heard quite a bit, although that was last season,
perhaps this year. A lot of volatility going on. Like
you say, on-farm inflation just perhaps rises.

Speaker 3 (02:51):
Yeah, I mean, we've consistently had a view that, and
this is easy to say and more difficult to achieve,
we know that, but nevertheless, you have to understand what
you need to achieve in the current environment. We think
mid to low eights in terms of fully absorbed cost
of production is where it should not, what should not

(03:11):
be exceeded. And then we take the view as a
company that above nine, you'll be profitable. Around 10, you'll
be strongly profitable, $ 10 that is. Below eight, you will
struggle to, as you say, wash your face, but you
won't lose your shirt. And that's the way. Managing a business,
including farming, Andy, is a lot about managing risk. And

(03:33):
to manage risk, you've got to have very, very tight
cost controls when much of the world in terms of
cost is against you. But you do have to control cost, efficiency,
and productivity. We're very, very hot on that in our
own business. And we work hard with our farmers to
encourage them to take the same view.

Speaker 1 (03:52):
Supply chain volatility, Laurie, are you guys experiencing anything?

Speaker 3 (03:58):
Well, there are stress points, Andy, but not points that
are causing us undue concern. I mean, the things we
worry about, can we get the imports that we need?
Can we get the boxes, the container boxes, both reefers
and dry boxes? Can we get those that we need? Yes,
there are cost issues, but availability of them and keeping

(04:20):
the product moving is the first requirement. The costing is
more difficult to do something about, but we manage it.
So we're doing all right. We haven't come across any
critical choke points in the supply chain that are causing
us anything other than what we've expected in terms of irritation.

Speaker 2 (04:41):
Well, the question's there, not the question, I suppose.

Speaker 1 (04:43):
The answer being, for the New Zealand economy, is that
rural is driving anything and everything.

Speaker 3 (04:49):
Oh, well, no question. I mean, anybody who thinks otherwise
clearly probably belongs to the Flat Earth Society, to be frank.
I mean, you can't have imports. You can't import anything.
I spoke to somebody the other day who votes, shall
we dare I say it, significantly centre-left. and are very,

(05:11):
very antagonistic towards farming. I asked that person, I said,
do you have anything in your house of note that
was made in New Zealand? The answer, as we all know,
is probably not. Therefore, do you understand that to have imports,
you must have exports? You must export in order to
create currency to import. That seemed to come as a

(05:34):
bit of a shock to him, which worries me enormously. But,
you know, we're doing all right and New Zealand is
marching now, maybe not so much on the sheep's back,
although sheep meat prices are very good and wool's better,
not great, but better. But we are marching on the farmers' backs.
Of that, there is absolutely no argument.

Speaker 1 (05:55):
Well, you can tell your lefty friend, farmers are asset
rich yet cash poor.

Speaker 3 (06:00):
Well, that's right. Well, of course, that, in a strange respect,
is not that unusual in business. I mean... Andy, you
and I would both know a lot of people in
small to medium-sized enterprises. As your business grows and succeeds,
you need to fund more working capital. It puts more
pressure on your balance sheet. So being asset-rich or your

(06:24):
business growing in terms of a balance sheet does not
necessarily create surplus cash. So, yeah, I mean, the city people,
in many respects, would think that the farmers are rolling
in it. as we all know, most of what the
farmers earn goes back into improving and growing their balance
sheet on their farm.

Speaker 1 (06:45):
Open days, Laurie. MVM's coming up in a few weeks' time.

Speaker 3 (06:49):
Yes, I think, from memory, Thursday the 1st of October.
That'll be a big day. We've had one in Wanganui recently.
We do them on a regular basis. Farmers love them.
We feed them. They get to have a beer if
they want or a wine if they want or a
soft drink if they want. and it gives them an opportunity.
They're not shareholders, but they are stakeholders. So it gives

(07:12):
them an opportunity to see what they are inherently and
essentially involved in. These plants are theirs as much as
they are ours. Our futures are entwined. They love it.
We love doing them.

Speaker 1 (07:23):
Well, the open day, you were telling me briefly off
air about the one held recently at Whanganui. You just
say the reception of these events is fantastic.

Speaker 3 (07:32):
Well, it is. I mean, it just helps farmers understand
how they belong. their place in our business, if you like,
they are really at the centre of what we do.
No milk, no plant, no plant, no jobs, no jobs,
no exports. So the farmers are the key, key, key component.
Everything is about them being able to witness and see

(07:54):
why they're doing things and how we pay them effectively.

Speaker 2 (08:00):
Supplier meetings, how often do you hold these?

Speaker 3 (08:06):
With the exception of mid-winter, when we put a lot
of focus into Mystery Creek field days, we hold them
every three months. The next round of meetings in Taranaki, Manawatu,
South Bend, and all through the Waikato, they are from
mid-September through to the beginning of October. And then we'll
do a big round of Christmas functions through November and

(08:27):
early December. And then we'll go back to farmer briefings
again in March, April next year. So they are critical
to us. We We put ourselves, our senior management, myself,
we put ourselves in front of our farmers on a
regular basis, and we expect them to tell us what
they think. We love it. It's an opportunity for us

(08:47):
to learn, to hear, to learn, to give them feedback.
And we don't tell them necessarily what it is they
want to hear. We tell them what it is we see,
and that seems to work really, really well.

Speaker 1 (09:00):
Just to wrap up, Laurie, your beloved North Harbour, as
Northland rugby deemed you on social media, South Northland. I'm
sure that would go down like a cup of cold sick,
but I'll give you guys kudos. 16 people away last
game against Northland with the flu, vomiting, diarrhoea and the likes.

Speaker 2 (09:17):
You turned around and you beat them.

Speaker 1 (09:18):
And this time last year we had a conversation and
you were saying that Harbour were losing all these games
because they were taking a homegrown approach. Has that been
the case this year?

Speaker 3 (09:28):
Largely, yes, largely. Well, a homegrown approach, which I know
many other unions are doing these days, including, I guess, Southland.

Speaker 2 (09:35):
Kind of.

Speaker 3 (09:36):
But the homegrown approach, Andy, it's the only approach. There
is not the money in provincial rugby, NPC rugby, there
is not the money to throw it around on imports.
So if you aren't committed to a largely homegrown... I mean,
every union will augment their resources... But if you're not
committed to a largely homegrown strategy, you are destined to

(10:01):
fall over.

Speaker 1 (10:02):
What are your words of wisdom for any Stags fan
at the moment who are craving success?

Speaker 3 (10:07):
I'll convert to North Harbour.

Speaker 2 (10:10):
You mean South Northland?

Speaker 3 (10:11):
No, convert to... I mean North.

Speaker 2 (10:16):
Got you there.

Speaker 1 (10:17):
Very good.

Speaker 3 (10:18):
Well done.

Speaker 1 (10:19):
Hey, Laurie Margrave, Chairman of Open Country, thanks as always
for coming on, having you out on the muster.

Speaker 2 (10:24):
Great to catch up with the team.

Speaker 3 (10:26):
Always a pleasure, Andy. You take care.

Speaker 1 (10:30):
Laurie Margrave, Chairman of Open Country, and a good sport
as well to boot.

Speaker 2 (10:36):
Chris Dunn is up next of Southland Federated Farmers. He'll
listen to the muster.