Words by Brett Haldane, images by Laney Mahuika-Willis
Newly appointed Ruralco Director Andrew Barlass has spent the last few years returning to his roots, in more ways than one.
Andrew was welcomed to the Board at last November’s AGM, however his connection with Ruralco is longstanding. The family membership goes back to the co-operative’s establishment days. Andrew’s grandfather Ray was a foundation member and the family still use the membership number issued in the first 500. That commitment and relationship remains as important today. “I grew up in a world where farmers did it tough. Coming out of the 80’s life was pretty difficult, and the banks weren’t out to make friends. Co-ops were there for you during those times because they had, and still maintain a strong shareholder focus.”
Andrew is totally committed to the co-operative business model, yet ironically, much of his career has been in the world of corporate finance where large scale organisations are geared towards optimising profit. Growing up in Methven, educated at the local schools, a healthy interest in business and finance led to Canterbury University and an honours degree in Economics. He had holiday work during school and university at South Pacific Seeds. This was a valuable introduction to the wider Mid Canterbury farming industry and a specialised field totally different from the family farm. In his final year at Canterbury a friend encouraged him to apply for an internship with Credit Suisse First Boston (now the investment and advisory group Jarden), and this summer experience led to a job offer. “The next 15 years kind of just happened. I got to see the world, work in Auckland, London and Sydney, meet some amazing people and work on some fascinating transactions”. However, the transactional focus of mergers and acquisitions left Andrew with a desire for longer term connections. “You come in and help buy or sell a company, work very intensely with a management team, but in the end leave them to carry on with their own business plan.”
While working with Deutsche Bank New Zealand in Auckland, he was presented with an opportunity to transfer to their funds management business in Australia and it was here Andrew cut his teeth in governance roles, managing clients’ investments. While working with large and complex organisations, where the board is surrounded by a strong management team, Andrew had the space and challenges to develop real governance capabilities. “We’re there to provide direction, and importantly, allow the CEO and management the freedom to conduct the business day to day”.
This governance experience was one of the platforms that supported Andrew’s application to join the Ruralco board, and it has been valued elsewhere too. With a history alongside infrastructure, since returning to Mid Canterbury Andrew has also taken up a directorship with Ashburton Contracting.
A strong belief in the co-operative model is clearly another reason he’s a great fit for Ruralco. Andrew is also a Director at EA Networks – the only co-operatively owned lines company in New Zealand. “It drives a very interesting dynamic around the board table because we’re a co-operative. While we have all the usual discussions the focus is on achieving the best outcomes in terms of cost to serve, service levels and reliability for customers, not the bottom-line profit. We still need to be profitable, but it’s tempered by a broader view of shareholder value. It’s a really fantastic company, delivering great outcomes for customers in Mid Canterbury”. By way of comparison Andrew recounts childhood memories of the power being out for days after a big wind or snow event, whereas now it can be back on in a couple of hours. Interestingly, Andrew was the recipient of an EA Networks Scholarship in his final school year, and he is now enjoying the opportunity to ‘give back’ to this local co-op.
More recently, Andrew’s previous governance role with the Melbourne Airport has led to a board appointment at Christchurch International Airport. Taking on a portfolio of directorships is not unusual, and the wider governance can be advantageous – for example through cross pollination of best practice or exploring business synergies. The last two years have really shone a light on the importance of this aspect of governance, as different industries and businesses have grappled with the everchanging challenge of the Covid pandemic. “There’s a variety of people juggling other roles on our board, and there are different farming sectors represented – so it’s great to see that diversity and exposure to other organisations, within Ruralco’s governance.”
Andrew and wife Sarah returned to Methven from Sydney in 2017 with their young family. While Andrew was leaving funds management, Sarah’s career was in law. The primary motivation was a desire for their children to grow up with the sort of outdoor life experiences they had growing up and access to extended family. “Our eldest was turning five, and we wanted her to have her schooling in New Zealand. That was a prime motivator, but Dad was ready to transition the management of the farming business as well. The family farm consists of two properties, Dalkeith and Kowhai, each located between Methven and the Rakaia Gorge. Ownership of Dalkeith dates back to 1947, when Andrew’s grandfather bought the land. Initially it was run as a traditional mixed farming operation with a herd of about 50 milking cows, sheep, and mixed cropping. However, over time the farm transitioned exclusively into sheep farming with a Coopworth flock. New Zealand’s dairy boom still lay ahead but in the early 90’s Dalkeith added heifer grazing to the system. Eventually Dad said, “We should be doing this ourselves!” “The sharemilker model worked well because Dad was regularly off farm and overseas with other business interests and he had had some health issues which made some animal handling aspects of farming difficult.”
Their switch to dairy in 1997 was still one of Canterbury’s early conversions, and Dalkeith’s 210ha milking platform now supports 675 cows. The remainder of the farm is reserved for young stock and winter crop. “The benefit of our system is that we’ve got 280ha accessible from the cow shed, so we rotate that winter crop through the milking platform over a seven or eight year period, giving an opportunity to re-grass at the same time.”
Kowhai, which was purchased from the Wightman family and converted in 2012, is now running 750 cows. It’s a recent return to milk because the property has a rich history in dairy. It’s thought it was the country’s largest dairy farm at the beginning of the twentieth century, milking around 500 cows with its own cheese factory.
Both farming operations involve sharemilkers. This allows the Barlass family to focus on the non-milking side of the operation including young stock, winter crop, silage, and maintenance as well as the longer-term farm strategy. “I’m very aware of letting Al and James get on with their business – the livestock side of the operation, the milking herd, pasture management and their staff,” Andrew told ‘Dairy Exporter’ Magazine during a recent interview. Within that article you also get a real sense of Andrew and his father David’s approach to farming; it’s experimental and analytical. “I don’t really have any preconceived notions, and I haven’t been taught a particular way of doing things – but I respect the years of science and experience that underpin our farming systems. It’s good to be curious, to be open and be prepared to try something different if you’re analysing what effect that’s having. That is something I have observed and learned from Dad.”
Methven’s climatic patterns bring uncertainty; while there’s enough rain to negate the need to irrigate, pasture growth rates aren’t as predictable up close to the foothills. To illustrate Andrew shares a quote he attributes to his father, David. “We always grow about the same amount of grass in a year, we just never know when it will come!”
Clearly, the Ruralco board will be well served by Andrew’s dairy and wider business experience. His appointment comes at a time when the industry is under pressure. He’s concerned about the lack of advocacy for farmers, particularly when it comes to the greenhouse gas debate. Methane is a short-lived gas, relative to CO2, and New Zealand has led the way by adopting a ‘split gas’ approach within its Zero Carbon Act. However, it’s a view seemingly not shared on the world stage, as demonstrated at the recent COP26 Summit, where New Zealand joined more than 100 countries in agreement to slash methane emissions by 30% (of 2020 levels) by 2030.
“A static herd of ruminants has minimal warming impact even though at face value emissions are high. The science has been there for a while, yet the position that agriculture is responsible for 48% of our greenhouse gas emissions in New Zealand persists. While technically correct, if we are going to solve the warming issue, we need a more nuanced discussion that recognises the relative warming impact of constant emission stream of CO2 vs methane”. He worries that a shift from dairy farming, and therefore available protein and other nutrients through milk and meat, will see the demand for processed foods advance further. It’s a position he sees as a worse outcome for the population’s health, the environment, and the land. “That said, we shouldn’t shy away from our obligations: we do have issues to tackle, and if we can also reduce methane then that’s a good outcome.”
Andrew would like to see recognition that farmers are in a position to help with global cooling, through herd management, with positive incentives put in place – rather than the threat of taxes. “The milk production from the bottom 10% of your cows versus the top can be significantly different. Now that the herd size is static, or even falling, we’ve the opportunity to be more selective and remove poorer performing cows, while continuing to breed for and improve performance trait.” He likens the current situation to that of the sheep industry in the late 80’s, where over time, the animal population shrank significantly without impacting the amount of lamb produced. “I think the dairy industry is at the start of that same cycle. It’s a journey that requires care. Pushing too hard on production per head can have unwanted results in terms of animal health and fertility.” However, Andrew believes the sector has a real opportunity to improve performance within the national herd.
Finally, when asked about Ruralco, and its markets, Andrew is struck by the unique conditions the co-operative finds itself in while Covid-19 continues. “It’s an interesting time. Now that our regional borders are down, and people are holidaying, the disease will spread within the community. So, you need to be ready, for example thinking through what self-isolating really involves, what it means for your business, and how you’ll continue to operate.” Consequently, he sees the first quarter of 2022 as challenging, very aware members are also managing changing labour input costs, and Ruralco’s team are working hard to ensure ongoing product supply to farms. However, despite the pandemic he remains upbeat, confident in the co-operative’s strength and adaptability. “We have a very loyal membership, and on the flip side there’s always opportunity to find new ways to serve your customers well – and the Ruralco Card is a convenient way to introduce new services.”
Andrew Barlass has gone from the farm to corporate finance, and back again. Ruralco welcomes him home, and onto the Board.