Gourmet Mokai Ltd is the result of a joint venture between two Māori entities and a partner. The company operates a state of the art climate-controlled glasshouse for growing, harvesting and selling tomatoes and capsicums to New Zealand and export markets. Gourmet Mokai has 50 fulltime employees and comprises a 5.5 hectare glasshouse plus grading and packing facilities on Māori land near Taupō.
The linking of the partners was organised by HortResearch who acted as an intermediary between Tuaropaki Trust and Gourmet Paprika Ltd. Gourmet Paprika had international market demand to meet all year round and was looking for a way to be competitive in the market by reducing costs on key inputs such as heating and CO². Tuaropaki was looking for options to commercialise its resources, namely geothermal energy, land and labour. It was also looking at further ways of getting an economic return on steam. The parties got together and decided to build the glasshouses. The venture was to produce primarily for an international market.
Gourmet Paprika Ltd brought horticulture expertise and Tuaropaki was able to provide a key input for the project - geothermal energy for heating. The Hauhungaroa Partnership was identified as a third investor because of its close ties with Tuaropaki, including a number of trustees who had roles within both Trusts. Additionally, being whānau, both Māori entities shared interests within the area.
The process for making a decision to enter the venture was to create a 'cost equation' that was agreeable to everyone. There was a significant level of financial analysis based on the cost and returns associated with producing and marketing fresh produce. Budgets were then drawn up to represent the resources brought to the deal by each party, and an agreement on a mutually acceptable return on the steam was agreed upon.
Gourmet Mokai is now the 'grower' with secured premises and distribution channels through its various venture partners.
Gourmet Mokai's current greenhouse system is a Dutch system, which is recognised for its high-end technology. It is also highly transportable and so anyone can set one up. The biggest market is the international market, although Gourmet Mokai also provides for the domestic market.
The market is highly competitive both domestically and internationally. The current business is leveraged off an established customer base built up over a decade by Gourmet Paprika. The greenhouse occupies Māori land subject to Te Ture Whenua Māori Act 1993. It is leased to Gourmet Mokai and that lease is registered with the Māori Land Court.
Gourmet Mokai does well competitively as the venture partners provide many of its key inputs, including geothermal heating energy which is supplied directly. The glasshouse produces 2,500 tonnes of produce per annum.
Gourmet Mokai has also recently invested in box making machinery which reduces costs by saving time. Previously the boxes would be delivered pre-made, but many would come apart and needed to be re-made again wasting time and money.
The three-way joint venture is governed by a Shareholders' Agreement. The overall governance remains with Gourmet Mokai's Board of Directors. It currently has four directors. Gourmet Paprika and its subsidiary New Zealand Gourmet Ltd appoint a director each with the balance being appointed by Tuaropaki and Hauhungaroa. Gourmet Mokai has alternate directors but has not yet considered a succession policy.
The appointment of directors from the different entities brings different skills and expertise to Gourmet Mokai. Gourmet Paprika owns and operatesthe glasshouses so it provides glasshouse expertise. Gourmet Paprika's subsidiary, New Zealand Gourmet Ltd, provides all marketing, management and distribution expertise and relationships. Tuaropaki brings knowledge of land, capital, heat and governance. The current Chairman of Gourmet Mokaiis Brian Jones, a Trustee from Tuaropaki. Hauhungaroa is an investor in the project and also provides governance support through Samuel Andrews Jnr, a current member of the Hahungaroa Partnership Management Committee.
The directors of Gourmet Mokai endeavour to meet every Tuesday at the glasshouse to discuss general business and operations. These weekly meetings provide an opportunity for regular discussions. Additionally, the board also meets quarterly to review budgets and discuss any conflicts of interest and other key issues that may have arisen. These meetings are a platform for open discussions on a range of issues.
All the joint venture partners maintain good relationships with external and internal advisors. Additionally, Tuaropaki and Hauhungaroa have responsibilities to their owners and are required to meet their own consultation requirements for their appointing organisations. Each director is required to report at monthly meetings of their parent companies. There is always an ongoing rapport at a personal level between the key people of the Partnership, reflecting trust and respect. This is picked as a key component for the success of the business by Phil McKinstry, current director of Gourmet Mokai, who says that "You can have all the skills and finance in the world, but if you don't ensure that the core relationship is based on trust and respect then being a successful venture becomes a lot more difficult".
Currently there is no register to record conflicts of interest. These are dealt with as they arise and are discussed at the Board's quarterly meetings. They are dealt with in accordance with best practice and according to the agreement operating between the shareholders and the company.
Gourmet Mokai's core purpose is to be low-cost, efficient and competitive. A primary strategy, therefore, has been to be sited with ready access to key inputs. Gourmet Mokai is targeting the premium end of the market by producing a high value product and it is always assessing the suitability of new varieties and crops.
Gourmet Mokai is currently working on a Research and Development project with Tuaropaki Power Company Ltd to understand the potential to harness CO² gas. The gas is emitted from the power station as a by-product and Gourmet Mokai is looking at ways to reuse it in the glasshouse. Technology NewZealand has provided the company with a grant to assist with the project. Another current research project is looking at ways to use geothermal steam for heating by converting steam into hot water. This is a first in this part of the world.
Gourmet Mokai has a number of processes in place to look after the integrity of the crop. For example it has a biologist who inspects the fruit. This person is responsible for looking after the health of the plants and preventing diseases. Additionally, the temperature, humidity and light intensity in the glasshouse is continuously monitored by a computer system.
Gourmet Mokai employs a person who is responsible for OSH compliance. He is the interface between OSH and Gourmet Mokai and ensures the company complies with legal requirements. The company has recently undergone an OSH audit with positive results.
Branding, export and distribution is looked after by the head office in Auckland (New Zealand Gourmet Ltd). Gourmet Paprika provides management expertise and insurance policies (but only for fixed assets, not the crop).
Gourmet Paprika provides management services to Gourmet Mokai via a Management Agreement. Gourmet Mokai currently employs about 45–50 people full-time through standard employment contracts. The employees are primarily from the surrounding district and 80% of the workforce is Māori with the balance mainly being Pacific Islanders.
Gourmet Mokai has a formal Human Resources Manual. An item worth noting in the manual is that it provides processes for ensuring that the health andsafety of the workers is formalised. Gourmet Mokai has a policy of 'best person for the job' but uses a three month period to identify exactly where a worker's expertise lies.
The Production Manager, who has a horticultural background, oversees the day-to-day operations. He lives on-site and is supported by a small management team. Since this is a new business, staff are promoted quickly into more senior positions. For example, the current personnel manger was initially hired as a glasshouse worker.
Senior staff and key operators are given a set of objectives to achieve and have informal key performance indicators (KPIs). As an incentive, staffare paid on a quantity basis, for example pickers are paid by the kilo, and pruners, twisters and layerers are paid by the row (there are over 300 rows). The manager's performance is measured against the productivity of the staff and crop.
The Māori venture partners had additional obligations to fulfil with their owners before they could make a final decision to enter into the project. Hauhungaroa and Tuaropaki went back to their shareholders and consulted with them to get agreement on the proposed investment. This was an investment down a new path. Both partners were experienced in pastoral farming so they had to quickly come to grips with this diversification.
The partners developed a huge degree of trust, particularly regarding delivery of what each party had promised. Two years on, it is this relationship that is the key to the success of the business venture. As Brian Jones points out "…the glue that binds us is more than legal documents governing the project, it is about a common vision of wanting to grow and become profitable".
Tuaropaki was keen to diversify into a different land use, which is clean and green, environmentally friendly and produces no pollutants. Incidentally, Gourmet Mokai endeavours to run its business on a low chemical regime. The business relies on integrated pest management by using natural predators for pest control and bees for pollination. For example, predatory mites are used to control the main pests.
The services provided by the joint venture partners are dealt with through legal agreements and conflicts are managed through these agreements. Gourmet Mokai relies on professional external advisors who can provide specialist advice for an objective view on any problem.
Last modified: 2/06/2011
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