Wairarapa Moana Incorporation is a successful farming and forestry venture owned by over 3,000 descendants of the original owners of Lake Wairarapa. During the 1880s Lake Wairarapa and the surrounding lands were confiscated. In 1916 the original owners agreed to take over a block of land in the South Waikato near Mangakino as compensation. The land was predominantly bush and scrub but over the years it was converted into forestry and farming.
Mangakino township was later established on part of the land when the Government was establishing New Zealand's hydro electricity scheme. The farming operation was originally run by a trust known as Pouakani 2 Trust. The township land and forestry business were run by the Mangakino Township Incorporation.
On 1 July 2002 the trust and incorporation were amalgamated and Wairarapa Moana Incorporation was formed. Kingi Smiler is the Chairman and Executive Director of Wairarapa Moana Incorporated. He is a chartered accountant and former partner in accountancy firm Ernst and Young. He has extensive experience as a business management consultant specialising in corporate restructuring. Kingi is a shareholder in the Wairarapa Moana Incorporation and has been involved "on and off" since 1990. He was appointed Chairman in 2000.
The other committee members are Mr Ron Mark (Deputy Chairman), Ms Arawhetu Peretini, Mr Fred Karaitiana and Mr Paora Ammunson.
Wairarapa Moana is a Māori incorporation governed by the Ture Whenua Māori Land Act 1993. As such it falls within the jurisdiction of the Māori Land Court and all legislative regulations governing incorporations. The Incorporation does not own any subsidiaries but has entered into joint venture partnership arrangements.
As already outlined, the farming operations were originally part of a separate trust and the forestry and township sections were part of an incorporation. There were various attempts to amalgamate the two organisations over the past 75 years and this was finally achieved in 2002. The owners found the Incorporation structure to be more flexible than a trust structure and agreed to amalgamate operations into a single Incorporation.
The Incorporation had to stay under the Act but all operations are now part of a single organisation. The Wairarapa Moana Incorporation now has about 3000 owners on the register.
The Incorporation operates a shareholder office in Masterton which maintains the owners register and deals with shareholder inquiries. This office also provides secretarial services for the Board.
The farming operations are governed by a three-member board, two of whom are appointed from the Incorporation's main board. It includes an independent member appointed for his farming expertise. The Incorporation has a large farming operation valued at around $55 million. Kingi explained, "This is why we have employed a highly qualified and experienced management team to run the farm." The Incorporation has total assets of approximately $85 million.
Kingi believes the current structure is the most cost-effective management structure available to them at the present time. While the farming activities is a hands-on operations requiring active board and management input, the other investments in forestry, property management, porfolio investment funds and off-shore farming are managed directly by the joint venture partners or investment managers who report directly to the board.
The core purpose of the organisation is to manage and grow the assets of the Incorporation and to pay adequate dividends to the shareholders. The major commercial activities currently are farming and forestry.
The shareholders have agreed that the social development activities are separated from the commercial activities and managed by a separate organisation. The social development organisation is the Wairarapa Moana Trust. The Incorporation allocates funds to the Trust and these funds are used to provide cultural, social and educational scholarships and marae grants.
The board has recently developed a new strategy to diversify the incorporation's assets and add value to its current portfolio. The board is seeking to develop added value farming and forestry products rather than just providing basic commodities. The board is also examining other export potential areas such as fishing to provide a new sustainable earnings base.
The Incorporation's businesses are covered by the normal regulations governing farming and forestry. Kingi notes that like all other farmers they must comply with the Resource Management Act and the Kyoto Protocol.
In order to carry out its business the Incorporation recognises the need to develop good relationships with key industry bodies such as Fonterra and the Wool Board. Kingi notes the board needs these relationships to know what is happening and how to influence change. The Federation of Māori Authorities networks are very important as are other farming networks which enable the Incorporation to develop business opportunities for mutual benefit.
The Incorporation originally consisted of a seven-member board. However, this was reduced to five. Kingi believes this number has proved to be enough for the nature of the business currently undertaken. The board was restructured to drive the Incorporation's businesses and commercial initiatives more efficiently.
Board members are spread all around the country. Kingi is the chairman and executive director appointed on a separate contract arrangement. This role is to overview all aspects of the Incorporation's business.
Board members are elected for three-year terms at the annual general meeting. Nominations are required to be notified 45 days ahead of the AGM and each nominee's curriculum vitae is circulated to shareholders. A postal vote is held up until the day before the AGM. Final voting takes place at the AGM. Board members are elected from the accumulated votes from the two processes. It is a very well managed and designed to be transparent.
Kingi notes that, to a large extent, the board has no control over its skill make-up because members are elected. However, it is raising the benchmark of performance and Kingi believes shareholders will start demanding even higher performance as a result.
The Incorporation tries to get its board from the shareholder base and it has looked at bringing in people with the expertise required for running a commercial enterprise like Wairarapa Moana Incorporation. As Kingi notes, "If we can't find the required skills within the shareholder base we find the expertise outside."
The board recognises the need for self-development and all attend the Institute of Directors governance training course. Additionally, members will undertake development initiatives to understand the farming business including on-farm visits. This is the same for all the organisation investments and includes education and mentoring.
Kingi estimates about 300-400 people attend the annual general meeting. All "major issues" go to the shareholder votes and Kingi notes they always have the ultimate power. He continues, "But from the other side of the coin we need the ability to carry out our business efficiently. It is a fine line - when do you decide to go to the shareholders?" The shareholders approve the overall business plan and strategic direction and the Board must be held responsible for implementing it.
The board's overall performance is rated on the Incorporation's financial performance. According to Kingi, the shareholders are becoming more demanding in this area. He notes, "As you become more transparent and accountable, the shareholders demand more."
In terms of seeking an ideal board member, Kingi believes that the shareholders must be able to trust them. They must have good strategic skills, intellect and judgement. They would preferably bring previous governance experience and it would be highly desirable to have business and commercial skills. In addition to this they must be good team players with excellent communication skills.
Kingi notes there are a number of risks in the commodity business as they have no control over prices, the weather or global supply and demand. These are major challenges and risks. The Incorporation has no direct competition as such because all farmers are in the same boat. However there is competition in terms of production and productivity levels and cost effectiveness to stay in the game long term. There is always competition for skilled staff and workers.
There is a need to manage the business conservatively due to the uncertain nature of the business and to ensure continued profitable operations during periods of low commodity prices and high exchange rates. As Kingi notes, "We need to be able to ride out the hard times and still pay dividends."
There are pressures created by the Resource Management Act and Kyoto Accord as well as consumer perceptions. The costs of compliance are becoming higher and more challenging and Wairarapa Moana Incorporation recognises it must keep up to date and ensure cost compliant systems and processes to avoid problems. The board positions its business appropriately to meet challenges and "to stay ahead of the game." The environment is a big issue. The board and management team are constantly examining farming practices and being conscious of sustainable management and environmental sustainability. This involves constantly looking ahead for possible changes or additions to the regulatory regime.
The board has five-year plans and objectives. Performance benchmarks are established and are constantly reviewed and updated, the most recent change being the adoption of a diversification investment strategy. All the goals have stood the test of time. The board undertakes this process with the management team and annual reporting is done against the plan and reported to the shareholders. This is a very effective process and the board has achieved all of its goals to date. This keeps raising the benchmark.
There is a clear separation between governance and management. Board members are apprised of management issues and performance at monthly meetings. Additionally, all board members interact with management on an "as required" basis.
All contracts are performance based and reviewed annually. Kingi notes that the Board "runs the show" and makes the final decisions. "At the end of the day we are responsible to the shareholders and therefore make the final call."
Board members attend key industry meetings and seek out key industry players to hold them accountable for their particular roles. The board also works strategically with FoMA for Māori representation on industry boards such as the Meat and Wool Boards.
Kingi believes there needs to be ongoing advocacy through FoMA on matters to do with land based industries. He is concerned with the current tax regime and believes more work needs to be done to ensure appropriate tax changes are being made which do not disadvantage the Incorporation.
Essentially he believes Government needs to listen more as to how "industry good" and "public good" funding is dispersed. He gives the examples of the Kyoto Accord and gas tax as initiatives designed to accommodate the public good, yet they unfairly penalise farming operations which also produce food and export earnings for the public good. He believes it is important that Government does not over tax these primary-producing industries. Additionally Kingi believes the cost should be shared over the entire system from producer to consumer, not just at the producer end.
Kingi believes a successful Māori business creates shareholder pride in performance and recognition of their business. The performance of the business would be acknowledged by peers in the industry as being successful. It would also be an industry leader.
Kingi believes that Wairarapa Moana Incorporation is making good progress. As Kingi explains, "We are successful in terms of where we've got to and we continue to develop. Over the last three years we have achieved our goals quicker than planned but this simply raises the performance benchmark. We seek to improve performance year after year."
NB: Pouakani 2 Trust amalgamated with the Wairarapa Moana Incorporation on July 1, 2002
Last modified: 15/06/2011
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