Forty-Seven The Age of Aquarius 1997

CHAPTER FORTY-SEVEN

The Age of Aquarius

Tediously long to say and a marathon to write are some of the criticisms levelled at the name of this ancient trading company. The Farmers’ Co-operative Organisation Society of New Zealand Limited has been truncated into various abbreviations and acronyms over the past 82 years for promotion and general reference purposes. It has been called, FCOS, the Co-op, Coop, COP and Farmers’ Co-op, but most staff could readily and with a certain amount of pride and confidence recite precisely the full and correct version. It was derived from what was in the early 20th century a standard format for trading enterprises of a co-operative nature. The fact remains that the Society was never a true ‘co-operative’, having been incorporated under the Companies Act 1908, and it included the word ‘co-operative’ in a desire to express the ideals and spirit of cooperation of its earliest guardians. A co-operative company is one established to allow the owners to carry on business on a mutual basis. It is a company incorporated under the Companies Act 1993 that applies for registration under the Co-operative Companies Act 1996 in order to operate as a co-operative. Only a co-operative company may have the word ‘co-operative’ in its name. Consequently with the Farmers’ Co-op company registering a new constitution to comply with the new Companies Act and looking forward to being listed on the New Zealand Stock Exchange, the time had arrived for change and the name that had been known to every Taranaki household was about to disappear into the pages of history forever.

Having rebranded the company in 1986 as Taranaki Farmers, and subsequently in neighbouring provinces King Country Farmers and Waikato Farmers, finding an alternative name was easier than expected. The name Allied Farmers had first been used when Doug Hazard, then chairman of North Auckland Farmers, was instrumental in merging that company with Farmers Auctioneering Company in the Waikato, which then became Allied Farmers Limited. Doug Hazard and David Simpson had been chairman and chief financial officer of the former Auckland-based Allied Farmers Ltd and as both had been pivotal to returning Farmers’ Co-op to a profitable operation it was considered appropriate that they be honoured by using the same name. David Simpson said: I researched the availability of the name because I knew that Elders had taken over the old company. To my surprise I discovered that they had discarded the name Allied Farmers. So as to preserve our anonymity I arranged for an unrelated Chartered Accountant based in Auckland to register a company of that name. This company remained dormant until the time was right to acquire it. With David Simpson’s foresight in protecting the name, it was available and ready to use. The cover of the annual report proudly displayed: ALLIED FARMERS LIMITED 1997 ANNUAL REPORT With a new name, a revised constitution, expansion into the Waikato and King Country, and a

New branch store, Glover Road Hawera. Occupied from 1998–2006.

clean slate with the accumulated 1988 losses of $10.5 million finally extinguished after six years, the company was heading towards the end of the century with confidence; the Age of Aquarius seemed actually to have arrived. Although the 1997 year had produced an increase in market share the company’s final results were disappointing, with a net result after tax profit of only $33,000. But coming out of the woods was never going to be easy and much had been achieved. In 1998 the relocation of the Taranaki Farmers Hawera farm supply store situated in Princes Street for the past 56 years to new ‘spacious and attractive’ premises on Glover Road in February 1998 for $600,000, showed a commitment to the future and was one of the highlights of the year. The Princes Street building, purchased in 1942 from New Zealand Loan and Mercantile Agency Company, had been sold to a consortium to build a twin-screen theatre complex, Cinema 2. The small farm supply store in the Wanganui woolstore was also closed as the operation was considered to be badly situated and small. A corner section adjacent to the Stratford branch on Regan Street, the site of the old Plaza Theatre which had been renovated to include a drapery department downstairs and upstairs offices, then purchased from Kerridge Odeon to enlarge the present store in 1969, was sold to Shell for the construction of a large modern service station.

May 1998 saw yet another general manager depart, when Mr Peter J. Burt was farewelled by the board after spending three years and three months with the company. The chairman said that ‘industry-wise’ they had not been easy years, ‘and expressed appreciation for the effort put in, and wished Peter and his wife, Esme, all the best in their travels and the future’. His replacement, Paul A. Macfie, had 23 years in the agricultural servicing field, including senior management positions in the stock and station, meat, and fertiliser manufacturing industries. With a Bachelor of Agricultural Commerce degree from Lincoln College and as an Associate of the Real Estate Institute he brought a wealth of experience to the role of general manager. He had served four years as a stock agent at Ranfurly in the South Island for Wrightson NMA, moving to Invercargill to the position of finance officer, then to Hastings as finance manager and back to Gore as branch manager. In 1993 he was appointed general manager of Livestock for Fortex in Christchurch and the following year general manager for Southfert at Invercargill. Joining Allied Farmers Ltd in 1998 as general manager he hit the boards running, at a time when the company was well on the road to recovery. His wide experience would have a significant impact on the company during his time at the top.

South Port NZ Ltd chairman Rex Powley commented in the 1999 annual report on his company’s divestment of interests associated with the rural sector,

it is with a great deal of satisfaction that we report on the South Port Board and management crystallising a number of significant achievements over the last 3–4 months. First, in early June 1999 shareholders became aware that the way had been cleared for settlement of the Allied Farmers share buy-back by that company. Litigation commenced by a third party had delayed the advancement of this transaction and South Port was pleased to be able to advise that it had successfully defended the court action.

He also reported the sale of South Port’s residual shareholding in Clifton Wool Scour which, ‘reflected the realisation of the final significant non-port asset held by South Port and substantially completed the company’s exit from the rural sector.’

South Port’s decision to focus on its core business and marine resource and sell its shareholding in Allied Farmers Limited necessitated calling a special meeting on 8 February 1999 to obtain consent from shareholders to purchase South Port’s shareholding at $1.65 per share. Under the false apprehension that Allied Farmers did not have the ability to buy back the shareholding, South Port had another buyer, whose name was confidential, in the wings, and this forced Allied Farmers to impose the pre-emptive rights clause in the original agreement to repurchase 2,873,074 shares held by Opawa Investments Limited (a wholly owned subsidiary company of South Port New Zealand Limited). Despite an injunction sought to restrain the company from holding the shareholders’ meeting and a further injunction requiring Allied Farmers to approve a transfer of shares from South Port to the proposed purchaser, the court ruled that the meeting could go ahead. Share transfers relating to the South Port shareholding were frozen for 14 days, with a date set for a full

Directors and management at Hawera saleyards: Peter Cook, Paul Macfie (general manager), Garth Cowie, Rick Bettle, Brian Train (chairman), Paul Harris (deputy chairman), Stuart Collie, Mike Cashin, Trevor Harrop (company secretary).

hearing for an interim injunction set down for 19 February 1999. The resulting poll at the meeting returned a positive result: Votes for 2,383,774 representing 1,241 shareholders. Votes against totalled 15,545 representing 8 shareholders. This represented a 99.35% vote in favour.

With a mandate from shareholders to move forward, the final hurdle was to retire all bank debt, amounting to $6 million, and re-purchase 2,873,074 shares from South Port at $1.65. This was achieved when Michael Cashin suggested that the board take advantage of what is said to be one of the world’s oldest forms of finance, ‘factoring’, which effectively involves selling the company’s invoices in return for immediate payment. A recipe of mixing grassroots with corporate professionals was now beginning to provide the essential ingredients to meet the growing needs of this old provincial trading titan as it moved into its third century of trading in Taranaki and neighbouring provinces. In this case its own subsidiary, FCOS Finance Ltd, purchased Allied Farmers Ltd debtors’ ledger on a factoring basis and realised sufficient funds to repay the bank debt and purchase the shares. In many respects this was a significant turning point for the company; it was now able to stand alone without being propped up by banks and a southern cornerstone shareholder. Settlement was March 2000, with South Port directors Collie and Harrington to retire upon the sale becoming unconditional on 23 March.

Sadness and a great sense of loss accompanied the chairman’s report to the board on Tuesday 31 August 1999 when he advised directors of the death of Paul Harris, one of the most distinguished gentleman to sit on the directorate in the modern era. He had played a crucial role in the survival of Allied Farmers Ltd and without Paul’s and Roy Lithgow’s intervention it is doubtful that the company would have survived. His outstanding credentials provide an insight into a man who left his mark on the district of South Taranaki. Qualifying for admission to the New Zealand Society of Accountants at age 19 he was unable to be admitted as a member until the age of 21. Awarded Fellowship status in 1984 he served on the Taranaki branch committee of the Society, including two years as chairman. He had been a Hawera Borough and District Councillor, a member of the Hawera High School Board of Governors, recipient of a South Taranaki Citizens Award, member of the Hawera Harness Racing Cub Committee, a Life Member of the Hawera Racecourse Committee, and president of the Hawera Harness Racing Club. He was also chairman of Hawera Mainstreets Committee, Cinema 2 Limited, Cinema 2 Properties Limited and member of the syndicate responsible for the development of the Cinema complex in Hawera. His service to Scouting was outstanding, with many achievements over a 51-year period, including appointments of Area Commissioner from 1995 until his death. He was the New Zealand delegate at many Scouting conferences throughout the world, including Melbourne, Paris, Bangkok, Oslo and Hong Kong. He also produced 17 gang shows with a cast of 70–80 scouts and adults. He was awarded the Member of the New Zealand Order of Merit for his outstanding service to the community in 1999.

The enormous and highly valued contribution made by Paul Harris will be remembered through the Paul Harris Memorial Fund, established by the company in 2001 using the proceeds of an insurance policy, covering the cost of replacing key personnel in the event of premature death, as a tribute to him as an employee and director. The fund provides that interest and income over the inflation-protected original sum is available for staff and children of staff to receive a grant for Outward Bound character-building courses or tertiary education. Trustees call for applications annually.

Paul R. Harris, deputy chairman of directors of The Farmers’ Co-operative Organisation Society of New Zealand Limited, 1987–99.

Douglas L. Hazard, former Scheme manager and director, also passed away during 1999. His outstanding judgement, leadership and corporate expertise led the company out of the mire in 1987 under the Scheme of Arrangement. He was held in high esteem by all who knew him and Allied Farmers was deeply indebted to this man – truly one of New Zealand’s most accomplished and successful financial managers.

Known to many as Nolan’s buildings, the site of the Company’s Head Office in Regent Street, Hawera for the past 65 years was about to pass into the pages of history when the Warehouse retail outlet sold the freehold to the building, forcing a move from what had been the nerve-centre of the company for most of its history. A decision was made to lease the area above what had been the Post Office in Princes Street, Hawera to house the Head Office. Coincidentally this was about one hundred yards from where Gillies and Nalder and subsequently Farmers’ Co-op established offices in what was the South Taranaki Winter Show Building in the first decade of the century. Out west at Opunake, a new farm supplies store was built at a cost $600,000. During a board discussion on the project, a director who resided in a city asked what the resale value of the building would be after completion. He was advised that Allied Farmers would be lucky to get $400,000! The fact is that few, if any, commercial buildings built in small rural towns would realise the construction cost immediately following completion.

Real Estate has been part and parcel of the company’s business portfolio, but the division had always been a relatively low-profile operation, with a few agents working out of small offices within the three branches situated at Hawera, Stratford and New Plymouth with no window displays or visual profile. Throughout the past century the main focus had been rural properties sales, although the chairman commented in 1981 that, ‘the urban scene, particularly in New Plymouth, has enlivened in the past six months, with substantial clearance of house listings created by the build-up over the latter 70s.’

The fortunes of the Allied Farmers Real Estate division fluctuated with those of the economy, but it was generally a very satisfactory adjunct to the other divisions of the company and valuable knowledge was able to be passed on of potential property movements in the respective districts. During 1999 the company made significant changes to its operation, firstly acquiring the real estate business of Selwyn Metcalfe in Hawera and appointing Selwyn as branch manager, and relocating the real estate division from his former premises, situated at the corner of High and Victoria Street. Selwyn had worked for the company in 1981/82 and resigned to set up a real estate office, purchased from another former employee of Farmers Co-op, the inimitable George Ranford. Another major move during the year was to join the First National network, which specialised in local real estate and agents with local knowledge, with a national network of support linking up with 90 other offices to take advantage of referrals, and marketing campaigns with first-class training opportunities. The company purchased First National Real Estate in Palmerston North and J P Morgan Real Estate in Feilding in 2003, but the Manawatu operation failed to live up to expectations and that connection was severed.