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Māori agribusiness giant stirring

Keith Newman08 July 2013

Keith Newman discovers a visionary plan to get Māori primary producers thinking beyond the gate will require youth to re-engage with their rural roots and trustees of disparate landholdings to operate collectively.

Re-energising the Hawke’s Bay Māori economy may be like attempting to wake the sleeping giant Te Mata O Rongokaka. In the giant’s shadow Māori grew a wide range of produce and such vast fields of export wheat at the dawn of the 1850s, that missionary-politician William Colenso dared not tell his peers “lest it be thought improbable”.

There’s a groundswell of opinion that the land-based regional economy remains dormant, largely because the current approach to job creation, training and land ownership is stifling Māori entrepreneurialism.

However, greater collaboration around smarter land use and broader involvement in the supply chain from the paddock to the plate could deliver higher value exports and resurrect a Māori agribusiness powerhouse.

Hawke’s Bay’s principal iwi, Ngāti Kahungunu, is leading the charge by ‘footprinting’ an investment strategy that it hopes hapū around the region can leverage, including those who have settled or are about to settle Treaty of Waitangi claims.

“There is a revival of interest in farming across the country and we want it to take hold in our rohe (region) and give it an igniting spark by being more cooperative among ourselves,” says Ngahiwi Tomoana, chairman of Ngāti Kahungunu Iwi (NKII) and the National Māori Economic Development Taskforce.

He believes it’s time for Māori to step up and plan for a future where they can lead the local economy out of the doldrums and add some employment virility. “Hawke’s Bay is not going anywhere without Māori being involved, but unless we start moving today we will be left behind in ten years’ time.”

Even without the Treaty settlements, which could inject up to $300 million into the billion dollar local Māori economy over the next four years, Tomoana believes there’s sufficient critical mass for a collaborative primary industry strategy.

This will require a fresh approach to Māori education to ensure a new generation engages in the full spectrum of land-based opportunities, and for Māori landowners to play a more strategic role in what happens to their product.
Foreign investment will be needed in partnership with Māori, to develop land and supply chain resources and support a “cultural pathway” into international markets.

Beyond blue sky mining

The Ngāti Kahungunu vision may have been dismissed as mere blue sky thinking until May, when NKII announced serious ‘skin in the game’ with the $16 million purchase of the 3,680 hectare Tautane Station, south of Porangahau.

Together with Ngāti Kere hapū, which owns neighbouring farms (8,498 ha), the collective holding is over 12,000 hectares, right up there with other big stations on the western and eastern boundaries of the Ngāti Kahungunu rohe, which runs from Wairoa to Wairarapa.

Tautane, one of the last big Hawke’s Bay stations, enables NKII to diversify from its fishing investments and reclaim heritage land. The 12 kilometre coastline property is ideal for developing aquaculture and growing the agricultural base.

“In the end our people decided it was about food. We can’t manaaki (care and protect) our people from commercial properties so we needed to look at something that would be productive for a long time,” says Tomoana.

The iwi was pleasantly surprised at the confidence the banking sector showed when it got to choose from eight of the best Māori financial minds to help broker the deal.

Eyebrows remained raised when NKII immediately signed a ten-year lease for the iconic sheep and cattle breeding operation to Taratahi Agricultural Training New Zealand. Taratahi will manage the business and expand its highly regarded training facilities to up-skill Māori who will ultimately run the station, revitalise other land holdings, and be part of further iwi land acquisitions.

NKII is pursuing further training opportunities with Massey and Lincoln University, Te Aute College and local Māori schools including Hukarere and St Joseph’s.

Tomoana is convinced the way forward is for Māori farms to work together, leveraging “agri-science, hort-science, aqua-science” and engaging in the full spectrum – from raising the raw product to processing, packaging, branding and building export relationships.

“When we occupy that whole value chain from earth to the girth; fence posts to marketplace and meeting and greeting, people will come home from Australia, for example, and want to be part of that,” says Tomoana.

Māori managers needed

Peter MacGregor, AgITO’s strategic relationships manager for Māori farm training with 30-years’ experience in senior government roles, says there’s “a buzz” around the region about working together.

Many, including the smaller scattered farms are already in discussion, sharing information and looking at how they can help each other. “You just need the right spark to get the conversation going.”

Talk of a Māori farming renaissance was encouraged by the fact the Pettigrew Green Arena was jam-packed for the 80th Ahuwhenua Trophy BNZ Māori Excellence in Farming Award, won by local Māori-owned Tarawera Station, which runs over 30,000 head of sheep and cattle.

Before the hype gets out of hand though, a reality check is needed. Although there are about a million stock units on Māori farms within Ngāti Kahungunu territory, most are run by non-Māori, including the finalists and winner of the Ahuwhenua Trophy, and those on the periphery of Tautane Station.

The largest concentrations of Māori land include over 60,000 hectares spread over six blocks near Kuripapango on the Napier-Taihape Rd and along the Napier-Taupō Rd at Tataraakina, at Tarawera and between Napier and Wairoa.

However, the majority of Māori holdings in the wider Hawke’s Bay district are in smaller fragmented blocks, which tend to be underused because of water issues and size. Unless blocks are close to existing agricultural or horticultural contractors they’re mostly considered unattractive.

Achieving scale and “grabbing as much of the supply chain as possible”, is where the value is, preferably in collaboration with other hapū groups, says Shona Jones, coordinator of the Hawke’s Bay Māori Business Network.

She, says it’s critical for each Treaty settlement group to make wise investments if they are to get value for their own communities; working alone means it’ll be “a big ask” to expect any impact for the wider community.

Much tidying up to do

Rather than settling for fragmented pockets, some hapū clusters would be better off with cash to invest in expanding existing properties or buying “more advantageous” assets; although working together for the greater good through “a cooperation of the willing” could be “quite powerful”.

Paul Apatu, director and manager of Hastings-based Apatu Farms, concedes Māori-owned land in the region is a hugely untapped resource … but changing that is a complex business.

For a start, he says, you would need to determine where the land is, how much of it is not being used to its full potential and what it’s capable of. While scale and diversity offer wider opportunities, there’s “a lot of tidying up to do”, including how you deal with the challenge of multiple ownership.

“It’s about who will drive that land use operationally and from a governance level and having the appropriate skills. A lot would benefit from capital expenditure but who’s going to provide that and make those decisions and what is the tenure of that investment?”

The real story for Māori agribusiness, suggests Apatu, is around cultural buy-in from consumers through retail items that can be labelled and sit on a shelf such as a bottle of wine, an item of clothing, a pot of honey or a health remedy.

It’s also about playing to your strengths. Apatu Farms is one of the biggest onion producers in the country and has diversified into livestock, transport and more recently viticulture.

The company, owned by brothers Paul, Mark and father Ken Apatu, make the maximum use of about 2,428 hectares on the fertile Heretaunga Plains, where they run around 20,000 lambs, 3,000 ewes, 1,500 cattle and grow a vast acreage of produce.

Apatu Farms strengthened its market leverage two years back when it acquired a 50% interest in Auckland-based Harvest Fresh, a global exporter of produce.

That gave it stability through the supply chain, rather than ad hoc supply when the season begins, and more strategic placement in retail programmes.

Paul Apatu says success depends on risk management, exposure and financial returns per hectare and enterprise. You have to keep looking at ways to remain competitive and innovative by up-skilling and using science and technology and “new genetics and techniques to ensure you’re operating in a sustainable, competitive and profitable manner”.

Indigenous branding

The $35 million Miraka milk processing plant near Taupō, owned by five Māori trusts and incorporations, is applauded as a model for Hawke’s Bay hapū. The factory, established in 2011, takes 80% of its milk from non-Māori farms and exports all its milk powder to China and other markets.

“If Māori can replicate this model in other industries, whether it’s red meat or whatever, then I think we’re on the right track,” says MacGregor. If you can train up future generations and build trust and strength “it will make huge inroads; it’s a great opportunity to grow Māori agribusiness.”

Currently, says Ngahiwi Tomoana, too many Māori trusts wave their product goodbye at the gate or lease their farms and take no part in activity on the farm. For those who do farm their land “there’s no cohesion and forward marketing plan, no pan-procurement or purchase processes — everyone’s operating in silo thinking.”

What’s been missing, he suggests, is a value proposition that appeals to all the players. “We’ve studied this as an iwi and we’ve said we’re going to be in the marketplace and in the production houses but unless we invest in this business it’s not going to happen.”

NKII wants to do away with the middleman; rather than cutting out Fonterra, Beef & Lamb, Dairy New Zealand or other representative export agencies, that means partnering with them.

“We can use the Fonterra pathway with our own brands alongside, just like we’re doing with Sealord where we’ll soon have our own brand on the box – it’s about mutual benefit and being part of the whole.”

Cultural commerce

Tomoana, who’s also on the New Zealand-China Council, headed a 40-strong Māori delegation for Prime Minister John Key’s Chinese trade delegation in July last year, including a kapa haka group.

This proved to be an important “cultural pathway to commerce” opening doors that went beyond selling product. “The Chinese deputy premier addressed his initial comments to John Key then spoke directly to the Māori delegation as if we were brothers.”

Treasury, having previously showed no interest in promoting the Māori economy, then asked for a day-long workshop. There’s now more acceptance of ‘Māori Inc’ which Tomoana hopes will translate into co-branding of primary produce and greater access to resources for Māori.

Now he’s pushing for greater recognition of the Māori economy in Hawke’s Bay, including a cohesive Asian strategy to work more closely with Business HB and other groups on building new export markets.

“Every farmer and his dog is running off to Asia then bumping into each other after meetings or swapping business cards on the plane, rather than synchronising at home.”

NKII is also looking for joint venture investment partners with the right mix of firepower and cultural values to help develop the local market in exchange for guaranteed access to Māori product. “There’s not enough investment in New Zealand to develop our lands and resources as fast as we’d like.”

Tomoana favours the Sealord model, where both partners foster the relationship, resulting in strong economic returns and a margin above fluctuating commodity prices.

“We market our products as specialised taonga or gifts from our whenua and culture to China or France or anywhere. It’s a people-to-people market, not just product-to-market; that’s our point of difference.”

Don’t underestimate us

A major obstacle in moving Māori agribusiness along is the ongoing dispute with Hawke’s Bay Regional Council (HBRC) over water rights and the lack of consultation around economic development.

In what was possibly a momentary lapse of reason, HBRC announced an amalgamation alternative earlier this year embracing the whole of Ngāti Kahungunu territory without consulting the iwi.

NKII was again left scratching its head when the council assumed it would be a major investor in the Ruataniwha water storage project without full consultation. When it said ‘No’, all the region’s hapū backed away and the council appeared genuinely shocked.

Tomoana says HBRC hasn’t shown good stewardship of existing resources, so the iwi is loathe to allow wider responsibilities. A refusal to allow the iwi to share its water rights and interests to help Twyford orchardists during the drought didn’t help.

NKII says it’s not there just to protect water resources but to have a say in economic development from those resources, which bring in about $250 million annually to the region. It holds regular meetings with the Crown to clarify water rights, but HBRC doesn’t want to know.

Tomoana says NKII wants evidence HBRC has “the kaha or guts” to sort out the hard stuff, including stewardship of the Ngaruroro River, before rushing off to the next thing. “The dam is a lazy option.”

NKII has asked the council for a six month taihoa (pause) on the Ruataniwha dam to clarify its options on the aquifer and water reticulation out into the Bay. “To say they are anti, is giving them too much credit, it’s ignorance and complete indifference which is worse — they can’t see the value…we don’t even figure.”

Tomoana says if Māori are involved, the country and the region can expect accelerated economic development, but if they’re ignored, “we’ll just jam on the handbrake and see you in court.”

The message is, don’t underestimate the influence of Māori in agribusiness. And while critics suggest hapū are at odds with each other and can’t agree on post-Treaty investments, Tomoana, says that’s “a Pākehā perception of what Māori negotiations are… We talk all the time.”

So the sleeping giant is rousing itself, working toward kotahitanga or unity of purpose, brand and purchasing power, and beginning to flex its muscles with a shared vision, to “take back the whenua”.

Tomoana says iwi and hapū are sensing this is their time, and are eager to operate under their own power and mana. Rather than going to Hawke’s Bay Inc and asking what can you can do for us, “we need to tell them what we can do for them”.

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Keith Newman08 July 2013

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