Agribusiness man of the year shares secrets of his business success

Progressive Meats boss Craig Hickson explains why staying small and finding a niche can be a good business plan.

Craig Hickson had no idea he would win agribusiness person of the year at the Federated Farmers awards in Auckland this week. 

The Hawke's Bay sheep farmer wasn't there to receive the award as he is in Australia attending a lamb industry conference, but he told NBR ONLINE winning is a pleasant surprise nonetheless. 

Modestly, he says he doesn't know why he won, but says innovation has long been a focus of his company, Progressive Meats, which he started with his wife in 1981. 

"The key to the success of the business has been through association and specialising. 

"We don't own trucks or rendering plants, which enables us to focus on processing. 

"That was a core component of our ability to focus on innovation, and we've become relatively good at it."

As well as being an astute agribusinessman, Mr Hickson has two university degrees, one in food technology from Massey University, and a Bachelor of Arts in economics and marketing from Victoria.

He started in the meat industry in 1969 as a student, working at the Hawke's Bay farmers meat company, before joining the meat producers board in Wellington in 1975, which he left in 1980 to start his own company. 

He is now a well-known and accomplished member of the sector, being a director of Ovation New Zealand and several other meat companies, as well as siting on the boards of Beef+Lamb NZ Ltd and Ovita Ltd. 

Chairman of Beef+Lamb, Mike Peterson, says Mr Hickson's success is due to his focus on productivity, aiming for 25% efficiency on everything he is involved with. 

He says Mr Hickson has proven you can be small but profitable by choosing to specialise.

"It's very hard to be a generalised business and good at everything.

"He has identified a particular part of the chain where he has been able to be successful, and he has just continually built on that."

Mr Peterson says it is hard to make a decent profit out of processing, which is Progressive Meats' main focus. 

"It's like running an airline - if you don't fill the airplane seats, you don't make any money. 

"It's exactly the same in the meat industry, which is often compared to airlines. If the hooks are not full, and you're not processing efficiently, it's very hard to make money."

He says Mr Hickson's secret has been staying away from exporting. 

"Because he hasn't been exporting, he has been able to provide a niche service for exporters who didn't want to be processing."

Wool industry shakeup
Mr Hickson says wool is being “out-marketed” by other industries in the agriculture sector.

He says there is also a disconnect in New Zealand between wool producers and the market, largely because of the system requiring wool to be auctioned, which prevents a direct connection between producers and consumers.

The lamb sector is doing a better job of selling itself, says Mr Hickson.

“They have farmer meetings, they educate their producers with regard to consumer needs, they tell them where the product is being sold and what the consumer likes and dislikes about the product.

“The wool sector needs to develop something similar”, he says.

“I don’t think lamb can do it on its own. Lamb had improved six times since the early 1980s, and productivity has improved dramatically.

“But wool has been nowhere near, it’s just lost a whole heap of ground, and it’s inherently a good product with specific applications, but it’s just been out-marketed.”

The picture for lamb is not all rosy either.

Prices have dropped considerably over the past three years due to a drop off in demand.

“New Zealand has dropped from exporting around 25 million lambs a year, to about 19-20 million - about a 20% drop.”

The situation has been significantly worse for wool, however.

According to Statistics New Zealand, export wool has been declining since the 1990s.

As a percentage of total exports, wool has fallen from 26% in 1920 to just 1.6% in 2011.

Sheep farmers have also switched their focus from wool to sheep meat, as meat prices have risen while wool prices fall.

Mr Hickson says the trend of converting dry stock farms into dairy is also hurting the industry.

“For those who earn their livings associated with the procurement processing and exporting of sheep meat, there’s a lot of concern about the conversion.

"Land is being converted because in the eyes of the owners, they can earn more with dairy.”

He says there was a period in the 1950s when a large number of dairy farms in Southland were being converted to dry stock.

“Now, 60 years later, a lot of them are going back. It depends on the relative economic returns of different enterprises, and they do change over time.”

Mr Hickson says it makes economic sense for land owners to convert if they will make more money for dairy, so the beef and lamb industry needs to make dry stock farming attractive again.

He says part of that is improving the marketing power of wool.

This was given a major boost late last year when Wools of NZ Trust was given the funding to buy the Wools of NZ and Laneve brands from PGG Wrightson Wool.

Mr Hickson says bringing those brands under control of wool growers will help form a more cohesive marketing strategy.

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