Norco loses another CEO

21 Mar, 2018 04:00 PM
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Chairman, Greg McNamara, has taken over executive responsibilities at the business, with senior management reporting directly to him.
It’s not a nice scenario opening up for the industry north of Sydney...
Chairman, Greg McNamara, has taken over executive responsibilities at the business, with senior management reporting directly to him.

Less than six months into the job, the Norco co-operative’s new chief executive officer has inexplicably left the business.

Ben White’s resignation from the NSW-Queensland dairy and farm services business on Monday is the second sudden departure from the role, with Brett Kelly leaving in late September after almost 10 years at the helm.

Mr White’s unforeseen exit has added to an already frustrated and uneasy mood within the dairy sector in northern NSW and southern Queensland.

A 20 per cent jump in feed and energy costs, a hard, dry summer and lower farmgate milk payments have triggered a new exodus of dairy farmers from the industry this year.

“It’s not a nice scenario opening up for the industry north of Sydney, and the latest news from Norco has raised serious concerns about the co-operative’s capabilities at a fairly troubling time,” Norco supplier and Dairy Connect chairman, Graham Forbes said.

“My phone’s been ringing non-stop.

"Everybody’s a bit shell-shocked and wondering what on earth’s going on.”

Mr White had been mid-way through a series of meetings with dairy industry bodies and Norco supplier functions, meeting many producers for the first time.

The company has now postponed further meetings until June by which time it will have set 2018-19 farmgate milk prices and completed a strategic plan for Australia’s second largest dairy co-op for the next five years.

Chairman takes reins

Chairman, Greg McNamara, has taken over executive responsibilities at the business, with senior management reporting directly to him.

At the same long-time Kempsey, NSW, district director, Mike Jeffery, has been made deputy chairman, a position which previously did not exist on the six-person board.

In a letter to co-op members and suppliers, Mr McNamara said Norco’s management priority was to improve the company’s operational performance within the parameters of its co-operative principles and values.

He said Mr White’s departure had been amicable.

Ben White had moved to Norco from southern Victoria’s Gippsland dairy heartland with an agribusiness background spanning dairy beef production and agricultural exports to Asia.

His appointment coincided with Norco looking to broaden its push into export markets and seek opportunities to expand its footprint outside its traditional geography, including possible partnerships in southern Australia.

When appointed he said there could be several areas where the 123-year-old business should take a refreshed look at what it did.

Norco made a modest $1 million profit from sales of almost $560 million last financial year.

It draws milk from about 215 suppliers in Queensland and North Coast NSW where it also has milk plants at Lismore, Raleigh, and Labrador on the Gold Coast.

It has 30 rural supplies stores between Bundaberg in Queensland and the Hunter Valley.

Dairy Connect’s Mr Forbes, whose family milks more than 700 cows at Gloucester on the NSW Mid North Coast, said many farmers believed Mr White was keen to modernise the co-op’s culture and infrastructure so it could compete head to head with the multinational corporates now dominating Australia’s dairy industry.

Fresh strategies and better long-term milk price planning were craved by farmers supplying not just Norco, but Lion and Parmalat.

Cost-price squeeze

The northern industry’s resilience to cost-price pressures was sinking to new lows.

Confidence had been rocked by looming closures of several big dairy operations including the Gee family’s 100-year old Jerry’s Plains farm in the Hunter and the 1400-cow Raleigh Dairy Holdings Norco’s single biggest supplier), owned by New Zealand investors.

Other northern NSW herds were also on the market as were 10 dairies in southern Queensland, according to Dairy Connect research with livestock agents.

“The industry is under a lot of stresses – costs will be about 20 per cent higher this year and milk payments across northern NSW and Queensland producers are averaging two or three cents a litre less than a year ago,” he said.

Tough seasonal conditions, which had turned “catastrophic” in the Hunter, had contributed to an 8 per cent production slide across the board.

Yet, even in areas where grazing conditions had been good, Mr Forbes said margins were so tight many farmers were scaling back.

“There’s a lack of clear direction coming from Lion and Parmalat about their long-term commitment to dairy between the Hunter Valley and Gympie,” he said.

“Everybody wants to process more milk, and the economics of trucking it up from southern Australia don’t make sense, but the industry isn’t seeing a long-term price strategy to give us confidence.”

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FarmOnline
Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media

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