Andrew Cornell: It sounds a wonderful story that Gallagher has grown from electric stock fencing to guarding Buckingham Palace but is it too good to be true?
Sir William: Well since old Joe the business has changed dramatically and from that first electric fencing we do all kind of herd control from the four legged ones – including elephants and rhinos – to the two legged livestock. That’s the security business.
We do a lot of work now with security perimeters, for example around the Indian parliament, and the Buckingham Palace relationship started after the Batman incident (in 2004 when a protester dressed as Batman made it to the palace balcony).
AC: Children? Electric fences for children?
WG: With animals, if you hit them hard enough with a jolt the first time you’ve got them for life. But humans are different, they are smarter. And then children are always testing, they’re very intelligent animals. But no, we don’t shock them, these are our electronic surveillance and monitoring systems. A lot of the issues there is eliminating false readings.
AC: It sounds like these systems are not just for security?
WG: No, that’s right. These are more intelligent management systems. In New Zealand we’ve always had limited land – unlike Australia – and so farming has always been intensive. So one of our first businesses was around intensive grazing, mimicking wild herds where animals stay together for safety, which is now becoming popular more widely as it is better for the pasture.
But our systems now allow very sophisticated monitoring, they can tell you the weight of individual animals as they pass a scale and they give you full traceability when coupled with electronic ID. But traceability is only the final stage. When you can monitor how fast animals are growing with the scales and you add traceability, then you have a very powerful productivity tool.
With dairy, our systems can detect lameness or weight loss, two indicators of problems with individual animals, which you can then act upon quickly. Of course this has a cost and government programs mandating traceability for exportable product is a negative for farmers. But we find that cost is more than offset by these productivity improvements.
AC: The New Zealand ag sector is already recognised as very efficient – particularly in Australia – is there much more upside?
WG: By 2025 we want to double New Zealand’s output of agricultural products. That sounds audacious but what it means in practice is bringing Mr Average up to Mr Top 5. Farmers need more tertiary education. Farms today are run on computers – on mobile phone apps. The productivity gains outstrip the cost many times over.
AC: It’s not just Mr Average and Mr Top 5 is it?
WG: No, no that’s very important. It’s often the lady of the house who has the computer skills and one of the bewt things about New Zealand farming is the number of well educated women. And we find too that women are more amenable to new ways of doing things.
I think the debate here has to move more away from cost, the cost of inputs, to the higher output. The dairy industry is a classic example where we have long benefitted from lower inputs – being pasture driven compared with supplementary feeding in Europe and North America – but the higher prices in the future have to be supported by smarter farming.
AC: Your father started Gallagher in a shed here in Hamilton, you’re still based here as a global business, but are you really based here?
WG: Without a doubt. So much of what we do is based on research and development and we have about 100 people involved in R&D. And you have to manage very carefully those projects. For some of the things we do the pay off may be five years, so those projects may drop off, but if the payoff is one year then you are losing money not doing it.
We also do most of our manufacturing in Hamilton, especially our highest quality product. We do manufacture some of the cheaper lines in China. What we find is that as markets move up the value chain – like Chile where they are moving to higher quality product – then they move up the value chain with us as well.
AC: While you can still see your father’s original idea in Gallagher, you’re now many times more diverse. Where is the future?
WG: We can still do a lot on the productivity side with our traditional lines but energy, our fuel pump systems, are a huge opportunity. There’re actually some similar issues with fuel pumps, there are compliance costs, emissions monitoring but our business case is the same: it is about productivity. Then you have scanning and barcode technology, already ingrained in Europe but will be huge in China. And the traceability issue is very widespread particularly when you start talking about, God forbid, foot and mouth or BSE, but electronic passports had very high error rates. Now with our systems in Australia there are almost no errors. That traceability factor with the focus on food security will be more and more important.
AC: And with that Sir William is off to chat to another customer…