When I posted on Farming Systems Uruguay in August I was restrained in my criticism.
I didn’t say that we were so unimpressed by what we learned when we visited one of their farms that we sold our shares in the company as soon as we got home.
I didn’t say that the manager of the farm we visited, who is one of New Zealand’s top dairy farmers, wasn’t being left to manage. He had to answer to the company’s representative who visited once a week not just on strategy but on day to day farming practices.
I didn’t say that the manager had only had a two-week Spanish course when he arrived, been getting just one lesson a week since then and his wife and children weren’t getting any help with the language at all.
I didn’t say that the manager told us of visiting another FSU farm where he’d been concerned that the cows were hungry and asked why they weren’t in a paddock with more grass. He was told that was being saved for the directors’ visit.
I didn’t say that everything we saw contradicted the glowing picture being painted in New Zealand of the company, its farms and the opportunities in Uruguay.
I didn’t say that we could see there was money in the business for PGG Wrightson and anyone else who could clip the ticket but we couldn’t see what was in it for investors in FSU.
I didn’t say any of that on the earlier post because it’s more than two years since we were there and I thought things might have improved. Brian Gaynor’s column shows they haven’t.
Everything he writes supports what we saw and heard in Uruguay.
What works in business in one country doesn’t necessarily work in another. The sobering lessons from the experiences of several companies which ventured across the Tasman show that and at least they speak the same language there.
Uruguay is not just another country, it has a different climate, different language and different culture.
It’s on a similar latitude to northern New Zealand but on a continent which gets much hotter than we do. Pastures which last 10 years or more here will have to be replaced every two or three years there. That’s good for PGG Wrightson which has the rights to all the business on the farms and will sell the seed. But it’s not good for farm profits and FSU shareholders.
Spanish is probably one of the easier languages for English speakers to learn. With total immersion you should have a good grasp of the basics after three months and be reasonably fluent in a year. But Gaynor says the last New Zealand manager who had been in Uruguay for two and a half years never learned the language.
It is the height of ignorance to live and work in another country without being able to converse with the locals. It’s also not good for business because you never get the full story if you have to rely on interpreters. But that the manager didn’t learn isn’t necessarily his fault. If his staff spoke English they would when talking to him and the demands of the farm would take precedence over Spanish classes.
But one of the first lessons of foreign investment 101 is that the people working on the ground must speak the local language. Ensuring its managers and their families learn Spanish should be one of FSU’s priorities.
Then there’s the culture. They do things differently in Latin America you can’t just pick up what works here, transplant it there and expect it to work as it does at home.
Adolf at No Minister is even less impressed than I am. He blames the directors. They are responsible for the decisions they made but I think they only see what the people in Uruguay want them to see and have no idea of what’s really going on.
PGW will make money by clipping the ticket on everything the farms buy but it’s going to be a long time before the farms make a profit and shareholders get a return on their investment.
There are wider concerns too. Crafar Farms has shown what happens when a business grows too quickly without good processes, systems and staff. If that happens here, the potential for problems half a world away are even greater.
New Zealand deserves its reputation for high standards of animal welfare and environmental practice. Our reputation is at risk from companies which try to emulate what we do here in other countries and fail to do it properly.