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Create a ‘coalition of the reasonable’ to engage in sustainability debate, urges AA Co chief

Jon Condon, August 9, 2019

 

THE red meat industry must build a ‘coalition of the reasonable’ to effectively engage in the sustainability debate, Australian Agricultural Co managing director Hugh Killen told a Brisbane Show audience yesterday.

Speaking to about 800 stakeholders attending the annual Rural Press Club Ekka breakfast, Mr Killen said while AA Co was approaching the issue of sustainability in its own right, it needed to join with others.

“We want to learn from those who believe in our industry – to learn about their approaches and successes,” he said.

“We also know there are some who use climate change to attack our industry. From them, we learn what we can. And then we leave them behind.”

“We then have to align our work with those who are genuine about sustainability,” Mr Killen said.

“But none of us can address climate change on our own. By sharing what we do and learning from others, we can align with them and this increases the impact of our shared work,” he said.

“This means, building a real coalition of the reasonable.”

“We have to navigate the extreme voices that have hijacked the sustainability debate, and we can only do this by working together. The ones we want to work with believe in a sustainable balance for our industries and the environment,” he said.

“They recognise that we need to act, but always in an environment of inherent uncertainty. They draw on the science, but do not overstate its conclusions. And they do not use it as a weapon to attack their enemies.”

If the industry could build this type of coalition, it could take the sustainability discussion back, Mr Killen said.

“We can make it what it should always have been – a practical, honest and nuanced discussion, about how we work together.”

Part of this work must be to change the climate ‘debate’, and return it to a climate ‘discussion’, he said, and agriculture must accept responsibility in this process.

“In agriculture we have been taking the long view for generations. Learning, evolving, working with the land – without ever thinking we have all the answers,” he said.

“This perspective is sorely lacking from the current climate ‘debate’. Our absence from this debate will not stop others filling the vacuum. Our honest engagement in this discussion might, maybe, help Australia find a way to meet this challenge.”

“Frankly, I don’t see any other way we can find a truly sustainable balance. And without that, how can we honour our history and grow our industry?” he asked.

A legacy of sustainability

Within AA Co’s own operations, Mr Killen said sustainability was fundamental to building for the company’s next 200 years (AA Co celebrates its bicentennial in 2024).

“Everything we do today has to be sustainable for that long term. Our customers want it and our stakeholders want it, but most importantly – it’s what we want,” he told the Press Club audience.

Hugh Killen

“This language can be confronting, but sustainability is already in our blood. Every farmer wants to leave something more than they found. You can’t do anything of value if you can’t work with the environment over time.”

“None of us wants to leach from the soil or scar the land we love. Yet the wider sustainability issue has been hijacked by extreme voices – on both sides,” he said.

“It’s been easier to keep our heads down and stay out of the fray. But those days are gone. And for those of us at AA Co, the wider sustainability questions are very real.”

“I am not saying that the recent the Gulf floods are evidence of a climate apocalypse, but the science demands we prepare for climate uncertainty, beyond what we’ve experienced in the last 200 years. It is no good caring and telling people you care, without doing anything.”

“We have worked hard to develop our approach to sustainability. We feel a responsibility to help lead on this issue, and that means, leading by doing, leading by listening, and leading by sharing the work of sustainability.”

He said the company took a three-pronged approach to leading by doing.

“We try to mitigate the effects of climate change and environmental degradation. We balance the effects we can’t avoid with positive contributions, and we adapt to changes which are beyond our control.”

“This means operating to minimise our footprint on the land, the water and the air. It means restoring land and fostering sustainable flora that positively impact the climate. And it means adjusting how we operate, to adapt to changes we can’t control.”

Leading by doing also meant making a clear public commitment, which AA Co had done with its release of its first sustainability policy earlier this year.

“As we say in that policy, AA Co is committed to being a leader in sustainable beef production, and producing high-quality beef is dependent on a healthy environment and healthy, happy cattle.”

“Our policy also commits to transparency, to investing in our people, to continuous data-driven improvement, to cooperation, and to industry leadership,” he said.

The initial priority areas were environmental stewardship, animal health and welfare, and livestock transport, but the policy would evolve over time, and will include meaningful metrics to measure our progress.

“We are developing more detailed action plans in different areas. As these come on-stream we’ll share them, and we’ll share the impact these actions are having,” Mr Killen said.

 

Click the links below to view Beef Central’s reports since last Wednesday’s AA Co annual general meeting:

 

Below is an edited version of Hugh Killen’s address to the RNA Rural Press Club breakfast:

 

This morning I’m going to tell you a little bit about our history – The history of the Australian Agricultural Company, and a little bit about our plans for the future.

And also how we view some of the issues we are all grappling with as an industry.

For much of the past 100 years, the people eating our product didn’t know, or care about AA Co.

In the 1990s we significantly ramped up our breeding program. We developed Austral Downs in the Territory and Meteor Downs in Queensland. And we developed the Goonoo feedlot at 20,000 head capacity.

In the 2000s we acquired the Westholme and Wylarah operations introducing Wagyu bloodlines to our herd. And we began our early foray into branded beef.

Although as we learned, putting beef in a box with your name on it and waving goodbye, isn’t quite the same thing.

Today we are one of the largest landholders in Australia. We are the oldest continuously operating company in Australia. We have one of the largest Wagyu herds in the world.

From the 12 Shorthorns the company started with in 1824, today we run around 400,000 head of cattle across 26 properties in Queensland and the Northern Territory.

We sell beef under our own brands into 27 countries around the world. And this is just the beginning.

Which-ever way you cut it, this is a remarkable history.

I can’t tell you the number of people with a personal connection to the business. You only need to see my emails to understand the advice I get from passionate ex-AA Co people.

We’ve left our mark on them. We’ve left our mark on over 1 per cent of Australia. We’ve left our mark on cattle bloodlines across the north.

And we were there, shaping new markets, for our industry, around the world.

We understand our history. And we are proud of it.

This has left us some great assets, some great skills and great experience.

We own a diversified group of properties across the supply chain. We recently moved cattle from drought to the Gulf country after the 2019 floods.

And we have just finished droving cattle from Winton to South Galway at Windorah – getting fat along the way, as they waited for the Channel country grass on the Cooper to grow.

Our history also lives in the generations of bloodstock in our herd, and the knowledge in our people.

Today we have deep understanding of our animals, the global beef trade and the land. Together this knowledge has helped us build one of the largest and best Wagyu herds in the world.

These assets mark us out. They are a testament to our past. And they give AA Co a unique position in the world today.

But the world that built these assets is changing, in ways no one could have anticipated.

And we know that our history is not enough.

Evolving markets

New markets are opening at an unprecedented rate. The rise of China, India and the rest of Asia is reshaping our world. The opportunities and challenges of Asia’s growth will define us – As a country and as an industry.

New global infrastructure is reshaping how we engage with new markets. Global logistics and information platforms connect us to customers in real time.

The old days of waving good bye to your product at the farm gate are over. If you don’t have eyes on your whole value chain, you are flying blind.

New competitors are emerging too. The US keeps fighting hard and South America is a global powerhouse. Individual producers are utilising bloodlines from Japan and elsewhere. And they are competing all over the world.

We know that customers today are willing to spend on quality. But their expectations are changing.

Every day they want to know more about where the product comes from – and how it was produced. Governments are also finding their way in regulating animal care, bio security and land use.

And new media and activist stakeholders are using new information platforms to hold us to ever-changing standards.

AA Co’s vision, goals and plan

To survive and prosper in this new world is no easy feat. It requires every part of our business to be aligned to a vision, a goal and a plan.

The elements to succeed are pretty clear. We need to grow the right customer base. We need to connect our beef to people who are willing to pay a premium for quality product.

We need to deliver that quality product for our customers every single time – or we lose them forever. This means taking responsibility for every part of our value chain.

That first connection with the customer needs to be with us directly. This means owning our own brands.

We then get the opportunity to deepen that connection by telling our story. That story has to be something that resonates. And it has to be true. Because if our story isn’t really us, again, the connection will be lost forever.

To do these things, our people and our culture have to pull in the same direction.

There are two parts to my job: Making sure our strategy and our people line up; and Advocating for the customer.

What sets AACo apart is our ability to produce quality at scale. As a large business, I can’t make this work by telling every one of our experts what to do every day.

To pull in the same direction, all the time, we need a strong culture. There is an interesting coming together here.

The connection our people have to our culture, and the connection our customers have to AACo, are both driven by the same thing. They both want to know they are part of something that matters – Something they can be proud of.

People, culture and customers

Put another way, our people and our customers need to know that we do the right things. And that we do them, for the right reasons.

Often, we talk internally about starting with the customer and working backwards. And it is vital to keep reminding ourselves that everything we do matters, because of the customer.

But there is another aspect to this. The customers who pay a premium for a dining experience don’t want a reverse engineered story.

They don’t want marketing guys crafting something out of thin air, based on a customer survey.

The really good marketing people know this too. These guys start by understanding our business, our history, our place, our people and our culture.

And this is the story we tell – because it is true, because this is what matters to the customer.

So we have to be honest about what moves us to create our product – About why we get up in the morning.

And this means that what matters to us, is as important as what matters to the customer.

Why AACo does what it does

For me personally, I do this work for a simple reason. I am moved by meeting a basic human need.

Feeding another person matters to me. This is also about family – About sharing with the people I love, in moments that really matter.

And it is about memories – The ones that stay with me, when all the meetings and the successes have been forgotten.

Providing the very best beef in the world, through an iconic business like AACo, is a source of great personal pride. For my team, they are motivated by creating the best beef, the best cattle and the best life. This begins with happy, healthy cattle.

Every one of us at AACo cares about these customers. We care about what they feel – about our product and about us.

And that’s why we care about the brands which connect them to us, and to our story

There is another motivation that we all share at AACo. Like all farmers we want to leave a legacy for the future.

As custodians of the AACo tradition we have a responsibility to leave our mark – Through our bloodstock, our brands, our customers, and our land.

This is why we are moving AACo into a new wild frontier –  Reshaping a 200 year old pastoral business to deliver the best food, around the world, under our own brands. We believe this is the foundation for our next 200 years. And we believe it is our responsibility to build this foundation.

I just want to say, this belief has sustained me and my team over the last two years.

It is hard to reshape a 200 year old business at the best of times. Transitioning from a pastoral company to a branded food business is harder still.

On top of this, our industry is facing its share of challenges. This savage drought and the Gulf floods are reshaping the Australian beef sector around us in real time. I don’t know what the herd size or make-up will be in 5 years, but it won’t be what it is now.

We’ve seen changes like this in sheep and dairy. We are seeing it in beef today – and it will make us stronger and better.

But on the ground, we‘ve seen friends and neighbours come under enormous pressure, from all sides – From the weather, the market, hateful farm invasions and the political debate.

Our own people feel it too. And like everyone, we take these hits – on top of the usual snafus of any large farming operation.

Given all of this, it would be understandable to keep our heads down. To run the same old pastoral business. To write-off big change, to the too hard basket.

And yet we persevere. Because we know change is inevitable, and because we believe in the change we are building at AA Co.

 

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Comments

  1. Greg Campbell, August 11, 2019

    At the first pass, long fed Wagyu and sustainability are in conflict, especially on the energy front. But less so if the freight linkages are shortened between breeding, backgrounding, lotfeeding and processing. With the AACo strategy now heavily focussed on Wagyu, and the Livingstone plant closed, why isn’t the next obvious step taken to sell down those northern pastoral assets which are in hot climate tick zones and unsuited to Wagyu, retire some debt and/or give a capital return to shareholders?

  2. Rob Introvigne, August 10, 2019

    Hugh Killen talks about sustainability and to minimise our footprint on our environment, and AACo is committed to be a leader in sustainable beef production.
    So why are AACo going down the Wagyu path when they have to be grain fed for 300 to 400 days?
    I would say that is creating a big foot print.

  3. Paul D. Butler, August 9, 2019

    Not sure all AACO shareholders would call losing millions of dollars…….”sustainable”.

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