At an industry breakfast during last year’s Beef 2012 exhibition in Rockhampton, Zanda McDonald gave an enlightening, candid and characteristically honest assessment of the reasons why he believed McDonald Holdings was the success it had become.

It was a speech that provided not only an insight into the business philosophies and vision of a young industry leader at the top of his game, but an indelible snapshot of the values and principles that defined Zanda McDonald as an individual.

As the beef industry comes to grips with the loss of one of its best and brightest, Zanda has been widely described as an innovator and visionary, a devoted family man, a true gentleman, and, quite simply, a “good bloke”.

Having known Zanda as a fellow boarding student at Downlands College in Toowoomba, I can readily attest to the level of respect in which he was held, not because he was a member of one of Australia’s largest cattle producing families, but simply because of the person that he was.

At his core was a sense of decency.

Zanda was an old head on young shoulders, someone people seemed to automatically look-up to, regardless of whether they were younger or older.

An enduring memory is of a seemingly constant smile, a relaxed, easy grin that never seemed to leave his face.

His passing has left people across Australia’s beef and cattle industry with a profound sense of loss, and simply in disbelief that such a positive, friendly and inspiring presence is no longer with us.

Beef 2012 address

At Beef 2012 at Rockhampton in May last year, Zanda was asked to speak about the reasons why he believed McDonald Holdings (MDH) had grown to become the business it was.

He distilled those reasons down to five key areas: buying land at the right time and for the right price; recognising the importance of integrity and reputation; the value of generational support; a genuine dedication to building strong relationships with staff, suppliers and customers; and maintaining a flexible approach to managing genetics and marketing.

Buying land at the right price

A golden rule for the McDonald family, Zanda explained, had always been to calculate the value of land based on the rate of return the family could see out of a cattle station on that given day – and not based on guessing where the market may be in six or 12 months or two years down the track.

Zanda said one of the great strengths of the MDH business was the generational knowledge it had been able to draw upon, from his grandfather, the late Jim McDonald who died late last year aged 105, and from his father Don and uncle Bob.

“I think the value in generational family companies is that stories get passed on through the generations, what went wrong, and what people have done right,” Zanda told the audience.

“Our family first came to Tasmania in 1827, so there are plenty of stories that grandpa keeps passing down the family now.

“I guess in the mid-2000s, I was caught up in the land hype with the sale of Stanbroke Pastoral Company properties, and I was very keen to expand, and everyone else was getting in and I thought we were going to miss out on the action.

“It was dad and uncle Bob and grandpa saying we don’t think the time is right for our family to be buying now, and having the older people there slowed us down, and in hindsight it was a great thing that we probably didn’t buy.

“It wasn’t the right time for us, so I think that having the stories of older family members is certainly very helpful.”

Zanda said the family owed much to the vision of his grandfather, who had grown up when Sir Sidney Kidman was running his famous cattle kingdom.

Jim McDonald’s plan in gradually acquiring a string of properties to form MDH was not only motivated by a desire to drought-proof the family operation by having properties in different geographic regions, but to ensure that as calves were born on northern properties they were gradually moved to growing properties south and east and closer to processing plants on the east coast, thereby saving on freight costs.

Zanda said the family had always tried to buy neighbouring properties when they came on the market, because purchasing nearby country allowed the operation to expand without requiring an expansion at head office level as well.

Perhaps most importantly, after every purchase, he said the family always consolidated each purchase before moving again.

“I guess being Scottish, we always like to be in control of our destiny, rather than the banks, so we’ve always stopped and waited for a few years until we got that under control before we moved again,” Zanda said

MDH today runs 175,000 cattle on an aggregation of 11 cattle stations in Queensland, covering an area of 3.36 million hectares. Cattle are bred in the Cape York Peninsula area, backgrounded in the Cloncurry, Winton, Central Highlands districts and then finished on grain at the Wallumba Feedlot on the Darling Downs.

MDH today value adds much of the beef it produces into three branded beef products, processed at JBS abattoirs in Queensland, and in July 2012 became a major shareholder of the Superbutcher retail chain, which has six outlets in South East Queensland.

The company has been a leader in research and development projects such as the ground breaking “testis germ cell transplantation” with CSIRO and the introduction of pain relief to improve welfare standards at castration, dehorning and branding.

That the MDH of today is a very different business to the MDH of even just 10 years ago is a testament largely to Zanda’s influence on the company.

Relationships

A commitment to building and maintaining strong relationships with customers, suppliers and staff had been a cornerstone of the family’s approach, Zanda told last year’s Beef 2012 breakfast.

The family had maintained a continuous relationship with abattoirs established by Thomas Borthwicks more than a century ago to current owners JBS today.

MDH’s strong relationship with the Batista family had allowed the company to enter into an unprecedented custom-killing arrangement with JBS’ Rockhampton and Dinmore abattoirs. Under the arrangement MDH now exports a container of beef to Brazil every week.

The family also placed high value on its relationship with staff, Zanda said, reflected in the fact that a number of second-generation employees were now coming through in senior roles.

“We help with boarding school fees, we let them use our aircraft for private use if there’s a wedding on in Townsville, to see some mates or something like that,” Zanda explained. “They put in a lot of very long, hard hours for the family, so we try and do some different things to repay their loyalty.”

Integrity and reputation

The importance of integrity and reputation was a value inculcated into family members at a young age, Zanda said.

“The older I get, I guess I really learn the importance of this value,” he said.

“It takes generations of family to build a reputation, and just one bad decision to ruin, so we’re very conscious of it.

“It is something we drum into our station managers, to always return a neighbours cattle, to never, ever, ever eat a stranger’s bullock for a killer. We all know happens in other places, and we just shake our head and say why would a station manager go and kill someone else’s beef and ruin his reputation.

“One of grandpa’s great quotes I think is that “if you can’t eat your own beef you shouldn’t be in the game”.

Another Jim McDonald philosophy was “A man with a good name is never broke”.

Generational support

The preparedness of older generations to move aside and allow younger family members to step up to positions of responsibility had also held the family in good stead, Zanda added.

“If we make a big decision of course they sit around the table with us, but I think youth and vigour in any company is fantastic, and to pick up new ideas and have a go.

“But it is important to have the age of wisdom of the older family members to put the brakes on at times.

“I look at a lot of the great men of the world from Alexander the Great or Napolean or Aristotle, Hannibal, they were all dead by the time they were 40, so I think it is important to step aside before you are too old and let the next generation have a go.

“I’m not sure what the perfect balance is in families but I think we have got this right, and it has worked for our family.”

Flexibility with marketing and genetics

In 1996 Zanda visited Indonesia and the Philippines looking for opportunities in the live export market. He acquired an export license and began exporting live cattle to Indonesia.

The move represented the first major shift for the family company away from its traditional pathway of selling grassfed bullocks.

However, by 2001, Zanda said it was evident that the company’s future in supplying the Indonesian live export market was limited, based on the nation’s decision to impose weight limits of 370kg on imports.

“We couldn’t make money out of anything less than 400kg, and that still works today, we can’t sell an animal less than 400kg and make money out of it,” he explained at last year’s breakfast.

Recognising the benefits of being able to turn over cattle at a young age and more quickly, and lacking the room required to bring all of the company’s steers out of the Gulf and to grow them out to four-year old bullocks, Zanda oversaw the development of the Wallumba feedlot on the Darling Downs, through which 80pc of the company’s turnoff now passes.

He said the feedlot had effectively provided “another bullock paddock” which had helped to further drought proof the operation.

It also laid the foundation for the company to launch its own branded beef lines.

Zanda conceded that he learned some early lessons from the family’s move into beef processing and marketing.

“Like most producers, I used to think that the packers were robbing us in the grids,” he said.

“I used to think they were making all this money, and they weren’t passing it onto us, so I thought we’d have a go at it. And I learned very quickly that they probably weren’t robbing us quite as much as I thought they were.

“But we persisted. The first two years were very difficult, we were only doing little numbers, but we’ve grown and we now kill 500 grainfed bullocks a week, and I think we’ve got on top of it.

“I think there is a huge opportunity still today for branded product, everything we see from marmalade jam to wine and cheese, everything is branded today.

“We’re very happy with the financial returns we’re making out of our branded product and I’m sure there is going to be much more branding in years to come, and a lot more of the larger packers will be offering custom kill services rather than purely just buying cattle.”

Selling a branded product came down to selling the story behind the brand, Zanda noted. MDH’s story revolved around not just its strong family values and history, but the “green” credentials of its production system.

Being able to explain that the company had more than 22 million trees across its stations, and used wind and solar power extensively, was a powerful selling point in environmentally-conscious markets such as Japan.

Equally, animal welfare was also becoming a key consideration at customer level, he said. As extensively reported by Beef Central last year, MDH under Zanda’s guidance has taken a leadership position in this area by introducing pain relief at branding and seeking to promote that message through the incorporation of welfare-friendly branding in its product packaging.

Closer relationships between producers and processors

Zanda spoke of a desire to see producers and abattoirs build closer relationships, as occurred in Brazil, and believed it was possible if processors moved towards premium-based grid systems.

“I think hopefully one day the packers will pay a premium when we sell a composite animal,” he said.

“If they can get an extra 3-4pc carcase yield, they need to be paying a premium instead of having a penalty system, which the grid currently is. I think if there was a premium paid for better carcase, I think we’d all go out of way to improve them.”

After moving into processing the family had identified a need to introduce new genetics to increase the saleable meat yield in its own herd.

However, with breeding properties located north of the tick line in country suitable only to high-grade Brahman cattle, its options for genetic improvement in the traditional sense were limited.

This illustrated another example of how family was embracing new technology in an attempt to solve old problems.

Zanda described how the family was working with the CSIRO in a stem cell project which, in its most simple form, involves replacing the semen in the testes of a Brahman bull with the semen of another bull that offers desired improvements in carcase characteristics, such as Angus for illustrative purposes.

The treated Brahman bull then mates with a Brahman female to produce a calf that is effectively half Angus-half Brahman.

“It is pretty exciting technology, but I see the biggest benefit for us is probably using an Angus/Charolais cross bull over a Brahman cow, and we then get a composite all in one generation,” Zanda explained.
Initial trials were showing early promise and another 50 bulls had been implanted with Angus stem cells in preparation for more rigorous practical trials this year.

A bright future for beef

Zanda spoke about the challenges of rising costs and the need for targeted, effective research to help Australian producers remain viable in real terms, but also expressed a strong level of optimism, based on Australia’s proximity to the growing populations of Asia.

“The global consumer is hungry for high quality, safe and affordable meat, and we know that when they leave poverty and enter the middle class, the demand for quality animal protein, including meat, dairy products and eggs, will increase.
“Our challenge is to continue to grow while also increasing our ability to produce enough protein to feed a growing world population. “

As AgForce president Ian Burnett noted yesterday, Zanda was a young leader taken too soon, a tragedy that represents an irreplaceable loss for his family, his business, and the Australian beef and cattle industry as a whole.

What someone who had achieved so much in 20 years in the beef industry had to offer for the next 30 or 40 years is a question that posed so many exciting possibilities but will now tragically never be answered.