Dairy farm governance : perspectives of dairy industry leaders

Abstract

This thesis reports on the governance requirements for New Zealand dairy farming enterprises. Over the past two decades dairy farms in New Zealand have increased in size. Owning multiple farms in a number of locations has become more common and increasingly complex business structures have developed. For many farms, succession is an issue. These developments have led to an increasing interest in governance. This research used a case study approach to obtain the ideas and experiences of dairy industry leaders, selected based on their experience in governance. Governance literature framed the research questions and established a model that outlined the factors and roles of the board. The interviews with the industry leaders determined that dairy farm governance is very similar to the governance principles suggested within the literature. Within the New Zealand dairy industry agency theory and stewardship theory have greater explanatory power. Therefore, ownership and operational considerations influence the board roles of strategy, control and service. Due to this influence, control is the most important of the three roles. Factors considered important by the leaders were an understanding of the need for governance, that governance and management should be separate, the importance of outside directors, meetings should be formal with consistent agendas and adequate management reporting, directors should be selected on skill and experience and represent a wide variety of personality types. An engaged board was the preferred operational model. CEO duality, passive boards, revolving chairmen, appointing token directors, inexperienced family members or directors selected on prestige should be avoided. Keywords: Dairy Farming, Governance, Board of Directors.