Dairy partner
DOWN UNDER
What's Nl wS Issue 2 February 1998
working relations
3
The New Zealand Dairy Board is the largest single national exporter
in a country with a strong agricultural tradition. Not surprisingly, it is also
a prime target for Rabobank operations down under. What's NewS goes to
the furthest fring of our network to report.
Although a small country, New Zealand
accounts for 22 percent of the world's
dairy trade, second only to the European
Union's 50 percent. Annually, 9.2 million
tonnes of rnilk are produced from New
Zealand's green pastures, of which 8.8
million tonnes are manufactured into a
mge of products, principally for export,
'he dairy sector alone earned NZD 3.8
billion in 1996, contrihuting 4.2 percent
to GDP - an amount forecast to increase
by 26 percent by the millennium.
UNIQUE CLIENT
Unique in the equation is the role of the
industry's offshore marketing company, the
New Zealand Dairy Board (NZDB). The
Board achieves total revenue in excess of
NZD 6.1 billion, making up the country's
largest earner of foreign funds - a figure
representing around 18 percent of New
Zealand's foreign exchange earnings.
According to national manager of
corporate banking Dean Clark, 'New
Zealand is the only significant supplier of
non-subsidized dairy products onto world
markets. And it's all channelled via our
^Hhent the NZDB - a body holding statutory
authority as the sole single desk seller of all
New Zealand dairy product exports. It is
New Zealand's largest multinational food
marketing organization, responsible for the
international sales of product from 13
manufacturing cooperatives.
STRATEGIC RESTRUCTURING
And for the globally rninded NZDB, the
sky's the limit. Since group treasurer Geoff
Taylor has been on board, the Dairy Board
has been experiencing a strategie treasury
restructuring, involving slimming down the
Board's Banking Group from over 100 to
under 20 core relationship banks - one of
which is Rabobank. 'We are involved in
exporting from New Zealand and
supplying to what adds up to 115
•ountries worldwide, distribution is then
upported by 45 of our global
subsidiaries,' says Taylor. 'And we have
identified Rabobank as one of the core
banks capable of meeting our needs. As a
group, Rabobank is in a position to service
what are largely commoditized banking
needs. They offer the simple trade-
associated products necessary for the type
of export product we are dealing with.'
CHERRY PICKING
Clearly, a sector monopoly such as the
Dairy Board is in a position to cherry piek
big banking names globally - and, continues
Taylor, our bank fits the profile. 'Rabobank
has a very good spread across the globe. In
addition, the main point of differentiation is
the extent to which Rabobank International
is a niche food and agri bank worldwide.
Whilst they don't have a high market share
of our business, they do have an excellent
understanding of the food and agri sector
and of the Dairy Board's involvement in it.
They are value-driven and discerning in the
business they do. This understanding is a
crucial prerequisite to building long-term
relationships in which Rabobank, as one of
our core banks, can help us achieve our
ultimate goals.'
TRIPLE-A WORTHINESS
In response to the triple-A rating, Taylor
was frank in admitting it was an
advantage in terrns of counterparty risk on
treasury products, products that NZDB is
taking more frequently from Rabobank
New Zealand since this business was
launched last year. 'We have a minimum
credit worthiness criteria for business
partners, but, to be honest, our thresholds
are a couple of notches lower than
Rabobank's. We don't consciously make a
decision based on the bank's triple-A
status - in fact, there is a logical argument
stating that a triple-A balance sheet is
more expensive to maintain than a
double-A. Sure, triple-A is in our mind,
but let's just say, since Rabobank is the
only core bank with such a rating, it's not
a prerequisite.'
UNTAPPED POTENTIAL
Asked how Rabobank could top-up
customer value, Taylor, after much
thought, pointed the finger towards trade
finance as an area to be developed. 'And
I'm not talking about the ability to process
Geoff Taylor, group treasurer of the
New Zealand Dairy Board.
documents, but more about the
development of trade finance relationships
globally. An improved use of your
network potential would provide us with
regional solutions for our regional
problems. And, I have to admit, the
development is a two-way street for both
of us and not a process that can be
changed overnight. This aside, the
potential is certainly there for an even
better partnership.' As far as a health
check goes, Taylor concludes that the
future in terms of an improved
partnership is looking good.
looking aheadj-
February
16-20 Relationship managers'
meeting, Utrecht (NDS)
17-18 International bond congress,
London (IB)
18 Dutch financials conference,
New York (RS)
Studies
World Grain sector
World Beaf market
March
2-3,5,23 Euro workshops, Utrecht (UB)
12-13 Millennium conference,
Amsterdam (GLIT)
17-18 F&A Europe meeting, NL (F&ABM)
20 Knowledge fair. Utrecht (UB)
Key:
NDS Network development and support;
IB Investment banking; RS Rabo Securities;
UB Utrecht branch; GLIT Global IT;
F&ABM F&A business management.
