Theo Spierings: 'Nothing has been achieved with all those subsidies for agriculture'

This is the English translation of an article written by Ron Kosterman for EW Magazine, 17 November 2020

Theo Spierings: 'Nothing has been achieved with all those subsidies for agriculture'

Until the end of 2018, Theo Spierings (56) was CEO of New Zealand's Fonterra, the largest dairy cooperative in the world. About celebrity, his company The Purpose Factory, Nitrogen Panic and his grandfather.

'In New Zealand,' says Theo Spierings, 'it's all about three people.' These are the country's prime minister, the captain of the All Blacks, the national rugby union team, and the CEO of Fonterra, the largest dairy cooperative in the world. Spierings was CEO between 2011 and September 2018. The company accounts for about 12 percent of New Zealand's economy. Add to this the production of the more than ten thousand farmers who are affiliated with Fonterra, and you get about 30 percent of the economy. 'When Fonterra sneezes, New Zealand gets the flu. It's that simple.'

There is no Dutch company with such an impact. Even Schiphol Airport and the port of Rotterdam are nowhere near. 'You could compare it to the importance of Nokia for Finland at the time. And perhaps to Samsung for South Korea.'

Spierings, born in the hamlet of Nistelrode in Brabant, became a man of the world. Before settling in Fonterra's headquarters in Auckland, he worked for Friesland Foods and its legal predecessors for a quarter of a century. First in Leeuwarden, then in Indonesia, Saudi Arabia, Peru and Nigeria. From 2005, he was a board member at the head office in Meppel in Drenthe. He then went to live with his wife and three children in Ommen, Overijssel. There was an international school nearby. The eldest son (27) was born in Indonesia, the second son (25) in Saudi Arabia, his daughter (21) was adopted in Peru.

For Spierings, Ommen is now the central point in the world

After returning from New Zealand, Ommen became the home base again. For Spierings, that town is now 'the central point of the world'. There is also The Purpose Factory, the company he recently launched. With twelve permanent employees and several external freelancers, he is committed to fighting hunger and poverty, facilitating clean water and sanitation, and a better climate - four of the seventeen so-called sustainable development goals of the United Nations (UN).

'With The Purpose Factory, I will continue to work internationally. I enjoy that. I was faced with the choice: do I want another job as CEO or am I going to do something completely different? I have worked for cooperatives my entire career. That's where these kinds of sustainability targets are in the DNA. When I started in the mid-1980s, I immediately got the message: create value and ensure that all stakeholders in the local communities get their share. I had a small factory built in Peru, water wells dug in Nigeria, pipes laid for clean water in large areas.

As a CEO, you remain dependent on what is happening in the boardroom, on politics, on the players. I wanted to get away from that. I thought: I'll do it myself

'As CEO, you remain dependent on what happens in the boardroom, on politics, on the players. I wanted to get away from that. I thought: I will do it myself, I will organize everything in such a way that I can create a better world. Ultimately, I want a global movement. I've seen enough people in business who want the same thing. Paul Polman, the former Unilever CEO. Or Howard Schultz, the former CEO of Starbucks. That movement must become a snowball that keeps on rolling and is not stopped by a decision of the board or shareholders.'

In 2011 he was given the opportunity to lead Fonterra

As CEO, he led Friesland Foods to the merger with Campina in 2009. FrieslandCampina's first CEO became an outsider. Spierings left. He invested, did consultancy projects, until he had the chance to lead Fonterra. That company (12 billion Euro turnover, 20,000 employees) is unknown to the general public in Europe. Here, Fonterra is mainly active with milk ingredients, for example for baby food. In the rest of the world it also sells consumer brands.

New Zealand’s pride processes no less than 25 billion liters of milk annually. That is more than twice the amount that is processed in the Netherlands, largely by FrieslandCampina. 'Of course I knew it was big. Beforehand I was told by the chairman, "Keep in mind that you are in the news every day." Yet you get on the plane with the idea: we'll see.’

'I underestimated that. You live in a fishbowl, everything is noticed. There is always criticism. It's very different. Under my leadership, we had a solid growth strategy. With major investments, partnerships in Europe, the United States and China. With all decisions involving a considerate amount of money, the prime minister calls. You also constantly inform the prime minister, even if the milk price is adjusted. Even then, you can still expect a phone call: Theo, explain why you're doing that.’

Theo Spierings - Photo by Guido Benschop
Theo Spierings - photo by Guido Benschop

No red carpets and large cars for Spierings

At the end of 2017, Labor Prime Minister Jacinda Ardern, was elected, and Spierings experienced her leadership for nearly one year. Ardern has been critically acclaimed for her corona approach and conciliatory actions following the bloody March 2019 attacks on two mosques in Christchurch city. 'I admire her, yes. After so many years in New Zealand, you can vote. I voted for her. Although I did not disclose that. All farmers vote blue, the National Party. Jacinda is innovative and crystal clear. At Fonterra, I was fully engaged in innovation. That's why she appealed to me.’

'My wife was part of the Auckland society. She did use her maiden name. No red carpets or big cars for me. I have always been reticent in my private life. Everywhere you go, they take a picture of you. Before you know it you will be on social media.’

I had a sailing boat in Westhaven. I left home, set the sails and within 30 minutes, I was in the most beautiful area

'We lived in Auckland in such a beautiful bay. I love sailing. It was my outlet. I had a sailing boat in Westhaven. I left home, set the sails and within 30 minutes, I was in the most beautiful area. You can invite anyone you want to invite. Having fun with each other on the boat. That's the best.'

In March 2018, Spierings announced that he would leave Fonterra in November of that year. ‘Any New Zealander between eight and eighty knows you. That's not my thing. And any way you look at it, you’re far away from the rest of the world. At least once a year, I traveled to Europe for Fonterra. After five or six years, I started to find it very relaxed in Europe. I hadn't experienced that in the first years.’

'I have traveled a lot throughout my career. Enter country, exit country, like an international gypsy. You arrive, set up shop, build a social life, do your job, but at the start you already know that it will be over in a few years.'

Spierings also has a farm in Argentina

He was due to leave two months earlier. In China he had contracted meningitis. ‘That got worse and worse. By September, I was in really bad shape.’ Once recovered, he did 'a tour of Australia' with his family. They returned to the Netherlands in the middle of winter. Shortly afterwards he flew off to Argentina.

'There I have an investment with five Dutch people: a fairly large farm with Angus cows. When I was at Fonterra, I had little time for it. We have about six hundred mother cows and twenty bulls. Every year, those mother cows give birth to a calf. We buy extra calves depending on how much food we have on the land. We sell about twelve hundred cows a year. The farm is located in the province of Mendoza. Close to one of the most beautiful ski areas and a ten hour drive from Patagonia. That's like New Zealand. It's beautiful there.'

Theo Spierings - photo by Guido Benschop
Theo Spierings - photo by Guido Benschop

As a little boy he listened to his grandfather's stories

He got his urge for adventure from grandpa Theo Spierings. He moved to Canada in the early twentieth century. 'He had eleven children and thirty grandchildren, but I am the only one carrying his name. When he was eighteen, just north of Winnipeg, he knocked a flag into the ground with his brother and built a log cabin. There they started a fruit and vegetable trade. That has grown into the village of Fisher Branche.’

'He was having a blast. When visiting the Netherlands once, he met a woman. She joined him upon his return to Canada, but she soon became homesick. They returned just before the war. As a little boy, I listened to his stories. He drove a beautiful Ford there and walked around in a three-piece suit, with a gold pocket watch. Grandpa became 92.'

His father was a secondary school teacher, mother a nurse. He has two younger sisters. He grew up in Den Bosch and Drunen. He studied food technology in Den Bosch.

'I wanted to go abroad. The labor market was very bad during that period. In the newspaper, I read an advertisement of ccFriesland, looking for international management trainees. I thought: that's it. I travelled by train to the company. 350 people had applied for two positions. In the end, they chose a Frisian, still a friend of mine, and a Brabander, me. I loaded all my possessions on a trailer and drove to Irnsum to live.'

In New Zealand there is zero support for agriculture

Spierings sympathizes with the Dutch farmer. New Zealand was virtually bankrupt in the 1990s. 'All agricultural subsidies were abolished under pressure then. As a result, the New Zealand farmer knows where he stands. There is zero support, not even for the cooperative. The farmers dealt with that very astutely by scaling up, innovation and new systems on the farms. The cost price of a liter of milk has fallen to 15 to 17 cents in New Zealand. In the Netherlands, it is between 25 and 27 cents.’

'You have to be able to adjust swiftly according to the world market price. 96 percent of the milk in New Zealand is exported. Here, it is almost 70 percent. The New Zealand farmer can handle a fall in that price. The Hague and Brussels have achieved nothing with all those subsidies. Hundreds of billions of taxpayers' money has been injected. As a result, there is no agility, no alertness and too little innovation. However, the Dutch farmer is more than capable to innovate, with Wageningen we also have the best agricultural university in the world, but government support has caused a feeling of resignation.’

‘Policy-making is all over the place. Take the nitrogen measures. That is pure panic. In 2006, at Friesland Foods I co-wrote a vision for 2015. That year the milk quota would be abolished. There and then, you could calculate that significantly more milk would be produced and therefore much more manure would be produced in certain areas. This has not been sufficiently anticipated.’

Eliminate half the cattle? Nonsense, says Spierings

'The livestock must be halved, it is stated, we are exporting too much. Such statements are too easy. If our trade balance is hit, we are not happy either. People grab a calculator and say: these are the new standards, we assume that nothing will change, no scaling up, no innovation, so half of the cattle has to go. Nonsense.’

'The Netherlands and New Zealand work with roughly the same ratios in terms of dairy cattle. The available hectares, the number of animals walking on 1 hectare, the milk production per cow. The difference is the size of farms. In New Zealand, an average farm has 400 cows, in the Netherlands, 100. Each farm has a house and stables. That can be done more efficiently. The solution lies in scale and innovation. But what do we do? We limit the maximum speed to 100 kilometers per hour. Surely there is no curtain between the Netherlands and Germany? You can’t solve the problem on your own.'

According to Spierings, there is plenty of money in the world

The Purpose Factory has the same principle as the cooperatives for which Spierings worked. 'How do you create value and how do you redistribute it?' The company has three pillars: disrupt, transformation and foundation. The first branch involves coaching, guiding and possibly investing in start-ups. The second consists of strategic advice to large companies and who also help implement the advice. The third branch often supports and finances local sustainability initiatives.

The four UN Global Goals mentioned earlier, are guiding in everything The Purpose Factory does. The company operates on a no cure no pay basis and is paid a portion of the value created by the work it has done. 'That money goes to the foundation, but can also be used to invest in those start-ups.”

'There is plenty of money in the world. It just has to end up in the right place. I have engaged people in China and the United States who have funds and want to spend money. They want to stay up to date with good ideas and investment opportunities. We have to convince those people of our ideas. They want to make sure their money is well spent.'

The first major consultancy client is Gloria, a dairy company with a turnover of 2 billion Euros from Peru. 'It doesn't necessarily have to be dairy. But we prefer companies as a customer where it starts with a farmer. Can be a cotton farmer, grain farmer, soy farmer or cattle farmer, it doesn't matter. There is much to be gained in sustainability and efficiency in this primary sector.’

'We also do meat farmers, yes. Calculations that we can feed the world with far fewer farmers, land and livestock are incorrect. You really need everything for those nearly eight billion people. And every now and then someone wants to eat a piece of meat. You shouldn't forbid that.'

The original article in Dutch can be found on the EW Magazine website