Chancellor in charge

FOR more than 25 years, Harry Perkins has been a fixture around the Wesfarmers boardroom table, nearly 15 of those as chairman.

The “boy from Bruce Rock” joined the then Westralian Farmers Cooperative as a director in 1975.

Before that he had been one of WA’s first corporate farmers.

After taking part in a Nuffield scholarship, which allows farmers to see how farming is carried out in other countries, it changed his view from “local to global” and Mr Perkins set up Velcourt Holdings.

“One of the things I became aware of through the scholarship was the need for farmers to control their own destiny rather than having the Government tell them what was happening,” he said.

“In farming, it’s not unusual to have $2 million to $3 million invested in a farming operation. People used to talk glibly about it but never analysed what that investment meant.

“They probably had about 50 per cent of the investment in the land and about 20 per cent to 30 per cent in the high risk activity of farming.

“I decided you needed to get about a 4 per cent return from the land investment and about a 30 per cent return on the farming.

“But we needed a good cropping unit so I decided to put my money where my mouth was.”

Velcourt enjoyed success in Europe where the bounties paid to farmers helped its growth.

“In Australia it was either a feast or a famine. It became too hard and when I unwound the company I didn’t have any land left,” Mr Perkins said.

“But it gave me an understanding of a company director’s role and responsibility to shareholders.”

Mr Perkins said since he joined Wesfarmers in 1975, its perception had changed in the marketplace.

“When I joined in 1975 you couldn’t get a bright young graduate even interested in the coop,” he said.

“Our job is to set up the ideal corporate structure to make sure we get the opportunities.”

Harry Perkins

“We’ve been transformed from not being a desirable career prospect to now being sought after.

“We’ve probably become a training ground for graduates and a source for headhunters everywhere.

“Since 1975, I’ve seen this company grow from a modest but successful cooperative to a successful public company.

“The board has been astute enough to employ good senior executives.”

Wesfarmers success has been attributed to its financial discipline. The company has interests in areas that are definitely not sexy – agribusiness, hardware, coal, gas and transport – yet its share price is hitting close to $20.

When Mr Perkins joined the cooperative, it had a market capitalisation of $32 million. Wesfarmers’ market capitalisation is about $5 billion.

It has also been criticised for the acquisitions it did not take such as AlintaGas, Orica, Perth Airport and SGIO.

Mr Perkins said the good decisions had been the things Wesfarmers had walked away from.

“It takes guts to do that and you don’t make too many friends,” he said.

“Our strict corporate discipline has helped us. We like to keep our net debt to equity ratio at around 40 per cent to 60 per cent.

“Back in the 1980s, when the Parrys and the Bonds were going, I’d just become chairman here and was looking at anything and everything.

“There was some talk that companies such as Atkins Carlyle and Coventrys were old hat because they weren’t leveraging their debts.”

Mr Perkins said Wesfarmers would be a completely different company in 10 years time.

“Our job is to set up the ideal corporate structure to make sure we get the opportunities,” he said.

“Our growth driver in 1984 was CSBP. Today fertiliser is not so important. If we’d relied on CSBP we’d be in trouble. Today our drivers are energy and Bunnings. In 10 years time it will be something else, but I have no idea what it is.”

Mr Perkins said his role as Chancellor of Curtin University gave him a chance to see the young graduates coming out of Muresk Agricultural College – something he gets a “kick” out of – and seeing some “tremendous farmers applying for Nuffield scholarships.

“There are some tremendous young people going into farming who will make it work,” he said.

“The 1980s stock market crash killed off a lot of innovative, entrepreneurial farmers.

“We’re trying to promote a bit of flair. Farming is a bit like putting your house on the table at Burswood Casino.”


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