The family-owned WA business shares some of Wesfarmers’ corporate DNA, which helps explain its longevity.
Craig Mostyn Group has built multiple businesses across Australia over its 100-year history. Unlike most family businesses, however, it has not let emotion and history dictate its decisions.
Instead it has operated in a similar manner to famous Perth conglomerate Wesfarmers: always asking what is in the best interests of shareholders. If that means selling or shutting down a long-running business operation, then so be it.
That approach is considered one of the key reasons the group continues to operate successfully under family ownership. It is one of Western Australia’s oldest family business dynasties, with only 13 other groups having a longer history.
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Craig Mostyn does not just have longevity on its side. It is also one of WA’s largest family-owned businesses, with annual sales revenue of $605 million from its agribusiness operations and about 1,500 staff, mostly in WA.
Long-serving director Andrew Mostyn – a grandson of company founder Robert L Mostyn – said change had been a constant in the business.
“You don’t want to hold onto things that aren’t performing,” he said.
“One thing the company has always done well is change.
“We have changed our operations many times over. We weren’t even in the pig industry twenty-five years ago and now it’s a large part of the business.
“The same with lamb and beef. We were involved then we weren’t, and now we are involved again.
“It’s a matter of making the changes when you need to.”
Mr Mostyn said one of the keys to the group’s success was its governance structure.
The first independent director was appointed in 1965 and the group’s constitution requires a majority of non-family, non-executive directors.
“It wasn’t by luck at all,” Mr Mostyn told Business News.
“Back in the sixties, my grandfather said he wanted non-family directors on the board.
“My dad was working in the business but his two sisters weren’t.
“My grandfather was smart enough to see it would make things easier if we had non-family members on the board to be completely impartial and independent.”
Early days Robert L Mostyn founded the business in Sydney in 1923, initially with a focus on trading tallow.
He led the business up to 1975 and invested in multiple new ventures during that period.
This included lobster fishing in Geraldton in the 1940s, exporting apples and pears from Tasmania in the 1950s and prawning in the Northern Territory in the 1960s.
The group employs 550 people at its Linley Valley Pork operation at Wooroloo.
Andrew Mostyn said his grandfather had a very deliberate approach.
“He would send out various managers to start operations in other states,” he said.
“My father went to Tasmania and spent 13 years building that up.
“Bob Harrison was sent to WA and he built WA up.
“Similarly, Harry Nicholas was sent to South Australia.
“Along the way, there were always visits from head office and vice versa coming back, and I think the culture managed to just permeate from Sydney and reside in each of the operations.
“My grandfather or my father would always be visiting these places and people always felt they were working for the one company, a family business.”
Governance
Since 1975, the company has mostly been led by non-family chief executives.
Andrew Mostyn worked as an executive director (but not as CEO) between 1993 and 2016.
When he retired from that role, he became the last family member to work in the business.
Instead, family members have their say at the company’s annual general meeting and at other briefings held during the year.
There are currently 23 family shareholders, all descended from RL Mostyn. The shareholders include 11 from the third generation and 12 from the fourth generation.
They have just two representatives – non-executive directors Andrew Mostyn and David Keyte – on the six-member board.
Former chairman Jim Kennedy, who led the group up to 2018, said the ability of successive generations to hold together during a century of change was an almost unique achievement.
Writing in the company’s 100-year history, he highlighted the importance of having a majority of independent directors, along with shareholders who “left the professionals to run the business”, even through periods of major restructure and change.
Mr Kennedy said there was a “dynamic of trust” between the independent directors and the family shareholders that was unusual in a family business.
“This is not to say they were always harmonious, but there has been a consistent effort between the independent directors and family shareholders to work in the best interests of the company,” he said.
“At its most personal, this meant RL [Mostyn] was forced to leave the board of the company he founded.
“More recently, the tension has resulted in vigorous discussions concerning the profitability of the company in the short term versus long term, the very structure of the business and inter-generational equity.”
Ups and downs
While the company’s longevity is remarkable, it has had some tough times. The official history of Craig Mostyn Group pulls no punches on recent challenges.
In 2017, for instance, the company paid $50 million for an initial 49.4 per cent stake in Bunbury company V&V Walsh just as profits fell from $22 million to $6 million and debt increased.
“This necessitated tightening up capital expenditure and looking for ways to fund the second half of V&V Walsh within the next four years,” the history states.
“It was also a difficult time for shareholders, who for a long time accepted lower dividends to support the various divisions and who, at this time, saw a dramatic fall in dividends.”
The business has needed to manage price fluctuations for its commodities while also dealing with COVID, which hugely disrupted export markets, especially China.
The group was forced to write-down the value of its Tasmanian fishing business by $1.3 million before selling it in 2021.
That was followed by a $4.5 million write-down in the value of its Victorian abalone business.
Andrew Mostyn (left) and Wayne Crofts in the group’s boardroom in Fremantle. Photo: Michael O’Brien
Investment
The company is currently in the midst of a major investment program to support growth of its operations, which are overwhelmingly in WA.
The operational shift to WA was reflected in the board’s decision to shift head office to Perth in 2006.
That is despite most of the family shareholders still being in Sydney and four of the six directors living on the east coast.
The investment program is worth a neat $100 million.
“That is much greater than what we would normally do,” chief executive Wayne Crofts said.
“They are significant upgrades to enable better quality products or increase growth.”
The company is investing $40 million at V&V Walsh to meet the growth in international demand for lamb and beef.
Its export-accredited facility will have an increased capacity to prepare produce for containerised frozen shipping. Mr Crofts said this would help the business manage any ban on live exports.
At Linley Valley Pork, the company is investing $20 million upgrading the boning room capacity and chilling capacity.
Mr Crofts said it was moving towards value-added retail-ready food preparation.
Its Talloman operation in Hazelmere, which produces tallow and meal, is adding a fifth poultry rendering line, at a cost of $16 million.
Mr Crofts said each of these projects was supported by a number of complementary investments; the wastewater plant at Talloman is being upgraded, for instance.
As well as its WA operations, the group owns Jade Tiger Abalone, which employs about 100 people in Victoria and Tasmania.
Jade is the largest integrated abalone business in Australia, with three farms and a processing plant.
A long-running part of the group’s operations is a Melbourne-based protein trading desk. It employs 15 people and has been operating for 50 years.
The group has also made a small investment in local startup Xsights, which is developing technology to improve the tracking and monitoring of animals.
Mr Crofts said the group was currently running a trial using the Xsights technology and was hopeful it would help to improve animal welfare.
Scale
The scale of the group’s operations is highlighted by the volume of livestock it processes, both from its own farms and other suppliers.
Each week, it processes about 15,500 pigs, about 18,000 sheep and lambs and about 1,200 cattle.
A substantial portion goes into its retail brands, including Amelia Park, while the group is also a big supplier to local supermarkets, wholesalers and export markets.
Mr Crofts anticipates more opportunities overseas.
“We have a big role to play in supplying South-East Asia and other export markets with a level of food security,” Mr Crofts told Business News.
“A lot of our international customers are talking to us about food security, looking at the reliability of what we are doing in terms of our production systems.”
He said another driver for the business was a demand for improved transparency.
“If you look at our strategy, we are looking to take a greater level of control and transparency around supply.
“We are also looking to get closer to consumers in different retail formats.
“People want frozen, they want fresh, they want longer shelf life, they want to know where the product comes from, they want to know what has gone into it.
“So the transparency through our supply chain is just critical, and they want a trusted source.
“All our customers want to know we are doing the right thing with our animals, with the environment, with processing.
“They want to know we are doing the right thing because they don’t want to know about it.”
