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Richard Greenhalgh took up the position of First Milk chairman three and a half years ago, following a career spanning over thirty years with Unilever where his last role was chairman of its UK division. Unilever is a global brands company focused on nutrition, hygiene and personal care. It sells its products in 150 countries around the globe and had a global turnover in 2007 of €40 billion. Unilever’s brands like Persil, Dove, Sunsilk, Helmann’s, and Lipton’s tea are household favourites.

In addition to First Milk, Richard is a non-executive director of Rank Group plc, the gaming and entertainment services group; an adviser to Calor SA, a Dutch privately-owned gas supplier; and chairman of Care International, one of the world’s top aid agencies that assists poor communities in 70 countries around the globe.

StraightTalk caught up with him to ask some key questions.

What skills do you bring to First Milk?
My time at Unilever gave me extensive experience in driving brand growth and sales programmes, as well as developing an understanding of how retailers operate. I believe that my broad business experience allows me to provide a good perspective on ways around the strategic challenges that First Milk faces.

How does First Milk compare to other companies you’ve worked with?
It’s a completely different challenge. Our mission at First Milk is transparent; we are here solely to make members better off. The difference we have compared to a plc company is that our owners are also our main suppliers. In most companies where I’ve worked, the aim is to minimise supply costs, but with First Milk, we want to maximise the returns to our members.

How do you balance First Milk commitments with other calls on your time?
My work with First Milk varies in intensity. Some weeks I have three or four days of meetings, other weeks I keep in contact through conference calls and talk to fellow Board members by telephone. Like everyone else these days, I do the hours that are required to get the job done.

What does the role of chairman at First Milk entail?
The Board sets clear objectives for the Executive team at the start of each financial year, and we then let them get on and deliver, and they update us on a monthly basis. Of course there are some issues that come up that the Board and Executive team need to consider and tackle together. However, it is important that the Board are not back-seat drivers, but rather ensure that the Executive team have the tools that they need and clear any roadblocks to delivery. Peter is an extremely capable and experienced chief executive, and he has built a strong team around him.

Does First Milk need a full-time chairman?
No, I don’t think so, for reasons I’ve already outlined. The day-to-day responsibility for running the business and implementing the strategy sits with Peter and the Executive team. One thing however that we have discussed as a Board over the past few months is creating the role of vice-chairman from the farmer director group.

While we still have to put the flesh on the bones of what a vice-chairman role entails, I think we are in broad agreement that this person would actively champion First Milk’s vision and objectives throughout the supply chain. There’s certainly a member-facing element to this role, but we have also had requests from our retailer customers for senior farmer input to help them understand the dairy industry and play a role in developing stronger relationships.

When are members going to receive a dividend payment from First Milk?
The Board has approved a proposal and we are now consulting with members through the current round of discussion groups, and we will put forward proposals at the AGM this year.

The proposed new capital structure provides two ways in which members’ capital will be rewarded: 1) payment of interest on capital accounts; 2) payment of a dividend on new participating preference shares.

We believe that there are four clear advantages to these capital structure proposals. Firstly, they recognise member capital contribution to date through interest and dividends. Secondly, they reward past loyalty and milk volume. Thirdly, they provide a trading option that should unlock underlying value of the business once a dividend stream is established. Finally, dividends and interest will help retain and attract members.

We have consulted with local representatives, who are very supportive of the proposals, and we now await feedback from the discussion groups.

What will the next few years hold for First Milk?
Until eighteen months ago, First Milk was predominantly a milk broker. However, with the addition of the First Milk Cheese Company and First Milk Ingredients, our business has become considerably more complex.

As you’ll read elsewhere in this newsletter, the business came on leaps and bounds in 2007, but the Board are focused on avenues to develop the business further through organic growth and further strategic moves. Clearly the detail of these plans are confidential, but our focus is squarely on making members better off with First Milk and this will underpin any move we make.