The co-operative is recruiting organic dairy farmers as the demands of organic dairy are increasing.
“From conventional farming to organic farming, it’s a three-year certification process. So, to grow quickly, it’s very difficult, and last year, the farmgate prices have been quite buoyant. So, the farmers that come to our co-operative aren’t driven by the dollar. It’s about that lifestyle and sustainability of farming.” – Bruce Symons, Former CEO of Organic Dairy Farmers Co-operative
Healthy soils and cows along with good pastures, reduced costs and stable prices are major benefits of organic dairying.
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PIP COURTNEY, PRESENTER: As a way of organising farmers, the co-operative must be nearly as old as farming itself. But as co-operatives get bigger and more successful, they often find themselves the target of some tempting takeover offers. Some can resist this temptation. For example, the nation’s rice growers’ co-op still exists after its members rejected a buy-out. And the country’s biggest milk producer, Murray Goulburn, remains a co-op. As Chris Clark reports, fans of the co-op say it has some special benefits.
CHRIS CLARK, REPORTER: Calving’s a busy time of year in the busy life of dairy farmer Terry Hehir. The Hehir family operation is based at Wyuna in Central Victoria, and at calving time, it’s all hands on deck day and night to make sure it goes as smoothly as possible.
TERRY HEHIR, ORGANIC DAIRY FARMERS CO-OP: Well the first thing when a calf’s born that we look for is to first of all to feel their tummy.
CHRIS CLARK: A good first feed is the best start.
TERRY HEHIR: She has had a good feed of colostrum. She’s got this number now for the rest of her life. When she dropped, that was given and recorded.
CHRIS CLARK: And so how old might this animal be, what, eight or 10 hours’ old? Just born overnight, anyway.
TERRY HEHIR: We can have a look at the navel. Whilst it’s moist, this calf would be least eight or 10 hours.
CHRIS CLARK: The Hehirs are organic dairy farmers. And while Terry Hehir’s passionate about organic farming, he’s also passionate about co-operatives.
TERRY HEHIR: Co-operatives sometimes cop criticism for perhaps being a dinosaur and a relic of another time. I think I firmly believe that co-operatives are the most important plank for successful industries to be built upon.
CHRIS CLARK: Terry Hehir’s a shareholder and chairman of Organic Dairy Farmers Co-operative Australia, one of the smaller co-ops going around, with just 23 farmers. The co-op’s farmers are spread across Victoria, but even at this small scale, there are advantages in working together.
TERRY HEHIR: Well there’s lots of different benefits. One of them is that because we’re spread out across Victoria, there’s different seasons. People are calving at different times of the year. It takes away the pressure for people to produce out of season. And that brings a cost benefit and I consider that to be an important part of the premium from this co-operative, really, in the fact that you’re not forced, you’re not pushed to produce out of season, because farmers in other districts cover for that to some degree.
CHRIS CLARK: The co-op collects milk from its farmer members, including Terry Hehir’s place and then delivers to several different sites. About a third goes to a large milk processor to be marketed as organic milk. Another big customer makes a branded organic yoghurt.
TERRY HEHIR: The creation of a critical mass, a body of organic milk, means that our co-operative’s customers, our partners, like Parmalat like Five:am, can plan, they can build businesses. We’re building our own business based on a brand as well. And for an individual farmer to do that is really challenging.
CHRIS CLARK: That’s certainly John Smith’s experience. He went organic more than 20 years ago, but for a long time, couldn’t get any premium selling organic milk on his own. Soil health and good pastures are the objectives in organic dairying.
JOHN SMITH, DAIRY FARMER: This is a refractometer and it gives you what they call a Brix reading, which is the percentage of sugar.
CHRIS CLARK: Why does that matter?
JOHN SMITH: The higher the sugar content, the higher the energy level in the plant. Also, it’s an indication of the health of the plant, so the healthier the plant is, the less prone it is to insect attack. So if we can get the reading in this up above about nine or 10, we can pretty much guarantee there’s not going to be any insect attack on that plant.
CHRIS CLARK: The Smiths also do a lot of soil testing on the farm. As organic farmers, they’re limited in what they can apply, both for pest control and nutrition. And while samples for the lab will give precise readings, there are more straightforward ways of checking soil and pasture condition.
JOHN SMITH: We’re looking for colour, it’s a nice humussy-looking soil, it’s not white or red. You don’t want to see any hardpans in the soil.
CHRIS CLARK: They can’t use synthetic fertilisers for important elements like nitrogen, so mixed pastures are a critical part of the way they farm. In conventional dairying, pasture might contain only one or two different grasses or plants. At the Smiths, there can be six or seven.
JOHN SMITH: A cow’s just like a human being, they like variety in their diet, so we put in a lot of different plants. Different plants have different minerals in them and some plants are shallow-rooted and some plants are deep-rooted. Your deep-rooting plants will bring nutrients up from deep down in the soil profile.
CHRIS CLARK: Personal health problems prompted John Smith’s switch to organics, and although organic dairying has its challenges, he finds it more rewarding.
JOHN SMITH: It’s perhaps a bit more labour intensive, but it’s no harder. There’s probably a lot more enjoyment in it, I think, not having to use any chemicals. You’re looking for a positive solution to any problems, not a negative sledgehammer approach to things. Yeah, I find it far more enjoyable.
CHRIS CLARK: What wasn’t rewarding for many years before joining the co-op was the price the Smiths got for their organic milk. They didn’t have the volume to interest big processors or the wherewithal to market their own, so they weren’t paid more for producing organically.
Co-ops are nothing new for John and Wendy Smith. In fact for generations, it was the way dairying was run.
WENDY SMITH, MEPUNGA VIC.: The Warrnambool Cheese & Butter Co-op, they were very good to us and John’s family. When we went down the path of organics, well, that’s – they weren’t interested in that sort of thing and they got too big, whereas our co-op’s more of like a family, really.
CHRIS CLARK: From its small start 12 years ago and just four farmers, the Organic Dairy Farmers Co-operative is now selling not just milk, but its own processed products. There’s butter – they already have their own brand on the shelves and they’re about to launch another.
BRUCE SYMONS, CEO, ORGANIC DAIRY FARMERS CO-OPERATIVE: We’re going with an unsalted butter and we’re launching that within a few weeks time and that’ll be in the supermarkets.
CHRIS CLARK: Bruce Symons is the co-op’s CEO. Part of his job is developing new products while making sure the main point of the co-op for farmers isn’t forgotten.
BRUCE SYMONS: They’ve got to get a strong return for their milk. If we’re going to add value and that’s in the form of retail products, that’s got to add value back to the co-operative. So, we can sell milk and trade that at a margin and that’s relatively simple, but retail is quite an expensive operation. You need marketing people, you need salespeople and all your logistics to support that. So, it becomes much more complex.
CHRIS CLARK: As well as butter, the co-op has several cheese brands. One of them’s made here, only a short drive from the Smiths’ dairy farm. And it’s their day-old milk that’s being separated now.
MATTHIEU MEGARD, CHEESEMAKER: And especially the milk we get from the Smith farm is really outstanding all year long. They do the right thing, only use the best hay and they always have that little bit of grass that makes it wonderful all year long.
CHRIS CLARK: Cheesemaker Matthieu Megard is from France and brings to the task a family pedigree in cheese.
MATTHIEU MEGARD: So it’s important here to check as well at this stage that the acidification is not too quick. But it’s not – you can feel the curd is very soft and very nice to touch, actually, a bit like silk.
CHRIS CLARK: Making cheese from one farm, one milk supply, means there can be a lot of variation from batch to batch, because milk varies so much through the year, which is both a challenge and an opportunity.
MATTHIEU MEGARD: Here what we have if the weather changes, we’re going to feel that. If the cows are eating hay, it’s going to change and it’s going to change very quickly from one day to the other, so all these changes make it very difficult to make cheese, but as well very important, because you have a real sense of being part of somewhere, have seasonality, all these changes that will translate in cheese.
CHRIS CLARK: And that variation, the relatively small scale as well, can be a marketing advantage.
BRUCE SYMONS: People want to know where their food’s coming from and this story about provenance, which farms it’s come off. So we’ve got 23 farms. We can talk about those farms through social media and those sorts of things, keep giving people stories. This is a real farmer, this is where our milk’s coming from, this is just one of our members. So with our size, we can do that.
CHRIS CLARK: As the co-op’s grown, so has its range of products. Different cheeses are made in different places, cut and packed in different places. It’s getting complicated, so they’ve decided to invest in their own factory.
BRUCE SYMONS: We’ve actually got 11 contract manufacturers and we’ve got our product stored in six different external warehouses. So, that’s becoming increasingly difficult to control, complex for the business to manage. So we’ve taken a decision that we’ll invest in our own manufacturing facility to bring in some of those functions that are done by contract manufacturers at the moment.
CHRIS CLARK: Building a co-op takes time. You can’t just go to the sharemarket to raise money. Borrowing from banks involves liability which could put your farm at risk, so it’s a case of hastening slowly.
BRUCE SYMONS: We haven’t had a proper commercial loan from a bank for the 12 years of the co-operative. And so the money that we need is to be from the farmers and we’ll give those farmers a dividend for withholding any of that money.
CHRIS CLARK: And as a shareholder and co-op chairman, Terry Hehir says organic status has helped keep milk prices pretty stable, even in tough times.
TERRY HEHIR: The other big benefit is the lack of volatility. When the Global Financial Crisis hit the Organic Dairy Farmers Co-operative, our milk pricing remained stable. And that is – that’s a priceless aspect of belonging to this industry and belonging to the co-operative.
CHRIS CLARK: Terry Hehir’s an unabashed fan of the co-op as a way of doing business, particularly in dairy, where a perishable product like milk leaves you at the mercy of market forces every day.
TERRY HEHIR: There’s no question in my mind that co-operatives are relevant, but they’ve got their challenges, like every business. And I think the first one is just to make sure that you separate the interest of the directors on their farms from the business. And I know in our co-operative, right from day one, governance has been key. We have independent directors and they are absolutely independent and they are stars.
CHRIS CLARK: At the Smith family farm in Western Victoria, the co-op’s brought a financial reward to their decision to go organic.
WENDY SMITH: We’re doing what we years ago really wanted to set out and do: farm naturally. And the co-op, oh, gee, I take my hat off to them. The head – our leaders at the co-op are really, really – done well for all of us.
CHRIS CLARK: Having seen co-ops come and go, John Smith’s acutely aware of what doesn’t work.
JOHN SMITH: The main thing is that every decision that we make in the co-op, we’ve got to ask ourselves: is it in the best interests of the farmer? Otherwise, if it starts to be in the best interests of someone else, well, you’re starting to lose control of it then, I think.
CHRIS CLARK: The co-op wants to expand. They’d like to double milk production over the next five years.
BRUCE SYMONS: From conventional farming to organic farming, it’s a three-year certification process. So, to grow quickly, it’s very difficult, and last year, the farmgate prices have been quite buoyant. So, the farmers that come to our co-operative aren’t driven by the dollar. It’s about that lifestyle and sustainability of farming.
CHRIS CLARK: If the past is any guide, it will still be a matter of slow and steady.
TERRY HEHIR: Our farmers have a three-year contract and they roll it every single year so that the co-operative’s got certainty of supply. That certainty of supply through a contract is another point of difference. And I’m immensely proud that our members roll that contract every year. There’s no figure in there for how much they’re going to be paid. The co-operative pays to the best of its capacity, having balanced its receipts with its need to invest.
CHRIS CLARK: Whether it’s butter or cheese, Bruce Symons thinks it’s the close connection between farmer and product that helps give the co-op its strength.
BRUCE SYMONS: I think it’s quite a good model. It has its limitations in some area, but I think it’s a good model for our farmers and we’ve got a very supportive group and they can see what they’re doing and they’re part of it, they own part of it. There’s no disconnect between the products that we’re making under our own brands and the fact that they’re supplying the milk.
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Reference: ABC Landline