Bush Matters Op-Ed – “A co-operative approach”

28 November 2014

It is not mentioned every day, and it still remains just an ambition in the eye of a few passionate politicians, but the word cooperative is once again being spoken in the corridors of Canberra.

Whether it is sugar, beef or dairy, these industries have long and proud histories of cooperatives and/or grower-controlled entities scattered across the nation.

However, following the deregulation mantra of the 1980s and 90s, farmers gradually opted to relinquish control of these businesses and have long since cashed in their shares.

There is a case to argue that deregulation has, in many cases, left a gaping hole in the pockets of some farmers where their profits used to be.

There is certainly an ever increasing frustration among primary producers about the squeeze on their profits in the supply chain.

Decades on from the deregulation push, the consequences of these decisions are causing alarm among primary producers.

It is also leading industry and government to consider options for how apparent market imbalances can be addressed.

A milestone in understanding the role of cooperatives in the current Australian economic landscape was released earlier this month by the Business Council of Co-operatives and Mutuals.

The group’s 2014 National Mutual Economy Report lists the top 100 cooperatives and mutuals in what is a successful, yet often under-recognised section of our economy.

The report demonstrates the last remaining agricultural cooperatives are still reaping benefits for their farming shareholders.

If we skim through the introductory pages, we find a double page spread of the report, which details the cold hard figures.

Agriculture co-operatives have a combined turnover of more than $7 billion out of the total $25 billion generated by the top 100 co-operatives in the nation.

In fact, the top two co-operatives in Australia – across all industries – are West Australian bulk grain handler CBH and dairy processor Murray Goulburn.

While it always remains controversial over whether shareholders should retain their cooperative model or corporatize, these businesses have remained cooperatives and have invested company profits in improved infrastructure and further expansion.

As many will attest, the assets of these shares have also provided security to the farmers’ bank manager.

Further down the top 100 cooperative list, in 18th place, is Norco, which was one of the biggest winners from the free trade agreement with China.

Norco has 288 active shareholders across 159 farms and remains a shining example that Australian farming cooperatives can still compete, even in the cut throat world of supermarket staple items.

As reported just last week, Norco is an early adopter of fresh milk exports into China has recently had an order to supply an additional 90,000 litres of milk over three months to Middle Kingdom.

This improved market access has given the cooperative further confidence to invest $4.5 million to upgrade its Raleigh dairy processing facility, which will enable more processing capacity for its milk and more earning capacity for its shareholders.

So despite positive indicators that agricultural cooperatives can compete in the Australian and global marketplace, there is scant mention of a resurgence in cooperative models within Australian agriculture.

There is little doubt the ability to raise capital to fund establishment and further growth has stopped some would-be entrepreneurs before they really commenced.

The Green Paper for Agricultural Competitiveness delves further into this issue, with a listed ambition to consider what the Federal Government can do to encourage the development of more agricultural cooperatives.

Submissions for the submission process close on 12 December.

It is clear there are opportunities on the horizon for Australian agriculture.

Australia’s trade in goods and services reached a new high in 2013, growing by 3.7 per cent to $647 billion.

The Federal Government has signed free trade agreements with China, South Korea and Japan, which represent 52 per cent of our current export market.

The National Farmers Federation has speculated that Australia could conceivably see a tripling in agricultural exports to China within the decade.

But if our family farms are to reap these economic benefits, we must first begin searching for multiple ways to address the problems surrounding profitability and supply chain imbalances.

Cooperatives are one of the ideas that have been put on the table.

We need to have this conversation, so that action can be taken.