The great Aussie family dairy farm vs the corporate 10 bagger

MorningWorkersLoRes
With all the gorgeous artworks blu-tacked in pride of place and treats devoured, the kids and I spent much of Mother’s Day together in the great outdoors maintaining fences. They rode their bikes through the puddles while I launched an all-out attack on the tangles of blackberry canes shorting out the hot wires.

Not that any of that is unusual: right across Australia, there would have been kids helping to get in the cows, feed the poddies or hose the yard. In fact, 98% of Australian dairy farms are family affairs and everyone gets their hands dirty.

The other 2% of farms are corporate-owned and this group seems to be growing fast. Everyone from Gina to the Chinese see dairy as the new white gold and investment dollars are flowing in fast.

Investors want control and they only want to invest their big wads of cash in big operations, not in average farms like mine. They boast that consolidating farms, achieving economies of scale and enhanced bargaining power with the processors will turn dairy farms into lucrative “ten baggers“.

On the other hand, large corporate farms are not always appealing to their prospective neighbours. They have large footprints in small communities fearful of increasing numbers of trucks growling up and down quiet country roads, massive effluent ponds and, perhaps most controversially, large sheds housing large herds.

The new Chinese owners at Kernot in Gippsland, for example, must be wondering whether their investment really is welcome. Opposition to the proposed largely housed dairy operation from Kernot locals has been furious.

The concerns of Kernot residents has been amplified by the Australian Food Sovereignty Alliance, which says “dairy intensification is not the way to a fair food future” and took a stand against the farm on April 17 in commemoration of:

“April 17th, the International Day of Peasant and Family Farmer Struggle is an occasion to recognise the negative impacts of the industrialised food system on small-scale agriculture, and to remember those who have died fighting for their right to food and the freedom to produce it.”

“Died fighting”? Should I rage against intensification and, emulating French farmers, demand some form of protection so that I may remain a peasant?

Source: Daily Mail

That’s not really the style of Aussie farmers. We get cranky at local discussion groups and carry on milking. Why? I think it’s partly because there is no real solution. We can’t have tariffs because we rely on free trade for a fair go in international markets, we don’t have cheap labour or the lax laws of many competitors (and would rightly rail against that anyhow) and even a superpower co-operative cannot offer enough protection for exposed farmers when bitterly cold trade winds blow.

The difficulty is that we produce a commodity that is traded on now dizzyingly volatile international markets. Surviving and thriving on the rollercoaster demands the ability to keep costs low in tough times. Ironically, that hits corporates particularly hard, who must keep paying wages no matter what and whose investors tend to have less patience to ride out the bumps.

Unless the big corporates have access to especially favourable and stable markets, like the A2 Milk phenomenon that underpins the huge sheds of cows owned by the Perich empire, there are interesting times ahead for all of us – big and small.

3 thoughts on “The great Aussie family dairy farm vs the corporate 10 bagger

  1. Pingback: The great Aussie family dairy farm vs the corporate 10 bagger | The Global Dairy

  2. This comment came to me via email from “Currumbinvisitor”:

    Dear Marian

    Another excellent article. Of course the corporatisation of farms has been going on for a long time – huge beef operations, huge grain operations (Grain the other Gold period), huge irrigation operations (Cobbie Farm) et cetera.

    And while prices are close to average or above, and yields are close to average or above these corporate operations do very well, and with the benefit of advantages of scale can outcompete other producers and on occasion make things difficult for the neighbours in respect of prices. However once things become tight – low prices and low yields – they can’t tighten their belts to anything like the degree that most partnerships can. I remember in 1983 when average full time male earnings were $18,500 per year, because he was a drought year I my wife and my three sons survived on at $8000 for the year. So it is often at these times that the corporate companies fail.

  3. Not a fan of any of the corporate farming models in your article, except one and no surprise for guessing which one that may be. Take a look at a model in New Zealand that works well over there and although not entirely replicable here could be used as the basis for a good working approach that balances the needs of the farmer community and securing corporate funding and backing. Dairy Holdings Limited (www.dairyholdings.co.nz).

    Also I am sure many watch what Bill McDonald is up to on the SA / VIC border and with Camperdown Dairy.

    The Kernot debacle makes me cringe I have to say as it smacks in the face of everything that differentiates AU/NZ product from the rest. Poor council must be getting a hammering on this one for consent applications from all sides.

    Can’t say the Perich approach excites a lot either, glad they are in NSW not VIC – out of sight out of mind sort of mentality.

    Wonder where Linear Capital is with its “lets buy up SW Vic”…

    Murray Goulburn is on its merry way to being a mini-Fonterra on the ASX, wonder if they have had a change of heart and want to buy farms with the new found wealth instead of using the backdoor (overseas super fund through a 3rd party).

    Dear dairy farmer(s), be wary of the “coming to you soon” clean heeled slick salesman with a deal even you might find hard to reject. Hang in there and say no.

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