The politics of Easter eggs

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Easter eggs are now a political football with Animals Australia is using them as an opportunity to spread the word – and the guilt – about eating food laced with dairy cruelty.

At the same time, the Australian Raw Milk Movement is preaching the gospel of Vicki Jones, the woman behind the recalled milk associated with the death of a toddler. Apparently cows being treated with antibiotics when they fall ill are “paying the price” for the milk we conventional farmers provide. Better to assume no animal on an organic farm ever falls ill (or can simply “disappear” if she doesn’t respond to a massage with magic cream).

It disheartens me tremendously that treating a sick animal with the best medicine available can be dressed up as some form of cruelty but I think I’d better get used to it fast. Why? Because there are two movements gathering pace in Australia: “food fear farming” and “orthorexia nervosa”.

Food fear farming for product differentiation
You can make money from frightening mums and dads in the supermarket.

Milk that contains added permeate (which is an ugly name for milk’s natural sugars and vitamins), is pasteurised, comes from cows fed some grain or is not organic can be made scary. And non-scary milk gets a lift!

This is a basic marketing principle called “product differentiation” and is used by marketers in every consumer goods category from toilet paper to life insurance to gain market share or justify a higher price.

“When we were conventional dairy farmers I felt so frustrated at being powerless in the industry but now we are price setters and have security. It actually feels like we are running a business.”
– Vicki Jones, raw milk farmer, The Weekly Times, 17 September 2014

The reality is that as the margins around milk become tighter and tighter, we can expect to see increasingly desperate attempts to differentiate milk brands from the mainstream.

Orthorexia nervosa
Nutrition lecturer at UNSW Australia, Rebecca Charlotte Reynolds, wrote in The Conversation recently, that:

Orthorexia nervosa, the “health food eating disorder”, gets its name from the Greek word ortho, meaning straight, proper or correct. This exaggerated focus on food can be seen today in some people who follow lifestyle movements such as “raw”, “clean” and “paleo”.

Of course, food-centric righteousness comes in many forms and I’m watching as animal activists and food activists come together.

That quest for purity teamed with the need to differentiate what is otherwise a commodity product is perfect for farmers and food marketers desperate to make a dollar. Sadly, it’s often at the expense of everyday farmers and shoppers like you and me. And, if they could have their way preventing the use of basic medicines like antibiotics, the wellbeing of innocent cows.

What climate change means at farm level

A photo by Heather Downing of the kids and me out on the farm for the Earth Hour cookbook, which appeared in The Age today

When journalist from The Age Liam Mannix asked me how climate change was affecting our farm, the answer was: in every possible way, beginning with the circle of life.

When I was a girl, we used to get the ute, the tractor and our gumboots bogged every winter. It rained and rained and rained and rained and…you get the picture. Well, not any more. With the odd exception, the winters are warmer and drier these days. Boggings are a rare novelty for my kids.

This has some real benefits. Warmer, drier winters are much easier on the cows, calves and the grass. Much easier on us, too (plugging through deep mud in horizontal rain is character-building stuff)! We can grow a lot more grass in winter and that’s fantastic.

Less than fantastic are the changing shoulders of the season – sprummer and autumn. Spring can come to an abrupt halt very early in November these days and we often wait much longer into autumn for rain.

Every rain-fed farmer like me tries to match the cow’s natural lactation curve with the grass’s growth. In fact, the amount of grass the cows harvest is the number one predictor of dairy farm profitability. So, looking at the new growth patterns, we took the plunge a few years ago and shifted the circle of life to match. Now, calves begin to arrive in early May rather than mid-July.

Our decision is backed by hard data. Dairy guru, Neil Lane, has researched local statistics and found that farms just 10 minutes away have seen falls in production of 1 tonne of dry matter per hectare and increasing risk around late spring and autumn. On our 200 hectare farm, that’s 200 tonnes every year valued at roughly $300 per tonne we lose. That’s a lot of ground to make up.

But all is not lost. Dairy farmers are adapting at break-neck speed. We are on the cusp of breeding cows that are more resilient to heat and, in the meantime, have a very well-practised regimen to protect our cows from heat stress.

We are growing different pasture species like cocksfoot, tall fescue and prairie grass with deep root systems to tap into subsoil moisture. Planting at least 1000 trees per year creates micro climates that shelter both our animals and our pastures.

All of this makes practical, business sense and it also helps me feel better about our children’s futures. We are doing something!

That’s why I agreed to talk to The Age for this article and why we were happy to be featured in the Earth Hour cookbook.
It’s thrilling to see the great stuff farmers across Australia are doing in response to climate change. Now, if we can communicate that to foodies and the animal welfare movement, just imagine the possibilities.

The Earth Hour cook book makes climate change matter to foodies

The Earth Hour cook book makes climate change matter to foodies

It’s even confused the Chaser team at The Checkout

Last night’s episode of The Checkout tackled the supermarket milk war in all its bewildering glory. They did a pretty good job but I reckon even the very clever Craig Reucassel got a little confused.

The problem with The Checkout’s closing argument is this: while processors don’t pay farmers more for each litre of branded milk they sell, they do pay farmers less when there is less money to go around (as Craig mentioned). So, when the processors sell less branded milk at lower margins because of the stiff competition from homebrand milk, they have to cut their costs.

Now, if you were a multinational processor, would it be easier to protect your profits by negotiating a better deal with the duopoly or simply tell dairy farmers that the price of milk had fallen? You guessed right, and they did, with disastrous consequences for farmers in NSW, Queensland and Western Australia in particular.

In other words, if you are among the one in four Aussies who buys branded milk, good on you! Until Murray Goulburn and Norco get their new efficient and 100% farmer-owned factories operating in Sydney and Brisbane, the $1 supermarket milk war will continue to hurt farmers in those states. Sadly, there seems to be no light at the end of the tunnel for farmers in WA and the milk supply there is so small now that it’s being trucked across the Nullabor to keep Perth going. There is a real possibility that UHT will become the new norm there, as it is in many parts of Europe.

The second area of confusion for The Checkout comes in its update about the MG deal with Coles. Here’s an extract:

“Coles is currently run by a coterie of former Tesco employees so it is perhaps unsurprising that this latest step mimics the approach in the UK. British supermarkets have moved to contract with farmers and cut the margin the processors make. This has led to higher farm gate prices for the farmers contracting with Tesco – but also more expensive requirements for them. Similarly, a lot of additional costs are expected for Australian farmers collectives, with Murray Goulburn spending $120 million on milk processing plants.”

The additional costs that come with Tesco deals are not in processing plants. It’s in on-farm compliance costs as Tesco dictates some aspects of how the small number of contracted farms are run.

In our case, the Coles deal is with the farmer-owned processor, Murray Goulburn, and nobody is talking about Coles making demands about the colour I paint my dairy door or how I raise my calves. Why is it different? A handful of (relatively powerless) farmers supply Tesco direct (and Woolies under its new Farmers Own scheme) whereas Coles is picking on someone closer to its own size in Murray Goulburn, which boasts annual revenues of $2.29 billion.

Co-operatives have never looked so vital to the survival of Australian farmers and the ability of Australians to take fresh food for granted.

Coles has forged this deal with MG because, contrary to Craig’s opinion, Australians aren’t stupid. They know $1 milk is not sustainable and they’ve started voting with their wallets: yes, the share of homebrand milk is falling.

This is a huge win for the little people of Australia – dairy farmers and milk drinkers alike. We truly are what we eat.

Co-op does fresh milk deal with Coles

Murray Goulburn, the co-op that processes our milk, sent out an email this morning that will have a huge impact on dairy farming: it will supply Coles fresh milk for the homebrand and our own Devondale milk. Here’s an excerpt from MG’s press release:

“• Devondale announces 10-year private label daily milk partnership with Coles
• The Co-operative will also relaunch Devondale branded daily pasteurised milk
• Devondale cheese will return to Coles’ shelves
• Deal will deliver additional profits to Devondale dairy farmers
Devondale (Murray Goulburn Co-operative Co. Limited), the Australian farmer Co-operative, today announced a landmark, ten-year partnership to supply Coles with daily pasteurised milk for its private label brands in Victoria and NSW from July 2014.

Separately, the Co-operative will also relaunch Devondale-branded daily pasteurised milk, through an initially exclusive agreement with Coles, and Devondale cheese will return to Coles’ shelves.
The milk price paid by Coles under this unique agreement locks in a premium that will deliver additional profits to Devondale dairy farmers over the life of the contract. The premium is not affected by price fluctuations in international dairy markets or movements in the Australian currency and the contract
contains rise and fall provisions to protect the premium farmers receive.
As a Co-operative, Devondale will return 100% of the profits from this agreement to its farmer-shareholders through higher farm-gate returns.

Devondale Managing Director, Gary Helou, commented, “The daily pasteurised milk segment is currently mainly supplied by foreign owned companies that repatriate their profits to overseas shareholders. The entry of Australia’s farmer owned Co-operative into this market segment cuts out the middle man and delivers profits directly to farmers.

“This is a logical growth opportunity that extends Devondale’s domestic presence in consumer markets and is expected to lock in returns that will be paid to farmers through higher farm-gate prices. These higher prices will benefit all dairy farmers.”

It goes on to say that:

“We appreciate that there has been considerable public concern about the pricing policy for private label milk. Under the contract agreed with Coles the retail shelf price for milk does not determine the profits that will be received by MG supplier-shareholders.”

“MG expects to receive returns that represent a premium over and above the price available in other markets such as commodity dairy ingredients. The contract is expected to lock in this premium for ten years, regardless of what is happening in international dairy markets or movements in the Australian currency. All profits on this contract will be returned to all supplier-shareholders through improved farmgate returns. This new revenue stream will also reduce volatility by providing an additional domestic earnings stream as a balance to fluctuating export earnings.

“As part of this expansion MG will be taking on new supplier-shareholders across existing and new supply zones to meet the growing demand on our milk supply. This includes growing a local milk supply in the Sydney region. The Sydney milk pricing arrangements are yet to be finalised but importantly, the arrangement provides sufficient flexibility for MG to offer a fair farm-gate price which will be supported by Coles. In other words it is expected that all profits from this project will be returned to our total supplier-shareholder base.”

Will have more on this for you later today.

A very special present from a dairy farmer’s son

Our new pastures were sown in the rain into lovely moist soil the first day after Easter. Nothing’s come up yet and although the farm is pretty green, it’s stopped raining! I can’t help checking in on the forecast every day hoping that a deluge is on its way.

Even one-year-old Alex seems to know how exciting a trip to a full rain gauge is during Autumn and, this afternoon, he arranged a special present for me.

"Mama! Mls!"

“Mama, Mama! Mils!”

Alex ran up with the “rain” he’d prepared, shouting “Mama, Mama, mills!”.

“How much?”

“Four!”

“Great work, Alex, keep it up!”

Our farm is rain-fed rather than irrigated and I must admit that I often look enviously across the valley towards neighbouring farms soaking in water during summer and critical times like these.

Typically, Aussie dairy farmers also daydream of the seemingly perfect New Zealand climate. While Australia’s dairy exports stagnated during our 12-year drought, Kiwi exports soared. This year is different. The Kiwis have had a drought of their own and without a grain industry to help them maintain their cows’ diets, milk production has plummeted.

It’s a cruel irony that the misery of our Kiwi counterparts has already begun to see the international milk prices rise and with it, our hopes for the next season.

The totem of $1 milk

Two years ago today, Coles offered up milk as a sacrifice in the name of market share. It’s now become totemic in Victoria.

The reality is that about two-thirds of Australia’s milk comes from Victoria’s cows but not a lot of my farm’s milk ends up in the supermarket fridge.

We supply the Murray Goulburn Co-op, which processes about one-third of Australia’s milk and has the technology to make a huge variety of dairy foods and ingredients. It sells to the highest bidder, so the percentage that gets exported depends on how well global commodity prices compare with local dairy markets. In 2011/12, 49 per cent was exported, which is pretty typical.

But Victorian farmers are demoralised. Many are in desperate financial positions. The effects of the collapse in global commodity prices, skyrocketing energy prices, high feed costs and the high Australian dollar are clear but shrouded in secrecy is the impact of the supermarket war.

While $1 milk gets all the attention, other dairy products like butter and cheese have also been hit by the supermarket price war. Murray Goulburn has invested heavily in relaunching its supermarket brands and CEO Gary Helou infamously got all hot under the collar last month about Coles’ refusal to stock MG’s Devondale cheese. But nobody can talk about how Coles and MG negotiate our livelihoods behind the tinted windows of “Darth Vader’s Castle” as the Coles HQ is fondly nicknamed by its suppliers.

We’ll probably never know just what the damage has been – only that our situation is very different from that in states like NSW and Queensland where there is pretty much total reliance on fresh milk sales.

But what those claiming to be “the voice of reason” dismiss is the effect ‘milk that’s cheaper than water’ has on the psyche. It signals to farmers that a fair go no longer matters. And that’s what hurts the most on Australia Day.

Will Curtis Stone come to the rescue of Aussie farmers and foodies?

Coles is pushing prices down, down, down to help the Aussie battler, right?

Actually, it appears the driving force behind Australia’s supermarket wars is something much more prosaic – supermarket ROI. According to the Sydney Morning Herald:

“A report released in March by the Merrill Lynch analyst David Errington warns that the big three retailers, Coles, Woolworths and Metcash, will need to boost their earnings by $1.3 billion in the next three years if they are to make an acceptable return on the billions of dollars of investments made on acquisitions and capital expenditure. This is on a total earnings before interest and tax (EBIT) pool of $4 billion for the retailers.”

“In the past year, the profit growth of the entire sector has shrunk. Errington’s report says that in the first half of this financial year, the three food retailers delivered a combined EBIT growth of $150 million, a far cry from the $400 million-a-year earnings growth required to make an acceptable return. It will be interesting to see what the full-year earnings will be when the sector reports in the next few weeks.

“If Coles, Woolworths and Metcash fail to generate suitable returns on capital in the next couple of years, investors’ patience will run out and the groups will suffer a significant de-rating.

“It goes a long way to explaining the intensifying price war among the supermarket chains as they try to snatch market share to justify their investments.”

Doesn’t sound like the hostilities will ease up any time soon, does it? In the meantime, we can expect more and more private-label products – especially dairy – to flood the shelves of Coles and Woolworths.

Research by IBIS World Australia reported in the International Business Times showed that, already, “Up to 68 per cent of butter sold in the two supermarkets is private label, while for sugar it is 67 per cent, 56 per cent for bread, 55 per cent for fresh milk and 53 per cent for eggs”.

Alarmingly, the researchers predicted that “by 2017, the share of such products would make up one-third of total supermarket sales”.

Why am I alert and alarmed? Because this is bad news for anyone who cares about good food. When price becomes the only differentiating factor, quality must suffer right along the food chain and the ones who will ultimately feel the pain will be the little people – the farmers who grow the food and the consumers who eat it.

So where does this leave the foodies of Australia? I’ll let you draw your own conclusions.

No need to worry, I guess. Celebrity chef Curtis Stone will save us all. His spin doctors, Thrive PR, say this:

“And don’t think that Curtis is just a face when it comes to his partners like Coles. He is an active contributor behind the scenes to their business and marketing function. Their success is his success.”

Then again, maybe he’s blissfully unaware of the damage to Australian food caused by “his success”. I intend to appeal for help by emailing him at contact@curtisstone.com and am sure he’d love to hear from you, too.

While you’re at it, don’t forget to sign Lisa Claessen’s petition to Coles CEO, Ian McLeod by visiting http://www.change.org/en-AU/petitions/coles-up-the-price-of-generic-brand-milk-to-a-sustainable-rate-of-return-for-all