Producer co-ops the key to bargaining power

11 December 2017

Producer co-ops the key to bargaining power with supermarket chains, says South Australian parliamentary inquiry

Parliamentary Inquiry says primary producers should form co-ops to get a fair deal from supermarkets.

The co-operative model can help primary producers form value chains to give them stronger negotiating power with supermarkets, says the South Australian parliamentary inquiry, From the Paddock to the Plate – A Fair Return for Producers.

The inquiry recommended:

• All government grants and legislative instruments for primary producers be made available to co-ops
• The sa.gov.au website ‘Starting a Business’ section should detail the benefits of banding together with former competitors to increase their commercial power, address issues of scale and advise on operating in larger supply chains

Business Council of Co-operatives and Mutuals (BCCM) CEO Melina Morrison said, “Primary producers are vital contributors to the state economy and many of their organisations are owned co-operatively on behalf of farming and fishing families. The BCCM congratulates the inquiry committee for supporting a fair return for farmers with these legislative, regulatory and policy reforms.

“It will be fantastic to see South Australian co-operatives given access to funding opportunities that were previously inaccessible due to their governance structure.

“The Federal Farming Together program launched the BCCM’s co-op building tool earlier this year to assist farmers. We look forward to incorporating state-level farming grants into the tool as they become available to co-operative structures,” said Ms Morrison.

The inquiry also said SA primary producers could replicate the scaling success of agribusiness giants like the Western Australian CBH grain group by forming co-operatives with similar producers to get better prices for transport, processing, marketing and distribution.

Prominent and highly successful South Australian co-ops already doing so include almond processor Almondco, Lenswood Cold Stores which store, pack and market apples, and the Master Butchers Co-operative.

Almondco represents 85 per cent of all Australian almond growers, who do everything until the point the product is delivered to Almondco for processing, explained its Chairman Simon Lane. “Some risk can be managed by the company. We are responsible for not only the processing but the marketing, so we deal directly with the supermarkets here in Australia; we deal directly with import agents overseas. We export to 35 countries. We are doing all of that role on behalf of the growers. They don’t have to have any role in face-to-face communications with any entity that’s buying their product,” said Mr Lane.

According to the report, South Australian consumers are more likely to support local, state-based produce and producers, when compared with their consumer counterparts in New South Wales and Victoria, but can’t buy as much as they would like from major retailers.

The report recommends that the government educate primary producers to regard each other as potential partners instead of competitors. Using the co-operative model, producers can then access bigger markets, as they can satisfy stock levels large retail chains require. 

Our Co-op Fresh Foodland’s Phil Schmaal said their Barossa Larder helps smaller local Barossan producers reach a larger customer base. “In total, The Barossa Co-op actively supports over 30 local producers, including cheesemakers, fruit and veggie growers, coffee roasters, pickle and chutney makers. We would like to incorporate their products into our online shopping experience and grow that business to take the best of the Barossa into the suburbs of Adelaide,” said Mr Schmaal.