A group of 5 dairy families from North East Victoria left their processor and started their own co-operative. The Australian farmers found a way to regain control over their future.
In 2017 Australian dairy processor Murray Goulburn announced it would sell its co-operative for AUS $1.3 billion (US$ 946 million) to Canadian company Saputo. Murray Goulburn had made some controversial decisions, one of them being a claw back of AUS $183 million (US$ 133 million) it had already paid to suppliers. A group of 5 dairy families from North East Victoria decided to take their future into their own hands. They left Murray Goulburn and founded the Mountain Milk Co-operative.
Chairman Stuart Crosthwaite of the co-operative explains that the dairy farmers felt let down. “For generations we had been supplying co-operatives, the last one being Murray Goulburn. But they weren’t able to convert from the market and we didn’t get paid a decent milk price.”
The fifth generation farmer from the Kiewa Valley says that “we were concerned about how we were being treated. As farmers, as people and as members of a co-operative. We weren’t happy with this.”
It was in a way a courageous move for the farmers that committed to our initiative.”
The 5 families, with farms just 10 kilometres from each other, came together and weighed their options. “We thought: it’s great to have a local processor if it is performing well,” Crosthwaite says. “But when it’s not, it is a high risk to have just that one avenue to sell your milk to market. At first we considered bringing another processor to the region but we are geographically cornered here. Most processors are at least 2.5 hours away.”
The dairy farmers received AUS $140,000 federal government funding through the so called ‘Farming Together’ project to help start their new co-operative. “It forced us to get organised real quick,” Crosthwaite emphasises. “But it surprised us as well. We did not have any avenues to send our milk to at the time. It was in a way a courageous move for the farmers that committed to our initiative.”
Stuart and 2 other farmer directors used the funding to complete postgraduate studies about co-operatives at the University of Newcastle. “That opened our eyes to what a co-operative is. We only knew Murray Goulburn. Initially our number 1 goal was to make our farming businesses more profitable. A big processor will basically provide you a milk price and leave you to generate your own profit. But in a co-operative like ours you can help each other to achieve more profitability. We were looking more from the perspective of the farmers as opposed to that of the processor. I think sooner or later the big processors will too have to focus on the farmers’ profitability.”
Mountain Milk offered the farmers also the opportunity to appreciate their work, Crosthwaite says. “We are all good farmers. We care for our animals, our environment, our people, and we want to do the right thing. We live in a beautiful part of the world. But we were not really enjoying any of that. When we announced the start of our co-operative, we received a lot of support from businesses and people. Particularly from co-ops. We realised then that we were on the right track.”
Soon after the formation of the co-operative was made public, manufacturer of dairy products Freedom Foods approached the farmers to offer them a long term milk contract. “They are now taking most of our milk over a 3-year period,” Crosthwaite states. “But we are still searching for ways to work together and do things better. To find out how we can work more efficiently and how we can solve more complicated issues together.”
Mountain Milk now has 8 members from the Kiewa, King and Yackandandah valleys. All members of the co-op have 1 vote and every kilogramme of milk solids gets paid the same. Yearly the co-operative produces 23 million litres of milk, of which 20 million litres is supplied to Freedom Foods. The co-operative also has supply agreements with Gundowring Fine Foods and Lactalis.
After 18 months in the co-operative Crosthwaite adds that Mountain Milk has given him a sense of purpose and direction. “I feel I’m in charge of my own destiny. And with Freedom Foods we now have a multiple year milk price, which has given us some security.”
The farmers of Mountain Milk are investing and concentrating on their farming business, Crosthwaite points out. “As farmers we are confident about our future. Things are going well.”
The co-operative is also looking at providing bottled milk to its own regional community. “That is one of the reasons for starting our co-op as well,” Crosthwaite says. “We want to improve our link to the community. That is another thing we missed previously. Big co-operatives are often focusing on profit and not giving anything back to the community. And what better way is there for us to link with people here than through providing them with our milk?”