Department of Agriculture and Water Resources, April 2016
These case studies share examples of existing farmer collaboration
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- Oz Group’s production and revenue has been growing 25-35 per cent annually, bringing opportunities and challenges.
- Their growth strategy includes a $12 million packing facility in Coffs Harbour and expanding exports into Asia.
- Growth is aided by the co-op’s handling of ancillary tasks, allowing members to focus on growing blueberries, as well as the value from a marketing partner.
- Co-op buying power has reduced members’ production costs through discounted fertilisers and other inputs.
- Planning for growth is not the only challenge and co-ops require specialised accounting and legal advisors.
- Co-ops should be headed by a team with professional skills to handle growth, including good relationship skills.
- For further information visit agriculture.gov.au/cooperatives
Managing rapid growth presents both opportunities and challenges, as blueberry growers in Oz Group Co-op Ltd can attest. Based at Woolgoolga, near Coffs Harbour on the NSW north coast, Oz Group Co-op’s 100-plus members have been enjoying annual growth of 25 to 35 per cent in both production and revenue for several years, says Chairman Gurmesh Singh.
In 2014–15, Oz Group’s production was 2 500 tonnes with a turnover of $65 million. Gurmesh says its current monthly turnover matches its annual turnover of five or six years ago. ‘It means our staff and our infrastructure need to stay ahead of that growth, and have access to appropriate finances. That is the challenge.’
Oz Group’s growth strategy includes investing in a new $12 million packing facility at Coffs Harbour, which will open in time for the 2016 season. It also plans to export to China, India, Japan and Republic of Korea—an exponential expansion of its current exports to Singapore, Vietnam and Hong Kong.
Gurmesh says a range of factors is driving the co-op’s growth. This includes the co-op team’s assumption of all ancillary responsibilities, allowing members to focus on growing blueberries. The growers drop their field trays into Oz Group to get sorted, packed, chilled, distributed and marketed and the co-op remits payments back to the growers, after collecting the industry’s R&D levy.
Increased yields that match growing consumer demand, reduced costs and greater efficiencies are also strong contributors to growth. A critical success factor is Oz Group’s relationship with marketing partner Driscoll’s, which sells the co-op’s blueberries to supermarkets. Driscoll’s brought over a blueberry agronomist from the US to advise co-op members, resulting in higher yields.
Producers contemplating joining or starting a co-op should be sure the right team is at the helm, equipped with the professional
skills to handle growth.
Farmers need to trust the co-op’s employees with their crop, so the co-op’s people need to keep working on those relationships with growers.
Strength in numbers when dealing with both suppliers and major customers is another benefit to co-op members, says Gurmesh. This buying power enables the co-op to reduce production costs by supplying members with discounted fertilisers and other inputs at its store.
Gurmesh says the shared interests of its members, inherent in the co-op model, is the co-op’s main benefit. ‘Members can see that by supporting this co-operative, they are supporting their own businesses and sharing any profit it makes.’
Oz Group Co-op Ltd started in 2013 after growers had experienced the limitations to growth of their initial partnership structure and, later, a company structure. Extricating itself and re-emerging as Oz Group Co-op Ltd, with ownership of the Oz Berries brand, took several years.
Now, with the co-op in a maturing stage, planning for growth is not the only challenge, says Gurmesh. ‘A co-op must negotiate more regulatory hurdles and needs specialised accounting and legal advisors who are experienced in dealing with co-operatives.’
‘Another ongoing challenge is keeping members happy. Your shareholders are your clients, so you have to work with them to resolve any issues. Ultimately, that is much better as a long-term relationship than an adversarial one of client-manager,’ he says.
He advises any producers contemplating joining or starting a co-op to be sure the right team is at the helm, equipped with the professional skills to handle growth. He cites relationship skills as paramount. ‘Farmers can be quite independent. They need to trust the co-op’s employees with their crop, so the co-op’s people need to keep working on those relationships with growers.’
These case studies were compiled by RIRDC to share examples of existing farmer collaboration.