MID-sized farming enterprises frustrated by their diminishing marketing clout and the effort required to chase a fair price for their crops or livestock should look to co-operatives to help achieve their goals.
Co-ops formed specifically to bargain with buyers could provide greater peace of mind, more marketing efficiency and more reliable farmgate returns from the value chain says a study released today by the Rural Industries Research and Development Corporation (RIRDC).
Co-author and Bond University competition lecturer, Professor William van Caenegem noted regional or national farmer co-ops were a strong force in the North American, Europe and New Zealand farm sector - and not just as traditional processors or rural supplies groups.
In Australia, however, family farms typically struggled to match the scale or skills of the buyers they negotiated with, or those of rival corporate-sized farm enterprises.
Professor van Caenegem said in Australia's deregulated marketplace farmers were invariably competing with each other rather than pooling their resources.
They tended to have, strangely, abandoned the advantages of a co-operative culture and collective bargaining tactics which existed across much of the industry last century.
He said co-ops could flexibly service agriculture in any way farmers needed them to work, not just in the traditional manufacturing roles once widely common to the dairy, sugar or horticulture processing sectors.
Benefits of collective bargaining
Medium-sized farms stood to benefit from a return to more collaborative bargaining groups organised as co-operatives which would by-pass the Australian Competition and Consumer Commission's (ACCC) need for special consent to negotiate deals directly with buyers.
Such farmer groups would be better placed to employ professional marketing help, and better educate members on how best to unify their negotiations with commodity traders, retailers, and processors.
Retailers and processors would also benefit from the assurance of consistent quality and reliability of supply which producers working together could guarantee.
The RIRDC's report on collective bargaining is set to help guide a pilot programme to boost farmer competitiveness in the marketplace - a priority flagged in the federal government's Agricultural Competitiveness White Paper.
The RIRDC pilot will be designed to assist farmers with information and materials on co-ops, collective bargaining and innovative business models which may lift primary producer productivity.
Professor van Caenegem said some new co-ops and collective bargaining groups already represented regional producer groups in marketing talks with supermarkets, exporters and processors, notably in the dairy and fruit sectors.
More broadacre enterprises such as graingrowers or lamb producers could improve their bargaining firepower on a regional, or larger, co-op scale, too.
"We should have a close look at how modern co-ops operate overseas," he said.
"The US has a lot of big and competitive agricultural players, and yet it also has a lot of co-operatives who hold their ground in the marketplace - in some cases are very big players in their own right.
"NZ has some very successful agricultural export commodity co-operatives, particularly in its horticultural and dairy industries, which have been helped by flexible government legislation."
While Australian farmers were competitive business operators, he said many mid-sized businesses were disillusioned with their returns and the time and effort required to achieve what appeared to be "a declining percentage of returns from the commodity value chain".
Although most of Australia's agricultural output came from the top 25pc of farms, there was a "real untapped opportunity for medium-sized farms to collaborate and increase the importance of their contribution to the industry".
The University of South Australia's Dr Jen Cleary, who also co-authored the report noted particular forms of collective bargaining may work better in particular industries and regions.
There was no one-size-fits-all formula.
Professor van Caenegem, an intellectual property and competition law specialist was also involved in a RIRDC study into helping farmer returns by marketing the provenance of Australian food.
He pointed to potential advantages to regional development from legislating and protecting "geographical indications" for food and beverages originating from specific regional backgrounds.
Also released this week is research supporting farm productivity through smarter decision making, drawing on insights into some of Australia's most effective farmers, as nominated by industry peers.
It found regardless of a farm's size, information, planning and family were common priorities for the successful farmers studied, as was aligning growth strategies to business goals and improving financial literacy.