Transforming a defunct abattoir into the hub for a meat co-operative on South Australia’s Fleurieu Peninsula
Satisfying everyone involved from paddock to plate is the driving force behind the move to take over a defunct abattoir and transform it into the hub for a meat co-operative on South Australia’s Fleurieu Peninsula.
Located 55 kilometres from Adelaide and with a population of around 6,500, the town of Strathalbyn is known not just for its picturesque scenery, but also for its production of top-quality beef, pork and sheep, which also provide high-quality wool.
This ability to process meat locally was in jeopardy when the abattoir closed. For many years it had been a family-run operation, but was later owned and decommissioned by a large commercial group. The farmer who then purchased the land was not interested in the abattoir, which led to a push to run it as a co-operative.
Grant Baker is the visionary behind this initiative and brings with him decades of advertising and marketing experience in Australia and overseas. The Managing Director of Adelaide-based PKF Accelerate, Mr Baker was initially asked by the Regional Development Association to carry out a feasibility study to investigate how to get the abattoir up and running again.
After the potential for a co-op became clear, Grant managed to unite farmers and other stakeholders from right across the food chain in pursuit of a common purpose. “Very quickly we realized that the role that it actually played in the community was far larger. The impact that it had of its closing was being felt exponentially across the area, not just from the farming community, but from the demand side as well,” explained Mr Baker, “from restaurants and other businesses – we just saw it as such a key element that the community was missing out on that we took it up quite aggressively.”
Grant decided to bring on board David Parsons, a regular user of the abattoir who had previously spent several decades working overseas in international trade before returning to his roots where his family had farmed for around 140 years. “What we’re looking at now is an organisation that will help us meet the needs of our consumers. And we can work together over the long term,” Mr Parsons noted. “We can have products that the consumers actually demand, right across the board – from wholesaling to retailing on the plate.”
You can also read our story to discover how the co-operative business model was selected and why on of the key considerations was the concept of paddock to plate.
Melina [00:00:02] Farmers markets have been instrumental in feeding people’s interest from paddock to plate. Hi, I’m Melina Morrison, CEO of the Business Council of Cooperatives and Mutuals with our Michael Kavanagh, who’s on the road in South Australia. Just where the food comes from not just at the paddock, but increasingly people want to know the complete road the food travels before hitting their plate. When an abattoir in South Australia’s Fleurieu Peninsula closed, it left the area’s primary producers without a means to process their animals. They decided to look at buying the abattoir as a co-operative. It’s now looking at very much value adding and having everyone from the producers to cafes, restaurants and hauliers involved so there would be a complete product. BCCM’s Michael Kavanagh was left wanting to taste the food of the region.
Michael [00:01:01] Melina, It certainly has the taste buds salivating because it’s an area that’s well known for its primary production, particularly in the meat area, and so the farmers they get it. But in this case, it’s not just the farmers that are involved, in fact, the driving force of it is a bloke, who’s been in advertising and marketing most of his life here and overseas. Can you picture him working with the sheep or the beef or the cattle as they go up the run to the abattoir?
Melina [00:01:30] It sounds like a really interesting project, you got my taste buds going.
Michael [00:01:35] Well, this is the interesting part is that they’ve got the cafes now moving in, the restauranteurs and some of the food supermarket. And it is interesting because not only farmers, but you’ve got, for example, PCF Accelerate’s Managing Director Grant Baker, and he’s very much looking at the marketing side and the logistics. And then you’ve got a bloke like David Parsons. His family go back well over 100 years as farmers in the area. He’s had an illustrious career overseas in international trade, and he came back not just to take over the farm, but he found that it’s also part of that is taking over the abattoir.
David [00:02:28] We got a very diverse area. It’s probably one of the richest sort of and most diverse agricultural areas definitely in South Australia, but in southern Australia, and we have the range from orchards right through to different livestock production, from broadacre livestock production, dairying and to more intensive livestock production so that’s a tremendous area, very picturesque. A lot more people around the provenance of the whole district is now well known amongst consumers.
Michael [00:03:02] And given that wide breadth of primary production when it comes to meat processing and the abattoir, what sort of livestock is being run in the area?
David [00:03:15] Well, I mean, we’ve become more and more aware through our marketing organisations and nationally and statewide to be much more concerned about consumers. But actually, we don’t find the means of doing that so much. It’s a fairly blunt instrument. So what we’re looking at now is sort of an organisation that will help us meet the needs of our consumers and we can work together over the long-term so we can have product that the consumers actually demand, whether they be right across the board from wholesaling to retailing on the plate.
Michael [00:03:50] So in the area, beef, sheep and pork?
David [00:03:55] Basically, yes that beef sheep sort of crossbreed sheep, which are absolutely real fun, the beautiful meat sheep. We have pork from some very specialised pork and we have a sort of dairy production but we also have really top line beef here and various ranges of beef available. And there is actually a whole lot of other products like alpaca and specialised game products and everything. But whether we’ll be able to tap all of that is a question for the longer-term.
Michael [00:04:32] And what do you run yourself?
David [00:04:34] I run basically sheep for wool and meat and also crossbred sheep, which are really fine meat sheep that go directly to be slaughtered for meat production. And I’m sure that my family’s views are any indication, they are very good eating sheep.
Michael [00:04:52] Well, you’ve had long ties in that area, going back a number of generations. The abattoir, it was operating for many years, so your families had involvement with it one way or the other. How did the farming community work with the abattoir when it was privately owned?
David [00:05:09] Well, I mean, it’s changing circumstances, really. The localised abattoirs in the earlier days were because transport was difficult, but we didn’t have the sort of interest in provenance and sort of servicing communities and now consumers. Now the big concerns have taken over and the smaller ones fell aside and at the great expense, the cost of that actually was the idea that we lose the intimacy of markets and the provenance and our being in touch with consumers there, whereas we never really were able to reach those people. So it left a big hole when this particular abattoir closed up.
Michael [00:05:48] Now you’re on the board of the co-op and another person on the board is sitting next to you and you’re not out on the farm at the moment. You’re in a studio in South Australia, Grant Baker, who’s the managing director of PKF Accelerate. And Grant, you’ve got a long career in advertising and marketing, both overseas and in Australia. Why get involved in the running of an abattoir?
Grant [00:06:17] It’s a great question, Michael. For us, we got involved through the Regional Development Association, who were desperately trying to find a way to get the abattoir reopened and up and running. And we initially looked at it from a pure feasibility basis, but very quickly realised that the role that the abattoir was actually played in the community was a far larger role than the impact that it had of its closing was being felt exponentially across the Fleurieu, not just from the farming community, but from the demand side as well from, you know, restaurants and which was etc. We just saw it as such a key element that the community was missing out on that we took it up quite aggressively.
Michael [00:07:05] Grant, you’ve got a long career in advertising and marketing. It’s not that many a weekend where you’d be found crutching sheep or working with cattle or pork, but you that’s been the driver behind the abattoir. It’s you that got people like David Parsons, who’s the farmer to come in on the co-op. It’s kind of which is first the chicken or the egg.
Grant [00:07:29] Well, from our perspective, when we did the feasibility study and modeling of the numbers and we’re looking at what it would actually take to create a co-operative that would be sustainable and have longevity, it was key that we started the way we wanted to finish with a combination of both supply and demand on that board. Alongside that, we also knew that it was key to have people come into the co-operative, especially as the chair that had a very strong commercial sense that it was not just about, you know, I understand sheep and I do some farming a bit. It was someone who has had extensive experience in the commercial realms and in the trading market. David is on the board of one of our entities. When I was looking for someone to represent the farming site of the initial board. It was a no brainer. His understanding of the area, the fact that it’s a 140 years of family history, the fact that he is a grazier, but the fact that he also comes with that extensive commercial experience and knowledge that we’re going to need to ensure success so he was the first person that I called.
Michael [00:08:38] Well he called you and why given he’s got a lot of experience, particularly in Asia, in trade, why, though, didn’t you go down the path of just taking it over as a commercial operation? Instead, you chose the co-operative?
Grant [00:08:53] We went through quite an extensive process on this and we actually, we looked at both business models. We looked at the private route and we looked at the co-operative route. And the thing that really swung it across to the co-operative route was we understood that this is quite a cutthroat business, excuse the pun, and there are some large, aggressive competitors out there, and we wanted to ensure that there was continuity for the community to have a facility that wouldn’t be focused on export that was focused on quantity that allowed the availability for smaller farmers to process smaller numbers of animals and have the opportunity for private kill. One of the key considerations was the concept of paddock to plate. The sustainability and food production in South Australia has always been very high on the agenda. But what we’re seeing nationally now, it’s becoming an absolute key issue and there is no facility in South Australia that allows from paddock to plate. Why? Because they are all the large commercial abattoirs, the private ones or the mobile ones that operate that do their private work for smaller farmers, can’t produce a licence to forget to actually create a licence to actually sell that meat, which meant that with a private equity model, it would be about profits. Whereas with the community model and a cooperative model, it was actually about securing the future of the actual community of the farmers and an equally important the, you know, the restaurants, the butchers, the supermarkets that are looking for, well processed high quality regular supply of meat that is paddock to plate and the co-operative model is the way to do that.
Michael [00:10:39] David, how important then, was it almost to have that trust of the community and therefore it not being purely a commercial entity?
David [00:10:49] Well, let me say at the outset, I’ll give you a bit of a secret that while Grant may come with the experience in marketing, he moved to South Australia because he was very interested in the provenance. He moved to South Australia to take to really sort of sip the wine and ate the meat. And so that’s one of the reasons that convinced me, and he actually saw this very clearly from the beginning, what the potential there. Now the problem is that there’s I have no problem with the big guys, you know, the ones who the big abattoirs, they keep us sort of a bit dumbed down. So it’s very hard to have this conversation between farmers, who really nurture their produce and consumers and restaurateurs or butchers, who really have to answer to their consumers. So, you know, this is a huge I mean, I think the whole farming community has embraced this with the enthusiasm because it enables us to have a much more intimate, much more productive relationship right down the supply chain sort of ways we can do that, match each other up with technologies and so on. It’s not just a question of folklore. There are ways that we can work together. So I think really, this just adds much more balance to the symmetry. And it really was for farmers an asymmetric process before. And so we want to see great success out of this.
Michael [00:12:11] David, you’re a farmer, you’re producing dual income with your sheep, both for wool and for meat. Now, the image of the abattoir community run would be of primary producers, but you’ve touched on it, and that’s that idea, as I understand it, there will be what butchers, café owners, restaurateurs and you’ve got a board member, who’s in the small goods processing industry.
David [00:12:37] Absolutely, I think that opens up a whole lot more vistas and it really, you see with the market realisations, we’ve been saying we have to be answerable to the consumers. We’ve got it. We’ve got to get our meat set up for consumers, our wool set up for consumers and so on. But really, that was talking the talk; we weren’t able to walk the walk. And this is really one means that we can do that by actually over the long-term, as groups of individual farmers, as groups of farmers work with our consumers right along the supply chain and make sure that all parties are satisfied. And we hope, therefore there’s going to be much more symmetry in the actual financial rewards as well. So, you know, we’re approaching this with great enthusiasm.
Grant [00:13:18] It’s worth mentioning that one of the key issues we identified very early in the piece is that up until now, farmers have been forced into being a price taking community. The price of meat, how it’s processed, et cetera is kept very gray. There is a network of brokers and exporters and et cetera that try and keep it instable. And the challenge that comes with that is that for a farmer, it’s all about herd management. You know, you don’t know what the value of your livestock is over the next three or six months. Coming into winter, it becomes a higher risk value, and that lack of transparency on the one side is a major issue. On the other side, you have supermarkets and butchers that are looking for reliable, consistent supply of quality produce, and they have an equal challenge and they don’t have a route to that. So what we identified was the opportunity to actually create transparency between the supply and the demand side to allow farmers to connect directly with those retailers or those restaurants, which meant that two things were achieved. Instantly, one, there is transparency on pricing, and the farmer could actually look at working through what the value of their stock was over the next three or six months. You know, fixed pricing, pricing that made sense, which meant that herd management and control came in so that the risks the farmers substantially. And on the demand side, it solved a massive issue of inconsistency of supply of produce. One of the large supermarket chains in South Australia is a group called Foodland and one of the groups, Foodland recently announced that they are shifting their entire marketing strategy to from farm to fork not just in terms of paddocks to plate of meat, but across the board. And they can’t do that kind of operation without a structure or a cost structure like the FCC. So it really was, it wasn’t simply about, you know, what was the easiest or the best. It was actually what was solving the key problems of both farmers and the demand side of the process. And that transparency is what co-operatives is all about. We talk about the reciprocity and the mutual mindsets of cooperatives, and this entity or the structure allows that to really happen in a positive way where it’s non-competitive, it’s actually working together and the community is so secured and sustainable going forward because they actually own that process and they manage that process. And by having both the farmers and the butchers and the restaurants, all as members of the same co-operative, there is a requirement to work together and it creates strength. It creates security moving forward in terms of what are the larger meat management companies choose to do?
Michael [00:16:27] Grant, with that in mind of having not just the primary producers, but the cafes and restaurants and processors and small goods, the structure therefore of the actual co-op and the shares, I understand there’s a joining fee and then membership through shares. How will that actually operate?
Grant [00:16:51] So there are two primary gates that need to be passed. The first is a joining fee of $100 and then there is a minimum requirement of buying 100 shares at a dollar each, which is co-operative capital, which means that you are a shareholder within the co-operative. And what that entitles you to is to then utilise the services. Now the rules around that we are looking at putting in place in this case is that the co-operative board needs to approve each of the members that come on board. And we do this to ensure that it’s in the best interests of the community. It’s not someone in Singapore that’s deciding that this could be a nice idea to make money, but rather those people that are actively involved in the community and in the programme. There is a second understanding in place in what we call active membership, which means that, you know, it’s not that you can sign up for 100 bucks and be a shareholder and then not use the facility because you actually don’t. You’re not part of the community. If you don’t actually use the facility every 18 months, your membership automatically lapses. There is a secondary portion that we’re looking at in terms of actual capital raise, which is the use of community cooperative units or CCUs. And we are in the process of issuing those as well understanding that this is effectively a start up and there are some substantial costs attached to getting the facility up to code into its licencing requirements around PIRSA and the EPA. We will be using CCUs to actually create that funding as well.
Michael [00:18:30] Grant, I can understand the aspect of the farmers having shares and being actively involved in the abattoir, getting their stock processed. And you say that everyone who is a shareholder has to use the facility. How does a small goods manufacturer, for example, or the restaurateur, they’re not running stock through the abattoir. How is their involvement and then being gauged to use and be actively involved?
Grant [00:19:04] Well, what they’re doing is they’re purchasing produce through the abattoir or through the abattoirs financial management platform, which means that they are active members of that and it’s interesting enough, it’s not simply just the restaurants or the butchers or the small goods producers, they’re all hauliers. There are transport specialists. There is a really large community of people that actually come together to actually ensure that something can go from, you know, a beautiful piece of green grass, some in the Fleurieu through to the fine restaurants in Adelaide. It’s actually quite a detailed process. And effectively, the co-operative is the infrastructure that holds all of those things together. It allows the processing of livestock coming from the farmers. But it also acts as a balance sheet for them to allow that direct side, the restaurateurs, the small goods producers, have visibility and transaction from those farmers, either be it directly between the farmer and the demand side or using the abattoir as a financial structure to manage, you know, 30 days or 45-day terms that might be outside of the usual farmer’s scope of financial management. But it really is a community that brings it together. We’ve actually been approached by a couple of people that have said, you know, is there an opportunity to look at a tannery, where it links to the co-operative? We know that the skins are a really good product. We’ve been approached to say, is there an opportunity to expand into poultry and the beauty behind, you know, this larger community is it means that the community is in control of those decisions, but it’s far broader than simply the restaurateur or the farmer. It is all of those people in between, including the staff of the co-operative. One of the wonderful things around a co-operative is that, you know, staff that work for the facility or in the business can equally be members and equally benefit from the work that they do and take pride. It also means that the co-operative is able to attract the kind of talent that we want to, you know, in boning rooms and in solar rooms and foremen, et cetera, to make this a sustainable, viable operation. It is truly a community co-operative, hence the reason we named it on that basis.
Michael [00:21:30] David, as a primary producer and many generations, and you’ve probably seen the way your own properties changed over the years and the way the stock at the same time, how do you feel about the fact that there’d be a community in a way, having a say in what you might be producing because you’ll be dealing directly with a small good processor or a cafe owner as well?
David [00:21:55] We are under no illusions that it’s not going to be easy. We’ve got to work at it because we actually, we have to unlearn a little bit of the sort of very decision-making, which is in silos and think about things right across the supply chain. So we’re going to have to work at that. And but I think that all the farmers have realised that that’s where we’ve got to go and that’s where the benefits and the productivity is going to be. I mean, as our consumers are becoming more and more discerning about provenance, they want to know, you know, how has that animal been treated well? What kind of pasture is it on? What has it been eating? I mean, in time, you know, have I been feeding it seaweed so that its methane production is less? I mean, we can be rewarded for all of those things where right now, right is easy. We send them off the farm and we take a price taker and we take everything and it’s a pretty blunt instrument. But I think the future is having that intimate link down the supply chain. And so people will have to learn a little bit more and be caring about a bit more up and down the supply chain. But I’m absolutely convinced that our farming community knows that’s the way of the future. I mean, you know, I can do many more things with it too. I can sell to my 20 friends that ask me for prime lamb every year. I can actually have it legally killed and sell to them or give to them. I mean, there are whole lots of ways in which this can grow and be a fantastic way. And as Grant said, we can look at things like game poultry and other products in the future as we, as we grow toward that. It’s not easy, but that’s the only way forward, I think.
Grant [00:23:37] Interestingly enough, we actually asked the community. We didn’t just assume what the community wanted. We did quite a substantial piece of work around engaging hundreds of farmers of small primary producers, restaurateurs, et cetera, and said to them, what were their challenges? What are the things that we believe should be setting the agenda around this? And the way that we then reconstructed the co-operative was specifically against that, and the issue of provenance was massive, both in the farming community and in the demand side, the humane management of livestock, the understanding that transport distances were getting substantially further and further away, which wasn’t in the interests of the livestock, things around quality of services in boning rooms. These were all the things that we didn’t assume what we should put into it. It was actually a direct response by the community. I think by the time we were completed, we had over 270 detailed responses from farmers. And that then led us to actually do quite a substantial roadshow across the Fleurieu community, where we ran six sessions in different parts of the Fleurieu, in Wypinger and in Strathalbyn. We actually engaged the communities directly. Some of the sessions were fairly robust where people were very clear on what they wanted and what their opinions were and we took that in and that’s key to the concept of the ethos of a cooperative. So it wasn’t that we set the agenda and said, this is what we think it is. It was actually directly driven by the wants, needs and the voice of farmers, of growers, of restaurateurs, small goods producers, transport companies across the Fleurieu.
Michael [00:25:42] The share issue of being a member, and you’ve made a strong point about the fact that you don’t want the big players to come in. So is there a limit on the amount of shares that an individual or company can buy into and therefore influencing decisions by the board and the rest of the court?
Grant [00:26:04] There are actually two answers to that question. The first is from a straightforward shareholding perspective. No individual can own more than 20% of the co-operative, which is a wonderful thing. With the CCUs, theoretically speaking, it can be greater, but we’re not going to allow that to happen either. But the more important piece is irrespective of your shareholding, if Michael, you decided to join the co-operative and you put your $100 in and David thought this was one of the best investments in sliced ham, put a million dollars in, when it comes down to the board into voting, you equally carry the same vote, and it’s one of the key sustainable models that we looked at around the co-operative. The idea of, you know, in a private entity, you vote according to your equity, whereas in a co-operative, that’s not the case. It’s each person has the right to one vote irrespective of equity and that creates protection and we’ve seen that play out in other states. There is a well-established co-operative in New South Wales that is almost 90 years old that is actually able to survive because of that. And we’ve talked to them about some of the challenges they’ve had over the over the years. And that co-operative model of only having one vote has protected them from larger private entities trying to destabilise or overrun the ownership of the co-operative.
Michael [00:27:27] The abattoir has been operating for many years, and then it was taken over by another farmer who then decided didn’t want to run it. Abattoirs are increasingly becoming more and more high tech, which means that are you looking at upgrade and therefore does that also come out of the present investment? Or are you looking at somehow doing that in a different way?
Grant [00:27:50] This particular abattoir was family owned and then was sold to one of the large groups, and the large group decided to close it down, and the land was then purchased by a farmer that wasn’t interested in running an abattoir just to give the structure around that. But yes, technology in meat production is really interesting. One of the things that we saw when we looked at when we were doing the financial modeling was that the technology and structure around the actual processing of meat is pretty good. And there have been huge leaps and bounds over the last couple of years using artificial intelligence and all kinds of things like that. But what we saw was really lacking was the actual management system that the abattoirs run on was an absolute mess. The large players are running on huge ERP systems that cost millions of dollars. The small private guys or the smaller boutique abattoirs simply don’t have access to that level of technology. One of the things that we’ve identified and are now substantially busy trying to finalise is actually a piece of technology that allows us to link the farmer to the demand side, but using and building a new abattoir management system, which means that we can actually future proof the technology around the abattoir. There is very little that’s available in the marketplace currently to do that with a cooperative. One of the things is we need at least 90% of the revenue to flow through from members, and you need to be able to track this. You need to be able to understand what that means from a taxable perspective. At the same time, you need technologies around booking livestock in for processing. You need the understanding of what services are being sold and that wasn’t there. So we are actually building that at the moment for the abattoir. And we think that it’s going to be one of the key things to future proof the business and ensure the transparency in relationship between supply and demand.
Michael [00:29:52] You’ve looked at co-operatives overseas as well, Grant, in Ireland in particular. Are there some tax breaks in Australia for someone that is going into something like the Fleurieu abattoir that possibly haven’t been explored enough by the primary producers or the haulage people that you’re talking about?
Grant [00:30:13] The beauty of a co-operative is that if 90% of the volume is through the members, the taxable situation changes substantially; it almost becomes a tax-free transaction. What that means is you’re not sitting at a 42% tax rate as a private equity or as a private entity. And what that means is it takes a huge burden of the operation in terms of how it trades. It also means that the return of dividends back to the members can be structured in some unique ways where it is un franked, but it can be passed back at a 12.5% dividend, or alternatively, it can be provided back as discounted services or reduced costs or issuing of different types. A number of cooperatives distribute dividends back to their members by issuing what we call a shares where, you know, 30% is paid in cash and the balance is paid in new equity. So the tax position of a co-operative is unique. It really is and it’s the reason why we can be really community focused and aggressive in terms of that management and control. And it was one of the key reasons why we looked at the co-operative model.
Michael [00:31:29] The issue of co-operatives, it’s called surplus, not a profit. And some cooperatives channel that money not just back into upgrading facilities and maintaining, but also look at community projects. Will the co-op be looking at not just providing employment and making sure that primary producers are connecting with the value adding of their product? Would you look at some sort of community investment as well?
Grant [00:32:01] The short answer is, I can’t make that decision, that’s the decision of a board, but we would strongly propose that be the case. The six pillars in which a co-operative is built, one of them is community and the importance of engagement with community and the engagement of members within the community. The opportunity around looking at secondary businesses, around looking at other support programmes that surplus can be channeled into actually improve the entire community is generally a fairly strong focus of the co-operative, but it’s something that we truly do believe in what those projects will be that needs to be determined by the members. Yes, the short answer is we believe that’s the part of the surpluses need to be reinvested back in the community. I would imagine in real terms, it will take us about two years to get there. The initial outlay and structuring of the co-operative is going to be pressure on the balance sheets. We’ve tried to protect against that. But by year three, we would imagine it would be a key community member.
Michael [00:33:06] David, on those roadshows and you’ve been wandering around talking to your fellow producers, whether it be in the saleyards as well or somewhere else. Are you already starting to think about possibly changing some parts of your operation, not on the wool side, but on the meat production side?
David [00:33:24] Absolutely and I think this gives us more reason to be doing that. And I’ve been talking to other producers. For example, we have a particular style of lamb that is demanded by restaurants or butchers. We could work with other farmers on Fleurieu Peninsula that in a slightly different rainfall category so that we can get a product, a common product that would be coming out over a series of months rather than me selling 100 or 200 lambs and that being a one off thing. So we can actually brand that sort of Fleurieu Peninsula to a degree and brand our, you know, groups of products. And this would add to the whole process, I think. And we’re already talking to each other, and I believe we’re going to do a lot more of that as technology changes. I think farmer groups are getting together and working out how they can improve upon provenance, how they can improve upon welfare. And so this is a virtuous sort of circle, in my view, and the abattoir is going to be a great catalyst for that. And really, frankly speaking, there is no other alternative model of the big guys that can actually be a sort of a stimulant or a catalyst in the same way that the strength of the Fleurieu community abattoir could do that.
Grant [00:34:41] Interestingly enough, it was one of the key drivers that came through from KI, Kangaroo Island, which is such an amazing brand across Australia, has no capability or capacity to actually brand any of their meat products. And it’s something has been strongly recommended to the point where they were actually looking at even building an abattoir on Cape Cod. So it’s a great example of how, you know, this kind of project can influence and change the actions of the community.
Melina [00:35:18] Paddock to plate is more than just a primary producer selling their product at the farmers market. People want to be sure of the provenance of their food so that farmers on South Australia’s Fleurieu Peninsula are getting together with others in the food chain to ensure that they get high quality food out of the region. It’s all coming from a wish to ensure that an abattoir that serves the area for many years will continue but this time as a co-operative.
Michael [00:35:48] Traceability is a big issue in the processing of meat. These days, you could probably argue that the system’s quite good. Are you going to just follow the present criteria for traceability or are there other things that possibly at this level that you’d be implementing?
David [00:36:09] I’ll hand Grant over to let you know about the quite exciting new ways we’re going to handle that but I might say that farmers started out being quite sceptical about traceability because the folklore is that you put your own beef into that small abattoir to be slaughtered and you get back some poorer version as your good, you know, prized animals go somewhere else. So we started out fairly sceptically thinking fairly sceptically about this, but I think Grant’s got some very exciting ways in which this could be really addressed in a very much more sustainable way. So I would hand over to him for that so really.
Grant [00:36:48] So the abattoir management platform that we are developing is built in a hyperledger blockchain that allows us to look at the origin of the actual animal where it’s come from, its immunisation records, how it’s passed on, maybe three different farmers, which means that we can actually do provenance properly. But the challenge of traceability through an abattoir has always been a challenge. And as David said, there’s huge folklore around that. So what we’ve looked at is we’ve looked at a number of new technologies to actually ensure that we can track and trace an animal from the point that it enters to the point that it gets delivered to a restaurant. There are a number of specialised technologies that we’re developing around this using the likes of artificial intelligence cameras, RFID tags, cross scanners, we’re even looking at some DNA technologies to actually take it to that point, which are now available. But there’s a fair bit of IP wrapped up in this question.
David [00:37:56] I would say that one important element of that is if you if you’re starting out with that benchmarking of credibility through the technology, then actually you’re building up a fairly credible process. So you can be saying over time that there is no wriggle room. No one’s trying to get wriggle room to manipulate the process in the tracing. So what we liked as farmers was that one is going to be benchmarked and set by the technology that the crowd is talking about. But secondly, that’s the standard we want to set and that’s sustainably going to keep so we can have trust in the process all the way through, and there’s no real substitute for that kind of trust and we frankly don’t always have that in the larger processes.
Grant [00:38:43] The other key thing around that is the volume that we’re putting through in a boutique abattoir. We can actually use technology like this to manage and ensure traceability. Whereas, you know, if you’re processing thousands of animals a day, it’s never going to happen.
Michael [00:38:58] David, it being a boutique operation using Grant’s description, you’re in the community, you’re on the board of the co-op as well, and you’re talking about some high quality meat as opposed to a lesser grade. And you’re also talking about wanting that area to be branded to be known to be producing top range produce, how do you then deal with possibly a member of the co-op who’s a producer and probably not as particular on that high standard that a person like you? Will there be room to negotiate with that person or try to get them to improve their product?
David [00:39:41] Well, you know, I’m a great believer in showing by example and setting the standards and showing that there is reward by a good provenance and by good actions and there’s moral suasion. So I think the market sorts these things out fairly well. And the good part about this cooperative is that, it’s not a blunt instrument. So there is room for us to highlight those things. And I think those who are not wanting to follow those sort of benchmarks and standards will not really find much benefit in the process. So I think the market will sort that out.
Michael [00:40:17] In setting up the co-op what sort of hoops have you had to jump through and support from business groups, the MLA, for example, government and people like BCCM as well?
Grant [00:40:33] BCMM Hepworth was fantastic. We needed to understand exactly what the structural process was of setting it up. And we worked with Anthony, who is obviously one of the key policy advisers to actually guide us around what the constitution and rules would look like. Understanding the need around the disclosure statements that needed to be established and that was really amazing. MBL, Master Butchers in South Australia have also been really amazing. Jamie Higgins, who’s the CEO, has given us substantial insight and information. Obviously, they would need to be a key part of the process moving forward as they are one of the primary equipment providers. And you know, from a government perspective, we’ve also worked with PIRSA and with the EPA to understand exactly what we need to do to get things to a standard that is not simply just acceptable for the licencing, but is more acceptable for what the community wants. We are in discussion with the state government to obviously support the process. There have been some interesting challenges in the co-operative process in that the Department of Consumer Business Services don’t really have a lot of attention and focus on co-operatives, and it’s been fairly challenging getting through that process. We will get there. We also understand that, you know, the interest that’s been driven now in co-operatives in the region is increasing. And we would imagine that the CBS will start to give greater support in that area.
Michael [00:42:10] David, walking down the main street of Strathalbyn, the Butcher bails you up. Are they all jumping on board or is there still this wait and see and wanting to know how the co-op is going to work?
David [00:42:23] Well, we’ve got as farmers, we’ve got to move the process forward. No, not everyone’s going to see this immediately because they need reliability. They need to be persuaded that we’ve got a model that’s replicable all the way along that every month or every week they can get their produce that we, as farmers are really genuine about producing it and the abattoir can do that. So, you know, we’ve got to earn our right in the world. But I think they’ll very quickly find out that we are really willing and able participants to move forward. I mean, I think we also need some support from the consumer side, so we don’t just leave it up to butchers. I mean, I think there’s healthy scepticism all the way along. But I believe we do have a model and a great deal of not just naivete, but real willingness to move forward with those obstacles in view. So it’s not going to be easy. But there’s, you know, we’ve really got to make it work.
Grant [00:43:18] We actually have commitment from at least 50 demand side providers made up of supermarkets and some of the biggest supermarkets in Adelaide and butchers. Already, there are two restaurant groups have also signed into the process. And what that means for us is it is, at that level, are we really at our production capacity as we stand. We’ve seen that interest come through and those people who are early adopters that have come on board first and have come into the process will obviously reap the benefits and the reward that goes with that from a CCU perspective, we believe we’re oversubscribed already.
Michael [00:43:59] Grant, you’ve talked about how there are supermarkets in Adelaide showing interest in other outlets and you’ve used the term boutique. Would the co-op once it’s upgraded and you’re pushing through a good number, would you consider export as well?
Grant [00:44:17] Once again, Michael, that becomes the decision of the board and the members, but I don’t believe we’ll have the capacity for export. I actually think moving forward the co-operative would need to expand its facilities to manage the paddock to plate requirements in South Australia. I think that we’re going to see it grow rapidly. If you consider that a large group of four or five supermarkets are probably consuming, you know, tons and tons of meat a week, it becomes substantial. We know of one arrangement where a sheep farmer was providing meat to a group of 22 restaurants and they were doing 6,000 tonnes a year. I’m not sure that’s 6,000 kilos, it was a big number. So I actually think the challenge is going to be a requirement to increase the facility’s production rather than look for export markets.
Michael [00:45:14] What about working with other co-ops?
Grant [00:45:16] Absolutely, we would look at working with other cooperatives. It’s part of the mutual mindset. In fact, we really are. We have been working and have had great support from a cooperative in New South Wales and another in Western Australia. And we believe that’s, you know, one of the things that we would love to see happen from our side is the technology that’s being built for the FCC. We will give that to other co-operatives to give them the sustainability model moving forward and future proofing them too. The mutual mindset is unique, you know, in a private enterprise model, the other cooperatives are my competitor and I’m going to try and take him on. I’m trying to get his business that’s not the case here. It is about reciprocity. It is about that virtuous circle that David was talking about earlier, and we really believe in supporting that. It’s where our strength is drawn from by having that mutual mindset and by bringing communities together.
Michael [00:46:11] David, in going out on talking to other primary producers and associated businesses, do you also see a value in just literally talking to other producers and people involved in value adding in being able to address, possibly issues in the rural sector?
David [00:46:34] I think that’s a really a key issue. I mean, we’re all facing the cost curve here. And so and we realise that things are changing. We know probably as much about consumers as anybody, and we sometimes need to work out how we can, how do we get the power to address some of those changes. So actually, you know, on a monthly basis, there are meetings right across Fleurieu Peninsula of likeminded farmers looking at regenerative agriculture, more sustainable activities, looking at ways of fundamentally changing practises to actually go down this line. So this is actually a complement to a whole range of activities that farmers are doing to change their practises and make them more in line with community and consumer sentiments.
Michael [00:47:18] So does that widen your own view of what a co-op does? You probably thought, co-op with an abattoir, we’ll just move the stock in and it goes out the other end.
David [00:47:27] Well, I grew up when in the time when they’re old dairy co-ops around the place and there were some were well managed and some weren’t. But really, that’s the way you did things here in the old days with the dairy industry. But I’m frankly talking with Grant and all the fairly substantial set of top line advisers who are experts in cooperatives. I’ve really learnt a lot and a lot more faith in that and realise that actually the whole process or regulatory process for cooperatives is very positive. It’s very fair, and it’s something that is actually quite market oriented. So I’m much more confident that I would have been with the background of having dairy co-ops that of the 1960s or something.
Michael [00:48:12] Do you think people overall are aware of co-ops still, there does seem to be a bit of a resurgence because of that by local, eat local, that sort of thing. But despite the fact that people don’t realise just how big co-ops are and such as mutual for banking and this sort of thing, is there a matter of education still in the community?
David [00:48:33] I think so. Grant would have met this more than me, but I believe there is need for more, you know, education and more publicity there. But, you know, we do not see enough of them. And I think our biggest, the reason we’re looking so sharply at this is because we’ve been looking at big, bossy corporates who haven’t given us a look in so really that’s the way we’ve looked at it. Grant would talk to more people out there in terms of in the information sessions.
Grant [00:49:02] The question we ask in the information sessions and when we did those town hall meetings, we asked people if they were members of a cooperative and 50, 60, 70 people in a room, and maybe one person would put up their hand. And then we turn around and say, well, who’s a member of the REA, which is the most trusted brand in South Australia, which is a mutual co-operative and then Hugh Banks, the People’s Choice, which is a mutual and who buys the food at the Barossa Co-operative, which has thousands and thousands of members and is one of the biggest employers in Barossa. And suddenly, when people start to realise the number of businesses they engage in on a regular basis that actually are co-operatives in South Australia or mutual organisations, it’s been really illuminating. I think the opportunity to highlight how many of those companies or how many of those entities that people engage with and often the ones that have the highest level of brand trust, like the REA, like some of the Foodland stores, et cetera. Or like in South Australia, the biggest pharmacy group here is National Pharmacies, are co-operatives and being co-operatives and having that ethical mutual mentality that goes with it. I think as people start to realise that that’s where you actually can build trust, that’s where those businesses are working in your best interest, not in a, you know, New York investment houses interest. It’s the reason why they are strong and you get those levels of services and commitment. I think getting that message stronger out into the market, it would be a fabulous thing to do.
Michael [00:50:42] I suppose what is the ultimate, you sit down at a café where they’re linked to the abattoir. You have a coffee and you serve up some lamb from your place, David, and you’re drinking wine from a nearby co-op.
David [00:50:58] Absolutely that’s Grant actually is the god for that tour. He is very good. He’s got a great nose for it.
Grant [00:51:09] David and I have a deal, he’ll choose the steak and I’ll choose the wine.
Michael [00:51:13] David Parsons is chair of the Fleurieu Community Co-op, which is taking over the abattoir, and Grant Baker, who comes from an advertising marketing background but still very much in tune with this. Best of luck with it, and I look forward to be able to enjoy a magnificent piece of lamb out of the abattoir being served up in a restaurant that is a member of the co-op itself.
Melina [00:51:41] I intend on joining with Michael sometime in the near future to sample the food of the region myself, all through the co-op run abattoir.
Michael [00:51:52] That’s right, Mel, can’t you picture yourself sitting down, opening up a white or red of the region and then having to decide whether you’re going to go pork, beef, lamb and then the veggies of the region as well, all in a restaurant that’s part of that co-op?
Melina [00:52:10] I can’t wait for that meal. In our next podcast, we’ll look at another area that co-operatives are helping out farmers.
[00:52:21] I hope you enjoyed this latest episode of Meet the Co-op Farmers. If you’d like to know anything about setting up or running a successful agricultural co-operative, you can find out everything you need to know at the Co-op Farming website that’s www.coopfarming.coop that’s right coop for co-operative. Please share this with your mates if you enjoyed this story. We really do want to get the great stories of farming cooperation out there and remember in a troubled world with all of the challenges, but also the opportunities we have, we really are better together. I’m Melina Morrison and I look forward to seeing you on the next episode of Meet the Co-op Farmers.
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