Friday, 12 June 2020 09:47

Coles buys direct from Oz farmers

Written by  Sudesh Kissun
Coles-branded milk in Australia. Coles-branded milk in Australia.

Imagine New Zealand supermarket chains buying raw milk directly from farmers — that's what's happening across the ditch.

While the idea may seem far-fetched here, Australian supermarket giant Coles is extending its raw milk buying scheme to more states, all in the name of delivering a better farm gate milk price to struggling Australian dairy farmers.

Coles has announced it is recruiting dairy farmers in South Australia and Western Australia to supply milk for Coles Brand fresh white milk, delivering guaranteed farmgate prices for farmers. South Australian dairy farmers are welcoming the move.

South Australian Dairy Association (SADA) chief executive Andrew Curtis says farmers welcome any market participant in the industry who pays a fair price to farmers. 

The Australian dairy industry has been facing depressed prices in recent years, forcing some farmers to exit the industry and milk volumes to plunge.

Curtis told Dairy News that competition watchdog, the Australian Competition and Consumer Commission, was very critical of the role played by processors in the troubles that have surrounded the industry in recent years – reserving its harshest criticism for those processors.  

“During the A$1 per litre milk war, SADA was critical of the supermarkets for their approach but equally of the processors, not least of which was Murray Goulburn, who enabled the war to continue by pushing down [farmgate] prices,” he says.

The Australian Dairy Code of Conduct now forces Coles, along with every other processor, to post their price well in advance of contractual confirmation. Last week, all milk buyers announced their opening price for the new season.

“They will be competing on the same footing as every other purchaser of milk in the market place,” says Curtis.

“Farmers will go to the best price offer and if Coles wants to purchase milk they will have to do so on a level playing field.”  

Coles launched its new milk sourcing model in Victoria and Southern and Central New South Wales last July, contracting directly with local farmers to supply milk.

This effectively makes Coles another buyer in a crowded Australian market, where Fonterra Australia is struggling to maintain its market share.

While Fonterra isn’t a player in the fresh milk market, Coles is adding another layer of competition for milk processors.

A Fonterra spokeswoman says the company does very little by way of fresh milk in Australia – it’s a brands cheese and butter business.

All its milk comes from farmers in Victoria and Tasmania.

Under the new sourcing model, Coles offers a farmgate price directly to farmers, and pays dairy processors to process and bottle the milk under a toll processing agreement.

Changing landscape

The number of dairy farms across Australia has been declining for decades.  SADA chief executive Andrew Curtis says dairy across Australia has been changing for many years. 

In 1970, South Australia had over 1,000 farms, mostly small farms supplying local product. 

But Curtis points out that individual cows are much more productive today and herds are much larger.  

“A farm count is not a fair indication of the state of the industry and individual farms now produce much more milk with better cows and bigger herds than in the past. 

“There is no indication this trend will change into the near future.”

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Lely offerings for the future

Dutch robotic specialist Lely launched a new farm management application called Horizon at its recent Future Farm Days 2020.

Designed to connect data from a range of on-farm equipment and suppliers into one management system, it creates a real-time decision-support platform, to make the farmer’s life easier, the herd healthier and the farm more profitable, says Lely.

Developed over a 24-month period, with over 100 test farmers in seven countries, working with 75 engineers, designers, farm management advisors, veterinarians and AI specialists, the new application will eventually replace the current Lely T4C management system. It uses smart algorithms and the cloud to deliver data that is processed into actionable information that is always accessible on any device in a user-friendly way.

Lely claims the Horizon application unburdens farmers from routine decision making and helps them optimise their workloads, using integrated routines based on easily scheduled cow ‘touches’, create logical and more efficient workflows. It is also possible to assign a certain task to an employee and to schedule a time slot for the cow touch, rather than analysing different reports and filtering long lists.

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To ensure full support in the migration to Lely Horizon, existing Lely T4C customers will be personally informed by their Lely Center before the end of 2020.

The migration is planned in a phased approach, from country to country, over the year 2021.

Also launched at the event, Lely Exos is an autonomous concept for harvesting and feeding fresh grass to the herd.

The company suggests that feeding fresh grass makes better use of available roughage, suggesting “fresh” has between 10 and 20% more nutritional value than grass silage, as there are minimal losses typically seen during mowing, tedding, raking, harvesting and feeding.

Lely suggests that feeding fresh grass over an extended season reduces the amount of silage that has to be conserved, reduces the need for concentrates and bought-in feed and increase the margin made on each litre of milk produced.

Based around an all-electric vehicle that mows and feeds, Exos is light weight and uses soil friendly technology, that can be exploited throughout the growing season. Design to work 24/7 as feed requirements change, the system places no constraints on labour or time, while it is also designed to work in tandem with the Lely Vector automatic feeding systems.

In operation, Exos also collects field data as it goes about its job, giving framers live data on grass supply and lending itself to a further concept of delivering a targeted liquid fertiliser as it passes over a harvested area.

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