Q&A Improving Farm Performance Through Innovation

Q&A Improving farm performance through innovation

Ticky Fullerton: Who's got a question for any of our panel?

Audience: My question is to Emma with regards to the chart you put up around farm gate prices and obviously the beef prices in terms of retail. I guess, within your co-op structures, how do you envision getting better visibility on the costs associated with the downstream part of the process? The reason for my question is, a lot of farmers think about value-adding, but don't understand the associated costs added in doing so. So I guess the real chart for me is, is not so much the price you receive, but the profit you make. And I'd just be interested in your thoughts about how to work with the industry. And it was in the previous session we had just before lunch around better visibility and transparency so that you can derive where the profit is, not where the price is.

Emma Robinson: Thanks for your question. I certainly don't have all the answers. But I'd just like to make a couple of points. The model that we're looking at is being driven by the ground up. So it's looking at our cost of production and looking at how we can maximise our cost of production and how we can add value to the supply chain. So I guess that transparency in costs is a part of that. So us being clear on what our costs are and being able to talk about those and be transparent about what those costs are and being realistic in how we're adding value.

So I think for that to be a reality, it's going to be about relationship and it's going to be about how you're adding value to the supply chain. So how that happens would depend on where you're at with the relationship you have with the process or the person doing the value-adding. But I think it does come back to shared value and being able to drive that. But I think we're realistic and that's not how we currently do business. There isn't a huge amount of transparency in the supply chain around costs. So I guess the first focus for us is being realistic about our own costs of production and how we can maximise those three collaborations, and then looking at how we can work with others in the supply chain to help them with their costs and vice versa.

So it's not something that's going to happen overnight. But I think it's something that we're working towards, and I think the better handling we have on our data and how we're adding value the more leverage we can have with others about how we're enabling them through what we're doing.

Ticky Fullerton: And Emma, does-- I've just caught up with Mick Keogh at the ACCC-- his report into the beef industry and push for transparency I suppose-- more transparency on the processor's side. Is that going to make a lot of difference for you, do you think?

Emma Robinson: Probably not. I think processes will only be more transparent when there's value in them being more transparent. I guess there could be laws around that. They can be made to do certain things. But if you look at the US example, there is sort of a lot of laws in the US to enable greater price transparency, and there's all sorts of stories around at how useful that information is. So I think the law and government can only do so much. And the other component of it is about people working together and looking at how they're adding value to each other. And through that relationship comes greater disclosure, more transparency around price.

Ticky Fullerton: All right. Anyone else?

Audience: Gina Sullivan here. I'm just interested-- it's fantastic to hear the innovation through co-ops or digitally. I'm interested in how this innovation can lead to more regional development. more in remote area in Australia, the economic value of agriculture. But as we innovate, where are the opportunities for regional development?

Ticky Fullerton: Go on.

Darrin Lee: I was just going to say, being a part of a small community-- and we're very lucky in that regards because that is a real sense of community. I got tired of waiting, to be honest, and I saw an opportunity to put skin in the game and actually set up what I call myself a reference farm. And I think if farmers or remote parts and communities want to go ahead, it's about trying to take that first part and partnering up with people that can give you the ability to do so, but actually putting skin on the game.

Connectivity is a big issue. The NBN, for me, has been-- I call it a bit of a disaster with respect to NBN. But it really should be for rural and remote people. But cities get it. The hills get it in Perth and that just backlogs the whole system. So not every grower-- it's not a government responsibility to get connectivity to my farm. But the idea that I've sort of had is that, if you had a node that was local, and I wanted to put skin in the game and put that investment to it, enable that technology on my farm, I would then pay that cost of going to the node. With said references at the moment we don't really have those nodes. And I think that's a real opportunity to connect rural with city and allow us to have some of those things.

But I'm a very big believer that if you want to go on ahead and succeed in life, you've got to take those risks and challenges. And because we're rural and remote, which has great advantages but also has disadvantages, you've got to put the skin in the game and really sort of put yourself out there to try and make yourself not as remote. But I always take the love of rural if that answers your question.

Ticky Fullerton: The actual structure of a cooperative, presumably, if it works, will keep your smaller family farms going. And that must, in itself, and to keeping regional areas, a lot of rural areas alive. Would it not?

Emma Robinson: Yeah, absolutely. And I think that's what's great about the co-operative model is it can work on all sorts of scale. So you've got the largest cooperative in Australia, CBH. Or you can have a small community, Briskill Cooperative. Or it can work on so many levels. It's about shared meaning, a compelling need, and the ability to drive shared value. And I think by us being innovative on farm and driving profitability, the flow on from that for our communities and for our regions is there.

So I think our approach is similar to what Darren's saying. It's not waiting for others to do it for us, but rather looking at ways at how we can drive that opportunity ourselves. And I think that there probably is a bit of a mentality, culturally in the bush, waiting for someone to blame, waiting for someone to do it for us. But I think the idea is if it's going to work, it's going to work because we're going to make it work-- sort of not waiting for others to come in and make it happen.

Audience: Jim from Charles Sturt University to Darren, three quick ones. One is, are other farmers around copying what you've done? Secondly, if the NBN came, would you use it? And the third is, if everybody does this, what would were the community spin-offs?

Darrin Lee: The NBN, I ran across when I spoke awhile back now at a certain conference. And I went up and said, oh, I'd like to know if the NBN's available at our place. And not being rude to NBN but they couldn't even find my road. We're supposed to get Fibre to the premise in Mingenewor thereabouts. We rang and they couldn't do it. And to be honest, the amount of data that I'm going to pull down and use-- and I need that speed-- NBN doesn't allow that for me to utilise that technology.

And a number of problems that we've had locally-- the guys have actually got onto NBN. They all have got wind of what I'm doing and wanted to know whether I can build them into the network. I could make my Wi-Fi network available to others. It's been discussed and we're going down that road to have a look at. What was the other question?

Audience: Were there other farmers following your lead?

Darrin Lee: We're probably a little bit unique. And I was very lucky to partner up with Annie. But rest assured, there's a fair bit of chatter around the district what these towers are and where they are what they're doing. And everyone is keen as mustard.

But I said before, grower are very conservative people. You can talk to talk, walk the walk, all that sort of caper, but it has to be real. It has to be relative and hit the ground. And I've spoken at a few of these things and the guys say, we want to come and have a look. So they want to see it. They want to see it in action.

And for me it was like a bolt on that. You get a bit-- not scared, because it's new. I said, did you digital agriculture because simple is just having a rain gauge in the backyard-- one rain gauge. You can then go to one moisture probe. So you can bolt things on. You don't have to have the Rolls Royce of the system. But big data for me doesn't really mean a lot in some regards. It's more about the digital agriculture and making tools and making more effective use of those tools.

Ticky Fullerton: Terrific. Tom, one for you. Your graph that you put up from the survey which you said surprised you, which is in good times the difference between good and bad farming, and how the less successful farmers spent up. And how that was-- is that right?

Tom Jackson: Yeah. That's right.

Ticky Fullerton: So that's rather different then from say, farmers who would do exactly that with the temporary water. Because when water's cheap, you just go, spend, spend, spend, and you're making lots of money because the level of spending-- it's worth it. Whereas you're saying, the sort of spends that they were doing was simply not efficient for them in terms of profits they were getting.

Tom Jackson: Well, so in this case this was broad acre cropping. So there's no irrigation in play here. And what we were really looking at were things like fertiliser and chemical use. So what I was showing was that for those people that were previously applying, sort of a relatively low level of inputs, suddenly changing your system and applying a whole lot of inputs, because it's rained a lot more, wasn't necessarily helping them, or wasn't necessarily as beneficial for them as it was as applying those same inputs was for the guys that were doing consistently and had a different production system.

So I suppose the message from that was that the use of inputs does change over time, bu it shouldn't necessarily throw you're whole system out because the weather's changed.

Ticky Fullerton: Yeah. Yeah. And Emma, one of the things that came up in the session just before on co-operatives was that when it came to spending up on things like data and data mining and that sort of thing that was the old problem that the co-operative had, but they didn't because they were small have the capital to invest in the future. Do you think you're going to come up against that sort of challenge?

Emma Robinson: I guess it comes back to the value that you're able to generate, and the value in that data. But I think the important point from that session this morning-- it wasn't just in technology and big data sets. It was in the value of farmer knowledge. And a lot of that is tacit. But it is highly valuable. And I think producers working more collaboratively can leverage out of that knowledge that we all know is out there, but it just needs to be coordinated in a bit more of a standardised approach. So I don't think it's necessarily about huge data sets and huge examples of connectivity, but even at a regional level utilising that knowledge and standardising systems and processes in a more coordinated way.

Ticky Fullerton: Another one from the room. Yeah. One mic. Trail it back that way. That'd be great. And there's one mic-- there's a lady here actually.

Yeah. David Campbell, agribusiness freelance. Question for Emma. Processes-- you mentioned processes a fair bit in your presentation and you talked about shared value and collaboration. Processes have some real issues around continuity of supply, return on the capital investment and their cost base, particularly if they're buying the stock, not just processing on a contract. And we're seeing that in the lamb industry right now with shutdowns for example.

So taking your model, the co-operative model-- and I'm a great supporter of co-operatives-- how do you address some of these shared value issues in tangible terms? What are some of the levers you could pull as a co-operative that individual producers wouldn't be able to do, such that you can collaboratively address those issues that processors face that affect the trading relationship you have with them? What are some of the tangible things that a co-operative could do that individual producers on their own wouldn't be able to do?

Emma Robinson: Well I think the first one today is about numbers. It's about volume and continuity. And I think that's a real-- there's some real leverage at the moment given the short supply that we currently have. And then from the other one that goes with that is quality and consistency-- being able to deliver what you promise day in and day out.

And then I think I talked about a range of other benefits that I think-- things like efficiency in the supply chain, reducing selling costs, being able to improve transport efficiency, being able to improve processing efficiency. And then on top on that some higher value aspects like the transparency, the story, the branding, the prominence. And I think the first two-- the most important two are being able to have volume. So scan continuity around that volume and then the consistency of what you're delivering.

And I guess I'd just make the point that I think there are a lot of producers out there are looking at branding their own product and cost custom killing. And there's also a lot of, particularly Chinese investors looking to work with supply groups. And I think those are obviously great opportunities. But I also think there's an opportunity in just working differently with our existing processes and looking for where we can get some shared value rather than sort of going out trying to do everything ourselves, which is obviously not an easy strategy.

Audience: What about the tricky issue of how you share the risk and the arbitrage, which we've seen other agricultural industries where producers and downstream players have been able to develop some relationship of sharing that? What would be required in your industry for that to be applied? Because that seems to me to be one of the big tricky issues so that you can do this over time, not just at specific points in time.

Emma Robinson: Yeah, it's a great question. And it's not the way we traditionally operate. So there is going to be some hurdles to overcome there. But I guess we've got a shared interest in making it work. And processors need cattle coming through the door. They need quality cattle coming through the door. And we're the ones that can supply that. Producers are the ones that have got the cattle.

So I guess they either-- processors can either choose own more of their own cattle and have more of a captured supply, or they can look at how they work differently with producers. And they're doing that anyway. There's more processor-driven supply group. So that's the other model is processes driving that opportunity back down the chain. But the producer is still simply selling an animal and taking a price on that animal.

So they're the big questions that need to be worked through and there's no easy answer. But my point is if producers did nothing more than coordinate with other producers and looked at how they can get leverage just at a farm gate level, they'd probably be 20%, 30% capacity there in terms of extra efficiency and extra return, just in doing that, disregarding the price that we might get on that animal. So there's a huge opportunity in producers thinking about how they can leverage from each other, and then looking at how that value can drive down the supply chain.

And I think processors are going to have to think differently about how they work with producers. I think that's the reality. So they're going to have to think about how they do that. And there's going to be some processors that-- there are processors out there now that work differently with producers. So I think they are already people out there kind of doing that.

Audience: Anna Speer from Options Plus. Sorry, Emma, another one for you. I'm really inspired with what you're doing and the evolution that you're working through with the co-op process. And I really like the idea around getting beef producers closer to the supply chain and moving away from spot pricing.