South Australian Dairy farmers’ Association unite to market their own branded milk

NIGEL AUSTIN
TOctober 24, 2013
he Advertiser

THE state’s dairy farmers will sell their own branded milk in an attempt to lift profits and provide a brighter future for the state’s remaining 268 diary farmers.

The move by the South Australian Dairy farmers’ Association is believed to be the first by an Australian dairy farming association in which its members have joined forces to produce their own brand.

The farmer-owned SADA Fresh brand went on sale for the first time on Thursday in more than 50 Coles supermarkets across the state in two litre containers of Full Cream, at $3.99, or Low Fat milk at $3.79.

Under the unique concept, farmers own the brand, the milk is processed under contract by Parmalat at its Clarence Gardens plant and Coles will sell it through its SA supermarkets.

The dairy farmers are hailing the move as a chance for the industry to grow, rather than continue its decline, by investing their brand royalties in areas such as research and marketing that will provide significant benefits for the industry.

Under existing milk marketing arrangements, farmers sell their milk to major processors such as Parmalat, Lion (Dairy Farmers), Murray Goulburn, Warrnambool Cheese and Butter and United Dairy Power. They then onsell to major retailers.

But with the SADA Fresh brand, the key difference is the SA Dairy farmers’ Association will own the brand and, therefore, receive a 20 cents a litre royalty from Coles.

Dairy farmers are receiving about 45 cents a litre for their milk so far this financial year, compared to about 35 to 37 cents a litre last year, when depressed international markets forced the industry to a low-point.

The price of SADA Fresh was similar to other mainstream branded milk prices yesterday, but well below the price for specialty milks.

South Australian Dairy farmers’ Association president David Basham said he regards the SADA Fresh concept as a really exciting move for the industry.

“It will provide the opportunity for the industry to reinvest in itself and hopefully grow rather than continuing to decline,” he said.

The bold bid to regain a fair share of profits in the industry from processors and retailers follows a series of protest marches and meetings by the industry earlier this year as it started to fight back against a range of problems.

These included the poor profitability of dairy farming due to falling prices, soaring costs, $1 a litre supermarket milk and poor international markets.

The SA dairy sector has declined from 1730 farmers in 1974 to just 268 farmers in 2013 and Mr Basham predicts it will fall to 100 farmers in the next decade, unless farmers move from being price takers to price makers.

Mr Basham said he really encouraged SA consumers to buy the new SADA Fresh brand and support the state’s farmers.

“The more people who buy it, the more we can achieve,” he said. ”It’s really important that consumers are given a chance to support the SA dairy industry.
Coles will have exclusivity to the brand for a limited period of up to a year and if it is successful, SADA will take it to other supermarkets such as IGA and Foodland.

In a series of other niche milk marketing programs around Australia, farmers have developed brands such as Great Ocean Road in western Victoria. But in nearly all cases, the brands are owned by the major supermarket chains and farmers receive limited benefits compared to the SADA Fresh arrangement.

Woolworths last month conducted a trial with seven New South Wales dairy farmers, near Taree, in which it bought their fresh milk, had it processed under contract and sold it under a new “Farmers Own label” in nearby stores.
The milk, which sold for $1.65 per litre, proved highly popular and delivered more profit to farmers than the controversial discounted $1 per litre home-brand milk.

The SADA Fresh idea started to gather momentum when Family First Member of Parliament Robert Brokenshire wrote to Richard Goyder, the managing director of Wesfarmers, parent company of Coles, requesting a meeting to discuss its move to drop the price of milk to $1 a litre and its impact.

“To give him credit he came to my office in Parliament and we discussed the dairy industry and the Coles strategy,” Mr Brokenshire said.

It led to a series of meetings between Coles and SADA executives and Mr Brokenshire and the development of the SADA Fresh milk brand.

Money raised from the SADA Fresh brand, through a royalty of 20 cents a litre, will go into an industry fund and be used on projects to improve the future of dairy farmers.

“As far as we can tell this has never been done in Australia by any farming association to generate funds to reinvest in an industry,” Mr Basham said.
“There are huge opportunities to use the funds raised in many areas such as research and development and extension, value adding and to secure greater market access in Australia and internationally,” he said.

“It will also allow us to advocate for the industry on key issues that we may not have the resources to do now.”

“I expect that in a relatively short period this should help improve the returns to farmers as we deliver benefits to them.”

Mr Basham said he is confident the SADA Fresh brand will lead to the production of other dairy products and the association has already had discussions about packaging cheese.

He believes the concept also offers an opportunity for other agricultural sectors to improve returns as consumers take-up the choice of supporting Australian industries.