Straddling the gate

There’s been a bit of chatter on social media lately about farmer policy groups extending their activity to aggregated buying for members.

It probably stems from a view the concentration of ownership of supply chains to – and from – the farmgate is not conducive to healthy competition.

It’s fair to observe we now seem to have an oligopoly environment in agriculture.

A few very large companies have majority market share of supplies to farms.

And similarly, a few large companies dominate the marketing of farm produce.

So does this scale of a few mean their buying power, or marketing power, generates a good outcome for Australian farmers?

Or does it mean the lack of competition leads to a poor outcome for them?

There’s undoubtedly arguments both ways, but I do find it hard to identify an example where oligopolies lead to good consumer or supplier outcomes.

Whether it be supermarkets, fuel suppliers or fertiliser suppliers, those with extensive market power use that to drive shareholder returns – we shouldn’t be surprised, that’s their job. So can farmers work together to balance the scales a bit?

I’m writing this from France, where I’ve recently met with people from the French farmer co-operative Limagrain.

Limagrain and the CSIRO jointly own the intellectual property for the specialty High Amylose Wheat being produced by Farm Trade Australia members.

Limagrain is owned by 1500 farmers.

It began in 1965 as a seed business but has evolved to encompass the entire supply chain from plant breeding to flour milling to retail supply of bakery products.

The business has 9000 employees globally.

Could we emulate this in Australia?

It’s a question we’ve been testing with Farm Trade Australia activities over the past couple of years.

Based on our experiences, I’m not convinced aggregated buying alone is enough reason to create a grower co-op.

Similarly, recent attempts to create co-ops for marketing commodity grains have not endured.

The exception, of course, is the CBH group in Western Australia.

However, the idea of creating a framework that allows farmers to collaborate with business opportunities they can’t access as individuals does have merit.

A farmer-owned agribusiness of scale would have a place – not to take over from incumbents, but to be a visible grower collective offering an alternate path for adoption of new technologies.

Farmers will often say they don’t have the time, or perhaps the ability, to establish and run enterprises other than their farm.

I don’t agree with this view.

Farmers are just as capable as any other group in the business community. They can develop the skills and structure to operate a successful agribusiness.

It’s mainly a matter of deciding if we want more influence over what happens outside the farmgate.

If we’re happy with the status quo that’s fine.

If not, then perhaps it’s time we did something about it.

Matthews, D. (2023). From AgLife column series. The Weekly Advertiser (AgLife), various issues.