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Case Studies

Developing supply strength with solid legal contracts

Address:
Melbourne, Victoria, Australia 3799
Description:

Farming Together stream: Expert Support
Case: 01606
Group Name: Yarra Valley Strawberries
Product/industry: Fruit

The group and challenge
Most Australian strawberries are eaten in the Australian market and many are grown in Victoria’s Yarra Valley. However, marketing and sale of berries to the major supermarkets is controlled by a few large companies, including the US-based berry giant Driscolls. Five farmers from the Yarra, ranging in age from 22 to 60 years, and with a combined 200 years of strawberry farming, felt they needed a bigger voice in their industry. Their application to Farming Together echoed many others:

Over the past 6 years I have seen the sons and daughters of strawberry farmers wanting to get involved, only to be scared off by diminishing margins and the dominance of big players. It doesn't have to be like this. If we give up, Australia will pay a higher price for food and jobs may be lost. By forming a cooperative, we will have the competitive edge of having smaller, more efficient and better run businesses.

The group has a varied skillset and each member faces separate, sometimes prohibitive grower costs. Individual farmers have limited opportunities to break into existing supply chains. If they act alone, they must accept what’s offered; they are forced to be price-takers. To challenge that situation, the group decided to form a collective supply entity; the Australian Berry Farms Marketing Group.

Sweeeet. Small berry farmers wanted a bigger voice.

Farming Together Services and Support
From Farming Together, the group received expert legal advice and guidance on business options, marketing and business structures. Early work in their collaboration journey meant refining their needs, their business case and specific goals. The growers (one small farm, three medium and one larger enterprise) when combined, become a medium-sized player.

Farming Together’s legal consultant drafted a formal Supply Agreement, setting out the links between each supplier and the new entity. The Agreement also dealt with quality control and food safety requirements, ensuring complyiance with the Horticulture Code of Conduct and the Harmonised Australian Retailer Produce Scheme. Such compliance is essential for selling produce to the major supermarkets.

Expert Service delivered

  • Business analysis
  • Legal - develop a supply agreement

Impact and Outcomes
The farmers are now equipped to negotiate more strongly as a group. The group’s administration assistant (and Executive Officer for the Victorian Strawberry Industry Development Committee) Miffy Gilbert, noted the need for trust.  “For farmers previously immersed in individual enterprises, working with a group involved frank exchanges, requiring honesty and a collaborative spirit, especially in relation to farming practices”. She said establishing leadership and a group culture was a big step.

“This type of collaborative effort is essential for the viability of family farms”. These farmers can see a strong future if they are working with others. Farming Together’s application process “wasn’t onerous. It has been clear and unambiguous and really helpful", Miffy said. “To be assisted to explore options, in an industry that is both labour-intensive and capital-intensive was a huge boost”.

Future Directions
The group aims to develop a strategic plan and see how it can work with other berry growers.