Northern Victorian dairy processor, Australian Consolidated Milk (ACM), is offering a guaranteed premium price of $8 a kilogram (milk solids) for two years to farmers who convert to organic dairy production. By Cara Jeffery.
So far, it has 30 suppliers in the midst of converting to organic dairy production, with its first products to hit the market in February.
ACM general manager Peter Jones, Port Melbourne, said ACM and many of its suppliers had been keen to enter the organic milk space for a long time.
He said the company’s processing asset at Shepparton in northern Victoria was accredited for organic milk processing.
ACM would produce fresh and UHT organic milk for both domestic and export markets.
“The thing about organic milk is that it is suitable for virtually any dairy product whether it’s powder, cheeses, butter or yogurt, there is demand for all of those products on the basis they are organic,” Mr Jones said.
Dairy in demand
Mr Jones said demand was the main driver behind ACM’s decision to get into the organic market.
“The Australian organic industry is about a $2 billion dollar industry, and growing at about 15 per cent per annum, with dairy the fastest growth category in that segment,” he said.
“Despite Australia producing 8 or 9 billion litres of milk annually, we are only producing around 30 to 35 million litres of organic milk. The demand is there in the Australian market.
“In the global market the industry produces 100 billion litres for organic products and most of that is in the US, which holds 40 pc of the market,
there’s growing demand globally also and that’s what we are focussed on.”
Mr Jones said ACM was supporting farmers to make the change to organic production.
“It is very new to a lot of them, so ACM is supporting them with resources and also helping them fund some of the costs to head down the organic path,” he said.
ACM provides farmers with access to an external consultant to create a one, three and five year plan for their move to organic production.
“We believe there is still room to take more farmers on that are interested and we think the demand is going to continue to grow and we are very happy to be putting our time, energy and resources into a sustainable long term business,” Mr Jones said.
Aside from the $8 kg premium, Mr Jones said some farmers were making the switch due to personal issues.
“Some farmers have had illness and exposure to chemical hazards and they have decided to go down this path from safer workplace and food products perspectives.”
“There are other that are sick of using synthetic fertilisers on their land and seeing what that is doing to their production and they are heading back to more natural systems, and there are some people believe in the philosophy of sustainable agriculture and its good for the environment and good for people.”
Mr Jones said suitable fodder had been difficult to source as the limited supply of organic grain had been similar to the limited supply organic milk.
He said ACM was working with Direct Feeds Australia to sources grain and also farmers who were accredited organic grain suppliers.
“Between ACM and Direct Feeds Australia we have a number of strategies in play to help boost supply to ensure we meet the demand as our dairy farmers milk comes online.”
In an organic dairy situation, Mr Jones said the health of the animal was paramount.
“If a cows needs to be treated it is so under the same way of the conventional system with issues such as mastitis.
“The difference in organic is once the animal has been treated the milk needs to be withheld from the milk pool for quite a period of time and in most cases it’s three times the normal withholding period.”
“We find those in the organic industry look at prevention rather than cure and they have had very good success in managing their cows and their farms to minimise health issues within their herd.”
Sixth generation dairy farmers Colin and Heather Stone milk up to 300 Holstein cows on their property at Katunga in northern Victoria and were changing to organic milk production.
For the Stones the switch to ACM’s organic program was a natural fit as they has been biologically farming for the last decade.
The Stone’s were also looking for an alternative to Murray Goulburn.
“We are basically in a situation where we have spent a lifetime milking cows and trying to do the right things and you always seems to suffer everyone else’s problems with price cuts, so we were looking for a sustainable milk price.
“ACM had a meeting and we realised the way we had been farming for the last 10 year was basically along the organic lines, so it was a real attraction to us.”
Making it work
Mr Stone said their focus prior had been on high production.
“We are moving away from production-orientated dairying to more economical and easier production for the cows,” he said.
In regards to animal health and feed supply, Mr Stone said organic could seems daunting at first.
“There are hang ups around organic, but once you get into it a lot of it’s just commonsense stuff”.
“We have been feeding probiotics for 10 years now and we use very little antibiotics, our approach to that is prevention rather than cure.
“We still get mastitis but very little of it, and the few cases we get are usually extreme and terminal cases anyway and they are sold.
If they were to retain a cow, such as a stud foundation cow, it’s would be withheld for at least six months.
Mr Stone is hopeful production levels will be retained.
“If anything hopefully we get a little bit healthier cow. We have been feeding a lot of by-products just trying to maintain a cheap production cost and rather than substitute a cheap product to get production costs down.
“We will be replacing it with a quality product such as lucerne hay or the like if we have to by it in.”
A future in farming
ACM’s push into organics has renewed the Stone’s confidence in the dairy industry.
“We have spent the last 10 years basically putting four farms together and building the dairy infrastructure with a long term approach.
“But with various milk price crashes and this last one with Murray Goulburn we were left pretty gutted and disheartened.
“Basically thinking it was nearly time to walk away from the industry,” Mr Stone said.
“But having found this organic market it has given us the vision to know we have a sustainable product, are being offered a premium price and a long-term price, so all of a sudden you do have a view for the future and not for the short term, of basically go into survival mode and not progressive mode so you can go forward.”