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Rural Industries Research & Development Corporation |
Thirty Australian Champions
Shaping
the future for rural Australia
edited by Keith Hyde
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RIRDC's major publication documenting the experience of thirty outstanding Australians who, through their business enterprise, vision and perseverance, are making a significant contribution to the welfare and economic growth of rural and regional Australia. Each chapter is presentedf as a separate html file which you can view, download and print.
North Queensland Essential Oils
When the writing on the wall
for the Australian tobacco industry became clearer, there were hundreds
of farmers faced with the prospect of diversification or leaving the industry.
Something else was needed to fill the enormous void. Fabio and Judy Petrusa,
of North Queensland Essential Oils, had decided in the early nineties that
if their tobacco industry dissipated, they would move into tea tree.
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Left: Judy and Fabio Petrusa, at Dimbulah, North Queensland, flanked by one of their mature stands of tea tree. |
In 1992, the Petrusas planted one acre of tea tree at their farm in Dimbulah and were impressed by its growth and yield of oil. They enjoyed working the new crop and believed that it had great potential. Yet this was still a time of uncertainty as the Petrusas did not yet have the cash flow to make a complete transition from tobacco to tea tree. In 1993, a tobacco buy-out scheme was announced, so they took what was offered and planted another 15 acres of tea tree. Around the same time, a nursery was set up in Dimbulah and began selling tea tree seedlings. After the Petrusas' one- acre success, other farmers knew that the crop could be grown in the area, and within six months there were 30 farmers with tea tree in the ground.
One year later, the Dimbulah farmers had the meagre beginnings of a new industry. "We thought, 'What are we going to do with these trees now?’ says Judy. "There were no harvesters, no distilleries, no infrastructure at all. So we organised a busload of 61 farmers to take a tour of northern New South Wales (NSW). We had already joined ATTIA (the Australian Tea Tree Industry Association) and we needed to speak to the established growers." The visit to NSW gave the North Queensland (NQ) growers an insight into the industry and new ides for harvesting and distilling the oil.
The Tea Tree Oil Cooperative
The NQ growers soon realised that the only way their industry might survive would be under a cooperative. The NSW farmers had planted around 100 to 220 acres of tea tree;areas which were far beyond the size of the NQ farms, most of which were small, ex-tobacco farms. "We needed to be more productive with our farms and make sure we cut down on costs," Judy says. "We also knew that none of us had marketing expertise. With the tobacco industry, the bales were loaded onto the truck and we had nothing more to do with it until the money came back. With tea tree, we knew we had to do a lot of marketing, so we formed a cooperative to sell our tea tree under the one umbrella. We were all involved in a tobacco cooperative, so we knew what was involved. We were comfortable with the cooperative structure."
The North Queensland Essential Oils (NQEO) Co-Operative was established in 1993 with 34 members and seven directors. It has 72 members now. The biggest tea tree grower member has 20 hectares, and the smallest has two hectares. Overall, there are about 500 hectares in combined area, with 100 tonnes of production. "Most of the farmers in this area are more than happy to grow a crop that they can understand and produce, and then forget about it after harvest," Judy says. "Most of them don't want to be involved in the marketing. So having a cooperative is the key to development of the industry. We buy the drums for the farmers. We work with the fertiliser companies and we source seed for our growers. And we've now found a more economical fuel to use in our distillation process.
Champion Qualities
- Industry choice limited by location
- Location determined by existing farm
- Focus on quality control
- Collaborative marketing
- Reconstruction priority
- Research and development support
When the tea tree cooperative
began, many of the farmers were led to believe that they were entitled
to a diesel fuel rebate for the fuel used in the distillation of the oil.
A fuel rebate had been available to the tobacco industry for their tobacco
kilns. Although the cooperative pushed for the rebate, it never happened.
"However," says Judy, "we investigated different types of fuel and eventually
managed to get a light fuel, which is now a big saving."
Below: A new stand of tea tree on the Petrusa farm.
Judy is Secretary of NQEO and works in the Dimbulah office from nine in the morning until one in the afternoon. Most farmers come in during their lunch break or while they are in town checking mail. "That's usually how we pass any information on — we try to get any news to the farmers so they're not behind," says Judy. “I can coordinate the contract-harvesters and know which contract-harvesters are working at a specific time. I can say to a farmer; ‘these are the four contract-harvesters closest to you, this one's charging this amount, that one's charging that amount.'"
The cooperative also organises
farm walks every two months. A farm is selected, regardless of whether
the trees are big or small, or the crop is producing well or poorly.
"All the farmers are invited
to that farm and we have guest speakers or a couple of our directors talking,"
she says."the farmer also gives a short talk on how his farm has been faring.
We had a farm walk here one season, when Fabio was contract-harvesting
and decided to harvest our own crop early, after the trees were about eight-and-a-half
months old. Cutting that early is a big mistake. We had the farmers walk
up and down the trees and they could see that there was about a 15 to 20
per cent loss because they were harvested too young. So those sorts of
failures can be used as an example of what not to do."
All NQEO oil is sold through northern NSW marketers, who have been in the industry for quite some time. The local Department of Primary Industry suggested that the Queensland cooperative set up their own marketing network.
“All our directors did farm leadership and marketing courses," Judy says. "We thought about it a lot, but finally we couldn't see any advantage in setting up another marketing desk. The industry is not big enough. We need to support the marketers who are already established. Of course, it would be nice to have our own marketing, but we would have to bring in a marketer with experience to work in our office and that would be a huge expense. The people we are already working with do so on a commission basis — that is more viable for the quantity of oil we produce."
The Farm
Fabio and Judy started tobacco farming not long after they married. In their first year of share- farming they doubled their money. Nine years later, in 1971, they put a deposit on their current farm in Dimbulah. For 20 years, they grew tobacco, until the time came to diversify. It was not a simple shift from tobacco to tea tree; the Petrusas experimented with mangoes and wild lemons before discovering tea tree. "We love the idea of tea tree," he says. “It sells, it's a wonderful product. It's great going from something that's not good for your health to something that is the opposite. We didn't cry too much when it came time to exit tobacco."
The Petrusa farm is about 80 hectares, with 40 hectares of land suitable for cropping. At the moment, only 20 hectares are cropped. "Because we were the first farm in the area to have a harvester and distillation plant, we recovered our capital costs pretty quickly," says Judy, "and slowly we are planting more tea tree. We wouldn't attempt to plant more than four hectares a year, because it's very important to set up the trees properly and keep the weeds under control in the first twelve months. And you need irrigation in this area, which isn't cheap. Most of the farmers grow their own seedlings, so the establishment costs are lower than for the tree farms in the south. Farmers in the south pay seven cents a seedling, we pay about one cent."
The
Petrusa's farm-based tea tree oil distillation unit.
The Petrusas have recently planted another four hectares of tea tree, which has cost them close to $20, 000. Tea tree seeds are as fine as talcum powder, so it is usually planted into an open seedbed first and then, ten to twelve weeks later, the seedlings are transplanted out into the field. “We've been planting tobacco in this way for so many years, so the farmers have the necessary experience," says Judy, "and tea tree and tobacco have so many similarities that it has helped our farmers make the transition."
Harvesting and Distillation
Seedlings are usually placed into the field during July, August, or September, in order to take advantage of the spring growth. About 14 months later, the trees are ready for their first harvest. And from thenceforth the trees are ready for harvest every nine or ten months. "It the moment sales are a bit slow," Judy says, "and people are not anxious to harvest because they don't want to register any oil that's not going to sell. A lot of the growers are leaving their crop for twelve months and we're finding that they're not getting as much oil." Nine or ten months is proving the optimum time for tea tree harvest in North Queensland.
There are now 26 mobile distillation plants within the 72 member cooperative (roughly one distillery for every three farms). Their first distillation plant was designed by a local plumber and engineer, Brian Dunigan. "He went through various models, consulted Tim Denny in Tasmania [of the Tasmanian lavender oil industry] and eventually decided on a final design," says Judy,"Then we all had a big party when the distillery was built and we made our first oil from the tea tree harvested by hand from our original one hectare plot." These distilleries can be loaded onto trucks and taken from farm to farm. They are usually operated near a dam, where the distillery can recycle its water. "The whole process is on-farm," she says."Only drums of oil leave the farm."
Below: One of the mobile tea tree oil distillation units used by farmers in the Dimbulah area of North Queensland.
The cooperative holds a quality assurance certificate and farmer members are expected to keep extensive crop records. Judy runs all the training programs for farmers from the cooperative's Dimbulah office. "They keep written records of their soil type, the chemicals they're using (and they have to registered chemicals), and also the fertilisers they've been using," Judy says.
“When the farmer comes in to register his harvest, he brings in three samples of oil, all his paperwork, his name is registered in our stock book and he's given a number. The area he has harvested and his production volume is also recorded. Then we send off one sample for testing, we keep another, and the farmer also keeps a sample.
“Once we get the results back, we can tell the farmer that his crop is'chemical-free'and show him the analysis. When we need to sell some oil, we go down the list and notify the farmer that his oil is ready to be shipped. We weigh the oil and give the farmer a receipt. Then we go down the list and pay the next person on the list. No-one jumps the queue. If we require a certain type of oil and the supplier of that oil is four or five down the list, we sell the oil and pay whoever's at the top of the list." This system has been agreed by all cooperative members to be fair and equitable.
Challenges
When asked about the main challenges faced by the Dimbulah farmers, Judy responds that their biggest challenge was facing up to the need for change. "After so many years with a crop strictly controlled like tobacco, we were set loose on unchartered waters. We did not know much about the new crop — whether it would grow in this area, whether it would coppice and whether it would produce marketable oil. Sharing information was just so vital in those early stages," she says.
Another problem in their early stages was the lack of suitable, registered chemicals for weed and pest control.
After the first harvest, NQEO was left with 27 unsold tonnes in stock. Eventually samples were tested and marketers became interested, but Judy admits it was an incredibly difficult period for the industry, "It was so hard trying to keep everyone together," she says, "and holding on until we could sell the oil."
Now (December 1999) they are faced with a similar problem. The market has been flooded and prices are down. No farmers have been excluded from membership but the cooperative is discouraging new members. Judy says, "We've been in it for five years and then, through no fault of our own, there's an overproduction. People who are diversifying spend every cent they've got on the new crop. If you don't sell that product, you don't have any cash flow. And you can't leave the farm because it's all you have. It has been very stressful. We cannot have the 350 farmers who were part of the tobacco industry all moving over to tea tree. A number of different crops are now available to former tobacco farmers and they can also get additional work on neighbouring farms picking tobacco, avocados or mangoes or chipping weeds from tea tree. The different industries are helping to build a more permanent workforce within the town."
Judy acknowledges that the Farm Family Restart Scheme has been very helpful for farmers in the Dimbulah area.
Below: Mangoes have been another diversification crop for the Petrusas.
The Future
In the future, Judy would like to see all 72 farmers in the cooperative growing between four and five tonnes of oil each, so that they can be fully reliant on tea tree for their livelihood.
She would also like to maintain equality within the cooperative, and not shift to a two-tiered pricing system. Yet, because of the various applications of tea tree, it seems inevitable that two-tiered pricing will become a reality at some stage.
But, at the moment, tea tree oil prices are very low. "I am hopeful that this downward spiral in oil prices will not last," says Judy. "I probably wouldn't mind so much if I knew that Joe Bloggs in Germany was buying his ten millilitre bottle of oil at a lower price because I'm getting less than I used to. But that's not the case — everybody along the line is just getting more. It always happens when there's an oversupply — the person who cops the brunt is the person at the end or the beginning of the chain. The industry can't expand if the prices are so low so that farmers can just exist."
Judy believes strongly that tea tree has the potential to develop into a major export industry for Australia. "If it doesn't expand then we're going to lose it like we lost the eucalyptus industry."
Advice for Newcomers
Judy recommends that other farmers looking to diversify spend more time investigating markets and learning about their potential crop before 'jumping in boots and all'. She recognises that the North Queensland tobacco farmers were in a very tight situation with very few alternatives at the time. “We were all aware of the problems facing the tobacco industry but none of us expected it to get as bad as it did. We should have done more research on alternative crops, earlier. We should have had alternative crops established well before we had to exit tobacco."
