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Medium-sized farms stand to benefit from a return to collective bargaining, new RIRDC research reveals 05 Aug 2015

New research released today in Canberra by the Rural Industries Research and Development Corporation (RIRDC) reveals how a return to collective bargaining can offer significant value for medium-sized farm businesses.

Released as part of a series of reports from RIRDC’s National Rural Issues program, the collective bargaining research will help drive a pilot program identified by the Australian Government’s Agricultural Competitiveness White Paper. The pilot, to be delivered by RIRDC, is currently being designed to provide knowledge and materials on cooperatives, collective bargaining and innovative business models to improve the productivity of Australian primary producers.

“This new research supports policy directions for the future of Australian agriculture,” said Craig Burns, RIRDC’s Managing Director. 

“Through providing independent analysis and trusted insights, RIRDC’s National Rural Issues program is designed to inform how policy is debated by Government and industry on national and global issues relevant to agriculture and rural policy.”

Professor William van Caenegem from Bond University in Queensland, who led the collective bargaining research, said opportunities to collaborate exist for medium sized farms in particular. 

“While a majority of Australian agricultural output is produced by the top 25 per cent of farms, there is a real untapped opportunity for medium-sized farms to collaborate and increase the importance of their contribution to Australian agriculture,” Professor van Caenegem said. 

“The concept of collective bargaining is not new to Australian farming, with some of the country’s most successful agribusinesses today starting as farmer cooperatives, but for many reasons, cooperatives have been more prominent in some agricultural industries than others. Understanding why this is so and how and where farmers might achieve greater returns from closer collaboration beyond the farm gate is an important consideration for Australian agriculture.”

Dr Jen Cleary, from the University of South Australia, who co-authored the report said: “Our research shows that many large farm enterprises have the resources and skills to negotiate effectively on their own and some very small operators may have no inclination to change their practices, because of lifestyle and other socio-cultural factors. It is the groups that fall somewhere in between that may be most receptive to and who stand to gain most from collective bargaining.”

“We suggest that particular forms of collective bargaining may work better in particular industries and regions and that there is no one-size-fits-all formula. Collective bargaining could be achieved for example, through the development of contemporary cooperatives established for the sole purpose of negotiating contracts collaboratively.  

“We need to take a closer look at what will work best for Australian conditions and our markets. Our research has taken us some of the way down that path.”

Professor van Caenegem added: “We hope these insights will be useful for agricultural industries to develop education and training support systems to assist farmers in understanding and negotiating contractual arrangements that will place them in a better position to benefit from those collective negotiations. Large retailers and processors can benefit from the assurance of consistent quality and reliability of supply that producers working together can guarantee.”

Also released today was research supporting the development of frameworks for improving farm productivity through smarter decision making; and identifying the origins of food to help farmers capitalise on growing consumer demand for knowing the ‘provenance’ of what they are eating and drinking.

Professor Geoff Cockfield, who leads the team that authored the farm productivity research, said it aimed to provide a powerful producer driven framework that could enable operators to better assess their performance in relation to their own priorities and objectives. 

“This research draws on insights into some of Australia’s most effective and innovative farmers, as nominated by industry peers, on what drives their business performance, to develop frameworks and activities that will help farmers to better plan for their businesses and achieve their goals,” said Professor Cockfield. 

The research revealed that regardless of a farm’s size, information, planning, production and family were common top priorities for the farmers involved in the study, although the order of priorities varied by industry. It also identified that establishing networks, aligning growth strategies to business goals and improving financial literacy were also important to building a successful farm business.

Meanwhile, research into marketing the provenance of Australian food, co-authored by Professor van Caenegem, argues the potential advantages to regional development of legislating so that geographical indications for food and non-wine products can be registered and protected in Australia.  

“Our research shows that Geographical Indications (GI) for food, supported by strong branding and marketing activities have the potential to increase domestic and export opportunities for Australian producers,” said Professor van Caenegem. 

“Where a region has committed to a quality, usually value-added product, our research shows a defined GI boundary inspires and comforts producers and creates certainty for investors. The Tasmanian whisky industry, for example, has recently advocated for the importance of establishing a GI to maintain quality and ‘brand’ recognition. Boundary certainty and quality standards can also help to mitigate the negative impacts of inferior products undermining regional reputations for high quality products. 

“The Australian wine industry has shown that Australia can develop valuable GIs which may benefit a region by enhancing a process of reciprocal spillovers in which other services are established to meet tourist demand and produce different local foods and beverages.”

Two other new research reports will be released on Friday 14 August; one that synthesises the big-picture 15 to 20 year agricultural sector megatrends, and the other considers factors that will influence Australian farm competitiveness in the global marketplace.