Collaboration creates stock benefits

The guest speaker at last month's Grasslands Society of Southern Australia conference at Naracoorte said there had been little change to the business structure of family farms in the past 30 years, despite significant changes to most of businesses they dealt with such as machinery dealers, banks and grain marketers.

The next big advance was to bring together the assets and resources of several farms.

He encouraged livestock producers to take a blank sheet of paper and design their most-profitable business in terms of efficiencies and economies of scale.

"Ask yourself where would it be, what size farm would it be, what breeds would you have, what would it look like, stocking rates, target markets, what would the labour requirement be, what capital is required and where will you get it," he said.

"Focus on efficiency not just scale. Biggest is not always best."

A third-generation farmer, Mr Gladigau shared his journey from questioning the future of the family farm in the 1980s to 1990s, to undertaking a Nuffield Scholarship in 2007 into collaborative businesses.

He said there had to be a way to work together with neighbours to create economies of scale, rather than buying-out neighbours.

In 2009 Mr Gladigau and his wife Bronwyn, who owned 2000 hectares, joined with four shareholders, including the Schaefer family, who had a similar-size farm in the area, to form Collaborative Farming Australia. The Gladigaus and Schaefers then formed Bulla Burra with the support of CFA.

Another 4000ha was sourced through sharefarming and leasing for the initial venture.

"It depends on where you are but in the northern Mallee we would say an efficient cell is about 4000ha which you can crop with a 12-metre seeder, 224-kilowatt tractor, 12m harvester, three labour units, two utes, chaser bin and mother bin."

"As we have become more efficient, the size of that cell has grown and they are now 5500ha cells so we are cropping 11,000ha."

He said the seven business principles used for Bulla Burra could apply just as much to an enterprise focused solely on livestock.

Maximising machinery efficiency determined the size of a cropping cell but for livestock businesses the cell size would be based on livestock infrastructure matching the area to stocking rate, and labour required.

"It may be building one large shearing shed or one person owns one large shearing shed which is redeveloped to shear 20,000 sheep," he said.

Among the other principles he stressed were to run two separate businesses - a real estate business and an operations business, understanding both needed to return a profit.

He highlighted the importance of building "win-win" relationships with neighbours, sharefarmers, contractors, wholesalers, retailers, marketers and employees. This was even more important in livestock with more participants in the value chain.

"We have gone to everyone that we deal with in the business and said to them, 'what can we do for you?' - from people we sell things to, people we buy our fuel from, Viterra and our machinery companies. The opportunities and doors that have opened have been amazing and more businesses need to have a look at."

He said the number-one reason for businesses failing was emotion, and that having an independent chairperson maintained a high level of professionalism.

The final collaborative structure would vary from business-to-business and location-to-location.

"There is no model, there are no rules, so I can't tell you what that business will look like but if it was based on the Bulla Burra model you might have two or three farms come together and form a collaborative venture,'' he said. ''They would lease their properties to the entity and sell their own livestock.

"Some of these livestock may go into the venture but it is up to the venture to purchase what it needs to run most effectively."

In the past seven years Collaborative Farming Australia had assisted the formation of another five ventures in cropping, winegrape and citrus industries which were operating successfully, he said.