Norco dairy farmers applaud record farm gate price

Dorrigo producer and NSW Farmers member, Julie Moore, has been a dairy farmer all her life but six years ago her and her husband Michael opted to supply Australia’s oldest dairy co-op, the 125-year-old Norco Co-Operative Limited, and have not looked back.

Their decision to become a Norco dairy farmer recently got that little bit sweeter with the historic 100 per cent farmer-owned co-op delivering a record farm gate price to farmers who have suffered through crippling drought and sky-high production costs.

The co-op, which was founded in Byron Bay in 1895, generated a 2019/2020 operating profit of $5.4 million, up from $1.2 million the year before.

Australia’s oldest dairy co-op, Norco, has delivered a record milk price to its farmer members

This stunning performance allowed the 203 Norco dairy farmer members a share in the $17.1 million of much needed farm gate milk price increases with an average of just over 70 cents a litre paid to farmers, depending on the component qualities of their milk.

The record price was about 10 cents higher than what was paid in the preceding year with the increase made up of a two cent supermarket drought levy with the remaining eight cents coming from growth in Norco’s milk sales as well as internal business improvements.

This has made Norco’s members among the highest paid dairy farmers in the country.

Recently appointed Norco Chairman Michael Jeffery, who replaced Greg McNamara as Chairman in June this year, said the results were a credit to the management team and its hard-working farmer members across New South Wales and Queensland.

Retailers are listening

Mr Jeffery told The Muster that Norco’s strong performance is largely based on two facts: strong consumer support and the guarantee that every cent of extra value is given back to member farmers.

“Being a 100 per cent farmer-owned brand has really resonated with consumers and we’ve had tremendous support over the last few years through our social media and other advertising promoting that fact,” Mr Jeffery told The Muster.

“We have had tremendous growth in the brand and increased ranging in supermarkets as a result of that consumer support, so that has been a big contributor to our success over the last few years, particularly last year.
“Once retailers see that there is consumer support for a particular brand that changes the relationship to a degree.”

This also played a significant part in winning an uplift on price at the check-out to help dairy farmers meet higher input costs.

“We’ve been able to put the case of the need for price increases as a result of the increased costs of production and the impacts of drought,” Mr Jeffery said.
“We are able to have a different discussion with retailers because we are 100 per cent farmer-owned and we can provide that guarantee that any additional value that does get placed on a product will make its way back to the farmers.”

Delivering for farmers

Norco Chief Executive Officer Michael Hampson said his management team are focused on continuing to deliver results that will allow farmers to reinvest in their own businesses.

“Every decision we make is for the benefit and sustainability of our farmer members, the community and our co-operative,” Mr Hampson said.
“Between drought, bushfires and a global pandemic, the past year has been without precedent, however by delivering change and empowering our people, we have been able to record a large increase in value for our farmers and lay the foundations for further success.
“Norco is ultimately here for our farmer members, our team members and customers and we thank all of them for the contribution they have made to this excellent result.”

Happy to be supplying Norco

Mrs Moore couldn’t be happier and says supplying a co-operative that is owned by farmers and run by farmers makes the experience more rewarding than supplying a corporation, whose employees may not always really understand the difficulties farmers’ face.

“We are pretty happy to be supplying Norco,” Mrs Moore told The Muster.
“We’ve always made a reasonable margin, but we’ve been in two years of drought and feed costs have virtually doubled so it has been quite difficult.”

Mrs Moore said having a Board of Directors at Norco, who are also dairy farmers themselves, is extremely important when it comes to working with supermarkets to ensure a higher price at the check-out.

“The Board of Directors are all farmers themselves and they understand the hardships that we are going through, and that helped us in their dealings with the supermarkets,” Mrs Moore said.

“They naturally speak from the heart when they are dealing with the supermarkets and the figures that they quote they know them inside out and upside down because they are also trying to pay their bills as well.

“I think that helps more than having someone else going to the supermarkets and say ‘our farmers are doing it really tough so the price needs to be lifted’. That person wouldn’t have the passion and the drive that a dairy farmer has, so this has pushed up the price at the shop which means we as dairy farmers get more money.”

NSW Farmers congratulates Norco

NSW Farmers Dairy Committee Chair Colin Thompson commended Norco for the result and said it would restore confidence in the industry.

“I think Norco should be congratulated for understanding what farmers have been through on the North Coast with the drought and the high cost of feed,” Mr Thompson told The Muster.
“Norco has understood the difficult time many of its suppliers were going through during the drought and has provided assistance through increased prices when they were needed most.
“The dairy industry needs processors that can do this and also remain profitable at the same time – Norco have succeeded in that.
“This will give farmers a lot of hope and encouragement to continue in the industry.”

Mr Thompson, a dairy farmer himself in the Cowra region, estimated that Norco’s milk payment was about 10 cents above the average NSW price which is commendable given the high costs of production traditionally associated with dairy farming in the state’s north.

Exorbitant feed costs

Mrs Moore said the grain she feeds her Friesian and Guernsey cattle comes from Western Australia and is shipped to Brisbane by sea and then trucked to her farm in Dorrigo.

“Before the drought we were paying about $280 a tonne, but that went up to around $500 a tonne so it is just these sorts of things that are out of our control, and hugely affect our bottom line,” Mrs Moore said.

“We can’t not feed it to the cows because then they are not getting the extra grain they need to keep their litres up and if your litres drop, your production drops and your income drops so that’s just how things have escalated.”

When there was no rain the Moore’s were forced to ship in hay from Victoria and South Australia, as there was nothing available in NSW, putting further input production costs on their farm.

What’s next for Norco

Norco recently released a new premium ice cream brand, Hinterland.

It is hoped a continued increase in consumer demand will also allow Norco to further expand its product lines.

“With Australians increasingly community focused when it comes to their purchasing habits, we have conducted extensive research to identify new products for them to enjoy and look forward to meeting their demands soon,” Mr Hampson said.