COOPERATION: THE GROUP THAT GAINED MOMENTUM FROM GOING DOWNHILL
THE COMPREHENSIVE way in which growers can collaborate to bolster their profitability and become significant participants in relevant off-farm enterprises is demonstrated by the AMPS group on the Liverpool Plains in northern NSW. The group - Agricultural, Marketing and Production Systems - is dedicated to improving agronomy, and the marketing of the region's grains.
This goal has led to the formation of two distinct sub-groups, AMPS Research and AMPS Commercial.
As a value chain program, the emphasis is on making on-farm production much more robust. The farm, and in particular its soils, are the foundation on which everything else is built.
A crucial part of the AMPS research and on-farm trials is knowledge dissemination, and a financial and production benchmarking program that enables growers to measure their operations against best practice.
The second AMPS arm, its commercial activities, was set up to develop long-term relationships with input suppliers and end-users.
It is also the vehicle for an agricultural merchandise business used as a cashflow earner to finance future investments in marketing and value-adding initiatives.
AMPS was formed three years ago and through its 23 grower stakeholders covers 45,542 hectares and has an annual cereals, oil seed and legume production of more than 100,000 tonnes.
The group evolved through a relationship that existed between growers and a contract agronomist, Greg Giblett, whose remuneration was based on supplying chemicals. After some of the growers formed a discussion group to look for ways to collaborate, it was decided better use needed to be made of Giblett's expertise as an agronomist.
"Basically we stood to make more money when he was advising us than when he was delivering chemicals," explains founding member, David Brownhill.
This led to the formation of AMPS Research as an incorporated association. Its main charter was information dissemination through monthly meetings and field days.
The overall goal, articulated at the outset, was to improve profits at the farm gate.
The group picked up some early momentum when it investigated downhill farming - as distinct from working across slopes. Soil erosion was a significant problem and about 20 of the growers flew to Emerald in Queensland to see downhill farming in practice. Despite misgivings, because working a slope vertically rather than horizontally was against all conventional wisdom, the AMPS growers were converted.
The principle behind downhill farming is that water forms its own channel and gradually penetrates into the soil. By contrast, conventional contouring tends to bank up water until it finds an escape point and pours away.
"The convincing moment came in the 2000 floods. The damage was nowhere near as bad as on land farmed on conventional contours," says Brownhill.
The importance of this simple innovation was that it gave the group a win first-up and encouraged it to formalise its goals, which became:
- Farm structure (bench-marking, record-keeping and truly understanding the business)
The first major research program, involving GRDC funding, is seeking better understanding of soil nutrition by trying to identify key trace elements. "The issue is pretty simple. When old fencelines are cropped for the first time they grow the best crops. You have this three-foot wide strip that's double the yield of the land around it. What we have to find out is why. We can see clearly that something has happened since we started mining these soils 50 years ago, but we don't know what," says Brownhill.
"We've been falling into the European trap of high-input farming and it's increasingly obvious that the land can't handle it. So there has to be a better way, and that's what we've set out to find."
Brownhill says the group's target is to lift average yields from 3.7 tonnes/hectare to 7.5 tonnes/hectare.
AMPS is an example of how grower groups are becoming more and more powerful in delivering technology adoption.
GRDC's managing director, Professor John Lovett, says such groups are creating a ready-made medium for the delivery of information directly, and are also showing how growers are coming to terms with the need for on-farm quality assurance.
On the marketing side, the AMPS members have visited traders and end-users (for sorghum and durum wheat) in Singapore, Hong Kong and China. However, they discovered that so many farmer groups from elsewhere in Australia, as well as countries like Argentina and Canada, are doing the same thing that many traders seem to be having trouble keeping track of who's who.
It made them realise that they needed professional marketing and a one-stop shopfront: "Clearly the buyers didn't want to deal with 23 growers from the Liverpool Plains, so we realised even while we were still in the Hong Kong airport lounge that we'd have to set up a single company structure," Brownhill says.
AMPS is now exploring different cooperative arrangements and even the possibility of a combined marketing operation with other farmer cooperatives, for high-value niche markets.
In the meantime, with startup capital of $200,000 from 22 grower shareholders, the group established AMPS Commercial in 2001 to look for strategic alliances and new opportunities.
The initial idea was to employ a professional marketer, until it was realised the money wouldn't last long, so instead it was decided to start a farm-supply business.
"Basically it means we're using this business to supply ourselves with the inputs we already have to buy, and using the profits to fund future marketing and R&D," explains Brownhill.
"We've had all sorts of discussions with all sorts of people about getting involved in other parts of the industry and in every instance it gets down to how much cash we're prepared to inject.
"For example, we'd like to be involved in a new process for manufacturing durum wheat, but the money needed to change an existing facility is substantial.
"The only way a miller is going to put in something new is if growers meet the cost.
"So what we're looking at now, once we've recovered from this drought, is the possibility of AMPS becoming a shareholder in a new value-adding processing facility. That's the sort of thing we need to do if we want to make changes off-farm to increase our returns.
"We're not looking to reinvent the wheel. We just want to become a part of value chains beyond the farm gate; and to be valued as part of those chains."