Wednesday, October 21, 2015

Are consumers really being given VALUE FOR MONEY?

$1 milk - good deal...or bad deal??

Fascinating isn't it, in a world where almost half the population have dropped below the poverty line, battling starvation on a daily basis - the other half are fighting off the frightening man-made epidemic...OBESITY!! All things being equal, should that not mean that we are enjoying a healthy balance of nutrient intake, and physical body a global village? You may question the relevance of this statement, in the context of the below article. Happy to explain it straight up, right now.

The global retail industry that is dominating today, is doing so under false pretenses. While appearing to be supportive of your cause, in a financially troubled would - you are going nowhere fast...while they (the retail giants) continue to stack double digit growth figures on top of each other, year after year after year. That is impressive isn't it - considering how all of their valued and loyal customers...YOU, thought they were offering tremendous prices wars and discount specials!! How is that feasible? They make $$ billion profits, while you and I struggle to pay our bills. Yet as a collective society, we blindly maintain the status quo - giving them a big old slap on the back, saying, "Love what you are doing for us...keep up the great work!!" Whether it be Walmart in the USA, Tesco in the UK, Aldi or Lidl in Germany or Coles and Woolies in Australia, we are willingly pouring bucket loads of our hard earned into their coffers. Marketing spin at its very best indeed.

Now it is almost five years since the WAR ON MILK started - Australia Day 2011. The Duopoly rarely maintain a price attack (slickly sold to you the consumer as a price discount) on one product, over such a protracted period of time.

Why milk? Why a sustained attack on the dairy farmer? The answer is simple...greed (y) This has proven to be such a successful 'LOSS LEADER' for the giant retailers, that they have chosen to continue it strategically...whatever the cost :(

The cost to the huge corporations at retail level? It is irrelevant, because of their ability to shuffle margins across many thousands of product lines. While they are knowingly losing money on $1 milk, they could literally be making 1000%, or even 2000% plus profits on imported items (y) Not possible you say!! Well, that toothbrush you paid $2, may have been imported for 20c...that is 1000%. Perhaps the bottle of shampoo for $10, may have been imported for 50c...that is 2000%. Of course I'm just making these numbers up, as I have no idea of the actual costs - but I do understand that's how it works.

Don't be alarmed by the frightening news of their drop in profits this year. As Woolies and Coles hit a pothole in the road, they posted a drop in profits of 12.5% and 9.3%. Does that mean they experienced a loss? NO WAY - Woolies and Coles profits for the 2014/2015 financial year were $2.15 BILLION and $2.44 BILLION respectively! That represents the fourth consecutive financial year while selling $1 milk that they have both exceeded $1.5 billion profits...yes profits not revenue!!

Just remember, while Woolies and Coles knowingly and deliberately lose money on fresh milk (they have told us so publicly), they made a combined PROFIT of $4.59 BILLION for the 2014/2015 financial year!!! Back in 2011 Coles stated this would not hurt the dairy farmer...but industry figures show the average dairy farmer, across the entire state of Queensland...posted a LOSS for the same financial year.

You see, most dairy farmers I know don't have 10,000+ products to shuffle margins - they have ONE. It is called milk, and if they lose money on milk...they make a LOSS. The war on milk, compliments of retailers, has dragged the farm gate milk price back to the where it was in the 90's. Hard to believe, but the Queensland dairy farmer today, is being paid 1990's milk prices by their big milk company. It has not only given the consumer a new point of reference as to the perceived 'value' of milk in stores, but it has also educated the independent retailer of a new and improved wholesale price point for fresh milk, as major milk processing companies continue to undercut each other for market share.

How is this your problem, as a consumer? Many I've spoken to don't think it is an issue at all, as they are enjoying the savings they receive. My question to them is, "At what cost...are the savings coming to you?" When we put the cost impact of milk in perspective - is it really out of your price range? The true value of fresh milk is $2/L. So if your family was to drink 10L a week, that represents a $10 cost. Yes an extra $1/L on whatever your household consumption is. Cost impact? Save a $1/L on milk by supporting this war, and you help sink your local dairy industry. Spend and extra $1/L on milk, and you secure the future of your local dairy industry.

But who really cares whether our fresh milk is produced locally, or whether it is coming from the southern states or Australia? It is still Australian right? Sure it is...for now. The truth is we know there will be tremendous competition for high quality, 'safe' food in the near future from many countries in South-East Asia (it has already started actually). The southern states are heavily geared to manufacture and export commodities, like powdered milk and butter. As soon as we reach a tipping 'price point' where milk processors are rewarded a better price for exports...than they are for domestic milk supply, which has been devalued by the Retail Giants who we now know to be devoid of a social conscience - GOOD LUCK!!!

Good luck? That seems a bit harsh you say! Not at all. Processors will seek markets that help them generate profits too. As they are losing money from the sales of milk at $1/L (as are the retailers and dairy farmers), they will inevitably seek better opportunities. The DUOPOLY + ALDI are remaining rock solid on their intent to break the Australian Dairy Industry. Understand that survival is a basic human instinct. It will remain a driving force at the core of our business, our family and our life. Market signals are driving us as an industry away from domestic sales...towards export opportunities. You don't have to like it, or even agree with me - but you the consumer, who spend 80% of your money with the BIG 3, and support the continuation of supermarket milk sales with 50% at $1/L on a daily basis - are helping the above scenario speed up.

Now that Aldi are firmly in the frame...what do you know about them? They did actually start the war on milk, and Coles copied their did Woolies. Who are Aldi? They were originally owned and managed by brothers Karl Albrecht and Theo Albrecht. Sadly Karl Albrecht passed away in 2014, leaving Theo with a personal wealth of €17.2 BILLION ($27AUD Billion), making him the richest man in Germany, with the co-owners of Aldi Nord, Berthold and Theo Albrecht Jr., close behind at €16 billion ($25 Billion). Globally Aldi have a revenue of over €60 billion ($94 billion) from more than 10,000 stores. Oh, and Lidl will soon join the picture to - they are bigger than Aldi, with over 10,000 stores across 28 countries in Europe alone. Their revenue is now exceeding $100 Billion.

Despite the fact I've said it all before...over, and over, and over, and over again - the huge majority remain oblivious to this truth, to this reality. The people I get to talk to on a daily basis, are amazed - even bemused as to why they were unaware? They were shocked that they were aiding in the demise of the local dairy industry, as they had never been given the knowledge to make an informed decision. Marketing spin is a great tool to increase sales. But it is a frightening day when we allow, and accept that it's OK for retailers to educate to the correct retail price point for our high quality, locally produced, fresh food. If these retailers set prices at an unsustainable low price - rest assured, it is a means to an end for them...not YOU!!

What could the end game possibly be? A continuation of downward pressure on suppliers is seeing them go out of business. Over time, repetition of these actions will open the door for more cheap imports - and that will enable retail giants to increase margins and subsequently - profits. It also gives them the perfect 'out', by saying to you the consumer..."Sorry, but we are unable to source items ABC locally anymore as they just aren't available." Happy days for retailers, and you now get to buy whatever is on the shelf - whether you like it or not!

As we have known for years, retail giants have been breaking local suppliers financially. The ACCC is finally stepping in, but their power to repair this broken system is questionable. We saw last year the ACCC take positive action, fining Coles $10 million (remember their profit last year was $2,440 million). While ACCC Chairman Rod Simms assured us all that this would send a very clear message...really? At least they've started the ball rolling and that is something we haven't see before.

Saturday, October 10, 2015

It's so easy to slip...

Well I must admit...I never thought I'd fall for that! What is that, you ask? 'That' thing us humans tend to do all too often. Our unique ability to judge ourselves on past achievements. To be confused, by rating ourselves and giving ourselves a mistaken identity.

Coming off the year that was...2014 - there was never any chance of going back to back and following up with an equally successful 2015 (if success is rated according to accolades)
*Business Person of the Year* - Scenic Rim Regional Council Business Excellence Awards
*Platinum Award* - Scenic Rim Business Excellence Awards
*Australian Dairy Farmer of the Year* - Kondinin Group & ABC Rural AFOTY Awards
*Marketing Program of the Year* ("Saving The Family Farm" - Vie Marketing), Australian Marketing Institute Annual Awards
*Queensland's 50 Best & Brightest* - The Courier Mail
Our story was covered by Landline and The Project, and radio interviews were done by Steve Austin and Spencer Housen - 612ABC, Greg Cary and Chris Adams - 4BC, Nicole Dyer - 91.7 Coast FM, Marney & Mike - River 949, Jamie Dunn - 98.9 Country, Ross Greenwood 2GB Sydney.

Some kind of year hey!!

In some crazy form of inexplicable logic, 2015 has left me more than a little flat. Despite invitations to speak, traversing the countryside, and speaking in 5 States...I regularly questioned my influence, or more to the point, subsequent impact. It is at times like this that you seem to question your direction - even your value or purpose?

My answers to these questions we less than inspiring. They we sapping me of energy - as I began to believe I was failing on many levels. I was failing my family and farm, as my absence was putting pressure on daily operations. I was failing my fellow farmers, as my dream of offering a solution to their financial woes was getting no closer to reality. If I couldn't figure this all out post haste - I would also be failing millions of Queenslanders...and Aussies for that matter, who don't even know we are heading for a fresh milk drought. The only saving grace was that support of 4REAL MILK was booming. Supporters and followers continued to put wind in my sails on a daily basis. To this day I still don't think I quite have a grasp on the extent of the following I am creating, or the number of lives I am touching?

Unfortunately I also started to lean heavily on a couple of keep me propped up - to help me avoid the perceived reality of my failings. Morning after morning would see me drinking six cups of coffee, regularly skipping breakfast. Sometime after lunch (which I often hadn't eaten either), if I was working on farm, or in my office - I might have a beer or two...justifying "It's five o'clock somewhere!" It was not uncommon for me to drink a six-pack on a weeknight. Before I knew it, my habit had turned into a carton a week. I understand that many would argue that is common...or even normal - but it was not ok for ME. My energy levels were fading, my thought processes distorted, I was fast becoming an insomniac, but most frightening - that well know 'fog haze' was rearing it ugly head. I knew it was time - for ME!!

I wanted to see a nutritionist - as I recognised the importance of getting some quality food back into my system. All things happen for a reason...and I was fortunate to meet a great girl at Boonah Show earlier this year, who had already been closely following the Robotic Dairy FB page, and was very keen to bring her family for a farm tour. It was a great opportunity for a catch-up, and I committed to book in with her for a consultation. I was honest and transparent with all of my dietary and health problems, and knew she would give me a solid plan to work towards, and hopefully a kick up the backside! What I didn't see coming was a diagnosis of Hypertension!! Yes my blood pressure was very high. This was exactly the sort of reality check I needed. It immediately served as my motivation - and Katie did a fantastic job of putting the pressure on me in the first 3 weeks, of keeping her posted with my daily eating plan, and blood pressure readings twice a day. She was tough on me - but I stuck to the gameplan (except for a couple of blowouts at my local Beauy Show, and a great friend and cousin's wedding). Two coffees a day...three beers maximum, three nights a week, four 'beer free' days a week! Yes the first week was serious detox - but the next week and the week after I could start to see and feel the obvious benefits. I'd lost 4 kgs and almost 2 holes on my belt buckle!! Energy levels had risen sharply - and most surprisingly, sleep patterns were returning to normal. Thought processes started to function with clarity once again. Blood pressure had miraculously dropped from 160/120 to a very respectable 123/81 without medication!! Funny thing, I often only felt like one or two drinks on a 'beer' night - now drinking less than a 6-pack a week. Amazing how some healthy lifestyle adjustments can positively impact the human body.

Wait a minute...said the faithful old body. Not so fast!! Yes just as I was chomping at the bit, ready to blast out of the blocks - another pothole in the road of life. SHINGLES!! All things for a reason, and this was especially great timing. I was about to embark on a 3,000km roadtrip with my 17yo daughter - to spead the good news of 4REAL MILK now being available in regional and remote QLD towns, and to run information talks about the importance of customers and retailers supporting farmers to keep them alive, providing fresh food to the consumer. Needless to say, we've had to reschedule that roadtrip for late November 2015. I wouldn't wish shingles on my worst enemy, and I'll be forever grateful I didn't have to endure the worst of it on the road...and that my daughter didn't have to cope with me in that state. It's been tough enough for me dealing with the excruciating pain through the worst of it, in the comfort of my own house. I'm confident the enforced lay-off is building my body to greater strength. My mind is certainly improving, so when my body is willing...look out!!

Until recently, there was one thing that I hated with a was the word "PASSION". I just always felt it was staged. I didn't feel comfortable using it, like I was a fake or a phoney. But through my relentless drive to solve the problem as I see it in Australia, the inability of the consumer to see past marketing spin, I've been given purpose. Through my efforts to educate and create awareness - to enable consumers to be motivated to help the people who grow the food, so the people who grow the food (perhaps the most noble of all Aussie professions) can continue doing so, and in turn help the people who need the nourishment that the food provides. It's not rocket science - but it is definitely WIN WIN!! What's all this got to do with passion? Well I guess I never used to believe that passion was real...because I never 'HAD IT'. But now that I've 'GOT IT'...I 'GET IT' !!

Yes I believe that everything I attempt to do today is dictated and driven by PASSION. A passion that I may not always understand - but will likely continue to serve, like a slave to its master.

We as a community need to give our farming families a future - we MUST!!

Farmer Gregie