Steve Ronald – Gippsland Jersey – Giving farmers a fair go

TRANSCRIPT

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Steve Ronalds and Sally Jones began Gippsland Jersey back in 2016. Their idea was to actually help give dairy farmers a fair go and try to minimise the massive mental health impacts on fellow farmers struggling to survive in the face of farm gut milk price decimation at the hands of large supermarket retailers offering milk at a buck a litre.

This was truly unsustainable for farmers. Starting with a background in farming and milk production, this just seemed to make logical sense. Steve, welcome. Thanks for having me, John. So, Steve, what inspired you to get involved into sustainably priced milk production?

Um, oh, I mean, it could go back generations, to be honest.

It’s, um, been a fourth generation dairy farmer. Um, I guess we just, uh, we’d been buying the family farm after I’ll actually, let’s take a few steps back. I mean, after finishing school, all I wanted to do was be a dairy farmer that’s just had no other ambition in life, but to be dairy farmer. Um, and that was following in my great grandfather’s footsteps.

He settled the farm that we’re on back in the 1890s. So, you know, it goes back quite a while. Um, the generations of farming and I just worked through the ranks working on other farms after school until our farm got big enough and then I was able to end up there all the time. My brother was on the farm to an older brother and my dad and my older brother ended up getting out because of health issues.

So I was just my dad and myself and I just worked up through an apprenticeship and then ended up just working. Um, and then we share farmed it, then we leased the farm off mum and dad, and then eventually we started buying the farm off them. We were, there was none of this, just hand the farm over to the next generation, all of our succession planning, you know, through the farms, and the way it’s operated as you know.

Um, there’s a commercial price put on the farm value, and then we’ve got to pay that for it off the previous generation to give them, you know, a reasonable retirement. Um, and obviously there’s, there’s help with the bank and mom and dad as well as the bank of the bank. So, yeah, so that’s where the process has been, but we’ve been doing that for probably 5 or 6 years trying to make payments.

And we just weren’t making any progress. It was a real battle in those, you know, mid 2000s, probably, probably early, late 90s, early 2000s, the industry really took a dive. And just the ups and Downes of the industry just seemed to disappear. And look, there was the odd ups in there, but they weren’t anywhere near as high as what they had been, and the lows were much deeper than what they probably had been historically.

So, I guess, yeah, we were just trying to make ends meet. I was working off the farm for a couple of the milk factories. Cheers. Um, learning a bit of the backend of the industry, which now is very be beneficial. Hindsight’s always a wonderful thing. Um, and I’m convinced the journey that we are on through life that we go through in life is, uh, leads us to the next, next purpose or the next reason why we’re doing it.

There’s always reasons why we’re doing things. Um, and so all those learnings in the industry. I suppose just scattering little seeds in my brain about, you know, what we should be doing. And, um, and it actually took a motorbike accident, um, where I was laid up in bed for quite a few months. Um, well, not probably in bed for a few months, but I was, I was out of action for months, um, where the mind just started ticking as to, you know, what’s, what are we doing with this?

I’ve, I’ve got three children and, um, I honestly didn’t want them to be in the dairy industry. I thought we’d be the last generation on the farm because I just couldn’t see much Opportunity for them in there. I’ll just figured what’s the point, you know, it’s, uh, they’ll just flog themselves all. All their lives to, uh, you know, be probably in a similar position to where we are.

We are just like massively in debt without, really without much chance for improvement the way the industry has been going. So, it was through that accident, I guess, my mind was just a bit more vacant than usual and more and more things were going around and around and it just got me thinking, um, and there was a few sort of little circumstances that happened, but that maybe we just need to value add to the milk.

On our farm, and that would be the only way forward for us to go because it is guaranteed that we would get a fair price for the produce that we’re producing. So, I guess that’s where the seeds started, and then I met, well, I didn’t meet a friend of mine, Sally Jones, who’s now my business partner. Her family, It sort of had a bit of a similar situation, they had a dairy farm milking Jersey cows like we were up in Lakes Entrance, um, and just, they just found things incredibly hard through the size of their farm, their location, where they were, to, to make ends meet as well.

So they ended up valuating to their milk and, uh, turning theirs into ice cream. And they would have ice cream, some ice cream shops throughout Gippsland. And it was just that connection with, um, with, with their history and Sally had, um, some experience in, in PR marketing, um, that led us to, to join together to, you know, consider starting a brand.

Right. And was the, um, was the, uh, the supermarket majors driving the price down at a retail level? Was that a major trigger or was that actually more of a marketing scam for them? Um, Um, look, it could be looked at. How much does the, how much does, um, supermarket retail price affect what Farmgate price?

Probably back then it wasn’t as much as what it was. Um, the industry has shrunk a lot to where it is right now. So, back then it, it, we were a net exporter. Most of our product that was made in Australia was exported overseas. It would be partially or fully exported. produced and turned into a product, um, and then sent over to feed the rest of the world.

Um, but with everything that’s gone on over the last, you know, probably 10 years, the industry has shrunk, uh, massively. And now we’re actually, essentially, you could actually call us a net importer, um, of product. We probably don’t actually produce enough dairy to feed our country, um, anymore, which is a bit, Which is a bit of a scary thought.

So, I think in answer to your question, it’s probably, it had an effect, and I think it put a lot of pressure on the processors who would then pass that back to the farmers. And, I mean, a trick that the process, the bigger process we’ve always used is, you know, one year they’ll be talking about the Australian dollar was down because we’re a net exporting, you know, country, and, you know, the dollar, sorry, the dollar might have gone up, which means, you know, the value that we pay The farmers are going to be a little bit less, um, but then the next year the narrative might shift a little bit because, uh, you know, that argument wouldn’t always work.

There’d always be something that would be shifting and it would be very rare that the moons would, um, align to give the farmers a reasonable price. So, I think use that domestic low price of the milk, um, because I think it’d come back from about 1. or 1. 50 a litre down to 1 a litre, which is massive, um, it’s, it’s a massive number and it’s got to get passed back to the farmers as much as the supermarkets or the other companies might stay.

We’ll pass that, you know, we’ll absorb that. Um, it’s just not fact and it couldn’t happen. And it’s funny how milk is always at the very back of the shop and it’s something, a staple everybody has to get. So, you know, they dropped the price of that and they walk past all the shelves making money on that and they always called it a loss later.

Um, and I think it’s pretty disgusting to be honest.

Yeah, well, if it’s a loss later, then then they’re not going to make too high a loss on it, which means that I guess the producer does have to

at the end of the day. Someone has to. Yeah, correct. And at the end of the day, there’s a lot of, um, noses in the trough that, you know, need to get fed out of that.

It starts with the producers and even there. You know, the supplies that from the farmers themselves, and then it goes back to the farmers with the freight companies for the milk processes through the distributors through the end users and anyone else that might be in the middle there as well. Um, and there’s only so much to feed in that trough and, um, there wasn’t enough and.

Look, I don’t stand here and say that the farmers were the only one getting starved, but I’m sure that the supermarkets were, you know, um, well, they’re not making good margin on their milk. It is impossible for them to be. And it would have been pushed throughout the whole, every one of those people in that chain along the way.

Yeah, for sure. So, so. You’re lying on your back after a motorcycle accident and you’re thinking, okay, that’s got to be a better way. And we need to actually do some value added and you and Sally got hitched up, you know, as business partners, she’s got, um, she’s got experience in PR and, and, and advertising.

So, then what happened? Um, so, well, there was a stage, then, then how did you actually mobilize?

Well, the very first conversation that we had would have been probably in April. I remember exactly where it was and where I was standing that particular time. And Sally’s father had just recently passed away.

Unfortunately, it was a statistic to rural suicide. So, taking a little step back further, yeah, earlier in April when I was laid up, Um, in bed, um, her dad March, maybe actually, to be honest, but anyway, just around that period of time, um, her dad, um, took his own life on the family farm. So, he, after he finished milking and, you know, processing, um, his milk into ice cream and probably, look, I only ever met him once, but essentially, you know, from my understanding, he was Mr.

Ice Cream. Um, and when he finished all that up, I think essentially, you know, he probably lost a bit of his identity on who he was. And apparently just spiraled into a place of, uh, where there was no hope and no return for him, which is a really horrible story. And that was where the first conversation with Sally happened.

Um, possibly maybe not the most appropriate conversation for me to have as the first time I’ve seen her since this happened. Um, she’s telling me a bit about what had happened, which, you know, obviously I was sympathetic. You know, understanding a little bit of what she was going through. Um, but I, I also in that same conversation said to her, Look, I think I really want to value add to the milk on my farm.

Would it be something you’d be interested in helping me a bit with your skills? That you, uh, have in, uh, in marketing and social media and this is stuff. And she was very heavily involved in the Warraba Farmers Market. She’d set start of that with one of her mates. And, um, and in the whole process of this, the dairy crisis was happening.

At that stage, Murray Gold wanted to drop their price, um, really significantly. And ended up going bust at the back door. Fonterra, the second biggest processor, if not second, second close to the biggest processor. Fonterra. Um, also dropped the price and what was going on the industry was just horrific. Um, there were farmers who were just, you know, going bankrupt.

Um, farmers who were, who were taking their lives and all this stuff. And it was such a horrific time. This is in 2016 and the thing could go down in history as, you know, the Big Dara Crisis. And during that time at the farmer’s market, Sally put a little, um, put a little group, a panel of farmers up on there to get, um, the consumers to understand what was actually going on because people were reaching out to the farmer’s market saying, how can we help the farmers?

We know they’re in pain and we know they’re suffering. how can we help them practically? And so they got these four farmers to talk about what was going on in the industry, very passionate. I was there, I was sitting outside the Arts Centre in Woggle, um, and the media was there and there was a lot of people listening to these farmers telling the story as it was happening, very live and real.

And it was actually after that, about two o’clock that afternoon, I get this text message from Sally saying, let’s do it, let’s start this milk brand. And so I think that was in April or May, and by September we had milk in a bottle. And it was pretty, pretty intense. Process to do that. Um, very full on.

Probably very emotionally charged. She was charged because of what was going on for her with her dad and her family and the grief that she was going through. And she was just telling her all her grief into, um, trying to start Gibson and Jersey. And I guess I was pretty passionate and happy to be pretty outspoken about what was going on in the industry and what was happening to me personally.

Um, so we just sat down really with a piece of butcher’s paper and a few people, friends, mentors around us and family and just said, what are we going to stand for? And probably took no more than 20 minutes to come up with three pillars. And the three pillars were fair price for the farmers. The farmers always got to be paid a fair price.

for the beautiful product, produce that they’re making. Second one was around, um, mental health and, uh, and trying to, at that stage, it’s probably shifted a little bit now, but at that stage was to, to really just try to smash that stigma of, uh, of farmer suicide and mental health, or probably rural suicide and mental health.

Um, and particularly in my males. at that stage. It was really something that was pretty shamed upon not that long ago, but the discussions are a lot more real and easy now than what they were back at that stage. And the third one was around kindness. Um, because at that stage there wasn’t a lot of kindness going on in the world, um, in a dairy world.

And we just wanted to make a little bit of a difference. And I mean, at the end of the day, we could produce as much milk as possible. We could, we could produce, you know, oodles of milk. Um, but unless we could sell it, um, and make a profit, we couldn’t really do too much with it. We had to market it and sell it.

So, what we did, we just decided we would put a cent a litre from every bottle of milk that we made, and we put that into a little, um, account that we call our Random Acts of Kindness account, and as that would just build up, and we’re only talking 100, 200, or whatever it was at the time, sometimes it was more, um, but we would just do random things for farmers to make a difference in their life at that stage.

So, it could be just Sending some family to the movies or it could be sending, you know, a female farmer to get a haircut or a nail done. We brought a bed for somebody because a farmer was sleeping on the floor. They didn’t even couldn’t even afford a bed. We sent, you know, people to the football. And just, just different things are the small little things that actually just made a difference because when somebody does something kind to you.

Um, it makes an impact and often that just reverberates through it either makes a shift in your own mental health and where the position you’re in, or else you might even pass it on to somebody else. So that was a really, um, enjoyable and fun and pretty special thing that we’re able to do. Um, now, moving back, you know, six years later on, the industry is doing a lot better and, you know, there’s not as much of a need for that every now and then we’ll still do something like that.

But yeah, we probably shifted our focus a little bit more. From that, this stage, but those three pillars of what we stand by, and that’s what every decision that we make, we’re going to busy business always comes back to those three pillars.

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Because, you know, the, the obvious channels were, okay, um, what farmers markets, I mean, the supermarkets wouldn’t have been interested or would they?

Um, a bit. Oh, well, initially, no. Um, so we did, we launched at the farmer’s market. So that was on September 2016 at Warugal, where the first decision was essentially made to actually do it.

Um, and yeah, look, we processed about 5, 000 litres of milk and I remember seeing that milk go off in the truck from my farm at that particular stage. Um, got photos of the truck driving in the driveway and just thinking, are we ever going to get any money back for that milk? Because even though I wasn’t getting a lot for it, sending it somewhere else, at least we’re getting a return.

Um, it was quite nerve wracking, you know, if we don’t sell that milk, um, what are we going to do? Um, but when we launched, you know, two or three days later, and we had the milk turn up in a little truck, um, to, to sell at the farmers market, there was just queues, um, beyond what our wildest imagination was.

We, we asked all our friends and family to come and help, um, you know, just set it up. And, and look, we made quite a scene. We brought a cow, we brought a calf, you know. We had it all going on. Um, we had some glass door fridges that were donated to us and, um, and the distributor that we, that we parted up with was there with their vans and, and we’re pretty much trying to pull the milk out and put it in the glass fridges.

Um, but we could didn’t even have time to do that. What we ended up doing was just taking the milk pretty much as a box of milk, opening it, just handing it to people and, um, they’d just pay us for that milk and go on. And it was at that stage. We thought like, gee, people are actually backing this. They’re actually behind.

What we’re on about, um, and I think we’ll be okay. And we had four or five of the smaller supermarkets, just your IGA’s and super, um, food works and just those independents and some general stores and a few cafes. I said, yep, we’ll, we’ll support you and use you. And that’s how we got started. And, um, and some of them are still with us today.

Some of the Marks. Um, yeah, it was quite a, uh, when you, when you think about it and consider what went on, it was pretty incredible to be honest.

Very, very grassroots start, which is why so many successful businesses have started. Yeah. Yeah. So tell me, how’s your, how does your business model work now, six years down the track?

Um, look, I mean, it’s shifted a lot. Um, so when we first started, we, we, we wanted to have a milk contract process. We, we studied a lot of the smaller dairies around Australia that, you know, did what we hope to do and what we found were that the majority of them were pretty small, um, just single, single, one farm, so single source of one farm, and then they would just, you know, Send them milk around their little area, which is great.

And that’s as far as I wanted to go, essentially. For us, um, that’s not what we wanted to do. We really wanted to bring on a number of farmers to get paid a fair price. And sort of the goal was, and probably still is, to have a dozen farmers or 15 farmers who were just always getting paid a fair price for their milk.

Um, so to do that, we knew that A, and B, We weren’t going to set up a little factory on my farm. I haven’t got town water. We didn’t have enough power. We haven’t got enough water on the farm anyway. So just some of those main, you know, utilities that you just need weren’t there. So we knew my farm was not the place to set up a little factory.

So we just decided we would just send our milk out to be contract processed. Um, so we found some, uh, a person who could do that for us in Dandenong, um, and that gave us the ability to then go and just sell our milk. So Sally and I just wore out our boots, knocking on every Um, shop, cafe, retail store, whatever we could find pretty much from the, uh, the New South Wales border, um, all the way through to Melbourne.

So the distributor that we had could service Gippsland and Melbourne. So we literally wouldn’t see the milk. The milk would go off in a milk tanker. Um, and if we wanted to hand a sample out to a particular shop or whatever, we’d literally just go to a supermarket, buy a milk and then hand it to somebody else.

To, uh, to take it because we weren’t processing it because like I was saying, most of the smaller companies that did what we do, we find that the farmer milks the cows like I would be, and then they would jump into their factory and process milk and turned into cheese and milk or whatever they might do.

And then they’d think, oh, hang on, we’ve got to get delivered. So then they go do deliveries. And then they would have to come back, Oh, it’s milking time again. And that was just a cycle. And it’s not a cycle that we wanted to get into. Um, I’m not going to say we’ve got it right because we work incredibly hard and just in another cycle ourselves in our own business.

But what it meant was that we could grow our business and we just were totally, you know, not focused on anything to do with the product, but all to be do just was selling business, selling milk and just to grow that business as fast as possible. Yeah, so, um, we did that probably for.

Um, and then we got a phone call that, um, yeah, you don’t really want to get from a contract processor who says, um, Hey guys, we can’t process the milk after another 30 days. I’m just giving 30 days notice that you need to find someone else to process your milk, which is We didn’t do a super big panic, um, we’re actually looking at another milk factory in South Australia at that particular time, because we’re starting to sort of, the seeds were saying that once we got to a certain size, it would be time to process the milk ourselves, it would become economical and viable.

So, we’re actually looking at this factory in South Australia when we got that phone call, um, in the airport, and, We actually just did a little live video sitting in the Adelaide airport, uh, on our social media. We just went on Facebook Live and did a little video and said, Hey, we’ve just had this happen.

We’ve just got this phone call. If anyone knows anyone who could, um, You know, who could process the milk for us, just if you let us know, that’d be great and jump on the plane and, you know, an hour flight home and get there. And when we get back, the phones are just ding, ding, ding, ding, ding. And it just went a little bit.

Um, yeah, people were just sharing it and trying to help and realize that, you know, we probably needed some assistance. And that’s how we rolled a fair bit with what we’ve done. But what we found was that there wasn’t anyone suitable really to process our milk. It was actually quite tricky because we were a bit too big for the really small people to process the milk, but we’re still way too small for the big factories or big guys to, uh, to want to do it.

And they probably wouldn’t do it anyway for us, to be honest, because we didn’t get a yes from them anyway. Um, but that’s, that we found ourselves in this little, in this little pickle. So we ended up having to, the only place we could find to process our milk was. Four hours away in the Western District of Victoria.

That’s the only place we had offers of people. Oh, we can do it. We’re in Queensland. We can do it or we can do it somewhere else, you know, but it just wasn’t viable or able. Um, so once again, we pulled out the butchers paper and we’re sitting in the, um, in the world library one time because we never really had an office and we’re just thinking, what are the options of how we can do this?

You know, we can’t really find in the process and milk. What’s the options for us to survive? Because the milk getting processed in the Western District wasn’t viable at all. It just kept milk on the shelves to keep continuity of supply, which we thought was, that was worth, um, the risk of, you know, going broke for essentially.

So, it really come down to that. Um, at Sally’s family farm up in Lake Centrance, there was a factory sitting there that had a horse living in it and a squatter, um, hadn’t been used for a number of years, was sitting there. And so I went for a drive, had a look at it, uh, afterwards and thought, well, that’s actually got potential to turn into something if we had to, um, but it was sort of the last option.

And so I spoke to, uh, Bec, my wife, and I said, what do you think about, um, what would you think about moving to Lake Centrance if we decide to process that? And I really expected her not to be keen at all, and that would have been cool, we wouldn’t have done it, but she actually said that might be good for our family, so yeah, maybe we should do it.

So we jumped on and we did a little, you could call it a crowdfund, or um, we, we asked people to pre purchase bottles of milk, so we didn’t ask for money just to be handed to us. Um, but they were, they were 10 for each bottle of milk. So they’re an expensive bottle of milk. Absolutely. But the idea was that once, once we had that factory up and racing and operating, that we would then hand the bottle of milk back to that person and say, thank you very much, you know, for your support.

And I think we did 5, Um, social media posts on that and we raised 110, 000 in, you know, 20 days or something that was quite, quite incredible, um, how that all come about and, and that was just cover the things that weren’t, we weren’t able to finance. We had a bank manager, the CBA really backed us with some old equipment, our separator and homogenizer were pretty old.

That probably not normally financeable, but yeah, they backed us, um, and the important things um, well the extra important things like our Pasteuriser and our Chilean and things that really affect health. We’re going to be talking about milk quality. We went and purchased brand new and just finance all that.

We finance ourselves as high as we possibly could go. And we use that 110, 000 to rewire the factory and pour concrete and paint floors and paint for paper plumbers and the things that you just can’t finance that you just need cash for. Because we weren’t, you know, like I said, we’re bleeding money with our milk being processed in the Western District.

So it was a, it was a pretty full on period of time, but we managed to scrape through it. Um, and then, yeah, here we are, we’re processing our milk. Funnily enough, the fires in, uh, in East Gippsland were very, very close to us just as we’re about to open. Um, we actually had our dairy food safe license, um, audit booked in.

In, on January the 9th or 8th of the 9th or something like that, and, um, and they couldn’t come up because the roads were cut and we’re actually blocked in by police that they couldn’t, uh, they wouldn’t let anyone in or out to the property, um, because of risk of burning down and we could see, you know, um, yeah, we’re in significant risk, which we just finished this brand new factory, well, a brand new old factory.

Um, and then the risk of it possibly being burnt down was, uh, was not an option to us. So, um, anyway, here we are now.

And so, now you’re producing how many thousand litres a week or a day?

Um, uh, look, it’s pegged back a little bit just at the moment, but yeah, sort of, Around 50, 000 litres a week, we could call it.

Yep.

Yep. And milk. And

so, and how does that business model work now? Because you’re actually not, um, uh, spending most of your time at farmers markets, is that right?

Yeah, correct. So, like I said earlier, we really wanted other farms to come on board and, and, uh, you know, just to try and support as many as possible.

And we’ve now got four farmers who, you know, supply us, which is great. So it’s my farm, um, I’ve got a great share farmer who looks after my farm to keep me focused on the business. And then we’ve got three other dairy farmers who now supply us most of their milk. We have got arrangements with the excess milk to get sent off to somebody else, which helps take some of the ebbs and flows.

Um, and the, the, the, you know, different times a year when we produce a little bit more milk than what we need. Yeah. But, yeah, uh, look, the model, model hasn’t shifted massively. It’s just that it’s now a lot broader, who, where and who we supply to. Um, we now do a bit of our own delivery, uh, or we control the deliveries a lot more.

Ourselves, we don’t have distributors do much of our work. We, we, we supply to our market, probably 97 percent of our customers. We just supply direct to and have the relationship with them. So we take their orders and make sure they get the deliveries. We have delivery partners who deliver the product for us.

Um, some of them, well, some of them are very, very close to the factory. They work within our business. They’re still a contractor, but yeah, they’re kind of a salesperson as well as delivery people. And then we’ve got, um, a third party logistics company in Melbourne who does the rest of our deliveries, uh, which is really good.

We also supply coals and Woolworths, both direct, um, through the DC, which works well. Um, and direct a store for some of the, um, smaller product lines that, you know, don’t go through DC. So yeah, we’ve been able to have that relationship with them and along the way keep the relationships with the smaller supermarkets and general stores and Ritchie stores and whatnot.

So,

yeah. And what’s your product range?

Um, so we do milk. We do three types of milk. So we do light, full cream and unhomogenized with the cream on top. And then, uh, once we started our factory here at Lakes Entrance, we started doing butter as well, um, sour cream, and cream and buttermilk. Uh, in the butter, we do that in salted and unsalted butter, and then we do that in various skews as well.

So we do sheets for the pastries, um, for the chefs and in bulk, and then we do retail packaging size 20 gram portions that can just be put ready to serve on people’s plates. So,

yeah. And, um, so that’s, that’s quite a range. And how is profitability across the business set? Is it, do you see it as being a long term viable business, Dan?

Yeah, look, it has been good. Um, we talked earlier about the supermarkets, um, and how they played with, uh, and affected the industry and the business. Um, and I sort of said, look, they had a, had a fair impact on it. Um, to be honest now, they’re actually having a significant impact as well, because now, uh, The supermarkets has, you have their own supply direct with the farmers.

And funnily enough, the cheapest milk in the supermarket, which obviously is owned by the supermarkets themselves, they’ve essentially got to pay the highest price to the farmers for that milk. In any normal industry, that just blows anyone’s minds. Um, but I don’t think many people really understand that that’s what goes on it.

Because at the end of the day, what they’re doing, they’re inflating the price of the milk paid to the farmers. So at the moment, the farmers are actually probably benefiting from that, uh, which is great. The farmers have been getting paid a really good price at the moment. Well, the best they’ve ever been paid.

I don’t think you’ll hear of any dairy farmers complaining of what they’re getting paid. Um, This current season, it’s relatively incredible to be honest. Um, but that then has put pressure back onto the rest of the um, processing companies and ourselves. I’m going to call ourselves one as well because they’ve got to match these really high prices.

Um, to pay the farmers and, and I think the whole industry is under a fair bit of pressure because of that at the moment. So, in answer to your question, look, we have been, I mean, milk is not a profitable business and we know that from the start. Um, but look, you know, we’ve been trading long okay and our volumes have been enough that it works.

Uh, this current season is really tight to be honest and it’s quite difficult right at the moment. Um, but we, you know, we will be able to trade through it and we just keep going. Um, but it’s funny how, um, just two big businesses can skew whole industries. And, um, look, essentially they need to be called out for it.

Because it didn’t make sense when they’re paying, you know, selling it so cheap a price. If they were where it’s at, you know, losing the margin on the whole lot of that and still paying the farmers a fair price at the start, there wouldn’t be, um, an issue. But what happened is that so many farmers have left the industry.

Um, you know, the industry’s probably shrunk nearly 30, 40 percent in the last 10 years. And the problem is, like I said earlier, we’re almost, well, we are actually a net importer, uh, a net importer of dairy produce. Um, so the price for milk has gone up, and that means that there’s not enough milk around now.

So, we’re really sort of, you know, if they had a bit wider view, they would have been able to understand that if we just pay the farmers a bit better earlier on, they’ll keep them in the industry and we won’t have the current issue that we have now. So, one of the supermarkets right now is trying to lock their farms in for 3 years.

at a really high price that probably doesn’t, um, reflect the narrative of what’s happening with the milk around the world at the moment. America’s milk price is, you know, dropping significantly every month at the moment. Europe is dropping every month significantly. And the major supermarket buyers just said, oh, we’re going to lock this ridiculously high price in for the next three years.

Doesn’t make sense.

So, yeah, so then when I think about Gippsland Jersey, it’s a, it’s a micro producer, I guess would be the best way to describe it when you compare it to, to, um, Bonterra, uh, and others. What’s unique about Gippsland Jersey that, that, uh, helps it deserve the, the supermarket space that it has?

And the premium pricing that it charges and premium, but fair.

Yeah, so I think it’s, um, it’s finding our lane and sticking to it. So one of the unique things about, um, Gippsland Jersey milk is Jersey is actually a breed of cow. So they’re little brown cows with the cute eyelashes and all this stuff, you know, a lot smaller frame.

Um, so they produce a higher fat milk. It’s got more, more fat. It’s got more protein. Okay. It’s got more calcium, it’s, it’s got more carotene, it’s got more of everything in it essentially, less water in the milk. Um, so that means that for every, you know, bottle of milk that you buy, there is a lot more dense nutrient value in that.

Um, that’s hard to explain to people. Um, but that’s the reality of why it tastes better. Um, the other part of it is that anyone who buys Gipps and Jersey Milk knows that, um, yes, it’s a premium product, it’s Jersey, but they also know that the farmers will always be paid a fair price for the milk, which I don’t think any other company can hand on heart say that they can do that.

Um, because that’s just our model. So we start with the farmers and pay the farmers first the right price and then just add all the margins on to dictate the price the consumer has to pay because at the end of the day we can’t go broke over it. We’re not going to send our farmers broke. Um, whereas I think every other single dairy company in, you know, in Australia in the milk space starts with the consumer what they think they need and work backwards from that.

Um, and I think that’s a really big difference in, in the model. Um, and people believe in authentic, you know, and grassroots. So we are the only, you know, Jersey producing milk in Gippsland or in Melbourne. So, you know, if you want quality milk, people need to come to us. Um, pretty much where the, where the most, there, there is a little micro dairy in Gippsland as well.

But, you know, in Gippsland, we are the only other producer of milk. There’s no, none of the big companies have got white milk processing in Gippsland. We’re the only one. Um, that’s quite unique. Gippsland and eastern Melbourne or the whole of Melbourne is a huge catchment of people. And people want to support local.

Um, as long as we’re price competitive, that’s what people want to do. Sorry. It’s funny, look, yes, we had to increase that price as we go along, um, and consumers seem to be supportive of that as we’ve done that, but yeah, we’re a very unique business, very grassroots, um, Sally and I are so embedded in this business and work incredibly hard just to make this thing work and keep functioning day in, day out, um, but now we’ve got a good team of people around us, we’ve got, you know, a whole factory that’s operating every day, I think there’s eight people in there working today, um, just processing cream, I think they’re processing cream, you know, Um, the three white milks and doing washing up and more more milk is arriving to go tomorrow.

So that’s just how business roles is operating six or seven days a week. And it’s, uh, it’s very exciting.

And you mentioned price increases. Um, how have you been able to make your way when faced with the brute force of the major supermarkets can apply? I mean, over the last 12 months, there must have been a requirement.

I would have thought with Processing costs, staffing costs, um, lack of staff in the region and so on. It must have been a, um, uh, a need for you to actually, um, talk to some of your major purchases about price increases. How, how have you gone with that?

Um, good. So, we probably did a rookie mistake. So, we were paying the farms right from the start, the same price for the first, Um, almost five, five, four years, uh, because the, our price was very, was better than everybody else was paying.

Um, it just worked. Our farmers were happy. And it was only at the end of last season that we probably didn’t quite stay competitive with the market. Uh, it was at that stage that, you know, the rest of the market finally caught up to us. The problem with that was that after five years, we hadn’t done a price increase either because we didn’t really need to, um, the rookie rookie mistake is that we probably should have been increasing the prices and reviewing them every year.

6 months or 12 months. Um, because when we did do the price rise, we had to do a reasonably significant one, which look, we did lose a couple of people. But even then, most people were very understanding. That was in May last year that we did that. Um, so yeah, look, but it wasn’t enough. It wasn’t enough. And we’re just currently right doing another one at the moment.

Um, because just all the costs have gone up and like I said, we’ve had to pay more to the farms than what we had budgeted for and planned for because the other companies, you know, paying more and we’ve got to be competitive. So, it’s been tricky. Each of our four farmers came up to me and just said, look, at the end of the day, if you guys have to pay us a bit less, you paid us a premium for the last four years or five years.

Um, so we’re very happy. We don’t need to be, uh, price matched or anything like that because the last thing we want to do is forget that and go broke. And, uh, you know, and then we’ve just got to go back to supplying the bigger companies. So the, the farmers are quite incredible in their attitude towards us and their, um, allegiance to us, which is amazing.

Yeah. Yeah. Well, I guess you’ve earned that, um, throughout the years. So when you think about the things that you’ve learned over the last six years, what have been the major roadblocks that you’ve, you’ve hit along the way and how did you overcome them?

Oh, there’s so many roadblocks along the way, isn’t it?

Um, I mean, yeah, look, some of them are self inflicted. So for us, where we decided when we started the business that we were all about local, you can’t, you can’t preach something and live a different life to what you preach. So, and that’s who we are. That’s how we roll. Um, that’s who, you know, embedded in who Sally and I are.

So we made sure that we used a local family owned, you know, distributor or delivery company. Um, that was part of what we just said. That’s what we have to do. The contract processor who process their milk, we said they have to be Australian owned and ideally families if they can. We found that, um, the people who manufacture our boxes that we put the milk in, um, if they’re made just up the road from my farm and near them south, and yes, we know we can get them cheaper elsewhere, but if we don’t support our own backyard, um, those businesses will go under and it’s just a bad spiral.

And we don’t want to be a part of that. So, in answer to your question, some of those become roadblocks, um, and we’ve got to keep communicating to our customers, well, this is who you’re supporting when you do that. The milk tanker that brings the milk up to a factory, yes, we could use one of the big companies that, you know, has shareholders all around the world or whatever, but we use a little fella who’s based in Druin in West Gippsland, um, who’s got two or three milk tankers, and he’s the fella who we bump into at the local shop at the same time, you know.

Thanks a lot. So that’s how, that’s how our business rolls and that’s, but that in itself is a roadblocker. Um, the contract processing is expensive. It was really good. It got us off our feet. Um, but we knew we had to process our milk at the same time. And finding that right time to do that is really, really difficult.

Sometimes you just got to make those jumps and just, you know, step in and do it. Um, that one we were forced into, which, uh, which was probably actually a blessing. In a lot of ways, not probably what we had expected or wanted to do so fast. But it probably actually worked really well for us and it’s really set us up, you know, to, to fit in our place in the market.

Um, yeah, sometimes loyalties can be a, be a problem as well that we had a, a distributor who were using that probably was holding us back a bit, but because they’re, uh, just a small and they’re family owned, you have those bit of relationship with them. Um, that ended up falling over when they decided to bring another dirty milk into their line that they would deliver.

Which we didn’t think was fair or reasonable because we were very restricted in what we could do, um, but we probably should have made some decisions and harder decisions earlier to pull the pin and, and go direct because that’s what works for our model at the moment is going direct to the customer. Um, I mean, they’re just a few.

Look, there’s so many. So many things, you know, we can elaborate on.

And so, um, you’ve, you’ve gotten to where you’re at now and you’ve got a, uh, a strong and viable business. Are you looking to expand dramatically, um, or continue on with where you’re at and how you’re, how you’re running it?

No, look, look, we, we still want to grow.

Look, we’re very committed to growing our business further. Like I’ve said, a couple of times, we really want to have, No, 10 or a dozen suppliers supplying it around that’s that’s where we would like to get get to I mean It could be a lot more but we don’t have We don’t want to become a massive big player in the industry.

It’s not what really floats our boat. Um, but we would like to keep growing in that space. It’s, it’s, I think we’ve had incredible growth every year. It was, it was pretty much 70 percent growth year on year for the first four years.

Well,

um, and it was, it was a crazy ride. It was really hanging on and trying to steer the ship the best we possibly could, because it’s hard to.

Um, run a business that and cash flow, you know, just keep rolling. Thankfully, with milk, it’s very, very fast moving. The cash is in and out very quick. Um, so it’s probably not a bad business to grow at that speed. We don’t have to hold much stock. It just, it’s very, very quick moving, which is good. Um, yeah, so look, look, we’re, we’re setting up more of a team around us to, to allow us to do that.

We’ve now got more of a sales and marketing team, and we recently put a full time salesperson on who’s just out and about in Melbourne all day, every day, um, pursuing customers. Um, we’ve got more of a, a much more of a plan, strategic, um, just. A plan around our whole sales and marketing plan. And I mean, and the whole business in general, um, but very focused with the whole team around that.

And we’re trying to really develop the team at the factory so that, you know, they’re not as reliant on, uh, myself. Cause I’ve been in there full time all the time, um, with other people bringing that in and, and just, I guess we’re just maturing. And, uh, you know, pulling up our big kid pants as we grow up, I suppose you could say.

And are you looking to relocate and expand?

Um, look, anything, anything’s on the agenda for us. Look, it’s, our location’s not perfect. What we do, we have to freight our milk up a fair way from, you know, West Gippsland into East Gippsland. It does give us access to markets in, you know, New South Wales, which we, which we take on.

Um, And look, all, yeah, all our milk, like I said, is coming up. So it would make sense for us to be in a different location, but look, it’s working at the moment. Our eyes are very wide open to how it might work. I mean, we might keep part portion of the business in Eastgate planned and move some of it at some stage.

We’re just not a hundred percent sure on how that will look at this stage. Very wide vision. Um, and, and especially around partnerships and collaboration and joint ventures with people. We talk to, um, the people in the dairy space regularly in our patch. We try to bring them all together. We don’t look at people as competitors.

So much for rather as you know, people that we can learn from and work with. And, and yes, we have our lines, but we’re all quite slightly different and they will cross every now and then. And we’ll probably tease each other’s off, excuse the dairy pun there, um, occasionally, but you know, that’s. You know, if we can just grow the whole industry together, it’s, it’s a good thing.

The, the, the dairy industry in Gippsland is just huge and it’s just not celebrated. Not at all. That’s the third biggest dairy in region, Australia, and no one really knows anything about it. Yeah.

Correct. Yeah.

Yeah. So tell me, Steve, if you could go back in time now and advise your younger selves, when you were starting this business, What advice would you give yourself knowing what you know now?

I’ve got to bite my lip and say don’t do it.

Nah, look, it’s, you’ve got to have nerves of steel. Um, business is hard and it’s been hard. I mean, going through the whole COVID thing. Look, that in a lot of ways, um, eventually, well, in the midst of it was actually beneficial to us. It was horrible at the start. Um, we probably benefited in the middle and probably out the other side of it.

Yeah. As the world sort of, you know, battling a little bit more and inflation is getting out of hand and. You know, prices are going through the roof. Um, we’re affected again. So that, that stupid word pivot that keeps getting put around, but it’s so true that you’ve just got to keep have eyes wide open and not stick to the same thing all the time, but I guess sticking to what our core is not steering too wide from that, you know, not trying to look at all the shiny things on the side that could be, could be exciting and fun, sort of sticking to our core, but having a wide enough vision that we’re not so narrow minded that we can’t, you know, Can’t do it.

Um, look, we won’t die wondering anymore. Um, but look, it’s a, it’s a interesting space. It’s a, it’s actually quite enjoyable and fun most of the time, to be honest. And just even dealing with the majors and the supermarkets and, um, look, I think they, people enjoy working with people who are generally grassroots and who are genuine.

And look, I think we are pretty much like that. We, we say, call a spade a spade, um, and not happy to, to shy away from that. We’re probably not quite as edgy as what we were when we first started because as you get a bit more bigger. And a bit more of it, you know, following on our social pages and stuff that, you know, you can get wallop every now and then.

You know, equally you can go the other way as well and rise, you know, bring you up. So, yeah, I’ll definitely say, look, if you’ve got a dream and do it, um, yeah, and, and have a desire to do it, you just got to have a crack and really try, but it’s hard work. And I think, um, the businesses that I’ve seen or people that I have watched and go, uh, it’s just.

If, if you think you’re going to get a huge big, you know, paycheck and it’s all going to be all this stuff and nice and rosy from the start, um, we haven’t experienced that, that’s for sure. We just did this with no pay. I don’t think we took any pay for the first two and a half or three years. Um, it was just trying to skimp and save off what, you know, I could make off the farm and what Sally could make through, you know, her husband.

Um, through his work, uh, and just the hours you put in it, just, you know, unrelenting to be honest. So, mm, nerves are still and just keep going.

Yeah, nerves are still, I like that, and keep going. The, um, so where do you see Gippsland Jersey in five years time?

Um, I would think that we would in five years time, we’d be double the size we are now.

Um, we’ve got capacity to do that where we are, um, or it could be elsewhere. I don’t know, I can’t, I haven’t quite got a vision of that. I looked. If I had a crystal ball, I think we might be, uh, have our base in a different location still within totally 100 percent within Gippsland. Um, look, and it still wouldn’t really change that much, just be a bigger version of who we are.

So we’ll just have bigger, um, a bigger operation with, you know, a team around us and a board who can, you know, advise and hopefully we would be less hands on, but still have that passion and that inner drive that, you know, be so embedded in the business because that’s what we want to do. Five years is not very long.

That’ll fly very quickly. Um, yeah, I don’t think it’ll be a heck of a lot different. It’ll just be bigger with a really solid team and we’re slowly building and developing that now and creating the framework and the pillars to sort of, you know, pull all that together and so we can, you know, do it very safely and securely and strongly.

Mm, mm. And with the, uh, the strength, uh, of Australian food security, Do you see that there’s an opportunity for you to be an exporter or is that off the table at the moment?

Yeah, absolutely. Um, no, that’s definitely a possibility where we are restricted in this site, but it doesn’t mean we can send our milk or products to someone else to make as well.

So we don’t have to have that control of everything. So it is something that we would like, and probably yeah, within five years, I would think that would be part of our suite of products that business does. Or, you know, part of who we market and sell to would be some different products around the world, probably more so our butter and those longer shelf life products that, you know, I mean, we get calls for it all the time.

There wouldn’t be a week that would go by that we would get a phone call from somewhere around the world wanting our product. It’s just trying to get it there in a, in a way that, you know, is economical. Uh, and big enough volume that it’s worth the extra cost that would, you know, the business would have to wear to get it over there.

Absolutely. So, Steve, if a CEO is looking to improve their organization from all of your years of experience and business learning, what #CriticalFewActions™ should they start doing tomorrow if they did nothing else?

Um, be considering the team around them or at least the system so a person can come in Steve.

Around behind them and pick it all up because then today we can’t do everything ourselves. So I think, yeah, if you’re, if you’re not ready for a team or, you know, if we as a business can’t afford that team, still setting yourself up with a framework, someone can just come in and build on. Those basic, you know, foundations, um, to ensure you can grow, you know, and make sure that you’re ticking all those boxes of, you know, you can make as much product as you as you want, but unless you can sell it and market it and people want what you’re going to make, there’s no point making it, especially in our space where it’s so fast moving, you know, the FMCG is just a different, um, you know, it’s a different word that I never really understood.

Um, but I think milk has got to be one of the fastest ones, you know, bread’s probably another one, you know, probably worth. But there’s not many that are so quick moving, so you’ve got to be very, very quick and aware of what’s going on with that. Um, #CriticalFewActions™ for a CEO, trusting people, you can’t do it all yourself.

Um, and putting people in key places where your strengths are. So, you know, for us, like I said, we, we went out contract packing and, and having our milk done elsewhere. And we were just selling, selling, selling and building the brand. Um, one of the things that we really wanted to do is make sure that the finances were.

Um, sorted and looked after, though we just had a bookkeeper who was just making sure they’re on top of that right from the very start. Obviously, we were very close. I’ve never let that go and I probably will never let that go. Um, I’m quite, I’m very, I do all the budgets and make sure, you know, we’re all, um, still buzzing along okay.

But to ensure that we’re ticking all the boxes in the background and making sure our basses are done on time and accurately and that sort of stuff. Um, doing that and that doesn’t really float my boat either. You know, for me personally, it’s finding the things that you’re good at and you love, really focusing on them and the things you’re not so good at, bringing people to help with that to ensure they don’t get missed.

Um, same with crop for us now building a factory. We had to bring in contractors to help us, um, navigate all the food safety plans and making sure, you know, our HACCP is correct and all that stuff. It’s not stuff that can be, um, taken lightly, um, or, you know, our EPA and all the regulatory stuff. It’s super important and critical.

So once again, bring the people in, around to help you where you’re lacking those skills so you can learn them. Um, to me, I don’t know whether it’s right or wrong, but one of the things that I really want to do, and not because, um, I feel like I have to, but I want to make sure that every single process in our factory or our business is something that I personally can do if I need to.

Not from a control point of view, but I want to be able to know as a small business, because we are still small, um, in the scheme of it, that. Um, if you lose a key person in your team that you can keep yourself and keep yourself getting, getting through, um, even right through to, you know, how to make butter or how to pack milk or, or how to put the tests on for, you know, in our lab or whatever.

There’s nothing in our business that, um, I haven’t been able to do up at this stage, but I’m probably losing a bit of touch with some of the closest of our, um. Customers and some logistic channels, um, because at the end of the day, you need to do that. And I, we’ve got a really awesome team, um, that would be where I feel like I’m lacking of understanding anymore, but I can’t keep hold of it, but it’s been really important.

So I know who it is and then I can understand our staff as well and understand the pain that they’re going through. I was writing some. Up at 5:00 AM with our factory operations lady who does all the organize, all the packing. ’cause I said, you know, you at the moment, you’re a weakest link because if you’re not here, nobody knows what you are doing at this early of the morning.

So I said, I’m gonna come round, I’m gonna shadow you, um, and we’re gonna jot it all down. She said, well, I’ve actually done it. You can just check it off. So, you know, we’re either go through it and just navigate that because, you know, you’ve just got to look for those weaker points and make sure they get fulfilled.

Gotcha.

It’s, it’s such a hard thing to be a small business and to be very hands on and operational, but also to be able to let go of the things you need to let go at the right times. And look, I certainly am not. You know, good at that sort of stuff at all. I probably hang on to things too much. Um, I think one of the things as a leader that, uh, in our business that I do get criticized for every now and then, which, um, is, uh, I find hard is to be very direct with people.

Um, I, I don’t like to micromanage people, um, give them the boundaries and help them understand it. This is what we need to do. You need to do this particular job in a certain amount of time. I don’t care how you get the job done. So they might ask me a question. I said, well, how do you ask? How do you want to do it?

Or here’s a few ideas. Um, but what I’m sort of understanding is a lot of people like that real direction of this. Just do it this way. Um, and I’ll do it exactly how you want to get out of there rather than having that, um, freedom to, to work out how the day might roll. And I find that hard because personally, I don’t like being micromanaged enough and just understanding how different people react and, you know.

Having to understand, you know, I’ve had plenty of farm workers over the years, and I think usually I understand how they operate, um, and then, you know, I’ve worked in a bit of the corporate sort of space and other sort of, you know, bigger business, so I sort of understand that a little bit, and then I’ve had to learn how factory work work isn’t and how, you know, Different kind of process operators want to be taught and understood.

So that’s been a good learning for me and something that I constantly have to work on. And I do get comments about, you know, just be a bit more direct about some things.

Fair enough. Steve, this has been really good. Thank you so much for sharing your learnings and your journey. And, uh, I wish you all the best with this.

Oh, thanks for having me, John. And, uh, thank you for your courses with you. I really, really enjoyed that and learned a heck of a lot through your CEO masterclass. Wonderful. Thank you.

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