The NAB Rural Commodities Index in January increased for the third month in a row. The index increased 2.2% month-on-month, and is back around levels seen in May 2023.
Honesty, transparency, integrity: that’s the mantra Australian Consolidated Milk brings to its relationship with suppliers and it’s paying off in trust and loyalty.
No business succeeds without focusing on the needs of its customers, but not all place equal importance on winning the trust of suppliers.
For Australian Consolidated Milk (ACM), the key to a sustainable future is to care for the supplier community of around 300 dairy farmers who supply milk for its dairy processing plant in the tiny northern Victorian community of Girgarre. Not only for the benefit of the company and its shareholders, but to help stabilise an industry that still feels the effect of the 2016 milk crisis, when the price paid to dairy farmers for their product fell below the cost of production.
Since that time, respect in the industry has sometimes been in short supply. But with ACM’s mantra of “honesty, transparency and integrity”, it’s growing again.
“Our suppliers are a critical element of our business, and we view it as a partnership between ACM and our suppliers,” says CEO Jason Limbrick.
Building respect creates trust, which in turn fosters loyalty.
“The suppliers trust us with their milk supply – it’s our obligation to extract as much value from those milk solids as we can and deal with it efficiently and return value to the farmgate in price,” Jason says. “Without trust, we really don’t have a business. We need their milk supply, so we prioritise that.”
Common empathy informs this productive relationship. “Our founding directors and shareholders started on a dairy farm themselves,” Jason says. “That was the origins of ACM, starting with our group of shareholders purchasing a farm, effectively.
“Our board has a strong understanding of what it means at the coalface for our suppliers. So we try to conduct business in a way that keeps the most important things at front-of-mind, all the time.”
NAB Senior Agribusiness Manager Matt Woods helped the company to establish its Girgarre plant in 2019, and to build out a range of milk-based consumer products such as powdered milk, butter, cheese and cream for domestic and export markets.
“They could have literally sat back and clipped the ticket as a broker of milk, because they were making very good money,” he says. “But they wanted to diversify the business. They’re constantly looking to improve and think outside the square.”
“It’s a very strong relationship with our board and the NAB team – they’ve been there every step of the journey,” Jason says. “We wouldn’t have done it without them, that’s for sure.”
With an eye to a prosperous future, ACM has carefully managed its workload and debt profile, ensuring it prioritises its most important relationships.
“To me, growing sustainably means not taking on too many projects at the same time,” Matt says. “ACM split the milk factory across stages, as opposed to going in head-first and hoping for the best.”
It’s an approach calculated to bring much-needed stability to the dairy industry. “We need dairy and agriculture to be sustainable and thrive,” says ACM Executive Chairman Michael Auld. “We want the next generation of dairy farmers coming through to see that there’s a bright future and a livelihood in it for them.
“If we can help do that, then I think we’d be pretty proud of what we’ve been able to achieve.”
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