THE company sources its milk from its own farm, Spring Creek, at Murgon, in the South Burnett region of Queensland, a three-hour drive north-west of Brisbane.
Barambah’s owners, Ian and Jane Campbell, established the company in 2001 in a bid to add value to their on-farm production and move away from the mainstream agricultural production they believed was sending many farmers broke.
Spring Creek has been in the Campbell family since 1912, but deregulation and the continuing pressure on farm-gate prices was putting the farm’s long-term viability in jeopardy.
The Campbells believed they were fast running out of options if they wanted to stay in the dairy industry.
“We had little choice.
“If we wanted to stay in the milk business, our only options were to stay poor and supply the local processor (Parmalat Australia) or have a go at something different,” said Ian Campbell.
Have a go they did.
While the going has been tough at times, Ian Campbell maintains it has been a rewarding experience and far better than the alternative.
The couple began converting the farm to organic production in 1998.
The certification process, with Biological Farmers of Australia, took three years.
The farm was officially being awarded organic ‘A’ status in March 2000.
At the same time, the couple was working to increase the demand for high-quality organic milk in suburban Brisbane.
The process has taught them a huge amount about establishing a ‘paddock to plate’ supply chain.
“None of it has been easy,” Campbell said.
“I don’t think I could recommend anyone to follow in our footsteps – we could have fallen over many times.
“Economically, we have been through drought, deregulation and everything else.
“We were on our knees for a lot of the time.
“We are only just getting our heads above water now,” he said.
Being relatively young, made the work load a bit easier for the couple, according to Campbell, especially as it was not at all unusual in the early days for one, or both of them, to miss a night’s sleep to meet a production order.
“Having a strict timeline to get the job done before your money runs out and you’re bankrupt generates a bit of pressure and worry,” he said.
The situation was made all the more difficult by the fact that they were running the farm at the same time.
“It can be difficult enough just trying to run the farm efficiently at times, without trying to process milk, look after customers and organise distribution,” Campbell said.
However, the hard work has paid off.
Spring Creek farm is still standing, while many other dairy farms in the area have gone to the wall, particularly since the industry deregulated in the 2000.
As a processor, Barambah must contribute to the 11¢/L Dairy Adjustment Levy that funds the history-making, multi-million dairy deregulation package paid to dairy farmers nationally.
The package is something of a sore point for Mr Campbell, who is in the rare position of being able to look at it from both sides of the industry – producer and processor.
“A lot of farmers who got the pay out are in as much debt now as they ever were, because they have lost their milk price.
“The money has gone into machinery and dairies and a lot of that equipment has sat doing nothing,” he said.
“They should have used the money to get out of the industry.
“They should have bought properties on the Gold Coast and they would have been wealthy people now.”
Back at Barambah, there are challenges enough to keep the couple well occupied.
For instance, coming to terms with the processing side of the business has been a steep learning curve.
“There are lots of challenges in distributing short shelf life products,” Campbell said.
“You must have tight control over production, because it is costly to overproduce.”
Generating efficiencies throughout the chain has also been difficult.
While it is true that the Campbells gain the margins at each link of the supply chain, they also have to bear all the costs.
“We get a premium for our organic product - and it deserves a premium - but this is easily eroded by inefficiencies throughout the chain due to being a small player,” Campbell said.
Barambah doesn’t have the long production runs of the big players, but it is still subject to the benchmark prices they set in the various products categories where they compete.
Only the start
Campbell sees the organics tag as just a standard on which to build the business.
He is of the opinion that certified organic production systems are a good way to promote the chemical and GM-free nature of a product, but that there is never going to be a market for a product unless it tastes good, has a good shelf life and looks good.
“You can’t bottle rubbish and sell it, whatever tag you put on it,” he said.
In fact, nearly half of Barambah’s market – due to a strategic alliance with a chain of coffee shops via coffee roasters and sellers, Merlo Pty Ltd – does not rely on its organic production.
With five coffee shops of its own, Merlo started to use Barambah milk for all its drinks because it believed it enhanced the taste of its coffee.
Campbell said this is partly due to the way the milk is processed and its fairly high levels of milk solids.
“The cafes are buying our milk for its quality and they like the taste, not just because it is organic,” he said.
“If you tried to build a business just around the organic market you would never make any money - there is not enough market.”
While organic production gives Campbell raw milk with a better taste, he said it must be back by a service ethic that aims to keep customers satisfied.
“We would rather provide the good service today and make the dollar tomorrow,” he said.
It is a strategy that seems to have worked.
From supplying a coffee roasters with five cafés, Barambah now supplies more than 60 cafes and restaurants in the Brisbane area.
All that without spending a cent on advertising.
Instead, Barambah has relied on word of mouth between the cafes and customers, and the quality of its service.
More than a good product
According to Campbell, it is not enough to have good quality and marketing; it must be backed by good manufacturing, distribution and accounting systems.
While experienced in the farming side of the business, the Campbells found there was much more to manufacturing and processing than installing equipment and getting it to work.
However, the couple were fortunate to have a business plan good enough to secure a New Industries Development Program grant of nearly $103,000 from the Department of Agriculture, Fisheries and Forestry.
They used it to develop the processing plant and supply chain.
The demands of staff recruitment, training, and sales and marketing forced the Campbells to use specialists in areas ranging from financial management and milk manufacturing technology, to human resources and product quality systems.
This has allowed them to concentrate on managing the ‘big picture’ parts of the business.
While every facet of the business has its problems, Campbell said Barambah has been fortunate to secure the services of a talented team of professionals to look after production, accounts and, more recently, farm management.
In hindsight, he said trying to save money by doing everything themselves was false economy.
Their team is now important to them because its saves them extra work and worry.
Future developments
The Campbells are undecided about how much Barambah will grow.
“It is a bit of a treadmill that you get on.
“If you have extra money at the end of the month, when do you stop investing it back into the business?” he asked.
Barambah is currently processing around 2500L/day across all its products and hopes to increase that steadily, as long as profitable growth can be found.
Campbell said the way forward will be to develop relationships with other distribution companies, and to become more efficient by using those relationships.
“You can establish your own supply chain to a particular market, but it is costly and often difficult to establish yourself,” he said.
“It is far better to link with established players and add value to their operations, as well as securing a margin for yourself in the process.”
It is a strategy that has paid off for Barambah in the past and one which offers promise for the future.
This article was originally published in Australian Dairy Foods.