By Tony Webb

This article looks at some of the challenges faced by the Australian food industry and the scope for cooperation between the various interests that have a stake in resolution of these issues. In particular it explores the role community-based cooperatives might play in the future development of a more socially, ecologically and economically sustainable industry.

Food security - a global challenge

Within the foreseeable future we will need to roughly double global food production, producing this from 75% of the land currently available for agriculture, with major changes in global climate patterns affecting local temperatures and available water supplies in these areas leading to more frequent and more extreme weather events and extreme and extended patterns of heatwaves, droughts and floods. Australian agriculture has a tradition of cooperation around adaptation to such weather extremes but the future forecast changes from overall global warming caused by human induced carbon dioxide and methane pollution are likely to be unprecedented.

Australian Food Security - a brief history

For most of the period since Aboriginal management of country was replaced by agricultural systems developed mainly in European climates, Australia has produced a surplus of food over its population's domestic need. It has a food export orientation where 50% of what is produced here feeds people elsewhere. The downside is that this results in a number of environmental costs that are seen as external to the cost-benefit economic equation and not counted.    

The food export industries have largely involved export of bulk commodities - traditionally mainly meat, wheat, and wool with lesser quantities of some other grains such as barley and rice. Over time the exports have included some fresh produce, dairy products, increasingly wines, and a range of dried, canned or packaged 'preserved' foods.  

Australian farming regions have a long tradition of processing or preserving the second quality food after selecting first quality for fresh markets. The processing factories were usually located in the growing regions, some initially set up and owned by growers as 'cooperatives'. Few had any employee ownership, worker representation on boards, or involvement of workers in determining work practices, wages and conditions. Indeed, many of these grower-owned enterprises had adversarial relations, similar to other private sector employers, with the unions that organised workers in their fields and factories.

A significant part of the food industry, and of the state and federal government policies in support of it, was thus farmer driven and export/trade oriented, with particular emphasis on preferential trade with the UK. This changed drastically with the UK’s entry into the European Common Market. There was also a significant shift in economic power relations with the growth of a small number of large food manufacturers buying from many, often small, producers and these manufacturers in turn selling to an even smaller number of food retailers. Australia has one of the most concentrated food supply chains in the world. There are approximately 100,000 farming enterprises, around 3,000 food manufacturers, of which around half of the largest are foreign owned, and a retail sector dominated by just two supermarket chains, who sell around 50% of all food, fresh or processed, to consumers. 

To offset this imbalance of economic power, along with the cooperative ventures linking growers with processors in some commodity sectors, growers have traditionally organised, and had recognised by the states, 'Statutory Marketing' Arrangements (SMAs) where the price for all growers’ produce in a particular commodity was negotiated collectively with the processing and distributing companies. However, these 'cooperative' arrangements have been progressively unravelling since the 1980s. A significant number of grower-owned coops have 'demutualised' and been sold to private corporations. SMAs have been dismantled leaving producers to negotiate individually with buyers of their produce.  Neoliberal economic theorists have argued that SMAs are anti-competitive and their dismantling would lead to lower consumer prices.  Evidence, however, shows that few if any benefits flowed to Australian consumers of these food products. Rather the demise of SMAs led to increased profits for Australian food manufacturers.

Towards a sustainable food industry strategy

By the early 1990s most of the value-adding food processing industry was concentrated on the domestic market. Only 10% of these processed/value-added food products manufactured here were for export, which remained concentrated on bulk raw commodities. The food manufacturing sector had a fairly good union organisation with a history of winning sometimes lengthy industrial struggles. Progressive consolidation of smaller unions as food divisions of the majors saw this food union strength continuing. The agreements underpinned by the national award system included elements of training that up-skilled the workforce and tied improved wage classifications to the rising competencies.  This training went part way towards creating a 'career path' for the largely un-skilled or semi-skilled workforce, with a significant proportion of migrant, non-English-speaking  workers.  However, since that time the move from industry-wide to enterprise-based bargaining, together with changes in industrial relations legislation that restricted opportunities for strike action and particularly solidarity action, have weakened union bargaining positions across the industry.    

The early 1990s did see a number of progressive cooperative initiatives significantly influenced by trade unions. The ACTU convened a Food Industry Unions Committee bringing together all the unions with a stake in the industry. Union lobbying of federal government Ministers (Button in Primary Industry and Crean in Industry) seeded the idea of promoting Australian food at home and abroad, as quality food grown sustainably: as "Clean and Green". In response to this, and to the analysis indicating potential for growth in quality food exporting to expanding Asian markets, the federal Hawke/Keating government convened a tripartite Agri Foods Council with the five-year aim of increasing the proportion of value-added processed food exports from the initial base line of 10% to around 15%. The ACTU unions committee provided regular briefings to ACTU President Ferguson who was the union representative on the Council that drove this agenda forward. Indeed, so successful was the initiative that the council was temporarily retained (renamed as the Supermarket to Asia) by the Howard government when Labor lost office in 1996.

In parallel with this union-led national policy activity, the unions were also active in making connections with other industry stakeholders: notably farmer groups (and farmer owned coops), and consumer organisations. These connections resulted in a national Food Policy Alliance with the aim of more generally promoting the idea of a future based on food quality, and cooperating on a number of specific legislative and educational campaigns around food standards and their enforcement, including:

• Rewriting the Act establishing the National Food Authority (NFA - now FSANZ Food Standards Australia and New Zealand) that prevented reduction of existing food standards in line with lower international standards
• Submitting evidence to the five-year Senate review of the NFA documenting its capture by the large, often international, food manufacturing corporations
• The passage of the Act creating an Imported Food Inspection regime ensuring imported foods complied with Australian standards
• The legislation on Country-of-Origin Labelling - enabling consumers to identify fresh and processed foods genuinely grown and processed in Australia from foods merely manufactured here from imported ingredients
• Challenges to deregulatory attempts to dismantle a number of growers' Statutory Marketing Authorities that had traditionally allowed many, often small, growers/producers to negotiate collectively with the few large processors
• Initiatives from within the food inspectorate (organised by the CPSU) highlighting inadequate standards in meat processing, disparity between standards for processing of meat for domestic versus export markets, and the risks to health and reputation from the global drive for deregulatory/self-regulatory approaches to meat processing
• Alerting other food industry stakeholders and backgrounding of media by unions where workers in the know were prevented from blowing the whistle on a number of food scandals
• Food Company Rescue Campaigns - notably of the Mountain Made fruit processing factory in Batlow NSW facing closure that was purchased out of 'Receivership' using industry Superannuation funds
• A National Food Industry conference bringing together employers, workers and their unions, farmer/grower, consumer and government representatives leading to an ACTU policy document on Food Industry Best Practice
• Extension of the grower, union, consumer alliance to include concerns of environment, public health, and trade/aid/development groups around the theme of defining what would be a new 'fair trade' agenda as part of national and international food policy.

These activities took place in the broader context of concerns by other groups about food security/sovereignty, sustainability and welfare/ethics concerns that have seen:

• Campaigns for controls on live export of animals for slaughter overseas
• Food Connect programs that link local food producers and processors to household customers
• Local 'fair trade' initiatives linking overseas producers of foodstuffs in less developed economies with Australian consumers on more equal terms of trade than through existing corporate-dominated food chains
• Campaigns highlighting concerns about the effects of:
  • land clearing on both biodiversity and water quality,
  • native forestry harvesting (especially where for low quality wood chipping),
  • over allocation and wasteful use of limited river and reservoir water for irrigation,
  • impacts on food quality and environments of large-scale chemical fertiliser, herbicide and pesticide use,
  • introduction of genetically engineered chemically resistant crops designed by transnational corporations to permit increased use of their patent chemicals
• Concerns over foreign ownership and control of significant parts of our national food supply system including large pastoral landholdings, individual food producing/processing and distribution companies
• Recognition that, in large measure, many personal and public health problems can be attributed to deficiencies in diets that include large quantities of highly processed food and that much food advertising promotes consumption of these unhealthy food choices.

The foundations laid for collaboration between unions and other food industry stakeholders have more recently made possible a number of 'cooperative' ventures notably:

• The Goulburn Valley Food Cooperative that grew out of efforts by the AMWU, farmers and the community to prevent closure of the Heinz tomato processing factory in Girgarre, Victoria.
• Attempts by workers, unions, growers and community to re-mutualise the SPC fruit processing company as a worker/grower/community coop after it had been sold by its former farmer-cooperative owners to the transnational Coca Cola Amatil corporation who were about to sell it on to potentially asset-stripping venture capital.
• Initiatives by the NUW (Now UWU) which organised workers to prevent closure (again as part of a leveraged investment fund asset stripping operation) of the Inghams turkey factory in McLaren Vale, SA. They developed plans for a cooperative takeover by the workers, local poultry producers, potential new customers and community supporters. The plans were endorsed as economically viable by a SA state-funded feasibility study. The coop was close to being funded by local banks before the investment fund managers ordered destruction of all equipment on site.

A role for more Cooperative Development in tackling food security?

These recent and past initiatives spread over a period of 30 years have highlighted both the challenge and the opportunity in the current crisis faced by the food Industry in Australia and elsewhere.  

There is significant tension between two competing needs. On the one hand there are those who care for the land they grow food on, those who work in food production, harvesting and processing, and consumers and public health advocates, whose interest is in providing a secure supply of quality food in a social and environmentally sustainable economy. On the other hand, there are the corporations and, increasingly, the foreign owned leveraged investment finance bodies that are buying up sections of the food supply chain, whose interest is driven by profit, who derive benefits from political structures wedded to wholly artificial neo-liberal economic theories, and whose activity is contributing to a rapidly evolving global crisis for humanity.  

Resolution of these tensions and conflicts will not be helped by tinkering around the edges with regulations that seek to shape the existing market economy for food production and distribution, nor by a wholesale state command and control approach to a 'planned' economy. What is needed as a starting point for industrial and economic reform is something much more radical and yet much simpler in its conception - that of extending the idea of democratic participation, which we broadly have accepted in the sphere of politics and indeed often seem willing to fight and die for, to the sphere of the working environment. We should demand that workers in this vital industry have both a degree of ownership, and hence a stake in, and fair share of, the added value their labour contributes to the profitability of the enterprises where they work; and, as importantly, can democratically participate in the decisions made about how the enterprise conducts its business - both within the workplace and with the external stakeholders in the chain of suppliers and customers that they depend on for a sustainable future. In short, we should demand cooperative structures that give workers ownership and control of their working environment.

There is a role for government in assisting the transition to such a truly democratic society – a role that focuses on providing support for changes that have value and embody values, and which focuses government investment on achieving more long-term sustainability; socially, and environmentally, as well as economically.

No small ask - and not likely to happen in a hurry. But there are a few practical things that could help it along.  The first is the possibility of establishing Coop Development Agencies (CDAs) at state level.  The form and remit for these might usefully be based on the model piloted in the Greater London Council under ('red Ken') Livingstone as mayor in the 1970s, before the GLC was abolished by the Thatcher government. The CDA works either within the government bureaucracy, or is supported at arms-length by it, to assist groups of workers to establish a viable coop. This can be a new start-up where workers (who could be, as with many of the GLC projects, unemployed workers), with particular skills and ideas for what could be a viable enterprise, can be brought together with others to complement their skill base - e.g. workers with manual skills linked with others who have office and/or management skills. Or it might be workers in an existing enterprise facing closure of a factory and potential unemployment. The closures could be due to retirement of the owner with no succession plans, changes in technology or other factors making existing activity no longer economic or, as in the case of the Heinz or Inghams workers discussed above, decisions made by corporate owners far away to rationalise and/or asset strip the enterprise for short term profit gains. Whatever the circumstances the CDA needs to address three specific tasks.

Prof Anas Ghadouani of the University of Western Australia gave this address on Water Sensible Cities on 21 September 2020

The first is to bring together those who have a stake in a possible coop venture to explore ideas for what might be viable. Ideally this would include both the workers to be employed in the venture and the stakeholders in the community who are part of the supply, distribution and consumption chain for the goods or services to be provided. The possibilities here are endless. Think about a coop of delivery workers - able to explore options that would be an alternative to the current gig economy. A coop of aged or health care workers able to offer backup or surge capacity services in a health or pandemic crisis. A group of psychologists and others concerned about mental health able to offer both individual, group and program/workshop services. Not to mention the obvious need for a variety of repair and recycling services that would tackle current built-in obsolescence, throw-away items, waste disposal and other resource depletion issues. The food industry, with its broad base of worker grower and community stakeholders, is an area ideal for such cooperative engagement and for new ideas about what can be done to produce quality/healthy food products. The challenge here is to engage those who have a potential stake in a coop venture to think cooperatively. To explore their own and other stakeholders' ideas and filter out those that might be feasible in the short, medium and long term. To dream of what might be, while exploring how to start with what is possible.

The second task for the CDA is to organise funding for hard-nosed economic feasibility studies that can be undertaken by reputable agencies that have people with expertise both in business and finance and some experience and understanding of coops.  Such feasibility studies do not simply assess the stakeholders' ideas as viable or not, but work with them to turn these ideas into effective business plans, advising and adapting as necessary. Plans that will stand up to the hard-headed scrutiny of the bank and other sources of finance who will need to be approached for the funds to get the projects off the ground.  

The third task, and from experience one of the most difficult, where many good ideas come to nought, is for the CDA to broker this initial seed-funding finance that turns the now economically feasible ideas into viable cooperative enterprises. All too often coop ventures fail because they are under-financed. And often the members have few resources of their own to put into the ventures. They need loans to purchase the factories, rent premises, purchase or refurbish equipment and to provide enough 'working capital' to see them through the start-up phase until the coops become economically profitable. Here having the CDA as a state run/sponsored agency is critical. State policies and programs can be used to directly grant-finance part of the start-up funding - encouraging others in the finance sector to look favourably on the balance of the risk capital needed. Alternatively state programs could be set up to underwrite all or part of the loans from the private sector - again reducing the risks and making such loan-investments more attractive - something that may be particularly relevant if coops are to attract patient capital from superannuation funds. The CDA can also broker discussions within the super-fund sector about possibilities for special funds for coop start-up and development, either in general or for workers facing closures and redundancies in the industries from which the fund draws members - something the union reps on these funds might consider favourably.

Within these three staged tasks the CDA can also share information with the coop stakeholders about the various options for the legal structure of the proposed cooperative. As we have seen from past experience coops can be owned and run by consumers, suppliers (e.g. farmers/growers) or workers or by combinations of these stakeholders in an enterprise. They can be structured with individual share ownership as were many of the Australian farmer coops or some of the more recent employee share ownership schemes. Alternatively, they may have ownership held collectively by all coop members (as in coops limited by guarantee without shares) or shares held in a trust controlled by the coop members - something that may be useful if the plan involves buying out a previous owner who may be retiring and willing to pass on their ownership to the workers. Strengths and weaknesses of different models and their appropriateness to the particular circumstances of the emerging coops can be explored and decisions on the appropriate one taken democratically as part of the process of establishing the cooperative.   

Much more is needed if coops are not to remain small islands in a sea of capitalism. Skill training programs need to include skills for cooperative working. Union organising needs to explore the scope for greater involvement of workers in identifying the future plans of existing owners, including the potential for corporate takeover or leveraged buyout by private funds interested in asset stripping, loading the residue of the enterprise with debt and selling on at a profit. Early union and worker involvement in exploring the idea of workers and supporters buying the company and converting to a cooperative can both discourage outside takeovers and lay foundations for worker ownership and control as a viable alternative.

And, as we come to recognise the limitations of the change to enterprise-based union bargaining over the worker solidarity and  broader industry policy development it displaced, we might consider revisiting the Australian union-led food industry policy initiatives of the 1990s, with outreach to farmers and consumers and perhaps also to public health, environment, trade and other stakeholder interest groups, to build a broad-front policy-oriented campaign that could tackle some of the wider food security and sustainability issues touched on above. 

Tony Webb,

December 2022

This article builds on some 40 years of experience that includes building an international campaign linking union, consumer and environmental groups opposing irradiation of food in the 1980s, from a base in the Greater London Council’s London Food Commission, work building an Australian Food Policy Alliance linking unions, farmer and consumer organisations, and more recent work around food factory closures with workers, growers and community stakeholders attempting to establish cooperatives to run as socially, economically and ecologically sustainable enterprises.

The Fabian society was founded in 1884 by Edward Pease, Frank Podmore, and Hubert Bland, joined later by Bernard Shaw and Sydney Webb. In Australia, the first Fabian group was formed in 1891; the now Australian Fabian society is a national organisation.

The Fabian tradition is one of achieving social progress through research, education and debate. The Society has no policy beyond that implied in a general commitment to social democracy, and issues its publications as the opinions of their authors not of the organisation. The publishing program is designed to promote informed discussion on issues to further the goals of social democracy.