Western Australia’s Agricultural Co-operative History
Introduction
This chapter reviews the history of the agricultural co-operative movement in Western Australia. While the focus of this thesis is on the contemporary era, particularly in the last decade or so, there is a strong, but arguably not well-understood, historical dimension to the Western Australian co-operative movement.
This chapter reveals that the severe economic and social conditions in rural and regional Western Australia during the early decades of the 20th century gave rise to the first agricultural operatives. These difficult circumstances nurtured the co-operative business model and subsequently agricultural co-co-operatives evolved into an economically strong and politically influential Western Australian agricultural co-operative sector up until at least the late 1970s.
Historical Accounts of the Western Australian Co-operative Movement
There is relatively little secondary information available on the development of the Western Australian co-operative movement and the agricultural co-operative story. Sandford’s (1955) account of the co-operative movement in Western Australia is the most detailed. He describes the early foundations of the co-operative movement as it grew alongside an infant agricultural industry establishing itself under primitive conditions. Of significance is his account of the genesis of the most well known agricultural co-operative in Western Australia - Westralian Farmers Co-operative - that later converted to the corporation, Wesfarmers.
Smith (1984) also briefly recounted some of the early agricultural co-operative activity in the State.56 The focus of his work was much more on the growth
56 According to Munro (2003), this book was completed in the late 1970s although it was not published until the mid 1980s.
and logistical development of Westralian Farmers Co-operative, which had commissioned his book. Co-operative Bulk Handling has produced a history of its background which sheds minimal light on the development of the Western Australian co-operative sector apart from confirming that CBH was based on the principles of the Rochdale model of ‘one man one vote, irrespective of the volume of business conducted with no racial, political or religious bias’ (Ayris, 1999, p 12). The Geraldton Fishermens’ Co-operative also published a history to celebrate its 50th anniversary (H. Gray, 2000), again focusing predominantly on the logistical aspects of establishing and sustaining the co-operative in regional Western Australia.
This chapter derives much of its information on two extensive personal interviews with Mr Don Munro. Munro’s involvement with the Western Australian co-operative sector commenced in the 1960s, when he began providing accountancy services to Westralian Farmers Co-operative members (Munro, 2003). His first exposure to agricultural co-operatives was in finalising the operations of many rural co-operatives that were no longer operational. His association with the Western Australian agricultural co-operative sector continued when he left Westralian Farmers Co-operative with, according to Munro, their blessing and acknowledged support, and established an accountancy firm specialising in the agricultural industry and, in particular, agricultural co-operatives. The Co-operative Federation of Western Australia (CFWA), the peak body for the Western Australian co-operative movement, subsequently contracted his accountancy firm to provide secretariat services until 1996, when the CFWA appointed a full-time Executive Officer.
Munro’s early connection with the co-operative movement overlapped the last years of several Western Australia ‘co-operators’57 who were involved with the first co-operative wave commencing around the time of World War 1. He spoke in detail of his exposure to the idealism and enthusiasm that motivated these original
‘co-operative champions’58 to form the first co-operatives in Western Australia. He commented that he felt privileged to share in ‘the wonder and values base of the co-operative movement’ as embodied by the founding agricultural co-operators in
57 Munro used the term ‘co-operators’, which is not commonly used in contemporary Western Australian agricultural co-operative discourse. Craig (1993) also uses this term.
58 The term ‘co-operative champion’ is adopted from Craig (1993) and is well understood as a concept by interviewees.
Western Australia, such as Harper, Thomson, Ashton and others from that era. 59
Arguably, Munro is a bridge between the original Western Australian agricultural co-operative movement and the present day era of agricultural co-co-operatives.
The Early Development of the Western Australian Agricultural Co-operative Sector
The early history of the Western Australian co-operative movement is a story of the newly evolving agricultural industry and of the adaptation of a business structure which itself was in its infancy. The emerging co-operative movement in Western Australia is a distinctive example of co-operative development (Munro, 2003). The closeness between the agricultural industry and the co-operative model resulted in the Western Australian co-operative movement being essentially one based on the agricultural industry. While the first chapter differentiated and defined the terms of the ‘co-operative movement’ and the ‘agricultural co-operative sector’, the beginning of the Western Australian co-operative movement is also the history of the agricultural co-operative sector. The formative and ongoing influence and dominance of the agricultural co-operative sector on the overall Western Australian co-operative movement is undeniable. The divergence of the Western Australian agricultural co-operative sector and the wider co-operative movement only occurred in the latter half of the 20th century when a number of metropolitan based operatives commenced in Western Australia. However, agricultural and regional co-operatives continue to dominate the contemporary Western Australian co-operative movement as evidenced by the number of agricultural or regionally based co-operatives that are members of the CFWA.
The literature contains several references to early agricultural co-operative activity in Western Australia. Kenyon (1983, p 49) states that rural co-operatives were in operation in Western Australia by 1859. The Swan district was exploring the formation of co-operatives as early as 1897 to ‘prevent a glut of grapes and to ensure
59 See Sandford (1955) for further information on the role of these key individuals in the early Western Australian agricultural co-operative sector.
the making of wine of a high and uniform grade on a large scale…’ (Lindley-Cowen, 1897, p 158).60 Smith (1984, p 115) refers to the existence of fruit co-operatives in the early 1900s with a reasonable network of co-operative grower packing sheds and export activities in place in the 1920s (K. Smith, 1984, p 116). Some dairy co-operatives were also operational, with the Bunbury Butter Co-operative registered in 1908 (Western Australian Department of Consumer and Employment Protection, 2005b).
These early Western Australian agricultural co-operatives focused on two activities. Co-operatives either provided farm services or inputs at near cost; or undertook the marketing, handling or value adding of commodities to achieve the best possible price for members. These early co-operatives provided a service or infrastructure which was lacking in the newly evolving agricultural industry, or were established in situations where farmers were economically disadvantaged. This is consistent with agricultural economic operative theory, in which agricultural co-operatives are created to either capture economies of scale or address some form of market failure (Cobia, 1989).
Sandford (1955) argues that the first co-operative champions such as Harper and Thomson recognised that in order to support farmers in their efforts to establish and expand the agricultural industry, the industry had to embrace the co-operative model. Undoubtedly, the influence of the first co-operative champions was an essential component in the development of the agricultural co-operative sector in Western Australia. Co-operative champions, both theorists and activists, were central catalysts in spreading the operative ideal and motivating farmers to form co-operatives (Munro, 2003; Sandford, 1955; K. Smith, 1984). Sandford writes
…three men, Walter Harper, Tom Bath and WD Johnson, have been the outstanding figures in the Western Australian co-operative movement. Harper primarily a businessman with a sense of trusteeship and the prestige of a name long famous in Western
60 At the time Lindley-Cowen was writing, in the last years of the 19th century, the co-operative wineries had not been established. He cited Harper (the father of Walter Harper who in turn is the father of the Western Australian co-operative movement), who warned that the industry was short-sighted in not forming co-operatives. Harper recounted the experiences of Californian, Victorian and South Australian grape growers where ‘[the] growers, in fact, had to come to the position of working for the benefit of those who were enabled to become monopolists, because those who had grapes to sell were without the means of turning them into wine’ (Lindley-Cowen, 1897, p 158). The similarity of this story at the end of the 19th century and that of grape growers in Australia at the beginning of the 21st century is striking.
Australia behind him, Bath an idealist in the practical sense of the word and Johnson, the enthusiast, able speaker and politician….
(Sandford, 1955, p 84)
Munro (2003) adds that Harper in particular had established links with 61
agriculture via his own family farm and therefore carried substantial credibility when rallying farmers to the co-operative ideal. Sandford further writes ‘co-operation was undoubtedly something of a crusade at the time and the example of the Rochdale pioneers in England was bandied about by …. [co-operative] organisers in a way that has not taken place since’ (Sandford, 1955, p 45). Munro (2003), based on personal contact with some of these first co-operative champions, states ‘they had a dream and wanted to share that dream with other farmers’ . The commitment and idealism of these co-operative champions as an element in the development of a co-operative movement is highly consistent with sociologically informed co-operative theory (Craig, 1993).
The Rochdale consumer co-operative model, imported from the United Kingdom, provided the guiding structure and philosophy for the champions striving to develop the Western Australian agricultural co-operative sector. The traditional Rochdale model is based on many retail operatives owning a single wholesale co-operative supplier, with the distribution of ‘profits’ back to member customers (Lewis, 1992). Akin to the Rochdale model, the early co-operative champions envisioned a long-term strategy in which a network of agriculturally focused country town retail co-operative stores would buy shares in a parent co-operative that would assume a wholesale function.
This dream, however, did not eventuate. Circumstances unique to Western Australia forced the adaptation of the Rochdale model and principles to suit the environment in which it was seeking to establish itself. Several factors can account for this. The infant Western government sought to create an agricultural industry in a primitive pioneering environment and in virgin rural areas with an unknown ability to support agriculture (Munro, 2003). Subsequently, the embryonic Western Australian agricultural industry had to readjust to the difficult economic and social
61 The family name ‘Harper’ did not continue as a civic ‘father’ in Perth or Western Australia, unlike several of the family’s business partner contemporaries.
effects of the First World War and the Depression, quickly followed by another world war (Sandford, 1955).
Sandford (1955, p 73) also argues that it proved impractical to have independent retail co-operatives in country towns serviced by a separate wholesale co-operative. The limited economic development of Western Australia at the time demanded a strong overarching agricultural co-operative to undertake both retail and wholesale functions to ensure that all country towns in agricultural Western Australia had access to goods and services. Westralian Farmers Co-operative emerged from the assortment of small agricultural co-operatives active at the time as the dominant agricultural co-operative. Only a State-wide co-operative, such as Westralian Farmers Co-operative, Sandford (1955) further argued, could provide the logistical coordination between different agricultural regions given the transport and communications channels of the period. Therefore, in response to the challenges presented by the immaturity of the economic and infrastructure development of the agricultural industry, the co-operative movement evolved as a top down initiative under the influence of one dominant agricultural co-operative, Westralian Farmers Co-operative. The unique development of the Western Australian co-operative movement reflects Craig’s (1993) concept of co-operative logic. This logic accepts that each group’s needs are unique and that the group’s members will develop a co-operative organisational model responsive to their specific needs.
While the Rochdale model had to be adapted for Western Australian circumstances, as represented by Westralian Farmers Co-operative, the co-operative based commercial activity embedded in the Rochdale model and promoted by the co-operative champions found fertile ground in rural communities. Steeped in a collective self-help ethos, the beliefs of rural people and those underpinning co-operative philosophy were highly compatible (Sandford, 1955; K. Smith, 1984).
Munro (2003) maintained that farmers believed that they were part of a community and the only way for them to survive during the difficult economic times preceding the First World War, the years of the war itself, the following Depression era and the Second World War, was to unite for their own common good. At a pragmatic level Munro (2003) also considered that the first wave of the co-operative movement was compatible with the ‘horse and cart’ level of technology in the early 1900s. These factors suggest a strong focus on geographically bound social and economic
networks among rural communities as a precursor to agricultural co-operative development in this era. The ability of the co-operative message to overlay the values of rural people and thus to enable the co-operative concept to take root and develop is also a recurrent theme in Craig (1993).
Munro, (2003) in addition, argued that the concepts underpinning the benefits of a co-operative, and how to form a co-operative, were simple for farmers to understand and the co-operative champions were able to convey the key messages to them without difficulty. These early farmers appeared to have an intuitive understanding of co-operative logic. According to Munro, the message of the early agricultural co-operators conveyed to farmers was to ‘look past your farm gate to see how you can help yourself to get a better deal by owning and controlling your inputs and outputs’. He asserts that this was an appealing and understandable message for farmers. Munro (2003) believed that this was the first time farmers had been encouraged to think more broadly about their industry by looking at issues outside actual farm production. This reflects early understanding by farmers of the agricultural co-operative structure as both a part of a supply chain and a means for vertical integration.
Westralian Farmers Co-operative
The evolution of the Western Australian agricultural co-operative sector is intimately entwined with Westralian Farmers operative. Westralian Farmers Co-operative, established in 1914, was one of the many localised agricultural co-operatives formed around the turn of the 20th century to provide services or infrastructure to the infant agricultural industry, or to assist economically disadvantaged farmers. Unlike many of these early co-operatives, Westralian Farmers Co-operative prospered and evolved over five or six decades into a powerful economic and political force in Western Australia. Arguably, its economic influence continues today as the publicly listed company, Wesfarmers.
Westralian Farmers Co-operative grew out of a politically oriented farmers’
interest group. In the immediate pre-World War I years, the Farmers’ and Settlers’
Association62 was formed at a conference in Perth on March 28, 1912 (The
62 This farmer association is a predecessor to the current agri-political peak body, the Western Australia Farmers’ Federation (WAFF) (K. Smith, 1984).
Nationals, n.d.). Discussions focused on the political and economic well-being of farmers and delegates elected to separate commercial activities from political lobbying (K. Smith, 1984). The Country Party was formed in March, 1913, to address the political concerns of farmers,63 while the co-operative business model was adopted as the strategy to achieve the economic goals of farmers (K.Smith, 1984).
The newly established Westralian Farmers Co-operative absorbed two existing grains related agricultural co-operatives, the Producers Union Co-operative and the Farmers Mercantile and Union Chaff Mills (K. Smith, 1984). The objective of the new co-operative was to buy and sell grain and also to provide farm supplies and merchandise, receiving commissions on the sale of goods and handling of grain (Sandford, 1955). Over the next three decades until World War II, Westralian Farmers Co-operative grew rapidly, and actively pursued agricultural supply, marketing or processing opportunities in most agricultural sectors, such as grains, dairy, horticulture, wool, cattle and sheep meat and honey.
Under the guidance of Westralian Farmers Co-operative, the agricultural co-operative sector in Western Australia evolved into two, highly inter-related, threads.
The first thread is that of Westralian Farmers Co-operative which directly owned co-operative branch retail stores in many country towns.64 This thread also drove the expansion of the agricultural co-operative movement in Western Australia for over a half century, and provided the necessary level of coordination to ensure that growth.
Furthermore, this thread, again through necessity, adopted a ‘top down’ approach to the development of the agricultural co-operative sector in Western Australia, contrary to co-operative theory which suggests endogenous evolution (Craig, 1993;
Mathews, 1999).
The second thread was the formation in country towns of independent merchandising co-operative stores owned by farmer members from the surrounding area. These co-operatives were established in those small communities that had sufficient zeal to form their own and therefore did not need to participate in the top
63Following the success of the Western Australian Country Party, farm organisations supported the establishment of Country Parties in Queensland in 1915, Victoria in 1917, South Australia 1918, New South Wales 1919 and Tasmania in 1922. The Federal Country Party was formed in 1920 (The Nationals, n.d.).
64 Westralian Farmers Co-operative head office was located in Perth, the capital of Western Australia.
down Westralian Farmers Co-operative network of branch stores. These co-operative stores were self-governing, and due to their atomistic evolution, tended to operate in isolation from each other and to some extent without overall direction or coordination from the wider agricultural co-operative sector (Sandford, 1955). Over time, many of these stores were absorbed into the Westralian Farmers Co-operative network as agents. Sandford (1955, p 45) indicates that by 1919, only four years after it formed, Westralian Farmers Co-operative had a country town network of 65 local co-operatives, either as directly owned branches or agents, demonstrating a high level of goodwill between the endogenous and exogenous co-operative threads. In this period, Westralian Farmers Co-operative also agitated to form a peak body, the Co-operative Federation of Western Australia. As a result of this, the separate threads of the agricultural co-operative sector were further integrated into a cohesive movement under its own peak body.
This intense first wave of co-operative development over a relatively short period, demonstrated a passionate and active social movement in rural Western Australia in these early years. Munro (2003) reports, from first hand discussions many years later with the co-operative champions involved, that they were extremely
This intense first wave of co-operative development over a relatively short period, demonstrated a passionate and active social movement in rural Western Australia in these early years. Munro (2003) reports, from first hand discussions many years later with the co-operative champions involved, that they were extremely