Koperativa Produtturi tal-Ħalib (KPĦ) is one of the few, if not only, success stories of the local agriculture industry. Set up in 1958, today the cooperative is made up of over 90 farms producing milk. It has two subsidiaries, Malta Dairy Products Ltd, known for the leading Benna brand, and the smaller Beef Products Ltd.
However, their success, like many others’, is under threat from the ongoing COVID-19 pandemic which has decimated the tourism and hospitality industries, which drive much of the demand for the cooperative’s milk products.
WhosWho.mt reached out to KPĦ chairman Brian Vella to understand the effect of coronavirus on the milk industry, the state of agriculture, and what can be done to attract new players to the sector.
“With the catering sector, so heavily dependent on tourism, taking a big hit, it was inevitable that our business would be impacted strongly,” he says.
“The situation is challenging. Our product depends on nature. We cannot stop nature with the push of a button.”
“On a positive note,” he continues, “since the farmers own the cooperative, it makes collaboration to manage production easier. Instead of focusing on a growth strategy we are focusing on reducing production to limit the impact.”
The assistance to farmers announced by Government last month was welcomed by the KPĦ chairman, although he questions whether it will be enough to secure a consistent food supply.
“There should definitely be a new strategy for where to go from here,” he says.
“Are we taking food security seriously? As a country we should look at agriculture in a different way. We cannot ignore agriculture in a world facing resource scarcity and climate change. We have our own limitations as an island but we have to think outside the box. We cannot simply adopt what worked in other countries.”
Mr Vella, who holds an MBA from Henley Business School and was involved in leading corporate change in the cooperative after chairing its subsidiary MDP's board of directors for five years, says the time has come for a strategic plan for local agriculture based on the three pillars of connectivity, technology and sustainability.
“I am informed that the Government is working towards this direction. But Government alone is not enough. Stakeholders must adapt to new challenges like the dairy sector has over the years.”
He points to the price of milk, the cheapest in Europe, as an example of the success of the industry.
“We are aware that our customers treat our brand as part of our local heritage, so we have a social commitment to sustain our sector and secure our fresh production every day.”
KPĦ manages to do this by taking advantage of the economies of scale possible through each member’s collaboration.
Turning to the oft-cited problem of a lack of new players in a sector characterised by hard work, long hours, high cost of land and equipment and low pay, Mr Vella says that telling farmers that their work is sustainable doesn’t cut it.
“Telling workers that their job is sustainable does a disservice to their efforts. Sustainabililty is a nice principle, and all stakeholders in all industries should strive to ensure that their business model is sustainable in the long run.”
“But sustainability does not replace profit. Indeed, no industry is sustainable without profit. No youths want to enter the sector for ‘sustainbility’, no investor wants to commit their resources to ‘sustainability’.”
“If the agriculture sector as a whole,” he continues, “doesn’t manage itself well, the decline will continue.”
The dairy sector stands out as the strongest and most organised agricultural sector in the country. Mr Vella credits this to the forward-thinking mentality of the organisation. “We are the only cooperative with a modernised organisational structure ready to tap into opportunities and innovate for the future.”
He makes it clear that being a cooperative “does not mean we are not business-minded and strategically-oriented.... We just have values, principles and a commitment to society that goes hand-in-hand with our profit orientation.”
Mr Vella encourages others in the agricultural sector to follow KPĦ’s lead and develop a similar model for their own needs.
“It is useless romanticising agriculture and depending on politicians to ‘think of us’,” he says. “The questions all players in agriculture need to be asking themselves are: ‘Are we organised? Are we capable of exploiting the chances we have? Are we structurally sound as an organisation?’ Without a deep restructuring of the agricultural sector’s organisational set up, I’m afraid nothing will improve.”
Mr Vella sees the CAP reform and the national plan for agriculture, currently in development, as opportunities for sector stakeholders to take stock of their position, identify the opportunities that will soon be available, and make the necessary changes to get ready to take them.
“We have to make the best out of the new CAP,” he says. “I look at it as a good opportunity, especially for young farmers. As a country we have to be prepared to tap all opportunities available. We need to have the right set up to make it easier for farmers to apply for the new measures.”
“As regards the voluntary coupled support [the direct subsidies tied to particular products] we are informed that the Government has manged to get a derogation to secure direct aid for three strategic sectors: dairy, beef and tomatoes.
Turning to the question of land, Mr Vella dispels the myth that the dairy industry depends on local farmland to feed their herds.
“Our feed is imported. The argument of land use by the dairy sector is because dairy farming accounts for 5,290 hectares of land. This means around 59 per cent of agricultural land is used only by this sector.”
“The dairy industry keeps agriculture alive since other sectors have declined.”
He links the issue to the ongoing construction boom, saying that “if it weren’t for the dairy industry, there would be significantly more development.”
“Due to dairy farming, agricultural land remains clean and attractive, with more greenery growing as time goes by.”
Mr Vella concludes with a note of pride in his industry’s success: “By managing our whole supply chain from farm to fork, we are helping make the sector sustainable.”
Koperativa Produtturi tal-Ħalib Chairman Brian Vella