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Mr Ian Smith

Wangaratta, Vic.

The definition of an entrepreneur, according to the Oxford dictionary, is one who undertakes a business or enterprise with a chance of profit or loss.

Looking back over our venture into game birds I feel that it could be summed up more as an enterprise rather than a farming venture. Unfortunately’ there was more emphasis on the word loss than on the word profit, but this could be putting the cart before the horse.

Firstly, I should outline the reasons why we looked at diversifying from the normal dry area farming found in our area about 17km north-east of Wangaratta. We have a small dry area mixed farm enterprise which, at the time of looking at diversifying, was trying to support two generations of families. We first looked at intensifying the enterprises we were in, at selling out, or at a completely new enterprise. We finally decided on the alternate enterprise, namely SQUAB, the meat pigeon. When it was first mentioned to us, we had to rush off to see what the word squab meant and perhaps that was our first mistake - going into something that we knew nothing about; but so be it.

We studied it, we looked into the economics of it and we did our market research which indicated a fairly large potential market in the Melbourne area. Unbeknown to us a lot of other people were doing the same type of market research, economic studies and things of this nature. The outlook appeared very favourable, even when we reduced the market size by 75%, which still showed quite good economy of scale.

Then, in hindsight, came mistake number two. At that time interest rates were not nearly as high as they are now. When you have to borrow a large sum to set up a large enterprise you hope that interest rates will not escalate the way they did.

We got the scheme going in the late 1970s and according to our figuring we were looking at around the 200 processed birds per week as an economic unit. To obtain this throughput we would have to employ labour on a part-time basis. Good part-time Labour, as we found out, were always looking for a full-time job, and those who were looking for part-time work were looking for an income for a specific purpose (e.g. a bit extra for a holiday or something of that nature) and when they got that extra dollar to accommodate their specific purpose they would resign. When one considers that it takes at least 6 months to train a person to be able to process the squabs properly and at a sufficient speed to make it an economic proposition there was quite a drain on the budgeted profit, through having to constantly train part-time personnel.

We then decided that we had to look further afield to see if we could increase the size of our operation so that it could warrant the employment of a full-time person. To that end we looked at different markets throughout Australia and we picked up several, but bad debts are a problem in the food industry. Unless you are actually there to collect the money when you deliver the goods it is very hard to repossess’ something that is already eaten. We overcame this problem by marketing through wholesalers. It meant a reduced margin from what we originally budgeted on but it did mean that we were getting paid. We also found that it was quite a good proposition to mark up the product and then discount back for settlement within a certain number of days.

We also at this time started looking at the export market and just really wondering if there was any potential in that area. To this end my wife and I attended an export development seminar held in Albury. We came to realise that export was not all beer and skittles, that there would be problems within it and so we virtually put this idea to one side. Then a few years later one of’ the officers within the Department of Trade, based in Melbourne, contacted us to see if we were interested in taking up an export contract with a Hong Kong company. It was to increase over a 3 year period up to a level of 10,000 birds per week which would mean employing about 20 people, some part-time some full-time, but also investing between 1 and 1 million dollars in expansion of our enterprise, including a new killing works. Once again we set to work with pen and paper and started doing our homework. The economics of it were favourable provided that we could get firm contracts on prices with an escalation clause to overcome the costs at this end.

The Department of Trade arranged a meeting with the representatives from the Hong Kong company and we discussed the position with them. They were favourably impressed with the product we had to supply and they could not see any problem with including an escalation clause. We then went to the Department of Primary Industry in Canberra to find out just what was involved in getting the birds out of the country. We were informed by them that they had taken all this type of product out of their regulations and had transferred the export control of that to the various States within Australia , as they declared that no game bird producer was prepared to bring their processing works up to DPI standards. At this stage we said fair enough and we went back to the Hong Kong people and said that we would have to get State rather than Federal export certification for the project. This is where the export side of our industry started to go a little bit astray. This information was taken back to the health authorities in Hong Kong and we were informed that the Department of health in Hong Kong recognised Australia as one country and they were only prepared to accept one lot of certification from Australia, not one from each State. We then contacted the Department of Trade and discussed this matter and they agreed to take up’ the matter with the Department of Primary Industry. At the same time I contacted the Department of Primary Industry in Canberra and informed them of this. I got the run around in Canberra and was given the name of “another person in the Melbourne office - he likewise thought the problem a bit too hard and gave me the name of someone else in the Canberra office, who shunted me back to the Melbourne office (I have the names of these persons with me today).

We then contacted a senior officer within the Department of Agriculture in Victoria to see if he could help sort things out and likewise they said that they would take it up with the DPI in Canberra to see if they could get any type of assistance that may get us out of this problem. At the same time I also contacted a friend of mine who is a meat exporter in his own right in Australia, specialising, I must admit, in red meats. I did not tell him the full story behind it - I just asked if there would be any chance of him getting any export for us. After about a fortnight he came and said most of the countries that he had investigated required Federal certification and he considered that unless we could get Federal certification for our birds there was no point going any further. Undeterred by this we did persevere a bit further. We conveyed this information to the DPI - they said that it was a State matter and they were not prepared to do anything; about it.

The Department of Agriculture in Victoria in the meantime developed a certificate which would comply with all the export standards from Australia, but it was on State government paper not on Federal paper. ‘[his certificate was turned down by the Hong Kong authorities.

I feel that if we had gone political at the start instead of trying to abide by the rules we might have got somewhere. We tried to stay within the “rules” and we worked through the officials from the Department of Trade, DPI, and Department of Agriculture people.

The Department of Agriculture in Victoria was prepared to go out on a limb to help us with the way they were going to arrange the inspectors to be in the works as and when we were killing, and things of this nature, but this was just not acceptable to the Hong Kong authorities. They recognise Australia as one country and not individual States within a country.

I think that the sooner the various governments within Australia realise we are one country and that we should be allowed trade as one country rather than separate States the better it will be for a lot of food exporting or potential exporting industries. It is bad enough having to comply with the various regulations with moving product from one State to another but it is beyond a joke when, because of this pettiness between the various States and Federal bodies, you are not able to develop what is potentially a lucrative export market especially when that market came to us rather than us to them.

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