Twenty percent of the Daly family's potato harvest was not meeting supermarket specifications and going to waste, so they sniffed out two value-add opportunities to make profitable use of their second-grade yield.

Susie and Gerard Daly have been farming potatoes in Dunalley in Tasmania's south for more than 35 years. They offer around seven types of potatoes in rotation and trialling, including their most successful varieties: Nicola, Pink Eye, Canberra and Spudlite. Across multiple properties, the Dalys produce around 7,000 tonnes of potatoes annually.

One of the biggest challenges the Dalys have faced is the increasingly stringent specifications that supermarkets require of their fruit and veg suppliers.

One of the biggest challenges the Dalys have faced is the increasingly stringent specifications that supermarkets require of their fruit and veg suppliers.

By 2016, 20% of their yield was going to waste due to size, shape or skin blemishes. Frustrated with this waste, the Dalys started two value-add businesses to use these second-grade potatoes: a ready-made food production company and a potato vodka distillery.

Snapshot

Farm/Enterprise Name: Daly Farm Tasmania

Farm/Enterprise Location: South East Coast, Tasmania

Type of Enterprise: Potato Farm

Primary Markets Served: National supermarkets

Staffing: 30

Property Size: 640ha (plus 100ha leased)

Property Elevation: 50m

Average Annual Rainfall: 460mm

Climate: Cool temperate

Soil Types: Sandy loam

Website: www.dalyfarmtasmania.com.au

Challenge: 1,400 tonnes of spuds left to rot

Up to 25% of the fresh produce grown in Australia never makes it to the shelves . This is primarily due to the strict supermarket standards that determine the cosmetic appearance of fresh fruit and vegetables, such as the curvature of a banana or the size of an apple. Of their 7,000-tonne yield, the Dalys were throwing 20% over the fence into the back paddock to rot each year.

It costs the same amount to grow that 20%, but we were making no profit on it.

"It costs the same amount to grow that 20%, but we were making no profit on it," says Ruby, Susie and Gerard's daughter. But where there are challenges, there are also solutions and opportunities. Ruby describes her mum as "a thinker who hates wasting anything". Susie was not happy about 20% of their yield going to waste, so she looked into how they could value-add to make profitable use of their second-grade spuds.

Solution

As well as increasing profit and using a product that would otherwise go to waste, the Daly family wanted to create job opportunities in the local area. Bushfires had recently ravaged the region, and several large businesses were destroyed, significantly impacting jobs in the local community. Offering employment opportunities in the area, using their waste product and adding profitability to the business were the three main drivers that motivated the Dalys to begin their value-add journey.

Offering employment opportunities in the area, using their waste product and adding profitability to the business were the three main drivers that motivated the Dalys to begin their value-add journey.

After extensive research into several different potato value-add options, they launched two new businesses: a commercial kitchen for ready-made potato products and a distillery producing potato vodka.

Susie also saw these new creative businesses as an opportunity to entice her adult children back to the family farm. Her hopes paid off when Ruby returned home to run the distillery.

Daly Potato Co.

No potatos are left behind on Daly Farm.

The Dalys received a Regional Jobs and Investment Packages grant to help get their ready-made potato product facility up and running. They named it Daly Potato Co. and began producing potato salads, mashed potatoes in different flavours and pre-seasoned roasting potatoes, all from second-grade produce.

The Dalys used their popular Nicola potatoes, leveraging the well-established consumer trust in the variety. The facility took $2 million to get up and running and brought 30 jobs to the local area.

Hellfire Bluff Distillery

Ruby and her parents also commenced the arduous research and development phase of their signature potato vodka. After searching high and low for guidance in making potato vodka, a UK company called Chase Distillery offered their help. Under their mentorship and a year of trial and error, Ruby and the team finalised the recipe and method in the nick of time, three days before launching Hellfire Bluff Distillery at AgFest 2016. The distillery took approximately $100,000 to set up and brought an additional seven jobs to the area.

Outcome

A home for every potato

Once both new companies were up and running, Susie became the sole driver of Daly Potato Co. while Ruby managed Hellfire Bluff Distillery. These businesses achieved their mission: to find a home for the 20% of second-grade spuds otherwise going to waste. Here's how both new companies fared.

Daly Potato Co.

Daly Potato Co. presented a massive learning curve for Susie and the rest of the Daly family. Faced with constant food safety, R&D and marketing demands, their new undertaking proved a challenge. They needed to update equipment regularly to comply with constantly changing food safety legislation. 'When we needed to update the equipment, it wouldn't be $10,000, it would be $100,000,' says Ruby. 'It was an incredibly cash-hungry business and one that wasn't profitable for farmers like us to maintain once we had set it up.' To keep their fledgling start-up profitable, in 2021 they sold Daly Potato Co. to Pure Foods Tasmania, a food investor group better equipped to deal with food legislation and the requirements of operating a large commercial kitchen. Part of this arrangement specified that Daly Farm was the sole supplier to Daly Potato Co., ensuring a profitable and continuous destination for the farm's second-grade potatoes.

Hellfire Bluff Distillery

From the reject pile to international awards and acclaim.

Hellfire Bluff Distillery provided a much-needed creative outlet for Ruby and allowed her to contribute to the family business in personally rewarding ways. Within a year of releasing their now iconic Potato Vodka, they worked with a food scientist and flavourist to develop several gins. Hellfire's product range continues to expand, and they now also offer a range of gins, liqueurs, pre-mixed drinks and non-alcoholic spirits.

From 2019 through to 2022, they have consistently won national and international spirits and gin awards. Ruby enjoys working with flavourists to develop new gins and liqueurs and planning new releases and market opportunities. In 2021, Hellfire Bluff Distillery paid off the investment made by Daly Farm, and it is now buying the farm's second-grade potatoes used in their vodka. They are currently producing 500 bottles of Potato Vodka per year and many other spirits, liqueurs and alcohol alternatives.

Ruby's top tips for value-adding

If people start eating those potatoes that aren't a 'normal' shape, then that will help a farmer get more product on shelves and waste less.

Because of increasing supermarket specifications, farmers will need to keep finding new ways to add profitability to second-grade products. Sadly, these standards won't change unless the culture around shopping starts to shift. 'The consumers don't pick up the ugly fruit and veg, they leave them behind, and that's what drives the specs. If people start eating those potatoes that aren't a "normal" shape, then that will help a farmer get more product on shelves and waste less,' says Ruby.

Here are Ruby's top three tips for value-adding.

1. Be willing to take a risk to value-add

If you don't take a risk and try something new, second-grade or undervalued products will continue going to waste. There is profit in value-adding, so give it a try.

2. If you're not the right person for the job, find the right people to help

If you have an excellent idea for a value-add but don't know how to get started, ask for the help of experts or consultants. Ruby believes that working with a professional flavourist at the distillery has helped them win a slew of gin and spirit awards.

3. Let the younger generation have a go

Ruby has found that she has a skill for reading the market and staying ahead of trends. Susie and Gerard have encouraged Ruby's creativity, which has catalysed the distillery's success.

In 2019, Ruby secretly nominated Susie and Gerard for the Australian Farmer of the Year Awards. She had almost forgotten about nominating them when she got the phone call saying they had won. The whole Daly family flew to Canberra to accept the award and were honoured that their efforts achieved national recognition.

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