Today (Tuesday 28 March) Co-operatives UK Secretary General, Ed Mayo, will address the world of farming's great and good in the Palace of Westminster. The round-table event, hosted by Lord Curry, will be attended by Farming Minister George Eustice, senior Defra officials, industry experts and representatives from namy of the nation's leading agricultural co-ops. And the one topic on the menu will be co-operation.
The event will be an opportunity to shape emerging policy for farmer co-ops, including how best to use the new £10 million collaboration fund and what government support for co-operation will be needed in the UK's post-Brexit agricultural policy.
It is time to talk about food, writes Ed Mayo. As a nation, we eat around half of what we produce. The European Union accounts for 90% of our agricultural exports. If crisis hit, we could produce much, maybe 70%, but not all of what we would need to get by. But the most likely crisis is the one we are facing, because in the context of what we know so far on Brexit, the food sector could be the first to be hit.
It is a combination of market access, farm support, labour restrictions, competition policy and trade policy. Take any two of those, it is a perfect storm, take three to five it is a perfect whirlwind. So, the exam question is what can be done? The exam answer is that we have to co-operate in our supply chains: we have to co-operate to compete, we have to co-operate to innovate, we have to co-operate to go sustainable, we have to co-operate to create pride and value out of the provenance and distinctiveness of our national food and drink. Forgive me for labouring the point, but we have to co-operate to survive.
Co-ops of course are key to this, in partnership of course. The UK has many hugely successful and impressive farmer co-ops. The first agricultural co-operative in Britain was set up in 1867, to supply seeds and fertilizers to its members. Horace Plunkett in Ireland exemplified this same movement. In Wales and Scotland, by the 1930s, it was said that there was not a railhead without a farmers’ co-operative at the end of it. But we are not front rank as an overall sector. The development of farmer co-ops was on the backburner in the UK for a long time because we were crowded out by statutory marketing boards, regulating markets and prices.
As a result, the UK is underperforming compared to our European counterparts in terms of production and market share through co-operatives. But there is one part of the UK that represents an extraordinary and ambitious success story in terms of farmer co-operation. That is Scotland. A consistent framework of support for agricultural co-operatives in Scotland post devolution stands in contrast to other parts of the UK. The achievement has been to encourage a network of new and established farmer co-operatives, working through the Scottish Agricultural Organisation Society (SAOS) in particular.
So, yes, of course, there are differences. The south typically has more fertile soils, more of an amenable climate and topography. 85% of Scotland, for example, is classified by the EU as ‘less favoured area’. The south is therefore majority crops, while the north is majority livestock. To get scale, co-operation has made sense. Agriculture has always been devolved. Even so, in a global market and in an age of big technology, all UK farmers need scale. In a way, in the context we are in, all farmers need to think like small farmers. How do we connect up to grow a supply chain in which we can thrive? And, for that, the story of co-operative growth in Scotland over the last 10 years and the promise for the next 10 is like a dram of Scotch - maybe a dram from Glenwyvis, a community co-operative distillery in Dingwall powered by renewable energy that, thanks to the Co-operative Bank and the UK-wide Hive programme, we have supported with business advice.
The case of Dingwall, as an aside, is one of the most inspiring examples underway of community economic development today – bootstrap responses to tough times, led by local people working through and investing in co-operative enterprises. So, what is the Scottish story? From 2001 to 2014, co-ops increased the value of their throughput by a factor of around three. While the overall food and drink sector had been relatively static, at around £10 bn turnover in 2007, this started to change. It now stands at over £14bn. That is 44% growth over a decade, with co-ops playing a key role in the farming sector – despite the toughest of conditions particularly in the latter period.
"Co-ops are a global success story. Worldwide, agricultural co-operatives account for 32 per cent of the top 300 co-operatives and are the second largest sector behind insurance." Ed Mayo, Co-operatives UK
Around three quarters of farmers now co-operate, formally or informally. And there are more memberships of farmer co-operatives in Scotland than there are active farmers, showing how some are now engaged in a range of co-ops, from machinery rings to marketing co-ops. Working with its members, with support from the Scottish Government, SAOS was able for example to support the first dairy producer group – over 140 dairy farmers across south-west Scotland supplying a creamery in Stranraer. But the story is all the more impressive, looking forward. While England has been all at sea on farmer co-operatives, in Scotland co-ops have become a key strategic partner in taking the food sector forward. The Partnership Board of Scotland Food & Drink is an industry led collaboration of which SAOS was a founder member.
In Scotland there is one strategy for the industry across all organisations, behind which are aligned activities and resources. There is a collective vision/ambitions for 2030 – which is a doubling of output value of the industry, to £30 bn. The key pillars of growth are 1) People and Skills; 2) Supply Chain and 3) Innovation.
In terms of the supply chain pillar, the need is recognised for farmers to work together to enable far more effective supply chain collaboration – so:
- Market-led information transparency and exchange
- Waste reduction and efficiency (smart farming and price improvement),
- Fair risk and rewards
One of the success measures is the number of producers involved in co-ops and producer groups. Another is net farm income, comparative profitability and productivity. In England, the original Industrial Strategy – the Green Paper – barely made reference to food and farming. In Scotland, farmer co-operatives are at the heart of an ambitious national food and drink sector strategy. Laissez-faire will not cut it. The DEFRA fund for co-operation is welcome and we will hear more on this, but let’s be honest it is just a baby step.
Co-operatives across the UK are starting to raise our voice. We are proud to have so many outstanding businesses in membership, not just our leading farmer co-operatives and networks like SAOS but also the rural micro-cooperatives of community food, housing, land and renewable heat and energy. We are not political, but we have a view on policy and we want to work in partnership. That is what co-operation is. You can’t dance, if your partner stands on your feet, or doesn’t look at you.
We want policy in England and the UK to be confident and give confidence in the context of Brexit. As a key part of that, we should have the confidence to innovate through supply chain co-operation. Innovation is increasingly a multi-player game. For businesses across Europe, across all sectors, collaboration around products and services innovation accounts for a quarter of their total revenues. We should have confidence in farmer co-operatives. Co-ops are a global success story. Worldwide, agricultural co-operatives account for 32 per cent of the top 300 co-operatives and are the second largest sector behind insurance.
We are leaving the Common Agricultural Policy. Hand in hand with the wider food and drinks industry, what we want is a Co-operative Agricultural Partnership. You don’t succeed in times of rapid change if you don’t have rapid learning. We want policy in England and the UK to learn about what works. Farmers will tell you that they are learning all the time. New technology, new processes, new applications, new markets – farmer co-operatives are tools for learning. They help by sharing good practice and knowledge exchange among their members.
When it comes to the future of British food and farming, we should all learn this: we co-operate, or we die.