Co-operative development in the Welsh agri-food sector

Executive summary

businesswalesgovwalessocialbusinesswales

The purpose of this study was to investigate the potential for the future development of the agriculture sector in Wales through co-operation With profound changes to the structure of support for the sector potentially arising from the UK leaving the European Union co-operatives and indeed co-operation in the sector could play an important role in sustaining and developing different aspects of the agri-food supply chain

The aim was to take a snapshot of the sector now and research the practices of organisations supporting co-operatives in the agri-food sector in other parts of the UK This included consultation with existing co-operatives in Wales to learn from their experience with a view to making recommendations for the future role of the Wales Co-operative Centre

The study was commissioned by the Wales Co-operative Centre which due to funding constraints has not been active in supporting this sector since 2004 the ERDF funding that has provided the backbone of the Centrersquos recent work supporting social businesses has prevented it from supporting agricultural activity directly

The research therefore focused on four key areas

Objective of the study11

1 Identify the extent of secondary agricultural co-operatives in Wales

2 Compare levels of co-operative activity in Wales with the rest of the UK and Ireland

3 Document case studies of successful co-operatives in Wales and elsewhere

4 Make recommendations for the next steps the Centre and others could take to step-up their activities in this area

Co-operative development in the Welsh agri-food sector2

wavehillsocial and economic researchymchwil cymdeithasol ac economaidd

AuthorsJon ParkerEndaf GriffithsIoan Teifi

Commissioned and published by Social Business WalesSocial Business Wales is funded by the European Regional Development Fund and Welsh Government It is delivered by the Wales Co-operative Centre and is part of the Business Wales service Wales Co-operative CentreY Borth13 Beddau WayCaerphillyCF83 2AX 0300 111 5050infowalescoop wwwwalescoop

The Wales Co-operative Development and Training Centre Limited (trading as the Wales Co-operative Centre) is a registered society under the Co-operative and Community Benefit Societies Act 2014 number 24287 R Rydym yn croesawu gohebiaeth yn Gymraeg a Saesneg Ni fydd oedi os byddwch yn gohebu acirc ni yn Gymraeg

3Executive summary10

Methodology12

The research began with a desktop exercise to identify the level of co-operative activity taking place primarily within the agriculture sector in Wales Scotland England and Ireland The role of supporting organisations in the sector was then reviewed and interviews conducted with key personnel within the Scottish Agricultural Organisation Society Co-ops UK the Irish Co-operative Organisation Society and the Welsh Agricultural Organisation Society

Primary research (in the form of telephone interviews and face-to-face interviews) was conducted with key stakeholders in the sector and also with existing co-operatives in Wales This research was conducted using a Directed Discussion Guide to ensure key subject areas were investigated to inform the recommendations sought as part of the study The study methodology also focused on emerging co-operative activity taking place primarily in the dairy sector in Wales with the potential creation of a Dairy Producer Organisation and also co-operative structures being developed around the supply base for a new processing facility in North Wales Interviews were undertaken with key stakeholders in the sector in Wales including representatives from organisations supporting agricultural co-operative activity in the UK and five co-operatives in Wales

The subject areas discussed to ascertain the opportunities for further development of co-operatives were focused upon the following areas

bull The development of agricultural co-operatives

bull Strengths and weaknesses of operating under a co-operative model

bull Where the major opportunities may be in the sector

bull The opportunity for secondary co-operative activity

bull The potential for jobs and growth

bull The requirement for supportive interventions in the sector bull The type of support the sector requires

131 Desk review Twenty-two formally constituted co-operatives were identified in Wales The breadth of activity of the agricultural co-operative sector in Wales covers many parts of the industry from the supply of inputs via large co-operatives such as Clynderwen and Cardiganshire Farmers Ltdsup1 to breed associations sales organisations such as farmers marts and the community growing sector

One of the key features of existing co-operatives within the sector in Wales is the longevity of some well-established co-operatives such as the Welsh Agricultural Organisation Society founded in 1922 South Caernarfon Creameries founded in 1938 and Clynderwen and Cardiganshire Farmers founded in 1904 These contrast with newer co-operatives within the community growing and food sector using co-operative structures such as Mach Maethlonsup2 and Cultivate UKsup3 who engaged with this study

In terms of secondary co-operative activity⁴ where the definition used is two or more primary co-operatives coming together with shared values there is very little identifiable activity taking place in Wales Whilst there is limited activity in the secondary co-operative sector we

have found evidence of informal co-operative activity taking place within agricultural sub-sectors often as part of a consortium⁵ and the proposed development of a Dairy Producer Organisation

132 Primary research

In the primary research strong governance and the absolute necessity for co-operative development to be from a bottom-up approach were key themes that ran through all of the responses to the development of co-operatives The collective nature of co-operation and the strength of farmer-owned businesses were the most frequent responses when discussing the strengths of the co-operative model Fairness and equitable ownership were also key elements that were put forward across a range of respondents

The ability of co-operatives to service the agriculture sector where possibly private businesses would not operate due to issues such as viability was an interesting area of discussion Particularly with co-operatives of scale the requirement of the business to be able to service all of its membership

Co-operative Development in the Welsh Agri-Food Sector

Findings13

sup1 httpccfagricouksup2 httpwwwmachmaethlonorgsup3 httpwwwcultivateukcom⁴ httpsenwikipediaorgwikiCooperative_federation⁵ httpwwwinvestopediacomtermscconsortiumasp

5Co-operative development in the Welsh agri-food sector4

The purpose of this study was to investigate the potential for the future development of the agriculture sector in Wales through co-operation With profound changes to the structure of support for the sector potentially arising from the UK leaving the European Union co-operatives and indeed co-operation in the sector could play an important role in sustaining and developing different aspects of the agri-food supply chain

The aim was to take a snapshot of the sector now and research the practices of organisations supporting co-operatives in the agri-food sector in other parts of the UK This included consultation with existing co-operatives in Wales to learn from their experience with a view to making recommendations for the future role of the Wales Co-operative Centre

The study was commissioned by the Wales Co-operative Centre which due to funding constraints has not been active in supporting this sector since 2004 the ERDF funding that has provided the backbone of the Centrersquos recent work supporting social businesses has prevented it from supporting agricultural activity directly

The research therefore focused on four key areas

Objective of the study11

1 Identify the extent of secondary agricultural co-operatives in Wales

2 Compare levels of co-operative activity in Wales with the rest of the UK and Ireland

3 Document case studies of successful co-operatives in Wales and elsewhere

4 Make recommendations for the next steps the Centre and others could take to step-up their activities in this area

Co-operative development in the Welsh agri-food sector2

wavehillsocial and economic researchymchwil cymdeithasol ac economaidd

AuthorsJon ParkerEndaf GriffithsIoan Teifi

Commissioned and published by Social Business WalesSocial Business Wales is funded by the European Regional Development Fund and Welsh Government It is delivered by the Wales Co-operative Centre and is part of the Business Wales service Wales Co-operative CentreY Borth13 Beddau WayCaerphillyCF83 2AX 0300 111 5050infowalescoop wwwwalescoop

The Wales Co-operative Development and Training Centre Limited (trading as the Wales Co-operative Centre) is a registered society under the Co-operative and Community Benefit Societies Act 2014 number 24287 R Rydym yn croesawu gohebiaeth yn Gymraeg a Saesneg Ni fydd oedi os byddwch yn gohebu acirc ni yn Gymraeg

3Executive summary10

Methodology12

The research began with a desktop exercise to identify the level of co-operative activity taking place primarily within the agriculture sector in Wales Scotland England and Ireland The role of supporting organisations in the sector was then reviewed and interviews conducted with key personnel within the Scottish Agricultural Organisation Society Co-ops UK the Irish Co-operative Organisation Society and the Welsh Agricultural Organisation Society

Primary research (in the form of telephone interviews and face-to-face interviews) was conducted with key stakeholders in the sector and also with existing co-operatives in Wales This research was conducted using a Directed Discussion Guide to ensure key subject areas were investigated to inform the recommendations sought as part of the study The study methodology also focused on emerging co-operative activity taking place primarily in the dairy sector in Wales with the potential creation of a Dairy Producer Organisation and also co-operative structures being developed around the supply base for a new processing facility in North Wales Interviews were undertaken with key stakeholders in the sector in Wales including representatives from organisations supporting agricultural co-operative activity in the UK and five co-operatives in Wales

The subject areas discussed to ascertain the opportunities for further development of co-operatives were focused upon the following areas

bull The development of agricultural co-operatives

bull Strengths and weaknesses of operating under a co-operative model

bull Where the major opportunities may be in the sector

bull The opportunity for secondary co-operative activity

bull The potential for jobs and growth

bull The requirement for supportive interventions in the sector bull The type of support the sector requires

131 Desk review Twenty-two formally constituted co-operatives were identified in Wales The breadth of activity of the agricultural co-operative sector in Wales covers many parts of the industry from the supply of inputs via large co-operatives such as Clynderwen and Cardiganshire Farmers Ltdsup1 to breed associations sales organisations such as farmers marts and the community growing sector

One of the key features of existing co-operatives within the sector in Wales is the longevity of some well-established co-operatives such as the Welsh Agricultural Organisation Society founded in 1922 South Caernarfon Creameries founded in 1938 and Clynderwen and Cardiganshire Farmers founded in 1904 These contrast with newer co-operatives within the community growing and food sector using co-operative structures such as Mach Maethlonsup2 and Cultivate UKsup3 who engaged with this study

In terms of secondary co-operative activity⁴ where the definition used is two or more primary co-operatives coming together with shared values there is very little identifiable activity taking place in Wales Whilst there is limited activity in the secondary co-operative sector we

have found evidence of informal co-operative activity taking place within agricultural sub-sectors often as part of a consortium⁵ and the proposed development of a Dairy Producer Organisation

132 Primary research

In the primary research strong governance and the absolute necessity for co-operative development to be from a bottom-up approach were key themes that ran through all of the responses to the development of co-operatives The collective nature of co-operation and the strength of farmer-owned businesses were the most frequent responses when discussing the strengths of the co-operative model Fairness and equitable ownership were also key elements that were put forward across a range of respondents

The ability of co-operatives to service the agriculture sector where possibly private businesses would not operate due to issues such as viability was an interesting area of discussion Particularly with co-operatives of scale the requirement of the business to be able to service all of its membership

Co-operative Development in the Welsh Agri-Food Sector

Findings13

sup1 httpccfagricouksup2 httpwwwmachmaethlonorgsup3 httpwwwcultivateukcom⁴ httpsenwikipediaorgwikiCooperative_federation⁵ httpwwwinvestopediacomtermscconsortiumasp

5Co-operative development in the Welsh agri-food sector4

Methodology12

The research began with a desktop exercise to identify the level of co-operative activity taking place primarily within the agriculture sector in Wales Scotland England and Ireland The role of supporting organisations in the sector was then reviewed and interviews conducted with key personnel within the Scottish Agricultural Organisation Society Co-ops UK the Irish Co-operative Organisation Society and the Welsh Agricultural Organisation Society

Primary research (in the form of telephone interviews and face-to-face interviews) was conducted with key stakeholders in the sector and also with existing co-operatives in Wales This research was conducted using a Directed Discussion Guide to ensure key subject areas were investigated to inform the recommendations sought as part of the study The study methodology also focused on emerging co-operative activity taking place primarily in the dairy sector in Wales with the potential creation of a Dairy Producer Organisation and also co-operative structures being developed around the supply base for a new processing facility in North Wales Interviews were undertaken with key stakeholders in the sector in Wales including representatives from organisations supporting agricultural co-operative activity in the UK and five co-operatives in Wales

The subject areas discussed to ascertain the opportunities for further development of co-operatives were focused upon the following areas

bull The development of agricultural co-operatives

bull Strengths and weaknesses of operating under a co-operative model

bull Where the major opportunities may be in the sector

bull The opportunity for secondary co-operative activity

bull The potential for jobs and growth

bull The requirement for supportive interventions in the sector bull The type of support the sector requires

131 Desk review Twenty-two formally constituted co-operatives were identified in Wales The breadth of activity of the agricultural co-operative sector in Wales covers many parts of the industry from the supply of inputs via large co-operatives such as Clynderwen and Cardiganshire Farmers Ltdsup1 to breed associations sales organisations such as farmers marts and the community growing sector

One of the key features of existing co-operatives within the sector in Wales is the longevity of some well-established co-operatives such as the Welsh Agricultural Organisation Society founded in 1922 South Caernarfon Creameries founded in 1938 and Clynderwen and Cardiganshire Farmers founded in 1904 These contrast with newer co-operatives within the community growing and food sector using co-operative structures such as Mach Maethlonsup2 and Cultivate UKsup3 who engaged with this study

In terms of secondary co-operative activity⁴ where the definition used is two or more primary co-operatives coming together with shared values there is very little identifiable activity taking place in Wales Whilst there is limited activity in the secondary co-operative sector we

have found evidence of informal co-operative activity taking place within agricultural sub-sectors often as part of a consortium⁵ and the proposed development of a Dairy Producer Organisation

132 Primary research

In the primary research strong governance and the absolute necessity for co-operative development to be from a bottom-up approach were key themes that ran through all of the responses to the development of co-operatives The collective nature of co-operation and the strength of farmer-owned businesses were the most frequent responses when discussing the strengths of the co-operative model Fairness and equitable ownership were also key elements that were put forward across a range of respondents

The ability of co-operatives to service the agriculture sector where possibly private businesses would not operate due to issues such as viability was an interesting area of discussion Particularly with co-operatives of scale the requirement of the business to be able to service all of its membership

Co-operative Development in the Welsh Agri-Food Sector

Findings13

sup1 httpccfagricouksup2 httpwwwmachmaethlonorgsup3 httpwwwcultivateukcom⁴ httpsenwikipediaorgwikiCooperative_federation⁵ httpwwwinvestopediacomtermscconsortiumasp

5Co-operative development in the Welsh agri-food sector4

demonstrated a strong aspect of collective responsibility within the model even where this may be detriment to one business function of the co-operative business

Positive responses were received with regard to the role of both existing co-operatives in taking advantage of and developing new opportunities to support the agriculture and wider food sector within Wales and the UK There were differing viewpoints with regard to where co-operatives could effectively operate in the sector with new co-operatives potentially finding it difficult to break into the processing sector due to the cost of infrastructure for example

Overall the key findings from the study are highlighted below

5

bull The level of formal constituted co-operative activity in the agriculture sector in Wales is low in comparison to the areas of England Scotland and Ireland

bull It should be noted however that Wales has a number of very well-established co-operatives operating in the sector with some having been in business for decades and generating considerable turnover bull There has been consensus throughout the consultative process that support forco-operationwithinthesectorisrequiredatanumberoflevelsthatreflects the position of the sector in Wales

bull Responses have shown that co-operative activity in Wales contributes and can contribute in future to policy objectives that impact on jobs growth and the sustainable development of the agri-food sector

bull The support provided to the sector by organisations within the nations under study is structured according to the needs of the industry within those areas

bull The agricultural co-operative sector in Wales is diverse with a range of activities from community growing and shared land use to large-scale agricultural input purchasing through supply co-operatives

bull The question of how co-operatives can support during EU Transition has been difficulttoascertainattheearlystagesofnegotiationbuttherewasa viewpoint taken by many respondents that co-operatives can respond to support the sector as they have previously should adverse conditions arise

Recommendations14

Throughout the consultative process of this study views on the need for supportive mechanisms for the development of co-operatives in Wales in the agriculture sector were positive When questioned with regard to the type of support that should be available to the sector the responses were however more varied but could be transposed into two categories existing Co-operatives and new Co-operatives

Throughout the study those who responded on behalf of existing co-operatives discussed the potential for activity and services that supported good governance and the up-skilling of individuals who represent co-operatives both at either Board and operational level Whereas the support structures for new co-operatives were based around a headline requirement for their development to be from a member led bottom-up approach

Given the current political and economic uncertainty brought about by leaving the European Union it was felt appropriate to research the potential areas and gaps where co-operation would be of benefit to working with stakeholders throughout the sector There is clearly a gap in the provision of business support for both new and existing co-operatives in the agri-food sector in Wales There is also a requirement to further analyse the

opportunities for effective co-operations as the outcome of the negotiation processes become clearer

Overall the key recommendations from the study are highlighted below

Recommendation 1

That Wales Co-operative Centre further engages with developing and established co-operatives in the sector to review and identify requirements for support We would recommend co-operative business diagnostics taking place to identify issues that can be targeted with specific support to aid co-operative development and cohesion

Recommendation 2

For Wales Co-operative Centre to work with organisations in Wales who are engaged with the agri-food sector delivering programmes where co-operation and collaboration are key features These include Agriscocircp⁶ Cywain⁷ and Welsh Governmentrsquos Food Clusters Programme⁸ The outcomes of these programmes may present opportunities for more formal co-operative structures to develop benefiting the Welsh agri-food sector

The potential is to develop a supporting supply chain between programmes to ensure that co-operation and the development of co-operatives is considered alongside other formal and informal business structures

7Co-operative development in the Welsh agri-food sector6

Recommendation 3

For Wales Co-operative Centre to offer existing co-operatives and those emerging in the sector the Social Business Wales structured model of support It was clear from respondents that the specialist advice provided through Social Business Wales is required in the agri-food sector to support new and existing co-operatives

The potential for the use of Wales Rural Development Plan funds should be investigated to fully or part fund this activity or other funding sources such as The Princersquos Rural Action Programme

Recommendation 4

That Government Wales Co-operative Centre and relevant stakeholders ensure that co-operative activity is considered in its broadest sense in the food sector across all production including horticulture fisheries and community approaches

To support this we would recommend that the Wales Co-operative Centre promotes and informs on the benefits of collaboration and co-operation with particular emphasis on young people taking an active role in the agri-food and fisheries sector

Target audiences for this activity could be through agriculture sector youth leadership programmes such as the successful Agri-Academy initiative⁹ Young Farmers Clubs Future Farmers of Wales and the Royal Welsh Agricultural Society Young Members Forum

Recommendation 5

In the context of secondary co-operative activity to consider non-food rural activity that provides economic benefits such as community energy ancillary rural services and finance

The study identified secondary co-operative opportunities that required further exploration to assess viability and deliverability This could be provided through the delivery of recommendations as set out in point 3 or through more traditional mechanisms such as Business Wales

This recommendation is closely aligned to the ability of existing co-operatives to innovate and diversify their businesses creating secondary co-operatives that will be of benefit to themselves in terms of resilience and their members in terms of product or service provision

7

⁶ httpsbusinesswalesgovwalesfarmingconnectagrisgocircp⁷ httpwwwmenterabusnescoukencywain⁸ httpsbusinesswalesgovwalesfoodanddrinkclusters⁹ httpsbusinesswalesgovwalesfarmingconnectagri-academy

Co-operative development in the Welsh agri-food sector6

Recommendation 3

For Wales Co-operative Centre to offer existing co-operatives and those emerging in the sector the Social Business Wales structured model of support It was clear from respondents that the specialist advice provided through Social Business Wales is required in the agri-food sector to support new and existing co-operatives

The potential for the use of Wales Rural Development Plan funds should be investigated to fully or part fund this activity or other funding sources such as The Princersquos Rural Action Programme

Recommendation 4

That Government Wales Co-operative Centre and relevant stakeholders ensure that co-operative activity is considered in its broadest sense in the food sector across all production including horticulture fisheries and community approaches

To support this we would recommend that the Wales Co-operative Centre promotes and informs on the benefits of collaboration and co-operation with particular emphasis on young people taking an active role in the agri-food and fisheries sector

Target audiences for this activity could be through agriculture sector youth leadership programmes such as the successful Agri-Academy initiative⁹ Young Farmers Clubs Future Farmers of Wales and the Royal Welsh Agricultural Society Young Members Forum

Recommendation 5

In the context of secondary co-operative activity to consider non-food rural activity that provides economic benefits such as community energy ancillary rural services and finance

The study identified secondary co-operative opportunities that required further exploration to assess viability and deliverability This could be provided through the delivery of recommendations as set out in point 3 or through more traditional mechanisms such as Business Wales

This recommendation is closely aligned to the ability of existing co-operatives to innovate and diversify their businesses creating secondary co-operatives that will be of benefit to themselves in terms of resilience and their members in terms of product or service provision

7

⁶ httpsbusinesswalesgovwalesfarmingconnectagrisgocircp⁷ httpwwwmenterabusnescoukencywain⁸ httpsbusinesswalesgovwalesfoodanddrinkclusters⁹ httpsbusinesswalesgovwalesfarmingconnectagri-academy

Co-operative development in the Welsh agri-food sector6