Farmer Co-operation & SAOS James Graham, Chief Executive October 2011
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Transcript of Farmer Co-operation & SAOS James Graham, Chief Executive October 2011
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Farmer Co-operation & SAOSJames Graham, Chief Executive
October 2011
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Top SAOS Members
First Milk £581mMilk Link £547mOpenfield £502mANM Group £232mGrainCo £140mACT £107mUnited Farmers £70mUnited Oilseeds £66mScotlean Pigs £52mScottish Pig Prods £46mTarff Valley £38m
£2.35bn
Ringlink £30mEast of Scot Farmers £12mEast of Scot Growers £9mScotShellfish Mktng Grp £8mAberdeen Grain £8mTayforth MR £8mFarmstock Scotland £7mHighland Grain £7mGrampian Growers £7mBorders MR £5m
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Farmer Co-operation in Scotland
65% farms of 100Ha+ co-operate70% dairy farms co-operate68% general cropping farms co-operate59% mention machinery rings71% cost saving as main benefit85% same or more co-operation in next 5 yearsMore co-operation for labour sharing, cost savingLess co-operation due to retirement
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Potential/Actual Advantages of Co-operation
Total (n=410) 100Ha- (193) 100Ha+ (213)
Lower fixed or variable costs 60% 83%Better input prices 56% 74%Better output prices 45% 69%Increased profits 51% 67%Fairer share of end price 40% 61%Opportunity to supply new mkts 44% 58%Opportunity to add value 37% 55%Better risk management 36% 47%
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The Value of Co-operation 1
Gross Value Add = Output – Intermediate costsFactors that contribute to GVA:– Increased output values– Increased output volumes– Lower input costs– Increase production efficiencies / productivityCo-operation delivers all these
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The Value of Co-operation 2
• Safeguarding independence of family farms• Shared risk and capital enables innovation• Maintaining essential facilities & services• Investment & employment in rural areas• Competitiveness of Scottish food/drink industry• Increased efficiencies = carbon benefit
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Many Issues and Questions
• Why choose a co-op constitution?• Why is capital such a tough issue for co-ops?• What are the governance challenges?• How do co-ops communicate member value?• Why don’t we have co-ops on the scale of Arla or Fonterra?• Why are our co-ops not producing more consumer ready
products?• Co-ops future potential?
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Key Success Factors
Effective Governance + Competent Management– Roles and responsibilities– Accountability & member participation– Checks and balances– Succession
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The Role of the Board
• Establish Purpose, Vision & Values• Set Strategy and Structure• Delegate to Management• Exercise Accountability
Requires preparation for the role = training as well as experience
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What SAOS Members Say
“The SAOS strategy workshop with our board and managers really focussed us. They bring a real understanding of co-op business, and how we can develop Ringlink to make the most of being a co-op.”
Graham Bruce, Managing Director, Ringlink (Scotland) Ltd
“SAOS ensures that we do a really thorough job in determining our goals and strategy. They always impress the need to face up to tough challenges and be innovative.”
Mark Clark, Managing Director, Grampian Growers Ltd “As a board, we ask SAOS to help us undertake a strategy review every three years. No one else
knows as much about making co-ops work in our industry.” Sandy Howie, Chairman, Scottish Pig Producers Ltd
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And others“I really value checking with SAOS on all issues related to governance and Rules because of
their wide experience across agricultural co-op businesses and because they have a constructive interface with the FSA and Co-operatives UK.”
Angus Waugh, Company Secretary, First Milk
“There is no doubt that the work SAOS does to develop agricultural co-ops and their connections with the market is absolutely essential, and will be more necessary than ever in the future.”
James Withers, Chief Executive, NFU Scotland
“SAOS’ contributions to our discussions with HM Treasury and the Financial Services Authority have been absolutely essential, helping us take into account the distinct needs of agricultural co-ops as we work to update legislation.”
Helen Barber, Secretary and Head of Legal Services, Co-operatives UK
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SAOS Income Analysis 2010
£ %Scot Govnmt 383k 16Consultancy 1899k 81Member Aff Fees 44k 2Miscellaneous 26k 1Total 2352k 100
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Why Co-ops Need Specialist Support
The purpose is differentThe legislative framework is differentCapitalisation & returns are differentForm of participation is differentGovernance is differentBoard responsibilities are different
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