An East Yorkshire potato marketing co-operative is getting the best price for every potato it sells, not just the pretty ones.
In less than four years, Wholecrop Marketing has grown into a £20m business, thanks to a collaborative approach between growers and marketing specialists.
Aided by around £40,000 from the Rural Development Programme for England, the group established itself as a private limited company in 2008. It is owned equally by 10 shareholder-directors, nine of whom are growers, with two additional directors, including an outside chairman.
Each grower-member has committed their produce for marketing through the group, as well as bringing facilities and skills to the venture. Non-members also offer produce for marketing and the company now sells on behalf of more than 30 growers.
Last year it handled more than 120,000t of potatoes with 80% of its business being done in Yorkshire and Lincolnshire. It also trades in the Scottish Borders, Lancashire, Cheshire and Shropshire.
The company’s focus is not just those perfect potatoes destined for the markets and supermarkets – they are easy to sell – but also marketing lower grades.
“Anybody can market the premium produce,” explains co-founder Mark Tomlinson. “But if your eye is on maximum return, as ours is, then the whole crop has to be placed as profitably as possible.”
Mr Tomlinson runs a small mixed farm near Selby but makes his living from potato trading. He and co-founder David Burks both have potato trading backgrounds and wanted to establish a secure trading position for the growers. “We needed to guarantee a supply of potatoes,” explains Mark. “It’s a cut-throat industry.
“When we looked at who we’d invite to join we considered what each grower had to offer. For example, one has no storage but another member nearby does. We all help each other in a tough market.
‘We have regular meetings. Working together brings a lot of market knowledge to the table. It also means that we have a large volume of potatoes to sell, and that we can supply 52 weeks a year.’
WCM provides a range of outlets, covering all corners of the potato industry from chip shops to supermarkets. “Our traders work hard to find the most appropriate market for a particular sample. Much of the produce is grown for a target market, with contracts in place prior to growing,” says Mr Tomlinson.
Security of supply for customers is ensured by maximising supply, drawing on a network of contacts developed over years of trading. “We buy from most parts of the country and overseas to fill gaps in supply from our own territory,” says Mr Tomlinson. “We continually update our customers on the supply situation throughout the season, and our growers have significant storage facilities to cover short, medium and long-term requirements.”
The co-op employs eight people at its rented base at Manor Farm, Kirkburn, near Driffield. Here samples are tested for dry matter and graded for looks, matched with buyers and storage and transport arranged.
The potato market is buoyant but trending towards convenient and low cost products, says Mr Tomlinson.
“The fresh market is under pressure. People buy dirty potatoes at farm shops but the supermarkets and a lot of consumers prefer washed potatoes. Washed potatoes don’t last as long so that’s challenging for us in terms of storage and transport.
“Although potatoes are a natural, healthy product, there remains a demand for convenience. Consumers also want frozen and processed potatoes in the form of ready meals and frozen products like chips and roast potatoes. The current trend is returning to home-cooked food, but pressure on working families means time is precious and so good convenience products are sought after.”
Soup and ready meal manufacturers demand lower grade potatoes showing damage or marked skins, as do restaurants, caterers and livestock farmers. Crisp and chip manufacturers want different types of potato, but the variety and price has to be right.
WCM looks at all possible markets and regularly sends consignments to Cambridgeshire and Essex and has exported to Europe but favours buying and selling locally.
The weight and bulk of potatoes means that local supply chains are becoming more important. Mr Tomlinson feels strongly that they should not be carried miles across the country for packing, only to return to be sold near where they were grown.
“That does happen, unfortunately,” he says. “We try to look carefully at the movements. We’re looking at miles to market. We’re working closely with local potato packers and growing the crop they require.”
This makes sense financially as well as reducing carbon footprint. The company competes with firms in Scotland for some contracts, especially when it comes to seed potatoes, and lower transport costs can help give them the edge. “Haulage out of Scotland costs £35/t. We bring that down to £9/t. We’re closer to the potato growing areas and closer to the markets.”
Moving about 120,000t a year gives access to discounts on haulage, with transport being co-ordinated to reduce mis-matching of hauliers and locations, in combination with reducing empty return journeys.
“A matrix of hauliers, growers and markets is maintained, to achieve best value. A number of our members run their own lorries, otherwise haulage is sourced externally but managed from within WCM.
“We use local markets wherever possible. Cost of haulage is significant, particularly in a poor price year. All traders are briefed to minimise haulage distances wherever possible.
“We’re totally transparent about what we’ve got, what haulage costs are involved and what cut we take from members and committed growers.” Members pay a marketing charge of about £5/t with committed growers being charged slightly more.
“Our shareholders are charged a fixed marketing charge for the service. This is reduced where potatoes are sold on a pre-arranged contract.” For non-shareholder members’ potatoes, profits are made on the difference between the buying and selling price.
“Members benefit in two ways. Marketing and administration is dealt with by WCM. We negotiate sales contracts, storage, grading and haulage on their behalf. And the average net price per tonne they receive should be better than could be achieved when trading with less market knowledge, experience, volume and number of market outlets.”
The co-op provides members with technical updates and advice, via seminars, grower days and trial sites, and assists with audits, assurance and grower protocols.
Of course, there are challenges. “In a potential over-supply year, as we’ve just had, all markets are challenging,” says Mr Tomlinson. “We continually monitor debtors days and credit check and insure against companies wherever possible.” Credit insurance currently costs the group about £1,800 a month.
“Careful and regular quality monitoring help reduce problems when marketing into tight specification outlets like the crisping market.’
For non shareholder members’ potatoes, profits are made based on the difference between the purchase and selling-on price.
Choosing the right varieties is crucial and the company’s seed potato trialling and sales arm has grown faster than any other part of the business.
Whole Crop Marketing’s seed manager Chris Yardley joined the co-op last year, when he took on its seed potato business. He works with seed breeding companies in the UK and Holland to offer as much choice as possible for the water-challenged, those who wish to sell to a particular market or to minimise fertiliser or agrochemical inputs.
The co-op is now a major producer and second seller of seed, holding regular seed view days, where stocks both sold and for sale, are available to view prior to delivery.
“We don’t want to be selling cheaper than anyone else and we don’t want to make more money than anyone else, but we’re set up to be there with the right variety at the right price, in the right place, at the right time,” says Mr Yardley.
WCM also helps with variety selection and field choice to minimise the risk posed by drought.
Tips for establishing a marketing co-op
• Pick members carefully
• Have a strong board with good management strengths and experience
• Ensure good communication between the business and its members
• Employ quality staff with key skills
• Don’t underestimate the task
• Resource the business well
• Focus on key objectives.
Whole Crop Marketing – key facts
• Grower marketing group established in 2009
• Based near Driffield, East Yorkshire
• £20m turnover in less than four years
• Handles 120,000t of potatoes a year
• Aim to market whole crop, placing potatoes for best return to grower
• Marketing for 30 growers
• Staff of eight