21 January 2000

All-Wales livestock co-op could not provide quick fix

By Robert Davies

ESTABLISHING a farmer-owned all-Wales livestock co-operative would not immediately raise market prices, nor solve the industrys current problems, according to a long-awaited report.

The report, commissioned by the Welsh Development Agencys Food Directorate last summer, concludes the proposal would only bring medium and long-term benefits if it is supported by enough farmers who are loyally committed to improving stock quality.

Launching the report, Geoffrey John, the former chairman of Food from Britain who led the group that managed the feasibility study, warned that a co-op could not provide a quick fix or panacea. But if farmer members improved product quality it would be in a position to negotiate premium prices.

While a successful procurement and marketing co-op could be a platform to exploit niche processing opportunities, Mr John said the evidence collected indicated the need to be cautious about early large scale involvement in processing beyond the farm gate.

Martin Palmer, director of MLC Industry Strategy, which carried out the study with DTZ Peida, said a managed co-op would get better trading terms, and this could generate funds for the investment in downstream processing that Welsh farmers wanted.

"But we strongly advise caution because to get involved in a substantial way involves very big costs and profits are not as large as some farmers believe," said Dr Palmer.

Producers tended to overlook the costs and high risks involved in the abattoir sector, and the level of management expertise required to generate even small profits.

If fewer than 1000 farmers joined the proposed co-op would not bring any of the significant marketing benefits the survey had identified. A group with 2000 producers who were prepared to improve the quality of their stock would be viable, and would generate better medium term prices. &#42