3 November 1995

WHEN CO-OPS CO-OPERATE

By Allan Wright

TALKS are at an advanced stage to bring together two of Scotlands largest lamb marketing groups. And the arrangement is being framed to allow other groups to join the fledgling federal at a later date.

"This is not a take-over, but co-operation among co-ops," says Willie Brown, who farms high hill land at Dalveen in Dumfriesshire and is chairman of Buccleuch Farmers, one of the groups involved.

The other is one of Scotlands biggest lamb marketing groups, Scott Country Lamb. The groups will be sharing Scott Lambies marketing expertise. He established Livestock Marketing (Borders) in the past year and, single-handed, has sold as many lambs this year as any of the groups.

"Working together we will be talking about handling 150,000 lambs and 3000 cattle a year," says Mr Brown. "This is the first concrete step within the lamb groups to pool resources and give us the numbers to talk meaningfully to the meat plants and, through them, the supermarkets."

He does not dismiss further expansion – for example, into feed and fertiliser – but thinks it may be a bulk order going out to tender, rather than a direct selling operation.

There are 10 lamb marketing groups in Scotland, stretching from Caithness in the north to Wigtownshire in the south-west (see table). They handle just 10% of the lamb crop each year and growth over 10 years has been steady rather than spectacular.

All groups are registered co-ops and they talk together in a forum organised by the parent co-op body, Scottish Agricultural Organisation Society. Projects director James Graham forecasts there will be fewer and larger groups in the future, but they could claim 20% of the market.

"There is an inevitability about it. What is relatively new is the move by retailers to get much closer to producers. Lamb groups with big production numbers are obvious partners in such a move," says Mr Graham.

"Working together, we may be able to change retail demands. We have been talking to one supermarket which wants to distinguish its lamb by concentrating on hill lamb. But 14kg Blackfaces did not fit the current specification. It could be that our discussions end in the specification, rather than the product, changing," he says.

Mr Graham is supported by Scottish Agricultural College economist Stuart Ashworth. He says the traceability and farm assurance being demanded by supermarkets should play into the hands of the groups.

"Volume is the key, even if it means giving up the brand image that some have worked hard to create," says Mr Ashworth.

SAOS chief executive Edward Rainy Brown points to several reasons why nine lamb groups are marketing 10% of the crop but two pig co-ops control more than 80% of Scottish output.

"Since groups were first promoted a decade ago we have seen variable premiums replaced by ewe support payments, which has not made the market any more transparent," he explains.

"Then there was the growth of the live export trade, which was never contemplated. Auction marts and electronic auctions have claimed a sizeable market share. There is a lot of choice for sellers."

He and James Graham are in complete agreement about the biggest factor holding back lamb groups – over-supply and lack of profitability in the meat companies.

"They are so concerned with throughput to stay alive that they are in fierce competition for supplies. They are taking anything the farmer offers and sending back conflicting market signals to producers," says Mr Graham.