How collaboration can strengthen farm businesses

Farm businesses are often perceived as the weakest link within the food supply chain, with retailers, processors, and merchants holding the majority of power.

However, collaboration through co-operatives and producer organisations can help to level the playing field and establish collective authority for farm businesses.

Collaboration can take a variety of different forms including machinery rings, buying groups, co-operatives, benchmarking and environmental clusters.

See also: Farm data revolution relies on greater collaboration

Its importance was recently highlighted in Defra’s Farm Profitability Review, led by Baroness Minette Batters and published in December, which stated that “establishing collaboration is a vital part of achieving farming profitability”.

Baroness Batters suggested that a pipeline of engagement between counties, regions and at a national level would be needed to build collaboration and partnership.

The review recommended the creation of “Agri-Growth Hubs” as collaborative farmer networks and called for further voluntary groups across England.

It also recommended that Defra works with farm environmental delivery groups to deliver Landscape Recovery projects.

Defra secretary Emma Reynolds addressed some of these recommendations on collaboration at the Oxford Farming Conference in January, announcing the creation of the £30m Farmer Collaboration Fund.

A Defra spokesman said that funding through the Farmer Collaboration Fund would support both existing networks and help get new ones off the ground, and it was aiming to launch a trial and application process for an initial set of projects this summer.

Further responses to the recommendations in the Farm Profitability Review are due to be included in Defra’s 25-year Farming Roadmap, which is due to be published later in 2026.

Co-operatives

Co-operatives are typically owned by farmer shareholders and are run democratically, with the aim of pooling resources and returning value back to its members.

They can vary in terms of remit and size, ­ranging from smaller local livestock marketing co-operatives to major enterprises, such as dairy processor Arla Foods and grain trader Openfield.

The Scottish Agricultural Organisation Society (SAOS) is the development body for agricultural co-operatives and has 60 members across soft fruit, potatoes, seed, red meat, milk, grain, and oilseeds sectors.

Robert Logan, head of co-op development at SAOS, said its role was to support co-operatives to make them fit for purpose, ensuring good governance with boards functioning properly and engaging with members.

He added that marketing co-operatives typically have direct line of sight with their own customer base and potentially even end market.

Mr Logan says co-operatives can offer many benefits for farm businesses such as shared costs, spreading risk, and accessing new ­markets, but suggests there is a lack of awareness in the UK of what they can do.

“The structure effectively gives them the opportunity to do something they couldn’t achieve themselves,” he said.

He added that even fairly large farming businesses are often still very small in the grand scheme of commodity markets and the co-operative structure can add extra legitimacy to be able to sit at the table and have a proper conversation within the supply chain.

“You’ve got a professional marketing desk who will be able to go with a commercial manager to sit with the customer and say, we’ll collectively get you this volume of product to this specification on these months.

“This is about making sure that you have a value proposition to the marketplace, so your retailer can have confidence in the knowledge that you can actually deliver, and make sure you can have the produce on the market shelves.”

Producer organisations

Dairy producer organisations (DPOs) offer a way for dairy farmers to collaborate and ­negotiate a competitive milk price with their milk processor.

There are four main DPOs operating in the UK: Davidstow Creamery Direct supplying Saputo Dairy, MMG Dairy Farmers supplying Muller, Milk Suppliers Association supplying Lactalis, and Selkley Vale Milk Group supplying Mondelez and Wyke Farms.

The Association of Dairy Producer Organisations (Adpo) was launched last year to aid open dialogue between dairy farmers and the processing sector and represent the four DPOs.

Adpo chairman and dairy farmer Rory Christie said the group represented 30% of UK milk through its producers.

The aim is to increase the professionalism of producer representation across the board.

He said: “We would like to see more dairy farmers form constituted organisations, that are both democratically and financially independent, who can then lift the professionalism and do a better job of negotiating price, terms and conditions.

“Working alongside the processors as collaborators as opposed to agitators.”

Mr Christie suggested that further DPOs could be created in the UK, but said it requires farmers to make a proposal to their milk processors and for the processors to be open-minded about the benefits, such as volume management and contractual management.

“[Processors] get the opportunity to work with a group of farmers who are very close to the market, understand their requirement and can help balance that requirement.

“It’s very efficient because they don’t have to deal with every single supplier they have, the DPO can act on behalf of a group of farmers.”

He suggested one of the driving aims of  the Adpo was to deal with wider industry concerns, such as the Dairy Roadmap, transport, assurance, and contractual issues.

Mr Christie also chairs the Milk Suppliers Association, which represents 93 farmers supplying Lactalis.

“The DPO looks after all of their contractual requirements and we basically manage the relationship and negotiation on behalf of those farmers. We are independent, financially and democratically, and are a co-operative with DPO status,” he explained.

He said members of the DPO were able to pool resources, money, and intelligence, and train its directors to as knowledgeable and  as informed as executives representing the processors.

He added that it also helps the processor as they know they are dealing with people who have the mandate of their suppliers, are professional, understand the market, understand their needs, and will collaborate with them rather than fight against them.

Producer organisations are not just restricted to the dairy sector, with many organisations operating within the horticulture sector on behalf of growers.

Farmer clusters

Collaboration can bring major environmental benefits when farm businesses share knowledge and resources.

Environmental farmer clusters have helped at a local level, driving improvements in soil health and landscape conservation.

More than 220 clusters are working with some 2,000 farm businesses.

The Game and Wildlife Conservation Trust (GWCT) works as a facilitator and offers advice to new and established clusters.

Dr Roger Draycott, director of advisory at GWCT, said farmer clusters were formed in the early 2010s following the publication of the Lawton Review, which emphasised the need for more and better joined up conservation.

“We developed the farmer cluster concept to bring groups of farmers together to focus on the wildlife on their own farms, with a facilitator helping them plan conservation, map habitats, improve connectivity and apply for environmental stewardship schemes,” he said.

Dr Draycott added that the reason why the original concept of a farmer cluster was so successful in the early days was that it just wasn’t about money or finance, but focused on a genuine desire to do more and better things for the environment.

This helped lead to a change in agri-environmental policy within the Countryside Stewardship scheme, and the Facilitation Fund was launched to help provide funding for a facilitator to bring other groups of farms together.

However, Dr Draycott suggested that the future of farmer clusters was in the balance, following the withdrawal of the facilitation funding and due to uncertainty of future funding opportunities.

Environmental Farmers Group

The more recent development of the Environmental Farmers Group has built upon the work of clusters and allows businesses to monetise that investment in natural capital, through private sector investment.

Dr Draycott said: “This is a farmer-owned co-operative, and that co-operative is looking to secure private sector investment into farmland for farmers to deliver that nature recovery and those other natural capital goods and services like flood alleviation and carbon sequestration.

“A lot of the trade that the Environmental Farmers Group has done so far has been in neutrality and soil carbon.”

Dr Draycott added that the biodiversity net gain market had taken longer to progress due to policy challenges, but was now starting to grow following the recent publication of Defra’s Environmental Improvement Plan.