Co-operation is all the rage and state cash too

26 February 1999

Co-operation is all the rage and state cash too

Co-operation is often touted

as the route to improved

efficiency, marketing

strength, and cost cutting.

Here, we look at the

potential in Scotland where

there is a unique level of

government support

THERE has never been such enthusiasm for co-operation among farmers and farming leaders, according to James Graham, chief executive of SAOS, the umbrella organisation for Scottish farm co-ops.

He counts Scottish farm minister Lord Sewel among the enthusiasts and welcomes the governments recent 25% increase to almost £300,000 in public support for SAOS.

"Our role is to turn good ideas into commercial reality and the new money will be used to fund an extra project development manager. The potential is enormous and there is no doubt that the current crisis in farm incomes is driving more and more people to look at new and exciting ways of co-operating," says Mr Graham.

"There is a lot to be done. We have 90% of Scottish pig production going through two marketing co-ops and 75% of our milk is still marketed by co-operatives. But the figure falls to less than 40% when you move to potatoes and field vegetables, and right down to 20% for cereals.

"The figure for beef and sheep is quite high, about 30%, but that is largely because of the throughput of two co-operative auction marts. It has always been the unsupported sectors that have led on co-operation while marketing is most fragmented for subsidised commodities," he says.

Mr Graham sees cereals offering most immediate potential with customers becoming larger and larger, an increasing need to deliver large quantities, and the opportunity to gain marketing strength and eliminate middle men profit-taking at the same time.

Machinery rings are seen as a modern success story for co-operation. "Some are now moving into the labour market as well. There are very few farms which cannot benefit from the use of these rings, making better use of machinery and labour."

He sees the range as enormous, from the traditional to contract farming and right down to a few farmers getting together in a joint retailing venture.

But the enthusiasm is tempered with realism. "The food market is global. The idea of farmers getting together with enough force to set prices is self defeating.

All that would happen is that the market would readjust and imports would be sucked in. But what we can do is make our supply chain as direct and efficient as possible so that costs are taken out.

"The fewer steps the better. But, in reality, more and more being marketed by co-operatives should be seen as a route to cost saving and efficiency rather than to dictating prices," Mr Graham says.

He quotes lamb marketing groups as a good example. "They could get together, not to dictate prices but to become the most important supplier to a customer. By supplying customer service, and a product of consistent quality there would be much less likelihood of the customer looking to alternative supplies."

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