Cooperatives

As the farming industry is challenged to produce more food, more efficiently, for more people, the industry needs to seek out innovative ways to increase sustainable production, competitiveness and profitability. Coops are uniquely positioned to drive forward the innovation and supply chain collaboration that is required, enabling shared risk taking and scalability amongst farmers and supply chain customers.

Andrew Faichney

East of Scotland Growers

East of Scotland Growers (ESG) is a farmer-owned cooperative established in 1987 that specialises in large scale vegetable production. We plan, market, administrate, haul, advise, and control the production of around 6000 acres across 16 farms. Innovation along with R&D is a critical part of what we do.

Some of the recent work we’ve done includes: planting and harvest automations, securing UK exclusivities on new varieties/ products, adjusting fertiliser application and timings, reducing the input by 25%, developing organic production, investigating the use of hydroponics for plant propagation, developing new crop production to achieve a 52 week production for members, and we’re in the planning process of a vegetable drying and powder mill.

As part of a board strategy, we developed ways of utilising waste from our production to add a revenue income. After a year of concept creation work we had eliminated several projects and product ideas and focussed on creating a broccoli-based crisp that would be healthier than alternative crisp snacks. The group’s intentions were to create a branded snack using the waste from our own broccoli — stems, leaves and trimmings — as the primary ingredient, whilst outsourcing the crisp manufacturing.

We had unintentionally created a world first — using fresh vegetables in an extruded crisp — so could not find a manufacturing facility anywhere, let alone the UK. This led to a slight rethink and back into the market to carry out more consumer testing. The product was still receiving very strong feedback which led to the board’s decision to price up the project of building our own factory.

This required a significant cash input: large enough that should the new business be unsuccessful, the capital outlay would destabilise the group and its core function. At this point the decision was to create a standalone company under the umbrella of ESG: this is when Growers Garden was created. The cash was essentially ‘crowd funded’ within the confinement of the ESG members under an EIS scheme and ESG’s IP was converted into a shareholding — so essentially the new company has the same shareholders as ESG, just under a different format. All of this has only been possible because of the collaborative structure of ESG.

As an organisation, the key lessons we learned from the process were about the brand process and the real costs associated with this. In hindsight, we should have put a greater emphasis on the strength that becoming a manufacturer has given the organisation — it is almost an unforeseen business in its own right. However, when I reflect on the overall business development and business structure, I genuinely don’t think we would do anything differently.

Andy McGowan

Scottish Pig Producers

Scottish Pig Producers (SPP) is a pig marketing coop owned by 75 pig farmers in Scotland and Northern Ireland. SPP plays a leading role in industry and market developments to maximise value for its farmer members. They operate Wholesome Pigs (Scotland) which drives improvements in pig health and welfare through information analysis and reporting, along with the emergency response facility for any potential disease outbreak. In a major innovation for Scotland’s pig farmers, SPP worked closely with coops Scotlean and Tulip to re-develop the abattoir at Brechin, creating a modern processing facility for Scottish pork.

The arrangement was that the farmers would own the site and facilities, but employ the staff through a company limited by guarantee called Quality Pork Ltd (QPL), which was set up in November 2014. The two farming cooperatives sell the pigs to Tulip, and Tulip pay a fee to QPL to cover the operating costs. This is an unusual model, since processors usually buy the pigs and operate the factories themselves. However, this arrangement enabled significant funding support from the Scottish Government’s Food Processing, Marketing and Collaboration Scheme.

The investments in the factory happened in 2015 through a mixture of private and Scottish Government financing. The upgraded line started operating in January 2016 and finished pig volumes grew significantly through 2016, with cull sows being trialled early in 2017. Later that year, an arson attack caused major damage to the plant and operations were suspended for 15 weeks. Through that period, Tulip continued to take full volumes of pigs from the farmers, avoiding what could have been major animal welfare problems due to the lack of alternative facilities in Scotland. With Tulip’s support, the pigs were moved to other plants in England and Northern Ireland whilst the repairs were made. Since the plant re-opened, volumes, customer base and operating efficiency have all continued to increase.

The fire was an exceptional event that could not have been foreseen. However, the relationships that had been built up between the cooperative, QPL and Tulip since 2014 greatly improved the ability of all parties to work closely and rapidly together to solve the numerous problems that the fire caused. By contrast, previous plant closures in Scotland and Northern Ireland have always seen farmers left to fend for themselves because the relationships were purely transactional, not collaborative.

If were to do it again, we would do so with the knowledge that getting governance procedures established early on is essential, as these protect the interests of all parties when challenges occur later on. It is too easy to get distracted with day-to-day issues and then when there is a serious problem, it is more difficult to sort out if the structures are not in place. The other piece of advice would be to stick at it — this is a successful model. Pork production in Scotland is growing and there is increasing customer interest, so it is worth the effort!