Hot off the press! SAOS Spring Update

The SAOS Spring Update reports on our conference and provides members’ news and our own work. Printed copies are heading out this week, or get a sneak preview here:

You can view our other SAOS Updates here.

 

Positive Response to SAOS Proposals to Align Farming Policy with Supply Chains

SAOS received positive responses from both the Scottish and UK Governments to proposals for stronger alignment of farming and supply chain policy and strategy after the UK leaves the EU. If adopted, co-operation, collaboration and innovation would be incentivised in farming and supply chains, helping to improve market responsiveness and increase competitiveness. The proposals were sent to Scottish Government ministers Fergus Ewing MSP, Cabinet Secretary for the Rural Economy and Connectivity; Mike Russell MSP, Minister for UK Negotiations on Scotland’s Place in Europe; David Mundell MP, Secretary of State for Scotland; and George Eustice MP, Minister of State at the Department for Environment, Food and Rural Affairs.

James Graham, SAOS Chief Executive, said: “The prospect of a new agriculture policy provides an excellent opportunity to correct some of the things that we feel have constrained the expansion of co-operation across more of Scotland’s farming. It is clear in the responses from government Ministers, and in follow-up discussions, that our vision of better-organised farmers working together to meet the supply chain and drive farm innovation is being fully considered, along with the policy measures that would generate the kind of changes that are required.” Some of the most important proposals are detailed below. The full text of SAOS’ submission to the Scottish Government can be viewed here: Leaving the EU – Submission of Views to Scottish Government .

Incentivising Innovation and Co-operation
SAOS has proposed that agriculture policy should provide for funding to Producer Organisations across all sectors of agriculture to support innovation programmes. This method of stimulating innovation has been used to good effect in the fruit and vegetable sectors, leading to the introduction of new farming systems and supply chain processes. Approved ‘operational programmes’ designed by each PO attract grant at a rate of either 50%, or equivalent to 4.1%, of the value of marketed produce. James Graham states: “This sets a precedent and exemplar for how to channel and target grant funds to agriculture in future.”

A Legal Right for Farmers to Negotiate Collectively
A legally-backed obligation should be introduced on large scale buyers of farm crops and livestock to recognise the right of farmers to negotiate terms collectively with them, when organised in appropriate forms of producer organisation or co-operative. The possibility of farmers collectively and co-operatively negotiating with buyers has been denied in important sectors where there is imbalance in negotiating positions, closing off opportunities for fairer terms and increased transparency. According to James Graham: “The absence of a legally-backed obligation is acting as a constraint to supply chain improvements. This might be achieved by extending the role of the Groceries Code Adjudicator to the trading relationships between farmers and large scale buyers, backed by powers to review and impose sanction where poor practice is found to be evident.”

Link Capital Grants with Supply Chain Improvement
An obligation to engage in supply chain improvement programmes including the primary sector should be a condition of all grant awards where Scottish primary produce is to be used in the resulting plant and processes. James Graham continues: “This would enhance the alignment of strategy amongst the primary and food manufacturing sectors. Every supply chain improvement programme we have facilitated has yielded commercial benefits for all involved. We need to encourage more.” The current SRDP Food Processing, Marketing and Co-operation Grant scheme enables critically important investment to proceed, helping to mitigate investment risk and reduce investment pay-back times.

Co-operate for Farm Resilience
Expert knowledge and facilitation should be available to continue innovation for greater farming resilience through co-operation. According to James Graham: “Agricultural co-operation delivers opportunities for risk management and enhanced farm resilience in a wide variety of ways. Within a single co-op, farmers may currently access ‘futures’ contracts (in some products), participate in long-term customer contracts, accumulate mutually held funds to use in volatile price cycles, participate in supply chain improvement programmes, identify and develop new markets, manage harvest risks, introduce innovation on farm, forward purchase inputs and diversify. Through co-operation, we have the foundations on which to build more sophisticated risk management systems.”

Brexit – SAOS Conference Looks Beyond the Uncertainties

 James Withers, Scotland Food & Drink

We are in control of more than we think” according to James Withers, speaking at the SAOS conference on 26th January. “We are in control of our ambition, our vision and our strategy. We control our brand and our market development activities. And we control the way we work together to achieve our aims.” James added that: “Every positive development that happens in food and drink stems from collaboration and co-operation.”

Speaking to more than 100 directors of Scotland’s agri co-ops, James pointed out that the provenance credentials and integrity of the Scottish brand is what distinguishes Scotland’s products from competitors and generates demand and value: “Scotland’s brand – our reputation and behaviour as a food and drink producer – is extraordinary. Others would beg for our asset”. However, with the exception of Scotch whisky, Scotland currently depends on too few markets around the world, with 80% of food exports destined for Europe, and only 7% each to Asia and North America.

Suggested “building blocks” for the future included a strategic “three market approach” (UK, EU, global) formulated from market intelligence, and aided by investment in supply chain collaboration, innovation and skills.

Tom Hind, AHDB

“The landing zone is clearer, but there is still massive uncertainty” was Tom Hind’s observation following the Prime Minister’s January speech on Brexit negotiating objectives. However, seeking a free trade agreement outside the single market or the customs union would take more than two years, and an interim agreement would be necessary to avoid a ‘cliff edge’ exit from the EU. This matters because of the level of tariffs that the EU levies on imports from third countries. However in the event of a ‘hard Brexit’, farm prices could rise in the short term, as UK products displace EU products in the UK.

Tom pointed to “significant global opportunities, if we can compete” in areas of the world where there is a growing, prosperous middle class. This meant predominantly Asia-Pacific countries.

In considering future agriculture policy, Tom emphasised the need to build resilience in the face of greater competition and declining financial support, suggesting that there could be a greater role for co-operation and co-ops. Other issues to resolve include the extent to which there will be a common UK-wide policy framework, and the level of budget priority afforded to agriculture.

James Graham, SAOS  

“To connect Scotland’s farmers with food and drink manufacturers more effectively, we need much closer alignment in future policies, strategies and resources”, was the message from James Graham. SAOS has submitted a series of proposals to the Scottish and UK Governments that suggest how this might be achieved. The key points included:

  • Deepen policy alignment and action via Scotland Food & Drink
  • A legal right for farmers to negotiate collectively with scale buyers
  • Remove competition law ambiguities relating to the legality of co-operative selling
  • Access to grants for innovation via POs and co-ops across all sectors
  • Link capital grants with supply chain improvement back to farms
  • Farmer Co-operation – invest in expert knowledge and facilitation
  • Supply Chain Improvement – invest in expert knowledge and facilitation
  • Invest in rural infrastructure, connectivity and communities.

The full text of SAOS’ submission to the Scottish Government can be viewed here: Leaving the EU – Submission of Views to Scottish Government .

Presentations from last week’s SAOS Conference now available

 

SAOS Conference 2017 was focussed on Brexit and Co-op Priorities for the Next Five Years.

We heard fascinating insights from Tom Hind, Chief Strategy Officer at AHDB on ‘Brexit Implications for Agriculture and Trade, and then from James Withers, Chief Executive of Scotland Food and Drink, on ‘Opportunities for Scotland’s Food and Drink Industry’. Their presentations are below.

Tom Hind’s Presentation

James Withers’ Presentation

We also heard from one of our panel session members, Trevor Lockhart, Chief Executive of Fane Valley, on ‘Motivating Staff Through a Time of Change’.

Trevor Lockhart’s Presentation

Morning Forum sessions

One of the morning forums was run by SAOS’ Head of Co-op Development Team, Jim Booth who looked at ‘Validating the benefits of Co-op Membership’ along with Mark McBrearty of NFU Mutual.

Jim Booth’s Presentation

Mark McBrearty’s Presentation  

The other morning forum was hosted by Alan Stevenson, SAOS’ Supply Chain Development Director, together with Ian Watson of Farm Stock Scotland Ltd, and Stephen Cameron of Scottish Shellfish.

Ian Watson’s Presentation

Stephen Cameron’s Presentation

 

SAOS ‘Next Generation’ award goes to Kate Drever of Aberdeen Grain

Kate Drever Next GenKate Drever was recognised at the SAOS conference yesterday as ‘one to watch’ for the work and accomplishments she has achieved so far at Aberdeen Grain and through the Co-op Staff Forum facilitated by SAOS. George Lawrie, SAOS Chairman, presented her with the award.

Kate joined Aberdeen Grain five years ago with very little experience of grain laboratory work or crop storage.  Since then, her knowledge and skill base have reached a level where she leads the team and is exceptionally well-respected, both within the supply trade and also with Aberdeen Grain members. During harvest time, Kate has the difficult job of informing members when their produce is of a lower specification than they expect. Her excellent demeanour and obvious knowledge ensure that, rather than being contentious, these conversations allow the member to understand the issues and help to improve their product in the future. Bearing in mind that in many cases this is done under intense harvest time pressure, this is a testament to Kate’s overall character and professionalism.

During harvest, Kate is in charge of around eight lab staff; split over two shifts during a 12 – 14hr intake period, but she still finds the time to produce a very detailed and informative summary of the day’s intake, allowing the business to function to a very high standard. This additional work for the benefit of Aberdeen Grain and its members is very much aligned to the co-op’s ethics and principles.

Through the Co-op Staff Forum run by SAOS, Kate has developed her overall knowledge of co-ops and their governance, and she demonstrates a real passion and understanding for co-operative working.

Presenting the award, George Lawrie, SAOS Chairman, commented: “Kate’s role is clearly critical to the success of Aberdeen Grain and her hard work and commitment to improving communication with members and the overall business are a real credit to her. In an era when young people are sometimes perceived to have a poor work ethic, it’s great to have proof that this is far from the case.”

The Next Generation Award forms part of SAOS’ work looking at ways to encourage, motivate and recognise younger people involved in agricultural and rural co-ops. Nominees for the award must be 40 years of age or younger and must have made an impression on the industry with their leadership, vision and commitment to co-operation. As part of the award, Kate will be invited to attend next year’s Oxford Farming Conference in January 2018.”

Stephen Young, SAOS Project Manager, who was closely involved with the award process commented: “We were delighted to receive some very high quality nominations, and to hear of great work being done throughout the industry. It’s clear that there are lots of young individuals out there making a real difference in their co-ops and it was really heartening to hear about them.”

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