FAQs about co-operation

1. What is co-operation?

Co-operation involves farmers, growers, other rural businesses and communities working together to achieve a commercial objective, which they cannot achieve independently and individually. Through co-operation, members help themselves, pro-actively taking responsibility for generating value and sustainable services in which they have a common purpose.

2. How does co-operation improve the profitability of farmers and growers?

Co-operation captures value. Co-operation may remove the requirement for intermediaries in supply and marketing chains, and ensure that markets work properly by preventing other companies from profiteering at the expense of farmers’, growers’ and other rural interests. Capital, machinery and skills can all be organised more effectively through co-operation. Co-operation equips rural communities to determine and provide for their own needs and priorities. Farmers expect their co-op to help them achieve one or more of the following over a period of time:

  • lower fixed and/or variable costs
  • competitive prices returned for their produce
  • a share in value added by their co-op
  • increased security of market access, payment and risk management
  • opportunities to supply new markets and to expand their production.

3. Is co-operation different to other forms of enterprise?

The primary purpose of a co-operative is to capture and return value for members through their use of its facilities and services. Return on capital invested in the co-op, although important, is not the main purpose and is not the primary success measure for members. Farmers measure the effectiveness of their co-ops by the profitability of their farm businesses, achieved by participation in their co-ops.

4. Where in the world are there other co-ops?

Co-operation is long established amongst farmers, and in rural communities, throughout the world, notably in European countries, the USA, Canada, Australia and New Zealand. Through their co-operatives, farmers in these countries have created global businesses and brands marketing a vast range of products. Rural communities in many of the same countries have invested in green energy, and in local services such as water supply, telecommunications and housing. Co-operatives that are specialist banks, serving agricultural and rural interests, are very important in the USA, France and the Netherlands. Co-ops are also vital in developing countries, working to create local capacity, and sustainable production with fair returns.

5. How important is co-operation in rural Scotland?

Farmers’ co-ops have played a vital role in Scotland for well over 100 years and are now more important than ever. Their activities include marketing farm and forest produce (responding directly to customers’ needs and to market opportunities in collaborative marketing chains); pooling buying power to negotiate better terms for supplies; providing cross-contracting opportunities and employment through rural services’ rings; establishing new ventures and solutions, often with wider community benefit, such as local food processing and retailing, green energy and waste management. Co-operation is part of government policy in food, agriculture, and rural development and is actively supported by the Scottish Executive.

6. How does co-operation in the UK compare with other countries?

The development of large farmers’ co-ops in the UK was not a priority for many years, because statutory marketing boards stabilised markets and prices. However, in today’s freer trade market environment, strong and effective co-ops are essential to creating a competitive market position and to maintaining the security and stability that producers require. That’s why there is strong growth in co-operation and community self-help in rural areas of the UK. Recent developments include renewable energy generation, waste management, farmers’ markets, rural broadband, transport, and even schools.

7. What are the key success factors for co-operation?

With their distinct ‘primary purpose’, based on participation, all members of a co-operative share responsibility for creating success. The most successful demonstrate the following:

  • Common goals and united commitment amongst members (a continuing challenge requiring sound strategy and excellent, two-way communications between the board and members)
  • Ambition and leadership amongst members and directors, and a concern for the future
  • Active participation in democracy and accountability
  • High standards of governance, and professional management that understands the primary purpose of members in co-operating
  • Commercial success, satisfying members’ needs of their co-op, and rewarding them in proportion to their participation.

 

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