Agribusiness News February 2025 – Inputs: The Benefits of Co-operating with Co-operatives

The role of Co-operatives in supporting agribusiness in Scotland

Co-operation is the quiet engine room of Scottish farming.  Collectively, producer co-ops generate over £1bn turnover to Scottish agriculture each year.  Some 65 producer co-ops represent over 25,000 memberships across all major enterprises.

From dairy to daffodils, pigs to potatoes, soft fruit to shellfish, cauliflowers to country stores, and more.  Each co-op member represents a family farm or small business in a rural community.

While some co-ops market members’ produce or sell specialist services; others sell supplies and inputs vital for remote island communities.

What defines a co-op?

Despite their ubiquity, it is fair to say that many farmers, crofters, accountants, solicitors, advisors, and other agricultural professionals don’t really know about the co-op business model.  Here are some basic facts about co-ops:

• A co-op is owned by its members: the people who use its services. Someone can become a member of a co-op by purchasing a share in the business, provided they are going to use the co-op’s services.
• Co-ops exist to serve their members. All members can have a say in what their co-op does.  They can join the board of directors, contribute at open meetings, and even call an extraordinary meeting if they are unhappy with the business.
• Co-ops exist to return value to their members. They do not pay out profits to external investors.  They usually invest profits back into the business and sometimes share their profits amongst their members.

Co-op Principles and Values

Unlike other business models, co-ops are based on a set of principles and values that define how they operate.  These protect and support their members’ communities, making them fundamentally different to other business models.

This sounds all very nice, but what does it mean in practice?  What difference do lofty co-op principles and values make to the way farmers, crofters, and supply chain organisations do business?

• Co-ops pool resources and employ specialists who can drive the business e.g. co-ops employ specialists who take on marketing, leaving farmer members to get on with farming.
• Co-operatives can invest in processing capacity.  This drives efficiencies, adds more value to primary produce, and can retain this value within Scotland’s rural economy.

• Co-ops are an integral part of rural communities.  Joining and getting involved in a co-op is a good way for farmers and crofters to be more involved in Scotland’s rural community.
• The co-op business model is tried and tested.  It should be considered when setting up a new business to support agriculture and rural communities.

Supply Chains

Co-ops play an important role in Scotland’s food and drink supply chains.  By engaging constructively with co-ops, market and supply chain organisations can secure a resilient supply of product.

• Co-ops have scale and can provide a secure supply of product, at volume.
• Co-ops pool resources and employ staff. Engaging with co-op staff is an effective way to engage with many farming/crofting businesses.
• Environmental challenges can be tackled across the supply chain by collaborating with co-ops. For example, working together to meet emissions reduction targets set through the Science Based Targets Initiative (SBTI).

Agriculture is facing many challenges and changes including policy change, climate change, social attitudes, and consumer behaviour.  It is important for organisations to work collectively, based on consensus, to address these challenges.

For policymakers

Nature restoration is more effective when it is done through co-operation, rather than through competition.

• As Co-ops have a large membership across almost all areas and agricultural sectors in Scotland; they are responsible for a significant proportion of Scotland’s agricultural economic output. Therefore, supporting a relatively small number of co-ops will support a significant proportion of Scottish farmers and crofters, and rural communities.
• Co-ops pool resources and employ specialists who can drive the business. Engaging with a few key individuals can have a wide policy delivery reach.
• Change can be made at pace and scale through co-operation and co-operatives.

David Michie, David.michie@saos.coop