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Cooperatives Are The Future, Dairy Conference Told

09 April 2014

UK – Dairy farmers have been called upon to form cooperatives in order to add value to milk at a Royal Association of British Dairy Farmers Conference in Birmingham.

Delegates heard that the size of the coop does not matter in the drive for a more profitable and sustainable industry.

“Small co-ops can be very successful; they tend to have a very clear focus, for example they don’t engage in the supply sector, they are dairy specialists with a clear profile and a very clear strategy,” Dutch co-op specialist, Dr Onno van Bekkum explained.

“Two models are frequently found in the major dairy countries; a handful of co-operatives focused on niche products operating perfectly well alongside their big sisters such as champion co-op Arla, which has evolved over generations from regional, to national and eventually a global organisation.

“These small co-ops don’t compete, but remain active and alive functioning on very different planes, however to be successful farmers need to come together with a shared vision, they have to establish a strategy, apply strict governance, respond to the need for capitalisation and ensure full member engagement. Loose structures do not survive.”

Promar International’s Matt Incles concurred: “Whilst a certain scale is required to successfully collaborate, however it does not have to be big. Innovation is critical to business growth – consumers won’t buy more milk, therefore growth can only be made by adding value and that’s impossible to achieve by individual farmers.

Collaboration enables farmers to investigate the marketplace, develop marketing resources and technical knowledge all of which are essential to developing a new brand, along with creating organisation with vision, focus and the correct people.”

Collaborating with farmers with the same mind-set was among the priorities for joining Phoenix Milk, according to Mike King, one of four farmer directors of the Gloucestershire based limited company with members currently supplying 21 million litres.

“We established the group in 2012 following the demise of a processor, offering a minimum fixed price for milk marketed on a fixed term producer tendered basis with a price movement basket built in. Our aim is to return a strong milk price, to grow the group and subsequently supply several buyers, pass back transport savings and negotiate bespoke contractual terms.”

Bowland Fresh, a farmer controlled business with 24 members and 12.5m litres has established a firm brand and traded with two retailers over the last nine years according to its Juliet Coates.

“We have focused on adding value to sales of liquid milk without any investment. We contract out milk collection, processing and product delivery.”

Promar International senior consultant Neil Adams said: “Co-operation is all about people having the right perspective, starting to work together and learning to take value from the marketplace.

"There is no magic formula, it’s down to solid management and governance. The legal structure is one of the last points to consider in the plan.”


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