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Last Updated: Wednesday, 23 February 2005, 23:42 GMT
The fruits of co-operation
Tractor in a vineyard
Joining a co-op could help struggling farmers
French farmers have been joining co-operatives for generations, but the custom remains relatively rare in the UK.

While farmers across France have long teamed up with their neighbours to pool both resources and output, British farming has traditionally been a much more individualistic affair.

Yet with UK farmers continuing to feel the financial pinch, more and more farmers are beginning to realise that joining a co-operative could give them strength in numbers and better bargaining power with buyers.

Here Russell Lawson, from the Federation of Small Businesses Wales, takes a look at how farming co-operatives can work.

Adam Sharping, Norfolk, UK
With a great many farms struggling and having to diversify, I wonder whether the practice of forming co-operatives might be the way forward.

It is very popular in France and elsewhere on the continent, but you hardly hear about them over here.

If I was to go into partnership with like-minded neighbouring farmers, how exactly would or could it work? How would we share profits and come to agreements?

Russell Lawson, Federation of Small Businesses Wales
From the perspective of farmers, working collectively can make co-operatives more attractive than contracting with non co-operative firms.

Small farmers especially can achieve diversification and capture value-added profits by working together interdependently via a co-operative.

When farmers have common goals and characteristics, as well as a shared entrepreneurial spirit, they can collectively achieve those goals more easily than if they worked alone.

But with diverse membership comes a number of challenges - co-operatives must continue to adapt and offer a variety of services.

They should also ensure they have sufficient and current membership information, creating a database, for example, containing various membership characteristics.

As agriculture changes, so too will the composition of agricultural co-operatives' membership.

Being cost efficient simply gets you into the food industry game, it doesn't mean that you will win. To be truly competitive in the future food industry, co-operatives will have to strive for additional achievements.

For example, they will need to do a much better job at knowing and meeting continually-changing customer demands.

Customer relationships, with food industry segments and consumers, need to be strengthened through better and more tailored services.

Food manufacturers have to be easy, low-cost and reliable business partners. Retailers don't care if manufacturers are co-operatives; they do care about customer relevance.

Uniquely meeting customer needs will be required in the emerging food system.

Continued innovation and aggressive behaviour will be keys to success.

Co-operatives need to be ready to provide products when, where and how customers want them.

They should continue to pursue new distribution options and new product development, proactively adapting to industry changes.

Co-ops need to compete in part on the basis of speed of response to industry and consumer trends and must also become more aggressive in capturing new markets or they will be too late.

If you still want to take this forward, then the best thing to do is contact the Department of Environment Food and Rural Affairs' Farm Business Advice Service which offers all farm businesses free advice whether they're looking for ideas for additional income or simply need advice on how to take the business forward.

Call the Business Link referral number on 0845 600 9 006 between 8:30am and 5:30pm Monday to Friday.

To ask Russell Lawson a small business question use the e-mail form below.

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