Co-operative success stories - but frustration over laws

Scottish farmers continued their enthusiasm for co-operation last year, with a 15 per cent increase in sales taking the turnover of their co-operative businesses to a record £2 billion.

Within these overall figures there were success stories. James Graham, the chief executive of SAOS, the umbrella organisation for farm co-ops, highlighted Rinklink, a machinery and labour sharing co-operative, for pushing new turnover figures, and Angus Cereals, a newly formed co-operative in an area where there had been very little co-operation.

However, Graham expressed frustration at the outdated legislation that controls and restricts investment in co-operative businesses. The particular problem for farm co-ops is raising capital for projects that will enhance the businesses.

All monies received from members is regarded as loan capital and it is difficult to lever in additional funding, he stated.

The issue has become more acute, as co-operatives have to compete with commercial companies that have no such restrictions. Graham said the problem had been raised with all the main political parties in the run-up to next year's Scottish Parliament elections.

He admitted changes to legislation would have to come through the Westminster parliament but said Scottish based politicians should be aware of the need for change to the laws.

Listening to Graham, who was addressing the annual meeting of co-operatives in Dunblane yesterday was Neil Kennedy, chief executive of Milk Link, a major 100 per cent farmer-owned co-op that has in the past decade moved into processing milk, most noticeably at the creamery at Lockerbie, where thousands of tonnes of butter and cheese are now manufactured.

He confirmed that farm-owned co-ops were at a major disadvantage in raising capital. He said: "Nowadays funders are looking at businesses having a mix of funding and we are not allowed to do that."

However, he hoped the required change in legislation would be enacted next year.

He said his co-operative also had the Office of Fair Trading constantly "on their back" ensuring competition in the market - an ironic situation given that one of its main competitors, Arla, had a 90 per cent control of the Scandinavian milk market.

Earlier Graham had suggested that even although there were major concerns for the agricultural industry, it was also a time of great opportunity.

The food and drink industry had been set expansive challenges, and in both the renewable energy market and biofuels there were opportunities he said.