Farmers are beginning to realise the vast marketing potential of co-operatives and the control they provide over their destinies


Five years ago Cumbrian farming was on its knees, funeral pyres glowed across the fields and a sickly chemically haze hung over the landscape. Farmers watched their livestock killed and burnt and their farms standing empty for months. After years of struggling economically this might have been the last straw. Now a Phoenix has a risen and a most rare bird it is today for it is a new co-operative venture which involves farmers in meat processing. Opened by HRH Prince of Wales last month, the Junction 38 Cutting Plant at Gaisgill near Tebay is owned by 50 local farmers. Prince Charles has had a personal interest in the project and was in at the planning stage with support.

Each farmer put in £2000 which is no small investment for hill farmers who the statistics show have a net income of around £11,500. The plant was built on land leased at a peppercorn rent by the chairman of the cooperative, Steve Dunning who farms at Tebay which is close to junction 38 on the M6 motorway which gives rise to the new name. The venture was supported by Rural Regeneration Cumbria, Leader Plus and Distinctly Cumbria.

The aim is to have greater control over the marketing of the livestock turning out a product which will enable the farmers to hold their own against the supermarkets, says William Houstoun of Rural Regeneration Cumbria. "It is the answer to the doomsayers who insist that everything they produce is just a 'commodity' to be traded at rock bottom world prices."

Vic Dawes is the plant manager who was a slaughterman at EJ Dudens abattoir at Lindale in Furness so he knows the local trade well. The plant takes in carcase meat and cuts and packs down to retail level including gas flushed and modified atmosphere packing trays. There is also a small goods room which is equipped for fresh sausage making. Members can have their stock killed at CCM abattoir at Hawes. Currently the plant is cutting and packing between 500 and 1,000 lambs a day. The next step is the application for organic status and a natural expansion of the customer base. Mr Houstoun says Cumbria has some great lamb produced from traditional fell breeds like the Herdwick, Swaledale and Kendal Rough .

"The challenge is to differentiate these products from the bog standard commodity lamb and offer traceability to the producer that consumers are now keen to know." It was 2000 when local Westmorland farmers (mostly Orton farmers market members) led by Steve Dunning who farms at Tebay and Jane Brook (Orton Farmers Market manager) decided to build an abattoir and meat cutting plant for beef, lamb and pork. They were fed up with low prices in the auction mart. They were already getting better returns from marketing their products through Orton farmers market and realised that the way forward was to control production from 'field-to-fork'.

Steve recalls visiting Borough Market in London and fascinated by the fact that rolled lamb shoulders were making around £28 each while back at home they were making £28-£29 for the whole lamb.

Then FMD hit in February 2001. Even so, the Prince of Wales visiting Orton farmers that year helped to keep the idea alive. Steve Dunning took what was described as a generous decision to offer the group a redundant building on his farm-right next to his farmhouse.

Co-operative Action, the Co-operative stores charity, funded William Houstoun and Richard Lancaster appointed in 2002 for two years through Farmcare Co-operative, the Co-op's farming company .

Almost at the same time the CCM abattoir opened in Bainbridge near Hawes, only 25 miles from Junction 38. This abattoir started the kill for some of the farmers who became members of J38 but there was still a problem of hanging space. The J38 directors took the view that, to compete with an abattoir so close, was not good business especially as it was almost dedicated to local farmers and so they concentrated on a cutting and packing plant, taking carcases from Hawes.

Fifty local producers committed to a non-refundable investment of £2,000 each to J38. Defra was approached for funding from the processing and marketing grant fund (PMG). Money was there but only 30 per cent of the total cost and only brand new equipment could be installed. At the beginning of 2003 it looked like the project would fail.

Then the Rural Regeneration Cumbria (RRC) was formed by the North West Development Agency (NWDA) to lead post foot and mouth recovery in Cumbria. RRC could only offer 40 per cent of the total cost and even then a special derogation was needed from the European Commission to use the money for such a project.

While they waited for derogation, known as State Aid approval, Steve Dunning, Richard Lancaster, some of the farmers, National Park officials and other backers visited the Lozerre region of France to look at farming and meat processing plants owned by local farmers and funded by the EU.

It was here they learned that the French had found a loophole in the funding rules which allowed them to use the value of the donated land on which the plant stood as private sector finance. When this value was added to the building costs it meant the 40 per cent funding could be used against the total costs so raising the actual amount of money available. Back in the UK they valued Mr Dunning's 'donation' at £250,000 and so increased the percentage of funding to the point where J38 project was viable. Then the EC set up a state aid exemption for processing and marketing of agricultural products. This resulted in a much shorter and easier process for getting state aid approval.

Blade Farming South West

Buying Mole Valley Livestock from Devon farmers' co-operative Mole Valley has given an impetus to Blade Farming South West's calf

supply. Blade set out to increase efficiency and better margins for its beef farmers by standardising finishing management. Farmers were sent a batch of calves and given a forward end price so they could gauge inputs and therefore a safe margin. In return, they were expected to produce 'peas-in-a-pod' beef, showing consistent conformation and even fat cover.

"A frustration was that some batches of 12-week old calves were quite uneven," says Richard Phelps, managing director at Blades, "which made the job difficult." The solution was for Blade to take on the rearing of calves from 10-days to 12 weeks using a standardised system of management covering breed, feed, welfare and housing, to produce animals of even size and weight stock.

The approach has paid off. Blade now rears 8,000 calves annually and, with the purchase of Mole Valley Livestock, have an even greater control of the quality of 10-day old calves. Honiton is the new calf collection centre for the whole of the West Country where thousands of calves are sorted. Those that fit the profile are taken for rearing. The rest are sold on the open market. One system, which is much in demand at Blades, is the use of large, sandy red South Devons or 'South Hams' to cross on to dairy calves, with a company guarantee to buy the calves. On the Blade management system, the heifers produced weigh 245kg to 290kg deadweight, are graded at O+4L, while the bulls kill out at 255kg to 300kg deadweight, and are graded at 0 +3/R at 14 months.

So far 2,100 of these South Devon crosses have been produced and finished. But it is Blade's ability to produce animals that closely match retailers' specification which is boosting business. "We are able to standardise bodies of beef which are similar regardless of source," said Richard.

Blade has grown strongly since its setup in 2000 producing no fewer than 10,000 finished cattle per annum or 10 per cent of Southern Counties yearly throughput. Next year, production is expected to hit 15,000 head.

Southdown farmeries

Standing on Ditchling Beacon comprising 250 metres on the South Downs is local producer group, Southdown Farmers. It was set up as a result of a feasibility study by the Sussex Downs Conservation Board with Southdown Farmers at Petworth to see if sheep farming could be revived to maintain the scarp slopes and keep the diversity and quality of local agriculture.

The study, which ran during 2003-2004, saw five or six farmers producing 800 lambs which were then sold through local butchers. The following year, 5,500 lambs were produced and sold through 22 butchers. Production this year is nearly double that of 2005 at 10,000 lambs. The Southdown's ability to produce good conformation, albeit more slowly than modern sires, is legendary since the famous 18th century John Ellman of Glynde, Sussex developed the breed from local heath-grazing sheep.

The related Hampshire breed goes back to 1839 and the first Royal Show when the son of John Webb's famous Babraham Southdown ram was crossed with a Wiltshire Horn and Berkshire Knot, creating a close-cropping grazer for the South Downs.

Target deadweight for lambs is19kg. Price is fixed by Southdown so that the farmer gets the same price all year through regardless of changes in the market. So far, Southdown farmers enjoy a premium of £6.50-£7 over the average market price. Butchers also pay a fixed price all year around and, after an initial trial period, must commit to buying regularly to stock the Southdown brand which is supported by point of sale material.

An important difference between Southdown Farmers and other co-operatives is the light administration, says managing director Chris Clark. There are just five directors. Significantly, only one is a farmer. Even more significant, Brian Scanlon, one of the directors, knows nothing about farming or the meat trade.

A mathematician, Brian worked at Costains, part of the team that built the Eurotunnel. "He brings a wealth of industry and manufacturing experience that is much needed by agriculture which has so little," says Chris. Other than daily executive Chris there is one other, the director of operations, Rebecca Moore running Southdown which is a limited company. even then Southdown is just one of her client list. Rebecca's experience includes 14 years at Chitty Food Group.

Chris says Southdown Farmers will be in profit next year but meanwhile butchers and farmers are becoming good friends taking part in breakfast meetings and discussions about producing and retailing lamb. There is no membership fee but participants are welcome to buy shares in the company. Work is being undertaken to get prospective producers to get the right mix of breed and feed and expand the butcher's network.

Branded Beef Breeders

Registered as a friendly society, BBB over the past 10 years has thrived and now boasts 1,400 members marketing livestock under the Aberdeen Angus and Limousin brands.

The Limousin 3L, Lean Lean Lean brand has been dropped. In the year to August 2005 BBB carried a net trading loss of £60,000 and were caught with the first bad debt for seven years with £35,000 owed by Central Edinburgh Meat Marketing which went into liquidation. All members were, however, paid in full and BB reported premiums of £257,022. Trading has improved since then with throughput and premium increasing monthly. Authenticity is a key factor for the AA and Limousin beef. BBB includes the option of DNA testing in their agreement with producers and retailers to protect the 3A, Authentic Aberdeen Angus and Limousin Classique marks which is governed on the principle that the beef must be sired by AA or Limousin bulls.

The organisation promotes the brands to retailers. Catering and group members are rewarded for producing cattle to specification with penalties for underweight or overweight animals typically under 240kg or over 380kg

BBB uses the EI Traceability to identify bulls that sire the highest percentage of calves which grade well, for example, the one that produces the highest percentage of 0+4H cattle or the highest percentage of steers weighing over 330kg.

The system, which is owned jointly by BBB and EI Enterprises, provides management guidelines. It shows an average of say 5L or 5H grades as a percentage of all farmers which can then be compared with the same percentage achieved by individual member's management systems.

The group is aware that the days when the words 'Aberdeen Angus' was sufficient to get a premium are lonng gone. It has been winning on carcases graded at 0+ and better and cattle killing out at 240kg or more. Members are aware, however, that with other breeds consistently reaching R and U grades, the O+ might not produce a premium forever.

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