INTRODUCTION

1. INTRODUCTION • WAOS founded in 1922 as the central body for Agricultural Cooperation in Wales • Secured Government assistance in 1931 • Cooperation boosted by Agriculture Act 1967 (CCAHC created) • Agriculture Marketing Act 1983 (FFB created to subsume CCAHC) • FFB withdraws from Agricultural Cooperation in Mid 1980’s • WAOS not supported financially since • WAOS operates as an Agri-food consultancy and is financed exclusively from fees earned_

2. THE WAOS VISION • Farmers have profitable and sustainable futures as mainstream suppliers of agri-food products. • By cooperating farmers will be able to capitalise on opportunities from the increased flexibility under the decoupled support system • Opportunities from growth in vertical collaboration in food chain as a response to greater demand for efficiencies

3. WHY COOPERATE • Food security and food inflation should give the primary producer an advantage • Value growth benefits retailers and processors more than producer • Rationalisation in food chain weakens the farmers strategic position

4. WHY COOPERATE • SFP leaves market forces determine farm gate prices • Without initiatives by farmers their market returns will be dictated by world agricultural commodity prices • Future characterised by new opportunities as Food security becomes more relevant • Relationships have been established in the supply chain for the benefit of processors and retailers • Food supply chain concentrated whilst farming remains fragmented • Cooperation best solution but lags behind rest of world

5. OPPORTUNITIES FOR COOPERATION • Food safety a major issue • Changing consumer lifestyles and demographics • Increasing demand for convenience, healthier, and environmentally friendly foods at a price • Food provenance, assurance, traceability, fair trade, organic supply and carbon footprint are issues that will come to the fore

6. WAOS DEVELOPMENTS • Welsh Lamb and Beef Producers Ltd • I and P Cooperative of 7500 livestock farmers producing 75% of the lamb and beef in Wales • Farm assurance • Organic Certification

7. WLBP Ltd • Farmers route to market. Farm assurance a minimum requirement for entry to UK multiple retailers • Earned recognition under cost and responsibility sharing initiatives • Lower Risk Profile for Statutory compliance audits (FSA, Animal Health, Environment Agency, Cross compliance …..) • Owned by farmers under Subscription model of constitution • Data management and information resource

8. WAOS SERVICES • Agri-food consultancy • Financial Services Authority “Sponsoring Body” for Model Rules • Management Services and resources • Corporate Governance • Board and company secretarial services • Non Executive Directors

9. WAOS SKILLS • FINANCIAL AND ACCOUNTING • CORPORATE PLANNING • MARKETING • LEGAL AND CONSTITUTIONAL • ORGANIC CERTIFICATION • PRODUCER CERTIFICATION • CORPORATE STRUCTURES • CHANGE MANAGEMENT • Staff Qualifications: MBA’S, Qualified Accountant, Certification Auditors, Organic Certification Officers, Agricultural Scientists, Agriculture Graduates.

10. THE PRODUCER • Retailers and Producers see collaborative opportunities within current structures rather than producers moving up the food chain • This will not result in investment beyond farm gate and farmers taking a more proactive role in engaging with consumers • The belief that farmers are incapable of playing a larger role in the food chain must be challenged • Niche market opportunities strong for Welsh Produce e.g. Welsh Mountain lamb

11. SERVICED FOOD SECTOR • Has been the UK’s fastest sector worth £50 Billion accounting for 35% of total food expenditure • Consumers demand more information about the food they consume • Food service need to source from recognised accredited sources • Cooperation’s ability to bring critical mass and traceability represents a real opportunity

12. COOPERATION IN WALES • Farmers are entrepreneurs and want a capitalistic approach to cooperation with return or at least preservation of investment • Farmers will need PROFIT as one of the drivers for cooperation • Recent trends in Wales have been for the development of “quasi” cooperatives operating in the name of cooperation and not by structure

13. DEVELOPMENTS IN UK • SAOS-Scotland-substantial funding from Public Sector equivalent to £382,000 p.a in 2009 • EFFP-England-awarded £2.5million by DEFRA in 2004 to “Help farmers in England work together and become more competitive and profitable” EFFP restructured in 2009 as an Agri-food consultancy

14. COOPERATION DELIVERS • Purchasing Cooperation (Buy Inputs at lower prices) • Marketing Cooperation (Joint Activities for outputs) • Processing Cooperation ( benefits from added value )

15. KEY FACTORS TO DEVELOP SUCCESSFUL AGRICULTURAL COOPERATION • Driving motivation must be profit not cooperation for its own sake. Structures must be well capitalised • Planning must be strategic and long term • Farmers must participate financially and commit to enterprise • Recruitment of top professionals paid accordingly and given appropriate autonomy • Strict corporate governance to ensure integrity and financial scrutiny and probity

16. DELIVERY MECHANISMS • Communication to farmers and the supply chain • Understand requirements of consumers, food retailers, and food service companies • Good governance and monitored financial performance to minimise risk of Business failure • Maintain Member Confidence and support • Data Capture and Management of Information • Develop a dynamic Strategy • Develop the appropriate constitutional structure for growth that best fits the strategy (Structure follows Strategy)

17. CONCLUSION • Welsh farming a lifestyle as well as a livelihood • Farming is long term business • Cooperation can be the salvation as Cost and Responsibility sharing initiatives come on line • Farmers must invest in their own destiny • Catalytic funding from public sector would pay good returns as the Industry takes more control • Wales cannot be left behind

18. PRESENTATION BY • DON THOMAS • Chief Executive WAOS LTD • GORSLAND, NORTH ROAD, ABERYSTWYTH • 01970636688 • dont@wfsagri.net

19. WAOS LTD AFFILIATED AGRICULTURAL CO-OPERATIVES IN WALES