Distress Fire Sale of Co-op Farms or a Co-op Farm Trust Buy Out?
Tracy McVeigh wrote an article in the 4th May Observer entitled, ‘Co-ops £140mn farms sale aimed at Chinese buyers.’ As critics of the sale are saying, ‘this firesale will barely make a dent in the Co-op Group’s losses.’ Here is the blog that helped inform the article:
Do we want the distress fire sale of the successful Co-op Farms? Or a Co-op community farm buy out to save the farms into trust-and help reinvent the Co-op Group’s values?
When you consider Kelly’s damning report of the ‘sorry tale’ of the Co-op Group’s recent leadership, with the costly Somerfield and Britannia acquisitions, the £700 mn wasted on bank IT systems, one questions the wisdom of the distress fire sale of the Co-op Farms. Are ‘the boys in the sweet shop ‘ now selling off the Co-op Group family silver to help pay for their spending spree and to delay the ship sinking?
The farm sale was announced at the end of February, with bids in by the end of May. Savills only issued farm particulars on 28 April. Despite repeated requests for information, both Savills and the Co-op Group refuse to send farm details because we are not ‘proceedable’ or credible i.e. we don’t have the £200 mn guide price needed.
Clearly, the Co-op Group prefer selling to hedge funds and speculators for the highest price. They ignore our proposed alternative of a community co-operative buy out. They make this option anyway impossible by withholding information and imposing an impossibly short time scale. The Co-op Farms, built by the skilled work of co-op management and workers, with members reinvesting the farm profits over generations, will be lost as a commonly owned asset if the Co-op Group has its way.
So how do co-operative community farm buyouts work? In 2005-6, we saved Fordhall Farm by setting up Fordhall Community Land Initiative as a charitable IPS/CBS with 8500 members investing over £800,000. Since then, over 1000 community benefit societies have been successfully set up to save pubs, run village shops, develop community renewable energy, run community supported farms, and hold farms in trust. I recently helped save Rush Farm near Redditch, Worcestershire, where we set up Stockwood Community Benefit Society with community shares and loans. As Rush Farm was where the original Archers broadcasts were made in the early 1950’s, this community buy out shows just how popular preserving a working, farming countryside is.
Scaling this up for the Co-op Farms, I propose that two bodies be set up, one to preserve the land into co-op trusteeship in perpetuity and to capture land value for community benefit, the other body to run the farm business.
Firstly, the 18,000 acres of farm land and property would be bought at a fair price and held in trust by a charitable community benefit society (CBS), the Co-op Farm Trust. Investor members would get 1-3 % interest on their withdrawable shares, and incorporated bodies such as co-ops can also invest, with one member one vote. Once the Co-op Farm Trust is registered, with good governance and a business plan, a community share issue can be disseminated locally and nationally through all Co-op Group and co-op channels. The income of the Co-op Farm Trust (CBS) would come from leasing the land to the Co-op Farm Business, as well as capturing land value for community benefit, such as developing the Leicester eco town as a co-op garden city.
Secondly, the Co-op Farm Business would continue its farming success whilst leasing the land from the Co-op Farm Trust, plus the 30,000 acres contracted land. The question would be the future ownership of the Co-op Farm business, whether continuing Co-op Group ownership, another co-op community buy out to capitalise the farm business and help the Co-op Group with capital, or selling/partnering with another competent farm business.
This proposal would prevent the speculative purchase by an asset stripping hedge fund, deliver a fair price for the Co-op Group, give a welcome opportunity for investment in community shares by investor/members, offer the Co-op Group the opportunity to reinvent its values, and persuade fed up co-operators to keep shopping, insuring, travelling and banking with the Co-op.
Whilst it is shocking that the Co-op Group is conducting a distress sale of the Co-op Farms, it is still not too late for Ursula Lidbetter, the Co-op Group chair, and CEO Richard Pennycook to urgently convene a meeting to consider the purpose, benefits and how a Co-op Farm Trust can work. And for members, Co-op farm staff, and Co-op Group board members to advocate for such an achievable solution.
National Farm Land Trust Working Group