Agricultural co-operatives: a win-win for the environment and economy?

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Why are greenhouse gases of particular significance in the food sector? Whilst there are many industries contributing towards the total greenhouse gas emissions of the UK, the food industry is important because of its visibility - after all, when it comes to food, all consumers are stakeholders. In addition, it is undeniable that its contribution to total greenhouse emissions is significant: Defra data reveals that over a fifth (22 per cent) of the UK's greenhouse emissions emanate from the food industry, whilst contributing a far lower proportion to Gross Domestic Product. The food industry is a key 'carbon hot spot' and requires significant attention.

The role of co-operatives within the food industry

Co-operatives have received a greater degree of attention in recent years, and one area they have seen particular growth is in the food industry. Defra data demonstrates the increasingly important role that co-operatives are playing in the food sector. In 2008, more than half of total sales of farm products or buying operations were made through co-operatives and this share is increasing.

A co-operative is a business that operates for the benefit of its members. The co-operative approach means that processing and manufacturing enterprises are located and run more efficiently. These efficiencies are associated with cost savings and more efficient use of resources per kilogram of output. However, my research investigates the impact of these economies of scale and their actual or potential benefits when it comes to the environment.

What it shows is that there are several ways that a co-operative and collaborative approach can, or has potential to, reduce greenhouse emissions:

Effective mechanism of machinery and labour sharing

Co-operative management of machinery and equipment can lead to reducing inappropriate machinery buying and more efficient utilisation rates, thus reducing embedded greenhouse gas emissions.

Exchange of knowledge and experience

The advice and knowledge which co-operatives receive and share is based on the results from trial works done by the farmers within the co-operative and the information from field trials is passed on to other the farmers as quickly as possible. This gives the co-operative members an advantage over non-co-operative farmers, and provides them with an opportunity to use most up to date fertilisers, chemicals and seed varieties to increase their productivity and efficiency. This could potentially have a positive impact on greenhouse emissions thanks to the increased emphasis on the ‘green credentials' of such products.

Planning and marketing

A good example of effective co-operative planning and marketing to reduce waste, increase efficiency and, consequently, minimise environmental impact, is the organic box delivery scheme. Under the scheme, the co-operative is able to give farmer members market assurance by predicting the number of customers and volume of produce, allowing farmers to plan planting and reduce food waste. This reduces the volume of greenhouse gas emissions both in terms of the growth of food that will not be used, but also in minimising food decay, which produces methane, a greenhouse gas 23 times more detrimental than carbon dioxide in terms of global warming potential.

Summary

Although co-operative managers do not always see the environmental benefits of their businesses, the efficiencies that these businesses can and do provide are numerous and potentially substantial. The co-operative business model, with its own alternative business philosophy and purpose, is able to drive efficiencies within food supply chains, and can improve understanding and knowledge/skills transfer through established communication systems. Furthermore, it can aid in the sharing of risk, where investments are needed to drive the necessary technological changes required to reduce greenhouse emissions.

It is clear that agricultural co-operatives do have the potential to deliver environmental benefits as a consequence of their primary purpose as a economic agent, which investor-owned firms would not. This is of significant importance both to promoting the cooperative business model as one that can deliver public good benefits, but also in providing a potential market benefit that could be exploited to further enhance the value of members' production.

Yevhen Baranchenko is a PhD researcher at Northumbria Univerity's Newcastle Business School

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