20 March 1981 Syndication For Survival

With the rising costs of machinery and services needed by farmers, syndication could be the way to survival in the future of smaller properties.
For syndication is already a multi-million-pound industry in the U.K. and is still growing.

It is hard to envisage many of the British forms of agricultural co-operation being adopted by New Zealand farmers who value their independence and their rugged individualism.
One man who is qualified to comment on the situation both in New Zealand and the U.K. is Mid-Canterbury farmer Donald Davison. He has been involved in a machinery syndicate of nine farmers for the past four years, and in 1979 he was awarded a Lincoln College Foundation grant to undertake a study tour looking at agricultural co-operatives in the U.K. and Europe.

Most of his time was spent visiting farmers and co-operative institutions throughout the U.K., and his findings make interesting reading for local farmers.

Attitude

The attitude he described in Britain in the past tense sums up the New Zealand situation well.
Co-operatives, he remarks, had the reputation in the early days of being somewhat inept and vaguely socialistic enterprises. He goes on to comment that today farm co-operatives in Britain have outgrown that concept. They are generally recognised as a special kind of managerial institution which is an integral part of a strong private enterprise system.

Supporting that claim are some 580 co-operative societies and 1,000-plus machinery syndicates now operating in the U.K.
One regional company alone, Eastern Counties Farmers Ltd, boasts an annual turnover in excess of £75 million.

There is a stronger tradition of agricultural co-operation in the U.K. than in New Zealand.
Precursors of the sophisticated schemes of the present day go back to the early years of the century.
The Plunkett Foundation for Co-operative Studies, established in 1919, is a leading name in this respect and today is regarded internationally as a clearing house for research into all aspects of co-operation.

But it was during World War II, when farmers and backyard gardeners alike were being exhorted to “Dig for Victory,” that co-operative ventures really got off the ground. It was a matter of using a depleted labour force to supply the requisites for home and military consumption.

Early ventures were largely in the field of labour and machinery syndicates, and the latter is still the backbone for many groups. These can range from a couple of neighbouring farmers sharing some items of non-seasonal equipment through to sophisticated central management systems, employing servicing and administrative staff and deploying a fleet of agricultural equipment.

Plus and Minus

The pros and cons of such schemes are often stated. On the plus side there is a better return for capital, more efficient labour usage, and increased financial strength.
Against these are the inconveniences of sharing vital equipment, with the accentuation of peak and slack periods, and the loss of individual control – a farmer can't go out and buy equipment or change machinery at will; there has to be joint consultation.

But Don Davison holds the view that many of these difficulties are more imagined than real, and that managerial expertise can overcome a lot of the apparent drawbacks.

One of the syndicates Don visited was Glentovie Farmers' Co-operative Enterprises. Established by eight farmers in 1967, it has grown into a multi-function co-operative whose operations include 12 official machinery syndicates and a number of unofficial ones. Although the Glentovie farmers were told that sharing combines would not work, their operation has been running successfully for eight seasons.

Factors such as varied soil types, organised drilling, and the use of early and late-maturing varieties of barley help to spread the harvest times.

Stepping Stones

Don remarks that machinery syndicates can be excellent stepping stones to more complex arrangements such as production and marketing groups, training co-operatives, and buying groups.

The top end of the scale is the conglomerate co-operation both on and off the farm for New Zealand farmers. There are a number of ventures such as the one he is involved in, and many informal sharing arrangements, but many farmers are unwilling to commit themselves to more formal co-operatives.

There are the fears mentioned earlier, but, says Don, a lack of informed people in organisations such as M.A.F. to give assistance and encouragement. In the U.K. there are far more monetary advantages offered, and the idea is pushed by both the Government and The National Farmers' Union.

Education

Don suggests that a great deal of farmer education is needed to convince local farmers of the advantages of co-operatives. The most logical places for training programmes in this area are Massey and Lincoln, he says. From there the benefits would filter through but it will take a long time. New ideas don't come easily, especially when you've got dad standing over your shoulder.

Don is fond of quoting the director of one of Britain's major syndicates: “we must be prepared to pool our resources so that we combine in strength rather than advertise our separate weakness. It makes no sense at all to compete with each other for whatever small share of the market others may be prepared to leave us.”

So while there is still a lot of resistance among New Zealand farmers, it could be that the U.K. experience shows agricultural co-operation is an idea whose time must eventually come. If nothing else, the price of machinery may see to that.

– John Goulter

Title: Syndication For Survival
Publication: Straight Furrow, Fri 20 Mar, 1981 
Image caption: Mid-Canterbury farmer Mr Donald Davison