A New Wave of Cooperation

New Zealand was voted one of the world’s most co-operative economies by the United Nations and 11 of the top 100 national companies are in this camp – contributing over $40 billion to our economy. The co-operative business model has been around since the 19th century, originating in Rochdale, England over 170 years ago when weavers banded together and opened a shop. With almost three million such organisations operating worldwide, the principles have endured.

Keith Woodford, former Professor of Farm Management and Agribusiness at Lincoln University highlights the value of shareholding for agricultural operators. “Co-operatives can help farmers maximise the selling price for their products and minimise the cost of specific inputs. They change the power balance between farmers and those who are further along the value chain,” says Kieth. Farmlands Director of Agri Products and Services, Andrew Horsbrugh believes the rise of smaller grower co-operatives reflects the diversification of land use beginning to take place around New Zealand.
“Many farmers want to know which alternative land uses are both profitable and environmentally sustainable. The growth in plantings of permanent tree crops like walnuts is just one way that many farmers around the country are successfully answering that question,” says Andrew.

A new wave of grower-owned co-operatives is exemplified in the Marlborough Grape Growers and Walnuts NZ stories.

 

 

The Toast of Malborough Malborough

Describing itself as neither a traditionalwine company or a grape growing contractor, the Marlborough Grape Growers Co-operative (MGGC) is one of the mainland’s finest examples of an organisation that demands its growers see the fruits of their labour. Founded seven years ago, the cooperative has adopted a unique way of doing business. The region in which their growers and shareholders live is worldrenowned for Sauvignon Blanc but they don’t just go out and sell it. Rather, they work closely with big international corporates in places like the United States of America, Australia and Europe, alongside smaller, more exclusive merchants to provide them with the wines they know they have a market for.

General Manager, Craig Howard explains the philosophy behind their sales model. “The co-op works with buyers to make the wine that they define. We then use diagnostic flavour tools to help growers get a clear definition of what they’re looking for. The finished product is a world-renowned Marlborough wine that we know is going to meet the needs of our customers,” he says.  The quality of the product is a massivepart of the MGGC’s success too. Members know grapes must meet co-operative quality profiles, before they come to the winery. If growers can ripen fruit that meets that standard, the entire crop will be taken. However, if the fruit does not meet the profile, it stays on the vines. It is these strict commercial practices that ensure profits are returned directly to shareholders, rather than being paid out to institutional or private investors.

Accountability and technology is also key to the co-operative’s growing success. When the co-operative attend trade shows around the world, they use a mapping tool to show buyers exactly where the grapes in their wine were grown. This also means buyers have a better understanding of the soil and the landscapes of that specific region. Today, the co-operative is moving towards blockchain certification to ensure identity from vine to bottle. “Five years ago, we started with about 30 growers producing 5,000 tonnes of fruit. We now have 78 growers and we’re on track to harvest 13,000 tonnes this vintage. “We run a very proactive viticulture programme with our membership, we’re partnering with Farmlands at our Innovation Vineyard in Blenheim and in the last six months we’ve run about 15 field days to further support our growers. The upshot is, quality is going through the roof – what we’re doing here in Marlborough is resonating worldwide,” says Craig.

 

New kids on the block

WalnutNew to the game is Walnuts NZ.The co-operative was established in 2015 but the original processing and marketing business was already on its way to brighter futures through the hard work of Jenny and Malcolm Lawrence. They began growing walnuts on their property in West Melton, Canterbury in the 1990s before building a processing facility and selling their produce at local farmers’ markets. Soon they were selling on behalf of other growers.

With Jenny and Malcolm’s retirement came a new direction for the enterprise and the formation of the Walnuts New Zealand Co-operative Ltd. GeneralManager, Shane McKenzie was soon appointed to head it up.

“We were at a farmer’s market level when I took over, producing about 100 tonne of walnuts annually. As growers’ orchards have matured, their walnut supplies to the co-operative have increased and in turn their shareholdings too. New shareholders have come on board to gain a path to market for their crops and because of our investment in technology.  Ultimately, we need the capability to be processing 650 to 800 tonne of walnuts annually,” says Shane.

One of the ways Walnuts NZ has invested in these long-term goals is through the purchase of a Smart Sorter, the first of its kind in the Southern Hemisphere. “We’re excited because this piece of technology gives Walnuts NZ the capability to process a greater amount of product on behalf of our shareholders and through collaboration we can use the machine to help other growers out there. It’s also a key part of us launching a new retail offering on behalf of our shareholders in the form of Trickett’s Grove,” he says.

 

 

Co-op characteristics

In many ways, co-operatives operatelike any other business but they do have several unique characteristics: 

  • They are owned and democratically controlled by their members – not by outside investors.
  • They return surplus revenues to their members in proportion to their use — not in proportion to their investment or ownership share. 
  • They put members’ needs first by buying members’ produce at the best price or by providing them with affordable, high-quality goods and services (rather than maximising the co-operative’s profit).