Co-op’s £140m farms sale aimed at Chinese buyers
The Observer, By Tracy McVeigh
Troubled group angers green campaigners by insisting on single purchaser.
The beleaguered Co-operative Group has insisted that it wants a single major corporate buyer for its portfolio of British farms, and will not consider community buyouts. This dashes the hopes of green campaigners, who are calling the move a "panic sale" that leaves the way open for Chinese buyers to snap up the land. The Co-op announced at the end of February that it would be selling all of its 15 farms, a total of about 17,000 hectares (44,000 acres). Bids are due in by the end of this month.
Estate agent Savills has been instructed not to give particulars to any potential buyer without a "proven track record in acquisitions". This weekend it wrote to a conglomerate of farmers – including Martin Large of the Biodynamic Land Trust – to clarify that there would be no consideration of community buyouts, even though groups are forming across the country to attempt to persuade the Co-op otherwise.
It means swaths of British farmland will probably be snapped up by a Chinese investor or hedge fund speculator. Interest in UK farmland from such foreign investors is high at the moment, especially because of the threat of food insecurity. Critics of the sale say it will end more than 100 years of ethical farming by the Co-op in its farms and at three packhouses across England and Scotland that process cereals, fruit, vegetables and honey.
The Farmers Weekly newspaper estimated that the sale of the land alone, without any added value from equipment or buildings, could bring in around £140m. This, critics say, will make barely a dent in the Co-op Group’s £2.5bn losses in the year to April 2014.
Large said the decision to sell was a poor one. "When you consider the sorry tale of the Co-op Group’s recent leadership, one questions the wisdom of the distress firesale of the farms. Are the boys in the sweetshop now selling off the family silver to help pay for their spending spree?
"Community farm buyouts can and do work, as we are showing time and time again. Since 2006 over 1,000 community benefit societies have been successfully set up to save pubs, run village shops, develop community renewable energy and run farms. I recently helped to save Rush Farm near Redditch, Worcestershire, where we set up a society with community shares and loans. Rush Farm was where the original Archers programmes were made in the early 1950s. This community buyout shows just how popular preserving a working, farming countryside is."
He went on: "Savills and the Co-op Group refuse to send farm details because we are not proceedable or credible – we don’t have the £200m guide price needed. Clearly, the Co-op prefers selling to hedge funds and speculators for the highest price. They ignore our proposed alternative of a community buyout and make it impossible by withholding commercial information and imposing a short timescale. The farms, built by Co-op management and workers, with members reinvesting profits over generations, will be lost as an asset."
Professor Molly Scott Cato, a sustainability expert, economist and Green party candidate in this month’s European elections, said she was horrified by the sale. "There’s a parallel here with Royal Bank of Scotland being owned by the taxpayer. If we own a bank, let’s use it to make loans to small businesses, decentralise and help local communities. But no, the government says we must make it an untouchable financial institution just like it was when it failed. So the Co-op farms are owned by members who aren’t allowed to use them as an asset to improve their lives, to meet their needs. They have to be sold as a corporate concern.
"The model we should be striving for in an unpredictable world is lots of local networks for food security, not one over-arching one. That’s unstable."
The Co-op said the move was "not driven by the need to realise cash because of the issues at the bank or the underperformance of any other parts of the business". It said proceeds would go to the group, which is owned by its 7.2 million members, although it admitted they had not been consulted on the sale. A spokesman for the group told the Observer they believed a single buyer would best preserve the jobs of the 250 people employed on the farms.
He said: "As part of the wider strategic review of all of its businesses, the Co-operative Group has decided that its farms are non-core. The sale was decided as a result of this and acting in the best long term interests of the group. A new owner will be able to provide the farms business with sustainable support to develop it for the future. Our primary focus is to sell the whole business as a going concern, which creates opportunities for our colleagues and a sustainable business for the future."
Phil Hudson of the NFU, who has been in talks with the retailer about the impact of the decision, said: "This is a really disappointing decision by the Co-op. From our perspective now it is important that we get some assurances from the retail side that they will continue with the strong links they have built up with British farming."
The Co-op shops have a commitment to sourcing 100% British milk, eggs, beef, pork and dairy.
In a similar way to central London property, farmland is now seen as a safe bet by foreign investors – while the average value of prime residential property in London has grown by 135% over the last decade, the value of prime British farmland has increased 273% to an average price of £8,500 per acre, according to Savills.