Three major East of England procurement co-operatives have formed a new purchasing alliance, initially to buy fertiliser. But they deny the move is a prelude to a more formal merger of interests.
The AF Group, Fram Farmers and Woldmarsh Producers have formed a new collaborative procurement initiative called the Agri Procurement Alliance (APA).
APA is effectively a relaunch of the now dormant Saturn Agriculture central buying vehicle established by Fram Farmers and Woldmarsh, together with Dengie Crops, in 2000. Directors say they will incorporate lessons learnt from the Saturn venture with added initiatives, a better structure and a clearer working relationship with member companies.
L to R: Andrew Knowles, David Sheppard, Heather Claridge, Iain Gardner, Stuart McKenzie (chair), David Horton-Fawkes, Andrew Price
Each group will hold an equal proportion of the equity of APA and have two directors on its board: David Horton Fawkes and Iain Gardner, respectively CEO and chair of the AF Group; Andrew Knowles and David Sheppard – CEO and board member of Fram Farmers; and Heather Claridge and Andrew Price – CEO and chair of Woldmarsh. The APA board will be chaired by former Woldmarsh CEO Stuart McKenzie.
The partners believe the new alliance will enable them to leverage the strength and influence of their combined 6,000 members, improving margins for their members and building stronger relationships with the supply chain.
However, the three founder members of APA are clear that the new company is not the start of a merger process and will not dilute their individual independence, identity, or regional propositions.
“Each of the groups has always recognised the value and benefits of co-operating and working collaboratively with organisations that share similar values objectives and ethos,” states Mr McKenzie. “Each buying group is a unique organisation – APA is an exciting solution to strengthen the individual organisations’ operational capabilities, streamline operations and create opportunities. This diversity is part of APA’s strength.”
APA will set a strategy for the purchase of specific products, utilising the collective strength of the new alliance to build stronger relationships with the supply chain. It will initially focus exclusively on fertiliser with a collective volume upwards of 500,000 tonnes per year. APA will negotiate procurement terms, collate market intelligence and new product innovation, and share this with the three buying groups. Ms Claridge – head of fertiliser at the AF Group before moving to Woldmarsh – will lead on fertiliser buying for APA, feeding information back to the fertiliser managers in the individual co-operatives.
The new alliance intends to extend its model to other farm input categories where scale would benefit its purchasing power once it has established an effective mode of operation with fertiliser. It is also open to expanding its membership in due course.
“Profound changes are taking place in the agricultural supply sector as we adjust to a post-Brexit marketplace, and transition from an EU to a UK agricultural policy platform,” notes Mr McKenzie. “These changes bring opportunities, challenges and new priorities for farm procurement.
“It has therefore never been more important for farmers to adapt to this disruption, and work together through their co-operative buying groups. APA is a response to these challenges and the continuing consolidation of the agrisupply chain, including manufacture and distribution.
“APA will be solely focused on working with suppliers, to optimise volumes and deliver more efficient forecasting, planning and enhanced procurement. There will be no change in how the individual buying groups support and serve their members, who will continue to receive distinctive value, service and advice.
“In short, APA is about working with suppliers and the wider industry to support UK farming, and we are looking forward to bringing further value to the collective memberships,” Mr McKenzie concludes.