Building a new economy: Covid and the finances of key co-op sectors

Snapshots from the agriculture, community energy and tech sectors

The economic impact of the Covid-19 pandemic are only just beginning to be felt and the potential consequences are alarming: it is predicted that half a billion people will be pushed into poverty and an estimated 200 million people will their jobs around the world.

With no definite end to the pandemic in sight, these impact could worsen – adding urgency to calls within the co-op movement to use its values and principles, and its resilient business model, to ‘build back better’.

But to perform this role co-ops must themselves have the money and resources. This is a challenge at the best of times and now the pandemic brings new disruption to the sector. How are co-ops faring? It is a diverse movement – straddling the globe and spanning all sectors of economic activity and the impacts of the pandemic are almost as varied.In previous editions the News has looked at the financial implications for credit unions, retail co-ops and local authorities. Here, we look at three other sectors which will play a crucial role in meeting the challenges of the 21st century: food, tech and energy.

Even within specific industries the picture is not simple. Agriculture for example covers a wide range of activities: the dairy sector, for example, has unique challenges.

For the industry as a whole the pandemic has brought dramatic changes, says Amanda Brown of the Scottish Agricultural Organisation Society (SAOS), with the closure of the hospitality industry shutting off a key market overnight.

“Premium meat cuts no longer required by higher-end venues affected carcase balance and supply into the retail supply chains,” she said in an SAOS blog. “The wider effects mean others who produce premium added-value products have seen traditional routes to market closed, with no other potential markets available short-term. 

“On top of this, much of this produce is for export markets which have slowed or closed, with foodservice outlets in international markets also in lockdown.”

There is some good news as “retail supply chains put under pressure have been resilient, reacting and adapting to demand through innovative solutions from farmers, growers, manufacturers, logistics operators and the retailers themselves”. 

But diverting business to retail cannot fully make up the loss, she warns. “There have been casualties and there will be more, as this channel accounts for just under 40% of food and drink consumed in Britain.”

And because the pandemic has created uncertainty over future consumer patterns, farmers faced a tough call when sowing this year’s crop.  

Ms Brown predicts ‘short term pain’ before markets recover – and stresses the value of the co-op model in helping farmers ride out the crisis: by pooling resources it offers “greater efficiency, productivity, profitability, managed risk, access to expert advice on innovation, data, marketing, and research and development”.

Loss of business has also affects co-ops in the tech sector – a concern as these are often young organisations operating in an industry which will play a crucial role in shaping the 21st century economy. Neto Licursi from Cambá – a worker co-op in Buenos Aires, Argentina – discussed the situation at an NCBA Clusa webinar

Principle 6 – co-operation among co-operatives – has offered a solution, he added: Cambá is a member of FACT[TIC], a federation of Argentinian tech co-ops. Many of these co-ops found themselves in a “critical situation” as their contracts dried up during the pandemic.

The solution was to form an “inter-cooperative workflow group to share projects, clients and commercial information”, with projects going to the co-op most in need of work: thanks to this collaboration all the co-ops have projects to work on, three months into the pandemic. 

“It’s not the best time in our history but we’ve saved co-ops in the federation through solidarity,” said Mr Licursi. “We leave no one behind. It’s very important for a young co-op to have work to do.”

This collaborative spirit – designed to help the co-ops ride out the financial crisis – is helping them devise new economy solutions. Cambá is developing open source software to empower users and communities, said Mr Licursi. “We need help and resources to build this free software – we don’t have the business model of big tech companies that sell your data … We need help.”

To that end Cambá is building a network of tech co-ops around the world – including CoTech in the UK, he said.

Tech is not the only key sector when it comes to ‘building back better’ after Covid-19: with the threat of climate change looming ever larger, there is more pressure to decarbonise the world’s energy networks. Community energy – with its democratic ownership model, accountability and innovative approach to renewables – is playing an important part in this process. But Emma Bridge, chief executive of Community Energy England, has warned of project delays as workers have fallen ill, self-isolated or even been stranded abroad under lockdown.

This could have cause fatal financial problems to the new renewable sites. The government is axing the Feed-in Tariff subsidy scheme for small renewable energy schemes; with 250 energy schemes delayed by the pandemic, it was likely that many would miss the deadline for the support funding. Fortunately – after lobbying from Community Energy England – the government agreed to extend the deadline.

In a blog for Community Energy Fortnight, Liam Stoker – editor of Solar Media – found the withdrawal of government support remains a more significant threat to the finances of the sector than Covid-19, and called for more imaginative thinking – for instance, changing  the rules so consumers can source electricity from different providers at different times of the day.

“The UK’s renewables sector is, thankfully, a much more mature and savvier beast than it was in 2015,” he said. “The proliferation of renewables has changed the face of the energy sector for the better, leading to a change in thinking. Embracing the concept of whole systems thinking has been pivotal and now, renewables projects across the country are realising the inherent value in not just their generation, but their flexibility too.”

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