Co-operative Group’s farming and pharmacy business under threat

The Co-operative Group has begun a process that will lead to the sale of its farms, according to a statement released on its website, while the future of...

The Co-operative Group has begun a process that will lead to the sale of its farms, according to a statement released on its website, while the future of the pharmacy is also to be decided.

Following the half-year losses for the Group of £550m announced last August, the BBC has reported the society’s full loss for 2013 is expected to top £2bn, and that it is this loss which has prompted these moves ahead of its annual meeting on 17 May.

As part of its strategic review, the Group has found that its farming operations are ‘non-core’ and are in the process of being sold. Future options for the pharmacy business are still being explored.

A statement from the Group 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 and has started a process that is expected to lead to a sale of the business. In addition, it is exploring options for the future of the Pharmacy business; this could include the sale in whole or part of the business.”

Last week, Co-operative Group chief executive Euan Sutherland, when launching a public survey on the future of the organisation, said: “We have been distant from customers, not understanding exactly what we should be doing. So that is part of the strategic review. And clearly a very important part of that is asking our customers to get involved and have their say.”

The farming business has been under threat for a number of years, according to former chief executive Peter Marks. He told the Treasury select committee last October that he once suggested selling off the farms businesses, which would have raised an estimated £100 million.

Mr Marks also told the committee that the Group was focusing on too many businesses: “I don’t know of any other businesses that tries to be a major bank, a major food retailer, a major funeral services provider, a pharmacy chain, a motor group chain, a legal services business, a security business, a property business — with limited capital resource how can you do that in today’s world? This crisis will be beneficial to the co-op in making it focus on what its good at.”

The Group operates 14 farms across England and Scotland, which mainly produce cereals and potatoes, but also extend to other fruit, vegetables and honey. It also has three packing houses for potatoes and strawberries.

The farms provide permanent and seasonal jobs as well as apprenticeships and a graduate management programme and are also important ecologically. On seven of the 14 farms, the Group’s Habitat Heroes project aims to preserve endangered flora and fauna, while since 2005, over 65,000 children have visited the farms through the From Farm to Fork programme.

If the sale of the farms did go through, it would mark the end of a 118-year farming legacy which began in 1896 when the first farm was bought to grow potatoes for co-operative food stores.

In pharmacy, the Group is the third largest operator in the country – and the largest in Wales – with over 770 branches. In the last financial report, prescription growth was up 4.7% by volume and 1.3% by value, despite cuts in government funding. In 2012, the business reported a profit of £28m, which was down by 4.9% on 2011, on a turnover of £764m.

The first half of 2013 saw pharmacy perform well, with sales up 0.3% to £379.3m (2012: £378.1m), and operating profit down on the prior year at £14.3m (2012: £16.1m).

Following a pilot in the previous year, the pharmacy team started to roll out our branch transformation programme, with an aim to provide an improved shopping experience. By the half year, 29 branches had been remodelled.

The Co-operative Group is expected to reveal additional details about the business sales on publication of its annual report for 2013 on 26 March.

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