A governance code to help agricultural co-operatives improve their effectiveness has been published by Co-operatives UK and the Scottish Agricultural Organisation Society (SAOS). The code aims to set a standard that all agricultural co-operatives can aspire to.
With agriculture being the second largest sector of the co-operative economy, good governance is essential for agricultural co-operatives, according to James Graham, chief executive of the SAOS. He said: “Effective governance is the number one critical factor for a successful and sustainable farmers’ co-op. Members have a right and expectation to the same professionalism in governance of their co-op for any other type of business, and the code sets how to achieve that.”
The code draws on Co-operatives UK’s Corporate Governance Code for Consumer Co-operative Societies, and takes into account the unique nature of agricultural co-operatives.
It is structured on three levels, including references to high-level principles, supporting principles and provisions. It touches upon the size and independence of boards as well as the role of board directors and the board chair. It also provides guidelines on how to monitor member participation policies.
The code will be sent out to agricultural co-operatives in the coming months, and the SAOS will engage in discussions with co-op boards about its content and rationale.
Agricultural co-ops will be invited to commit to the code and will be given one year to develop their governance practices in line with it. Although not compulsory, compliance with the code will provide assurance to existing and prospective members, directors and managers that the co-operative is well-governed in line with others.
Recognising that different co-operatives can choose to apply to provisions of the code in different ways, the SAOS underlines that smaller agricultural co-operatives may feel that it is not appropriate or necessary to comply with all of its provisions.
However, SAOS suggests that the high-level and supporting principles are universal and they should be reflected in governance practices. “The code is voluntary, and we ask that where a co-op does something different, they explain why, so there is transparency. We don’t anticipate that every co-op will comply with every provision in the code, and that adoption will differ according to the size of co-op, so we will recognise circumstances and arrangements in any compliance assessment,” added Mr Graham.