An obstacle to the growth of co-operatives within the agriculture sector is the Office of Fair Trading, according to the Prince of Wales.
Within 27 pieces of private correspondence between Prince Charles and ministers, the heir to throne called on the government to help level the playing field to allow co-operatives the room to grow.
In a letter to prime minister Tony Blair on 8 September 2004, the prince said there are “increasing problems” at that time facing the dairy sector, and “one major problem” appears to be the OFT.
He told the prime minister: “As you know, the dairy sector is going through a major rationalisation and many existing farmer-owned co-operatives are expanding as farmers increasingly understand that by working together they have more power to deal with processors and retailers.
“Unfortunately, I am told that the Office of Fair Trading is becoming a serious obstacle to developing dairy co-operatives of the necessary size and influence. As I understand it, it sees the United Kingdom as ring-fenced with the Channel acting as a barrier to imports, which is, of course, ridiculous.”
He added that the OFT will oppose any company that looks to exceed a more that 25% market share, whereas in Europe “particularly Denmark and Germany, where co-operatives are more established, competition law is being interpreted entirely differently and there is one co-operative in Denmark that has a 90% market share!”
Prince Charles added: “This may be somewhat excessive, but unless United Kingdom co-operatives can grow sufficiently the processors and retailers will continue to have the farmers in an arm lock and we will continue to shoot ourselves in the foot! You did kindly say that you would look at this and see if there was anything which could be done to help the OFT to take a wider view.”
In response, Tony Blair told the prince: “I hear different stories about the OFT attitude and part of the perception that they are a problem may well stem from the period in the immediate aftermath of Milk Marque. Of course, as you recognise, they are rightly an independent body and I couldn’t influence them even if I wanted to.”
But he added the OFT had proposed a ‘question and answer’ session to talk to co-operatives “on a without prejudice basis”.
James Graham, chief executive of the Scottish Agricultural Organisation Society, which focuses on farmer co-ops and collaboration, said of the letters: “The exchange between the Prince of Wales and Tony Blair is more than 10 years ago. The world has moved on and the OFT issues of that time have been resolved.
In the same letter, the prince also talked about the need for the government to support farmers to allow them to seize new opportunities through co-operation and pooling resources, such as marketing. He requested for farmers to be supported through the Agricultural Development Scheme to give grants to group of farmers for their marketing needs.
In February 2005, Prince Charles reiterated the need for family farmers to be given the knowledge and support so they can work together to be able to market more effectively and to “make the most in business terms”.
Tony Blair responded to the prince a month later, where he wrote: “I have long believed that farmers need to co-operate more, in order to equalise the negotiating power up the food chain and to minimise costs.”