Innovation through collaboration between co-operative businesses and universities in Scotland

Description of impact

The United Nations 2012 International Year of Co-operatives recognised the impact that co-operative enterprise has on three billion people across the globe. Co-operatives contribute to national and local economies and are underpinned by internationally agreed values and principles. The University of Aberdeen was the first Scottish university to develop a Knowledge Transfer Partnership with a co-operative to promote understanding of co-operative enterprise in higher education. Two further KTPs link the university with the Scottish Agricultural Organisation Society Ltd and Aberdeen and Northern Marts. Co‐operative businesses now collaborate with academics across Scotland to lead innovation for economic growth.

Project summary and aims

Our original aim for the first part of the KTP with SAOS Ltd was to answer the research question ‘Could farmers make better use of money by managing it amongst themselves rather than rely on external intermediaries (i.e. corporate banks)?’ The rationale derived from anecdotal reports of farmers’ dissatisfaction with restricted access to credit owing to banks’ lending policies and practices. There seemed to be an opportunity for SAOS to address those concerns through the formation of a financial intermediary through which the farming community could take responsibility for meeting some of its financial needs, retaining ownership and governance, and operating on a mutual self-help basis. A credit union was initially the preferred option, although other potential forms of intermediary were not ruled out. The research and evaluation of alternative financial intermediary structures found that UK credit union regulations are too restrictive to serve the business needs of farmers. This is because the regulations are designed primarily for individual members making regular savings and occasionally borrowing. Participation by businesses is strictly limited. The research listed three main disadvantages: common bond restricts access; corporate members are restricted to 10% of total membership; and there are limits on the amounts that can be loaned and deposited. Investigation of other forms of financial intermediary such as peer-to-peer lending, crowdfunding, and community development finance institutions also found levels of risk and regulatory challenges that discouraged application to the farming industry. This was the conclusion of the first part of the KTP project in 2014.
The context by the autumn 2015 with respect to banking services for farm businesses had evolved and showed some improvement for farmers. From 2016 new goals were set to develop a methodology in order to provide agricultural co-ops with a template for measuring the value of membership of the co-operative, then to test the methodology through work with member businesses, and to produce a publication. These goals match SAOS’s 2025 vision to be market led, delivering more value for members; farmer focussed as responsible contributors and partners in rural communities, and innovative and technology leading using knowledge services to give members an edge and utilise research advances.The survey and the focus groups found evidence that some farmers were receptive to information about alternative finance. The Principal Investigator produced a report on the subject of co-operative and alternative finance for agricultural/food communities in Europe. A further report examined solidarity finance. There was a meeting with the Scottish Government’s Directorate for Economic Development that was interested in the work of the Partnership. SAOS and the University of Aberdeen each made a submission to the Scottish Parliament’s Economy, Energy and Tourism committee that heard evidence on encouraging innovation in Scotland via social enterprises and employee-owned businesses including co-operatives.
The Scotland Financial Capability Strategy identifies knowledge acquisition among priorities for the next ten years, specifically calling for:- a step change in the number of people regularly using a planned approach to managing income and expenditure- preparing young people to meet financial challenges in their life- supporting people to develop their knowledge (including digital) enabling them to access the best financial products and services.
NFU Scotland has begun facilitating advice for its members in recognition that the family farm represents both farmers’ pension and long-term investment. For these reasons special care is needed when making plans for succession. On Friday 30 October 2015 NFU Scotland along with NFU Mutual and Gillespie MacAndrew held a seminar at the Rural Centre, Ingliston to cover these topics as well as others to do with financial planning and current legislation.
On 24 February 2015 and 23 February 2016 there were presentations on CETS, SAOS, and CDS in a two‐hour seminar for students in the final year of the MA programme at the University of Aberdeen. In this way Associates are involved with company staff and academics in bringing the global dimensions of the co‐operative movement, represented by the International Co‐operative Alliance, to the attention of yearly cohorts of one hundred graduating students. The joint seminar corresponds with the goals of SAOS in its Next Generation project; with the goals of CDS to increase the numbers of co‐operative businesses and consortia in Scotland; and with the goals of CETS to embed co‐operative enterprise learning at all levels in the Scottish education sector. 
Although the two KTPs were designed for distinct purposes, the businesses and stakeholders that have invested in these projects share an overarching aim of growing the co‐operative sector in Scotland. It remains a challenge to overcome widespread misunderstanding and misinformation of alternative enterprise models in UK society. Education about co‐ operatives and employee ownership is therefore a fundamental priority so that children and young adults regularly encounter these alternative ways of running a business in the curricula of Scotland’s schools, colleges and universities.A report issued by the Growing Value Scotland Taskforce observes: ‘The level of innovation co-operation between businesses and universities in Scotland is much lower than for the rest of the UK, as is the absorptive capacity of business for research knowledge.’ See National Centre for Universities and Business, Capability, Culture and Change: Growing the Value of R&D in Scotland (London, 2015). As the GVS Taskforce Chairs point out in their foreword to the report, raising the level of innovation co‐ operation in Scotland relies for a large part on ‘a strong university system which produces highly skilled graduates, and undertakes research with an impact on industry and society.’

Who is affected by, or benefits from, the research?

1. Company partner SAOS Ltd received Scottish Government grant support in 2016-17 to extend the KTP work on measuring member value.
From the SAOS Ltd summer update 2016 published online:
Cabinet Secretary for Rural Economy and Connectivity, Fergus Ewing, commented: ‘The Vision for Agriculture highlights the importance
 of the agricultural sector, enhancing performance and continuing to support communities, the environment and the wider economy in Scotland. Farmer co-operatives are well placed to take advantage of economies of scale, share best practice and accelerate the uptake of new technologies. Co-ops can also deliver valuable productivity and resource efficiency gains as well as increase resilience to challenges such as market volatility and climate change. It is with great pleasure that I am able to confirm Scottish Government funding support for SAOS to deliver three projects, aiming to promote precision farming, measure value of farming co-ops and record carbon gains from collaboration.’

2. Company partner CETS went on to develop a MOOC with University of Edinburgh and University of St Andrews launched in 2016. http://www.open.edu/openlearncreate/mod/page/view.php?id=130969

Impact status	Impact Completed (Open)
Impact date	2009 → 2025
Category of impact	Economic and/or Commercial, Policy, Societal
Stage of Impact	Benefit