“Ours To Share”- The First Honey Co-operative

 

A talk by David Stott, FHC

 

Date:                          Friday 26 January 2007

Venue:                      The Church Rooms, Stow-on-the-Wold

 

David began by telling us that his talk was not a recruitment drive! For a co-operative to work, you have to be committed to the organisation. The co-operative relies on enthusiasm, participation and interaction. It has over 100 members with a core group who drive forward its’ aims.

 

Why have a co-operative? What’s the big idea?

Ø      Beekeepers need a market for honey

Ø      Some outgrow sales at the door and local shops

Ø      They cannot access the larger markets independently

 

Hence they get together and target the larger outlets. Most honey purchased in Britain is not sold from British beekeepers. Until recently Nestle, using the brand name Gales, have been the major retailer. This honey is imported from overseas. British beekeepers have been unable to:

Ø      Compete on price

Ø      Access the market

 

In England, the majority of honey (over 70%) is sold through 4 major outlets:

Ø      Tesco

Ø      Sainsbury

Ø      Morrisons

Ø      Safeway

Beekeepers had found it impossible, acting individually, to access this market.

Consequently, once a Beekeeper outgrows local and door sales, they face a huge problem.

 

Through these major retailers, a standard 1lb jar retails for c. £2.20. The “Big 4” now also sell regional specialities such as “Pure Italian Chestnut Honey” for c. £2.50 for 12 oz.

David’s honey currently sells for between £2.75-£3.90/lb SO IF a beekeeper can persuade a major supplier that the produce is a local, high quality product, then they could and should be able to find a market. The solution is to get together and co-operate to target the larger outlets.

 

Won’t I lose money?

Beekeepers traditionally fear they will lose money if they market honey co-operatively. This is not necessarily the case. It depends on individual circumstances. Door sales and the local shop may be adequate but local sales require consistent input of time and effort.

 

Beekeepers often forget to cost their time in working out the economics of honey distribution. We need to cost in sales effort and distribution at a minimum of £9/hour.

 

Selling honey isn’t cheap!

We need to calculate the cost of:

Ø      Glass / jars

Ø      Labels

Ø      Filtering, bottling, set up

Ø      Time

 

So when doing an economic analysis of your operation to assess if the honey co-operative is for you, it is essential to take all these factors into account.

 

Honey Co-operatives elsewhere

Around the world, a number of major honey marketing organisations are co-operatives. E.g.

Ø      Australia:  Capilano

Ø      USA:         Sioux Honey Association ~ markets most of the honey that comes out of the western states of the USA, Georgia and Florida. Started in the 1920s by 5 beekeepers, it now markets 20,000 tons of honey per annum.

Ø      Canada:   Beemaid ~ This co-operative also sells bee equipment at advantageous prices to beekeepers

Ø      Norway:    Honnigcentralen ~ This co-operative markets 95% of the Norwegian honey crop. It is owned by 1800 producers and has an annual turnover of 6 million euros. It has 10 salaried employees.

 

The origins of the First Honey Co-operative  

Ø      Established as a “not for profit” co-operative in 1996

Ø      Centred in North Warwickshire

Ø      Nine directors

The founder members were Jim Hopkins and Sam Greenbank. David was also involved from the start.

 

David described the strong sense of responsibility the founder members experienced as they realised they were selling other peoples’ honey.

 

The First Honey Co-operative Constitution

Ø      Devised with Coventry and Warwickshire Co-operative Development Association (CDA)

Ø      Constituted as a “Service Co-operative” ~ a co-operative that does not own the members goods. It sells honey on behalf of the members and returns the money to them

Ø      Members sign a “Membership Agreement”

Ø      No obligation on members to supply

Ø      No obligation of Co-operative to sell

Ø      No shares issued

 

The early days

There were three major initial difficulties

1.      Storage

One major outlet, Rowse Honey Ltd, have a small number of preferred suppliers from whom they like to buy in 10-tonne lots. So you have to accumulate a huge weight of honey before they will buy from you.

The Co-operative will only return an attractive price to members if it can sell honey in jars, adding value to the honey and selling it at a reasonable premium.

This requires storage space!  

 

2.      Development of their own brand

 

3.      Transport

The Co-operative needs to be able to move large and heavy containers (barrels) around the country. Today, the only honey FHC will handle in buckets is heather honey.

 

Solutions to these problems:

1.      Jack Whalley

Jack was an original member who owned a farm in North Warwickshire on part of which a cement works had been built. Some associated redundant buildings were used to store honey.

 

2.      Sponsorship

Developing a brand that a supermarket will take requires money. The FHC was loathe to go to members for money for product development so they looked for sponsorship. They received and accepted sponsorship and advice from Nestle (and indeed used a packing plant owned by nestle for a while).

They developed a brand called “Beekeeper Honey” which was offered by Nestle to Tesco who brought it. Eventually, Nestle sold their ambient food arm to Premier Foods and the arrangement broke down.

 

3.      Hard work!

 

Milestones in FHC development

Ø      Acceptance of own brand product by Tesco

Ø      Product development grant from Ministry of Agriculture, Fisheries & Food (MAFF)-£15,000 to develop own product. “Mixed Floral Honey”, “Heather Honey” and “Star Flower Honey” sold to wholefood wholesalers. In addition, FHC attended the Food Expo at the National Exhibition Centre in 2002.

Ø      Supply agreement with English Heritage since 2004

Ø      Supply agreement with National Trust


The Co-operative sells tons of jarred honey per annum to the latter two organisations. Both wanted to use their own labels on the honey.

 


How it works

Bees collect honey


 

 


Barrels supplied by FHC ~ Hold 300 kilos / Quarter of a ton. They are steel food grade barrels lined with lacquer. Steam washed, they cost £20 new   so FHC uses 2nd hand ones.


 

 


Members harvest honey into barrels ~ The barrel is best moved by putting on a pallet.


 

 


Sample & “Supply Form” to FHC ~ 5mls of honey is sampled from the top of every barrel and sent off. The barrel is sealed with a rubber bung. The barrel is sampled again once it is delivered to the storage facility. The member fills in a “Supply Form”. Check for Taste, Odour and Water Content.


 

 


Tested honey collection ~ Publish a number of collection dates. The collection company (currently Pettifers of Coventry) has a list of all members and goes round to collect.


 

 


Honey packing & storage


 

 



Sale to customer ~  FHC sells as much honey as it can in jars. These are packed to order.

 

 


Invoicing

 


 

 

 


Payment to member ~ One of the biggest challenges for the Co-operative is cash flow. The organisation doesn’t have a lot of capital so people who supply honey to the co-operative have to wait until the honey is sold on. The crop starts to arrive with FHC in August and this continues until February. The Directors make a decision about how much FHC is able to sell in jars then release the rest in barrels to the major purchasers such as Rowse.

Until all the sales monies are  worked out, beekeepers are given a “base price” of currently c.£1.15-£1.25 / lb then, at the end of the year, this is topped up with a second “bonus payment”.

In the last couple of years, members have received  c.£1.35-1.40/lb for honey delivered to the co-operative in barrels.

 

Support for members   

Local Groups

Ø      Work together to supply honey

Ø      Often provide a pick-up point

Ø      Often collaborate in other aspects of beekeeping

 

Central structure

Ø      Identified officers for barrel supply, testing, sales, invoicing, payments to members

Ø      Nine Directors

 

Governance

Ø      Formally constituted as a limited company

Ø      AGM open to all members

Ø      Directorship for 3-year period

Ø      No honoraria or other payments

Ø      Professional book-keeper

 

Some costings

Ø      1lb honey jar with lid @ £28/gross = 19.5p each

Ø      Labels

-         Make your own for free

-         Thornes approx. 2p each

-         Bespoke approx. 3p each

Ø      Transport to shop (fuel) @ 2p per jar (based on 50 jars & 5 miles distance)

Ø      Time? Bottling, labelling & delivery @ 2 min per jar = 30p/jar (@£9/hr)

SO Total Cost = 54p per jar!

 

 

 

Do the sums

Ø      Price to shop       £2.00

Ø      Cost of sales       £0.54p

Ø      Price to beekeeper = £1.46/lb

………and then there’s travel to buy jars, storage space, space for bottling, drips & spills, storing jars of honey, taking & recording orders, ensuring continuity of supply etc.

 

So this £1.46/lb isn’t much more than the co-operative can pay!

 

Advantages to beekeepers

Ø      Sale of large quantity of honey for little effort

Ø      Possibilities for joint working & networking

Ø      Opportunity to influence UK honey market

Ø      Potential for joint purchase schemes

Ø      The only thing that FHC buys & sells to members is Apistan varroa treatment from Vita

 

Drawbacks

Ø      Slow payments

Ø      Honey looses local provenance ~ This puts a lot of people off the idea of joining. FHCdoes not have the current organisational capability  to regionalise honey

Ø      Some organisation required

 

Our Branch Chair Martin Edwards thanked David for a really inspiring and for some, undoubtedly opportunistic talk.