Despair for livestock co-op as council asks for another plan

The chairman of Shetland’s agricultural co-operative was left apoplectic yesterday when he learned that the head of economic development is recommending to councillors that the group come forward with a “sustainable” business plan which complies with state aid rules.

Ronnie Eunson was furious after being told that a special meeting of the council’s devel­opment will consider the request from Neil Grant days after the Shetland Livestock and Mar­keting Group (SLMG) published its business review which asks for more than £1 million of funding in attempt to revitalise local agriculture. 

Mr Eunson, who had not seen a copy of Mr Grant’s report to go before the development committee on Monday when he spoke to The Shetland Times, said: “We have just spent £10,000 on something that is sustainable. I don’t know why they think we’d come up with something that isn’t sustainable. [The report] is wholly state aid compliant and I don’t know why the SIC continue to have this problem.

As we went to press Mr Eunson was considering making a formal complaint to the council about the handling of the whole situation.

Mr Eunson is also understood to be upset by the fact that the same report from Mr Grant recommends that councillors should agree to sell off the slaughterhouse at Boddam to Pure Shetland Lamb Ltd. for £50,000 and approve a grant of £450,000 towards the cost of upgrading.

The SLMG review, undertaken by AB Associates, asks for funding from money already earmarked for agricultural purposes to encourage business development and save the co-operative, which ran into difficulty last year after accumulating debts of around £50,000.

After initially refusing to help the group by snubbing a plea for investment of £25,000 in February, the council did a U-turn and at that month’s development committee meeting invested £20,000 in the group and a further £10,000 towards the development of the report, which is being hailed by the co-operative as “providing a solution to bring Shetland agriculture into the 21st century”.

Among the suggestions in the 71-page SLMG report: essential upgrades and improvements at the marts building, including improvements to animal handling areas and pens, and upgrading the Laxfirth abattoir or creating a new one at Staneyhill. In his report Mr Grant states that the group should not expect a new abattoir.

The SLMG review also proposes setting up a separate arm with its own manager to look after sales and, most importantly, the creation of an umbrella organization to oversee agricultural development.

Mr Eunson said: “Shetland agriculture is very costly in terms of its production, its transport and its inputs. Folk must be able to sell their produce to their best advantage, whether as livestock or meat. Co-operation among members of the industry is essential if these facilities are to have a future. If there’s no co-operative service provision then only a very few individuals will profit from its absence.

SLMG has received financial support from 270 members – roughly all of its members – in the past two months and is convinced of the need for council investment. After a series of public meetings held earlier this year, at which a questionnaire on the future of the group was put out, the overall consensus of those consulted was that “a mart and abattoir facilities [are] essential to the survival of the industry in Shetland”.

“This is not a commitment made by a few producers. This is the determination of the many and this cannot be ignored,” said Mr Eunson.

“The results of a questionnaire carried out at a series of public meetings reveal that an overwhelming majority were of a mind to develop service provision. With this mandate SLMG intend convincing the SIC through their business plan to invest their already earmarked sums in the provision of and development of infrastructure.”

Andrew Blackadder of AB Associates said: “The council has provided short term support amounting to £20,000 over the last few months which has enabled the business to continue to trade. If the business continues to work at reducing costs, increasing its margins, and increasing income/throughput, then it has a chance of breaking even overall after three years.

“However it is not likely to be sustainable unless there is some capital investment to upgrade facilities and introduce more efficiencies, increase income, and reduce risks.

“It is important to avoid the mistake made in 2003 when SLMG was set up but was under capitalised.”

Mr Eunson continued: “We are only interested in moving ahead by learning from the past. We have worked long hours with very little resources to develop this solution along with AB Associates. SLMG believe that an appropriate service mechanism must be established, which encourages the industry to take advantage of every opportunity.”