Livestock co-operative given lifeline after council U-turn
By JOHN ROBERTSON
The troubled livestock marketing co-op has been thrown a financial lifeline after councillors performed a U-turn yesterday, risking a breach of EU state aid rules to pump in £20,000 to keep it trading for two months.
Another £10,000 grant will pay half the cost of drawing up a rescue plan for Shetland Livestock Marketing Group (SLMG) but its members will have to stump up the rest.
The frantic bid to save the co-op followed fresh advice from the government and SIC lawyers which was enough to sway councillors, many of whom had used state aid fears last week to justify withholding emergency support to the organisation amid inflammatory allegations about its abilities and motives.
A special meeting of the development committee was called yesterday to rescind last Wednesday’s decision, which had been to defer aid of up to £100,000 until the co-op provided its new business plan. This time nobody voted against providing £20,000 now and there were calls for crofters and farmers to try to unite and bury their bitterness and in-fighting.
There has also been a call for all the crofters and farmers who use the Shetland Marts and the Laxfirth Abattoir to sign up to the co-op and pay their dues instead of grandstanding and enjoying the benefits. Councillor Robert Henderson said it would cure the group’s cashflow problems overnight. Expect two of the first new recruits to be councillors Alastair Cooper and Laura Baisley.
Although never a money-spinner, SLMG has almost been sunk by £48,000 of bad debt due to a shipment of lamb to Faroe last year not being paid for and unpaid invoices to a butcher who closed recently. The crisis is far from over and the council will need to be convinced by SLMG’s new business plan at the end of April if it is to offer cash for a longer-term rescue plan. SLMG will also have to raise the matching £10,000 for the business plan exercise from its members – roughly £50 each although small-time crofters might pay a lot less than heavy users.
Councillor Cecil Smith reminded members that co-op chairman Ronnie Eunson said recently he would not ask them for money because he had no confidence that the SIC would back any subsequent plan to help agriculture because of poor support for the industry. He was not available to comment yesterday before we went to press. However, several councillors said co-op members had expressed their willingness to dip their hands in their pockets for the cause.
Development committee chairman Josie Simpson said it was up to the group to sort it out because if it could not find £10,000 it would lose £30,000.
Yesterday’s debate on SLMG was entirely different to the first of two about the group last week with none of the vitriol and finger-pointing. The main attack had come from councillor Allison Duncan but he was stuck in Inverness yesterday and unable to attend.
On his return he faces complaints to the SIC from constituents regarding his comments last week when he described SLMG as a “Mickey Mouse outfit”. “They are out for themselves and don’t give a damn for the benefit of Shetland agriculture,” he went on to say.
In a letter to SIC convener Sandy Cluness, SLMG member David Nicolson from Cunningsburgh called for a public apology by Mr Duncan, saying his comments were “unwarranted and offensive” to group members and those who represent them. He also considered them harmful to the perception of the Shetland agricultural industry. There has also been a letter signed by 60 of his agricultural constituents in Shetland south who support SLMG.
Instead, with the development committee eventually being unanimous in offering £30,000, members’ venom was aimed at Shetland MSP Tavish Scott.
Last Thursday after The Shetland Times had gone to press he came across as the hero of the hour, having intervened to sort out the worries over state aid by knocking a few heads together among Scottish government officials. He was withering in his attack on the dithering and excuse-making of the councillors. But that was not how Mr Simpson and others on the inside saw it after emerging from their own intensive talks with government officials last Thursday afternoon with what they believed was a green light.
Mr Simpson was forthright in his attack on Mr Scott at the end of last week and used language he said he should not have used because of his anger towards the MSP. Again yesterday he said he was “very, very annoyed” with Mr Scott.
Mr Cooper went further, saying the MSP “should be man enough” to publicly recognise it was the work of the SIC which clarified the situation. Councillor Allan Wishart said he was glad it had been cleared up that it was not Mr Scott who had been the “white knight in shining armour” and that it had been the council and its officials who had done the work.
It is no secret that the council fears another state aid complaint from Magnie Geordie Smith who runs the other abattoir at Boddam and has filed one against a previous council-backed abattoir proposal for the Staney Hill. Councillor Andrew Hughson, who has state aid concerns, said yesterday he hoped Mr Smith would not come back to haunt the council over its grant.
The basis for complaint could be that SLMG were in trouble before 1st July last year. It seems any commercial problems since then can be blamed on the global slump and governments and local authorities are allowed to provide much more financial help.
But Mr Simpson said there would never be a clear yes or no relating to state aid and the advice the council had now was “as good as it gets”. “We have a basis to take this forward on and we didn’t have that last time.”
Yesterday’s debate was held in public after the intervention of the convener who said it was “somewhat too late” to try to go into private when all the details of the affair were already in wide circulation. Officials and a minority of councillors were not convinced.
Rick Nickerson was first to speak, backing the £20,000 grant as appropriate in order to provide “a window of opportunity” to the group to change because the current model was not working. He said he had not backed the £100,000 bail-out last week because he lacked the required financial information.
He also admitted he had endured a lot of criticism from constituents for attending a meeting of what Mr Duncan referred to last week as his “members” who are opposed to SLMG. Mr Nickerson made no apology for having gone there to inform himself about part of the agricultural sector in Dunrossness.
He said the risk of trouble over state aid rules would lie with the members of SLMG who would have to pay it back. Gary Robinson, another who attacked SLMG last week, this time seconded the motion of support for funding.
Betty Fullerton, another who opposed full grant aid last week, wanted the grant switched to a loan instead, which might be paid back if – and it is a giant if – the co-op starts making money. She dropped the idea after hearing that a grant would be regarded by accountants as an asset but a loan is an extra liability. She won support for another of her ideas: that the council draw up a new policy to provide aid to Shetland companies which will be in trouble due to the credit crunch. She said SLMG was only be the first of many and she wanted to see fair treatment for others with problems in order to prevent many small companies going to the wall.
The £20,000 grant will only be released in weekly instalments to the co-op as and when it is needed and justified up to the end of April. If its fortunes improve the tap will be turned off.
In the debate councillor Gussie Angus said he was as confused as ever about where the SIC was going in its support for the agriculture industry and he hoped that out of the ashes of this mess came a proper policy on agriculture.
Mr Cluness said the council had rescued failing businesses for the last 30 years. Nobody understood what he called “the demon of state aid” and the cases relating to it were stacked up in Brussels, including the one involving 80 Shetland fishermen who may have to pay back grants with “draconian” interest on top. He contrasted that with what was happening nationally in the financial crisis with £15bn of taxpayers’ money being used this week by Northern Rock alone. He said he hoped one consequence of the global crisis would be that some of the “absolutely ridiculous” EU rules were kicked into touch. He said the institution was supposed to be about helping peripheral areas.
But the convener well knew that state aid rules were not the only reason some councillors would not support SLMG last week. He said he was sure councillor Duncan regretted some of his comments now. He said town members like himself and Mr Angus could not really understand the deep emotions in the crofting community but the Royal Society had said in Lerwick this week that the Scottish government should be investing far more money in rural infrastructure such as abattoirs.
Laura Baisley agreed there were very strong feelings in the community and these included beef farmers vs sheep farmers, arable producers vs livestock producers, strong personalities in opposition and some people who just did not like some other people. She summed up: “SLMG – not perfect but the best we have.”
If the level of controversy surrounding the issue can be measured in the volume of phone calls to councillors then SLMG is indeed one hot tattie. Mr Henderson said he had received more calls about it than on all the rest of council business put together.
Commenting later, Mr Scott strongly welcomed the council decision. He said: “Josie Simpson, who I have spoken to this afternoon, and his colleagues have made the right call for Shetland agriculture. I am pleased to have played a significant part with the council in getting the government to change their mind on the application of state aid rules and therefore enable this investment to take place.”
