BIM24705 | Meaning of trade: mutual trading and members clubs: mutual associations: specific activities: agricultural co-operatives: introduction and layout of guidance

Over the years farmers, market gardeners and fishermen have set up co-operatives. These co-operatives provide a variety of facilities to their members including:

• acting as marketing agents for members’ produce

• providing facilities for members (for example, grain storage/drying) and

• bulk-buying operations for members.

Governments have in the past encouraged this process through the Central Council for Agricultural and Horticultural Co-operation (CCAHC), later called Food from Britain.

The following guidance covers:

You should establish whether the agricultural co-operative’s constitution says that:

• only members can use the facilities and services the co-operative provides,

• the co-operative is a marketing agency,

• the co-operative sells on behalf of the growers and never owns the produce,

• members agree to market a certain amount of produce through the co-operative or provide a certain amount for processing,

• any surplus is shared out among members according to the amount of business they have done with the co-operative recently.

If a co-operative buys produce from members who grow it, then sells it to a third party, the trade is not mutual. However, if a co-operative sells the produce as an agent for the members and makes a surplus from the service, the trade is mutual as long as it passes the other tests for mutuality - see BIM24100.