Scottish farmers are being asked their views on the formation of their own tailor-made credit union.
The aim is to exploit a concept now widely used in communities across the world to help Scotland’s farming community to take advantage of new opportunities in the growing food and drink sector.
£183.6K has been awarded by the UK’s Technology Strategy Board and the Scottish Funding Council to explore the views of the farming community and the feasibility of setting up such a scheme.
The funding has gone to a Knowledge Transfer Partnership (KTP) between the University of Aberdeen and the Scottish Agricultural Organisation Society Limited (SAOS). SAOS is Scotland’s expert organisation on farmer co-ops and food industry collaboration, providing a range of specialist information, development and consultancy services.
The aim of the 30-month project is “to embed a capability enabling SAOS to establish new financial intermediaries for UK agricultural/food communities providing direct access to affordable, ethical financial products”. SAOS will work with a dedicated KTP Associate, Ms Preety Karal, based in its office at Ingliston, and with academic support from] the University.
The Scottish Government made clear in its May 2013 strategy document Sustainable Responsible Banking its belief that Scottish credit unions have the potential to become an even greater force in offering an alternative to mainstream banks, helping to promote diversity in the Scottish banking market.
SAOS believes that a new farmer member credit union would retain more benefit within the Scottish economy and spread those benefits more widely across Scotland’s citizens.
James Graham, Chief Executive of SAOS explains the project, saying: “There is demand for SAOS to respond to the economic pressures on Scotland's 28,000+ farmers and their families caused by the challenges of securing investment through the banks and access to financial services, particularly for the younger generation of farmers.
“Globally, credit unions have a proven track record of helping communities become more equitable and sustainable. This would be a mechanism through which farming families and rural businesses can deposit savings or short term cash at reasonable interest rate, enabling others in the farming industry to borrow money on affordable terms for their own business plans.
“Securing adequate resources to take this forward was essential. Having a full-time KTP Associate and the academic experience and rigour of the University of Aberdeen sets us up perfectly to take on the challenges and ambition of this project.”
As a first step SAOS has taken advantage of events in the agricultural calendar to seek the views of farmers on the feasibility of setting up the credit union. Feedback was resoundingly positive. The aim is to conclude the survey by the end of the summer, analyse results in the autumn and then proceed to the next stage of the project.