PART OF A SOLUTION
The success of the business model at Riverford Organics poses an interesting question: “Can big be beautiful as well?”
THE FOUNDATIONS OF Riverford Organic Vegetables were laid in 1951 when my mother, a fantastic cook with a passion and talent for making the best use of produce from the farm and garden, married an innovative farmer with scant respect for convention. All decisions were made in the kitchen, and since being unconventional brought many mistakes, we all grew up with the sense of a business tottering on the edge of collapse and, perhaps, picked up some insight into how to run (and sometimes not run) a business. Half a century later all five of their offspring have used their experience of farm and kitchen to launch four food and farming businesses – based at Riverford, South Devon, UK.
I started growing organic vegetables on three acres with the aid of a wheelbarrow and a borrowed tractor in 1986 with about £4,000 of savings. Two years earlier, sick of milking cows and wanting to do my own thing, I had left the farm to try my hand as a management consultant in London and New York. Now, how does a farm boy do that, you might be thinking? A First from Oxford helped, but it was my conviction that business was really just common sense that seemed to win people over. I had been bagging up manure and selling it at the farm gate since I was eight, after all. Though the work was as intellectually challenging as anything I have done, I could not abide office life and found myself surprisingly bothered by the narrow focus of business on short-term profit.
Twenty years later I find myself once again largely office-bound, but this time it is my own office and I am able to run the business my own way. We now employ 300 staff, growing and packing vegetables for almost 40,000 vegetable boxes each week, delivered by sixty franchisees across the South of England. Sales this year will top £20 million, up from £12 million last year, with no sign of any slow-down. More important than any of that, I am pretty sure that through our innovative approach to farming and business, we are helping to make the world a better place.
I am often asked whether I knew where I was going when I started. I suspect that on some intuitive level I did, but mostly I just put my head down and got on with it with a single-minded determination. The two years away had wised me up about how markets worked and helped me get pointed in the right direction. Once the first seeds went into the ground, I was obsessive in my resolve that this was going to work. I made a lot of mistakes but fortunately none that energy and enthusiasm could not make up for. At times I wept with frustration and fatigue when things went wrong but I suspect that is an experience common to most new businesses. Had it failed I think maybe I would be buried out there somewhere with my perished vegetables.
After five years the mistakes were getting fewer as I became a more competent organic grower. The wonderful thing about being present at the start of an emerging market is that there is no-one to follow, which suited me down to the ground. I love learning through experimentation and become bored long before an idea is fine-tuned to perfection. Young markets are more forgiving of mistakes (the inevitable results of most experimentation) because margins have not yet been squeezed. We tried a lot of things and the farm is littered with old machines made from scrap metal, many of which ended up being completely unusable.
The cruellest thing of all, worse than the most virulent potato blight, was the marketplace. Working night and day to grow vegetables, only to have our legs taken off by the wholesalers and supermarkets, was soul-destroying. I was very nearly sucked into supplying supermarkets but was saved by them being so unspeakably unpleasant to deal with. In 1993 we launched our vegetable-box scheme based on one run by the box pioneers Tim and Jan Dean. Increasingly the conventional markets seemed more like barriers than routes to market, and the early success of our first, primitive home deliveries served to confirm this. Thirteen years after delivering our first box, almost all of our co-op’s vegetables are still sold through the box scheme.
Back in the mid-nineties I could see that we were not going to keep up with market demand on our own so I encouraged other local mixed farmers to convert to organic methods with the aim of growing for our market. Ten of us joined forces to create the South Devon Organic Producers’ Co-operative in 1997. Though the co-op was my baby and I attribute my grey hairs to its formation, I am far too independent by nature and lack the political acumen to run a co-op. Within two years I was voted off the board, and though the more democratic style of decision-making sometimes feels like wading in treacle, things are more comfortable now. Riverford continues to do the marketing for the co-op whenever a more responsive, market-focused and entrepreneurial approach is required.
One of the characteristics of the business is long-term relationships, combined with good communication and a constant search for ways in which the business can create genuine value. This applies to suppliers, staff, franchisees, customers and the wider community. We are always looking for a net sum gain in any new relationship or development of an old one. For staff this means looking for ways to enrich their jobs and being able to pay them more. For suppliers it means removing risk, understanding what they want from us and not seeking to externalise costs at their expense. For franchisees it means understanding their businesses and looking for ways of reducing their administrative burden, through better IT, for example. For customers it means understanding how they use our vegetables in their kitchens and how the ethical and cultural issues around food fit into their busy lives; we have to make it easy and fun for them to be able to make the right choices about food.
Maximum value, minimum cost
Virtually all human activity is detrimental to the environment, even organic farming (when compared to no farming at all). It is also very hard to run a business without upsetting someone in the community. So, my approach is one of extracting maximum value for minimum cost. I use ‘value’ and ‘cost’ in their broadest terms to include social, cultural and environmental as well as financial parameters. This approach requires intelligent and pragmatic compromise rather than purist fundamentalism. In the fields it means growing our crops within nature’s systems rather than trying to dominate them. In packaging, marketing and distribution it means trying to reduce our footprint without driving customers back to the supermarkets.
We have a staff development programme where I ask people with little or no management experience to work in groups, to agree a statement about why we do what we do. The result is remarkably consistent despite the fact that we have no official ‘Mission Statement’. Environment, food quality, telling the story behind the food are in there, but so are accessibility, affordability, enthusiasm, fun and honesty.
A holistic business
Our business model starts with trust: because people trust us they are willing to believe in us, to buy our produce and to engage with what we do. This is the heart of our business. This trust enables us to generate profit. The more we gain trust, and the harder we work to live up to the beliefs our customers have in us, the more profit we generate, simply because more people buy more from people they trust.
This profit, the growth we see in the business, enables us to invest in ‘doing the right thing’. As we stride into uncharted territory with our business model, the profits we generate through trust open up new opportunities to do the right thing. This can include education, undertaking environmental research, promoting organic farming, investing in more local farms, developing relationships with other organic growers, and creating new ways of operating a business efficiently without compromising values. It also includes forming connections with the local community, and by ‘local’ it can mean wherever we have customers, wherever we have people who trust us and want us to succeed, wherever we live as members of our own communities.
This investment in doing the right thing is heartfelt by many of the people at Riverford and we hope that this comes across to our customers. Sometimes we are surprised by the reactions of customers when we have a tough choice to make. We had to increase prices this year to offset both inflation and increases in costs to us: we had letters and emails from many people supporting the price rises as they understood we had thought long and hard about it and did not do it simply to boost margins.
So long as we never abuse this trust and so long as we keep investing in doing the right thing, the trust grows, expanding the scale of the rest of the business model in turn.
The result is a self-perpetuating and growing, virtuous circle. A circle that is the beating heart of the farm, a circle we respect and learn from every day.
It is important to note, however, that one must never forget the basics: the importance of technical and operational proficiency combined with the right service and a good price. This poses a difficult question for an expanding business that is devoted to local economies and ethical production – can big be beautiful as well?
Big can be beautiful
When it comes to growing vegetables commercially, small is very often a bad back and a damp caravan. Small organic growers do not live in Rose Cottage. The rash of patronising reality-TV programmes idolising smallholdings infuriate most people who struggle to make a living on small farms. Small, local box schemes, given favourable circumstances and highly skilled operators, can work – but it is far from easy.
At the same time, the highly centralised, supermarket model offering cosmetically perfect but tasteless, over-packaged, over-travelled, anonymous food is driving further centralisation of food production and processing. One might argue about the environmental impact, the effect on communities, the road freight generated, the questionable trading practices, and more, but what annoys me is that, for vegetables at least, supermarkets do a lousy job. They are expensive, offer poor produce, and more and more people hate buying there. There is a growing rebellion of people wanting something better.
Initially the aim of the box scheme was to provide a secure market for us and our co-operative. We have now reached our initial target of 1,000 acres of vegetables within the co-op, with 95% being sold through the box scheme. I have little doubt that we could make more money through further expansion, but I doubt if the boxes would be any better and I am sceptical about any economies of scale from here. With 250 people arriving each morning, many of whom I do not recognise, let alone know, I worry that we will become impersonal and bureaucratic.
Three years ago we decided that rather than continuing to grow from Riverford, we would use our expertise to establish a regional network of box schemes, each supplied by a group of local growers and delivering within an average radius of fifty miles. Business systems, IT and marketing systems would be shared, but critically each region would develop its own identity and be as autonomous as was consistent with making the shared systems work. Most people advised me against this de-centralised, anti-globalised brand approach, so we shall see.
The first region opened in February 2005 in Peterborough, with a group of growers in the Fens serving customers in the East Midlands. In just over a year it is making 7,000 deliveries a week and is profitable, with an enthusiastic group of suppliers. I am greatly impressed by the energy and enthusiasm that pervade this new company. They are fiercely proud of their identity and though support from Riverford is valued, we meddle at our peril. This autumn we will launch the next region in Yorkshire, followed by Hereford, Hampshire and Kent.
By adopting the franchised system of delivery and working in joint ventures with farmers, we have been able to expand without huge borrowings. I am determined that all these ventures will be owned and controlled by the stakeholders involved in making them successful. Outside stakeholders are normally interested only in short-term financial gain: their influence would erode the holistic nature of the business.
We are not perfect, but we are trying to be part of a solution to at least some of the problems society faces. As pioneers in our field we will continue to make mistakes as we work towards making things better, but on balance we seem to be getting more right than wrong. A philosophy of equitable interdependence and re-investing in the world around us does work.