Guidance for setting up a food Producer Organisation

The aim of a Producer Organisation (PO) is to support its members and help them to secure a better position in the market, reduce costs, increase the viability of all members’ businesses and achieve a more sustainable position in the supply chain.

They are already proving a success in some sectors - livestock POs are growing in popularity in the UK and already deal with some of the multiple retailers, Waitrose for example has worked with its suppliers to set up over 30 POs.

While POs have a great many benefits some feel that these are outweighed by the bureaucratic burden and continued EU uncertainty over their future.  Having said that, they are a feasible and attractive option for businesses looking to harness their combined strength.

In order to form a PO, food businesses need to be aware of a numerous legal requirements and specialist food and drink law firm Roythornes has provided the following guidance for producers:

1. A PO must be officially recognised by the member state where the majority of the PO’s members are based, or where the majority of its produce will be for sale.
2. Recognition of a PO is based on the legislation of the member state where the PO will be based and two pieces of EU regulation: Council Regulation (EC) No 1308/2013 and Commission Regulation (EU) No 543/2011. Growers wishing to form a PO will be assessed by the Rural Payments Agency (RPA), if based in England or Wales, or the relevant administrative body if based in Scotland or Northern Ireland.
3.  A PO must have at least five individual members, all of which must be separate legal entities. Although a PO is made up of individual members it is a single enterprise operated democratically by all members which must be in equal standing.
4. A member of a PO must market all of its produce through the PO, although there are exceptions to this rule.
5. The members must also have a collective annual turnover of €1 million marketable production. There is an exception to this rule as POs specifically recognised for mushrooms or nuts must have a minimum marketable production of €250,000.
6. The PO must be democratic in structure and give all members an equal say in the PO’s management and operation irrelevant of their size, value and production.
7. A PO must create an operational fund to support its programmes and members of the PO or the PO itself must finance this.