In the final episode of our 5-part series, Wales Coordinator Katie Hastings guides us through two vital parts of setting up a cooperatively-run seed enterprise – the finances and the structure. See the bottom of this article to links to previous episodes!

Photo by Wales Seed Hub

 

Finances 

 

The WSH is set up primarily for growers to sell their seed direct to customers (as a cooperative), so our aim is to pass most of the money from selling the seed straight back to the grower. Currently our agreement is for growers to receive 80% of the packet price from every sale. 

WSH hold a central kitty to pay for costs such as seed packet printing, website fees, card transaction costs, packaging and registration costs. 20% of the cost of each seed packet goes into the central kitty to cover these things. WSH does not aim to make a profit or accrue any cash reserves, simply cover costs and enable growers to make the best financial return on their seeds.  

It’s important to point out at this point that we have no idea if this allocation of 80% to grower and 20% to the WSH will work out long term! Because we had no precedent to follow, we were forced to make an educated guess as to our costs and let it play out. As we increase in size, our central costs could significantly grow. For now, 20% of seed packet sales seem to comfortably cover the costs we are incurring as a group. 

 

Photo by Wales Seed Hub

 

Because our members all participate in the administration, running and promotion of WSH, we can keep the central running costs low. Our members do the work so we don’t have to employ staff. Although the WSH has been generously supported by the paid time of a Seed Sovereignty Programme Coordinator to help set up systems and establish the enterprise, this support will eventually be withdrawn so the WSH will function as a self-sufficient entity. 

Because WSH is not a legally registered cooperative, we cannot currently open a group bank account. This has meant that one of our members has used their farm bank account to ‘host’ our finances, taking payments from our shop into their account and paying growers for their seed out of this account. The financial records are kept transparent by our Treasurer, with members able to see the books. Financial decisions, such as how many seed packets to order, are made collectively. 

In the long term it will become prudent to hold the finances in a group business account, with multiple members having access. There will be an income threshold which will signify the tipping point at which we feel our finances will be safer held in a legally collective account. We have not reached this tipping point yet.  

 

Tips: 

  • Estimate costs collectively 
  • Ensure growers are paid the best price for their seeds 
  • Be ready to adjust the percentage of sales kept by the hub as your situation changes 
  • Keep financial records transparent 
  • Find someone to hold the finances as you are starting out 
  • Ensure the long-term safety of collective funds by looking at setting up a group bank account with multiple signatories 

 

Photo by Wales Seed Hub

 

 

 Structure

 

As a fledging enterprise, we opted for a very simple starter structure. WSH is a self-employed partnership, with each member being responsible for declaring their own income from WSH and including this in their own personal tax returns. This structure means that the WSH does not exist legally separate to its members. WSH is simply a partnership between multiple farmers and an agreed structure for how they work together. 

A self-employed partnership works well for a small enterprise, keeping the legal responsibilities and administration decentralised. It has become clear as our activities unfold that a self-employed partnership has its limitations, most notably in the fact that the WSH cannot open its own bank account or protect individual members from any financial liabilities that the group may induce.  

 

Photo by Wales Seed Hub

 

As the WSH matures, it will be sensible to look at creating a legal entity which can act as a protective barrier between the members and WSH activities. This structure could take the form of a community benefit society, a company limited by guarantee or a community interest company. These structures will require further administration, record keeping and reporting. They will also bring further security, limited liability and public transparency.  

For us, the most important thing in birthing the WSH has been to have a clearly defined agreement on how we work together under the WSH banner. Although not legally binding, our WSH Agreement sets out how people can join, what behaviour is expected of them and the process for asking them to leave (should the need arise). This agreement has laid the foundations for good working practices and clear understanding of responsibilities. 

 

Tips:

  • Obtain some advice on the legal structure best for you 
  • Make clear agreements on who should be declaring income and paying tax 
  • Make clear agreements on who holds personal responsibility for group activities 
  • As you grow bigger, think about forming a legal entity 
  • Make clear agreements on how people join and leave the hub 
  • Make clear agreements on the way you work together as a foundation of good communication 

 

More information on legal structures can be found at Coops UK: https://www.uk.coop/start-new-co-op/start/choosing-your-legal-form 

 

Photos by Wales Seed Hub

 

This article is part of a full guide based off lessons learned from the Wales Seed Hub. For the previous instalments, click here. The complete guide will be available in our Resources section, and will be updated regularly as the knowledge and experience of the Hub grows. This is just one example of setting up a seed cooperative, but we hope that by detailing the journey of the Wales Seed Hub we can help other groups looking to follow a similar path in the future. You can learn more about the Wales Seed Hub here and support them by buying their seeds here.’