Riverford Organic - Case Study

Contents
Riverford Organic - Case Study......................................................1 Contents........................................................................................1 What does it mean to be an ethical organisation?......................1 No hippies here...........................................................................1 Why organic?..............................................................................2 The wider agenda.......................................................................4 Down on the farm.......................................................................6 We want to use our business to make the world a better place. 8

What does it mean to be an ethical organisation?
Arguably an ethical business is one which operates fairly and decently in its dealings with suppliers, customers and workers, obeys the law and pays its taxes. However, the meaning of ‘ethical’ as commonly used by the media seems to have become equated with ‘green’ in the environmental sense. Clearly, all organisations, both public and private sector, can be challenged to run at lower levels of energy use etc., and many now include such objectives in their strategic plans. But is it possible to go even further, and seek to develop products and services which can actively reduce the environmental impact of modern life? And if so, how can an organisation be sure that what it is doing really achieves that aim? One organisation that seems to be attempting just this is Riverford Organic, a vegetable box delivery scheme based in the south-west of England.

No hippies here
For some decades the organic movement had a rather hippie, ‘muck and magic’ image which viewed organic production and consumption as an act of faith rather than a business proposition. However, a variety of food scares in the 1980’s and 1990’s, together with longer standing concerns about the health and environmental impact of chemicals used in food production,

local and focused around a single grower. Riverford has been able to become a very large player in business terms. whilst not . like most others. Five regional farms. and this often made relationships with suppliers combative and lopsided. used loads of chemicals in the growing process. whilst true to the values of organic farming and environmentally sustainable operating systems. with sales reaching £33 million. each supporting a co-operative or grower group of local farms. In 1992 Watson’s vegetable box delivery scheme was typically small-scale. This insight has meant that. Experience of the power of supermarket buyers and a desire to escape their stranglehold on vegetable distribution and sales was one of the reasons Riverford came about. it took Guy’s wider business expertise. was to see the market for organic produce as similar in nature to the emerging markets he had been involved with as a management consultant. to create the network of farms and the distribution system which forms the basis of the organisation today. His insight. As a teenager I got ill after getting careless while spraying chemicals on the sweetcorn. now form the network of regional producers that operate under the Riverford banner. However. which seems to have helped formulate the Riverford strategy. In 2008 the company made on average 47. partly gained during a brief consultancy career in the mid 1980’s.gradually brought organic farming into the mainstream.000 deliveries a week in England and Wales. it. serving about 200 customers in the south Devon area. The business has even managed to sustain its sales volumes despite two very bad growing seasons (2007-2008) and the possibility that customers would cut back on organic food purchases during the recession. The business was created by Guy Watson. and the boxes are delivered by 110 local franchisees. who do the rounds which put the vegetable boxes on customer’s doorsteps. “When I was growing up on our family farm. This might have provided a better outlook for organic growers. but the major food retailers remained both powerful and strongly focused on price and consistency. who grew up on his father’s farm in Devon. and by the turn of the century most major supermarkets included at least some organic produce in the fruit and vegetable section. Why organic? Watson often explains his decision to produce organic vegetables in personal terms.

This approach became the business model for the emerging Riverford brand. The move proved particularly significant after Univeg. this keeps the scheme sufficiently interesting to customers to ensure their loyalty through the less abundant times of the year. . Each week customers can choose from a range of box sizes. By then.wearing protection. and they share the original’s expertise. Since one of the tenets of organic farming is to focus on local produce. research findings and marketing tools. went bankrupt in 2004. Hampshire and Cheshire were added to the Riverford sisterhood. The aim is to build long term relationships with customers that will sustain organic consumption. and the door to door delivery scheme helped reduce the farm’s dependence on major supermarkets for its sales and distribution. My brother got paraquat poisoning. inspired by his experience of dealing with supermarket buyers who. The use of sophisticated on-line ordering systems through a well designed website certainly makes the business very user-friendly and significantly more flexible and responsive than many other box schemes. Riverford had teamed up with nine other farms to form the South Devon Organic Producers co-operative. and although this has inevitably led to some compromises such as the careful inclusion of imported produce when necessary.” His farm gained organic status as far back as 1986. while neglecting the health of the soil. This was a commercial decision. since one producer was no longer able to keep up with the growing demand either in terms of quality or variety of produce. Each regional farm operates the same delivery model. The creation and growth of the box scheme also coincided with the rapid extension of information technology (IT) into food retailing. cancel or even make a one-off order at the click of a mouse. ‘make second-hand car salesmen seem like priests’. Yorkshire. the local wholesaler via which farms supplied supermarkets. add to. he believes. can change. and by 2008 farms in Peterbough. and it enabled the business to be scalable in a way which had been hitherto impossible for similar box schemes. further extension of the business relied on forming partnerships in other regions of the country. get information about the week’s contents. Agribusiness uses chemicals to grow our food. As Riverford had taken the lead in marketing and box distribution it was able to replace supermarkets in the supply chain to become the main distribution channel for producers who belong to the cooperative.

and Watson himself is keen to make organic produce popular rather than worthy. “The myth that supermarkets are the cheapest places to shop is extraordinarily persistent.The company portrays a modern. the concept of ‘food miles’ may be flawed in the sense that some crops like tomatoes have a smaller carbon footprint when grown in more distant but warmer climates and then transported by road or sea than they have when grown locally under glass or in heated greenhouses. One section of the website is devoted to discussion of the environmental impact of the business. the environment and.” He is also very incensed about the way in which organic food is often seen as the expensive preserve of the well off. and is robust in his assertion that Riverford’s prices are highly competitive. above all. But we all need reassurance that our principles are not bleeding us dry. To most of our customers ethical trading. lively and efficient image. and Waitrose. “If we are going to change the lamentable way most people eat it will have to be by making it fun and helping them to discover the pleasure of preparing and sharing food. indeed the reverses seems to be true. Some of the research challenges a number of widely accepted ‘green’ practices and assumptions. Every month we compare our box prices with Tesco. on average only 10 per cent more expensive than supermarket nonorganic produce and significantly cheaper in a direct comparison with supermarkets’ organic fruit and vegetables. Preaching and guilt will never work. the results appear to show that home deliveries have a lesser impact than . flavour seem to be at least as important as price. The distribution model has also been tested for its environmental credentials. We are consistently cheaper. For instance the commonly held belief that plastic bags are worse for the environment than biodegradable bags or paper ones seems not to be borne out by scientific evidence. Sainsburys by 30% and Waitrose by 35%)” The wider agenda Watson’s commitment to organic farming is part of a wider environmental agenda. Similarly. last month by 26% on average (Tesco by 15%. Sainsburys. and research currently being undertaken in conjunction with Exeter University which will help to improve its performance. and a significant amount of time and effort is devoted to researching and communication information about these associated issues.

Individuals and groups can book for farm tours followed by a lunch featuring the day’s best vegetables prepared by the chef (and co-author of the Riverford Farm Cook Book) Jane Baxter.individual customer shopping round trips of more than 7. combined with good communication and a constant search for the ways in which the business can create genuine value. and the resulting publicity is a further platform for Guy to spread his ideas about ethical business. for example. through better Information Technology (IT). For franchisees it means understanding their businesses and looking for ways of reducing their administrative burden. This applies to suppliers. understanding what they want from us and not seeking to externalise costs at their expense.4km. staff.” Down on the farm Riverford employs on average 350 people. customers and the wider community. franchisees. For suppliers it means removing risk. Other initiatives to try to ‘change the lamentable way most people eat’ include the opening of a ‘Field Kitchen’ the Devon farm which acts as a visitor centre and showcase for the produce itself. The parent farm also employs a significant number of seasonal field workers and . and in 2007 opened up a patch of land on the farm for the school children to use to grow their own vegetables. For staff this means looking for ways to enrich their jobs and being able to pay them more. the majority of whom are permanent staff who work in the packing sheds and the general administration of the business. it is a source of information as well as a means by which consumers can access research findings that have a wider relevance. The ‘whole package’ is what resulted in Riverford being chosen as the Observer newspaper’s ethical business of the year in 2009. 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. The organisation’s website is becoming much more than a virtual greengrocer. He described the importance of ‘doing the right thing’ in the following terms: “One of the characteristics of the business is long-term relationships. We are always looking for a net sum gain in any new relationship or development of an old one. The Field Kitchen also prepares meals for one of the local primary schools in a move to reconnect local consumers with the land at a very practical and basic level. But there is more to being an ethical business than being ‘green’.

. close by and within earshot are the 14-15 marketing and customer services staff. Charlotte Tickle. Guy Watson’s desk is in one corner. A small number of EU migrant workers supplement the local labour force via HOPS (Harvesting Opportunities Permit Scheme) which recruits migrant agricultural labour in conjunction with the Home Office Immigration and Nationality Directorate. translation services for overseas workers. Benefits in kind (for instance free ‘grade out’ vegetables and fruit. Watson is also opposed to the commonly used practice of piecework which is common with fruit and vegetable picking: “My abiding memory of piecework was of the misery it causes. when staffing levels rose from about 50 to 350. though necessary.” Office staff is based on the farm in open-plan accommodation above the packing sheds. and accounting and other support staff. It was during the rapid growth period of 2004-6. The current HR Director. comradeship lost and less experienced workers got obsessed by how much they were making that they often wore themselves out before lunch. The average staff turnover rate of about 15 per cent is relatively low for the sector. but additional benefits were developed such as contributory pension scheme and childcare vouchers. working in teams of about five with a supervisor. . Slightly away from the packing sheds is the Field Kitchen restaurant. reflect the organisation’s ethos of being as straightforward. Disputes were frequent.. four Human Resources (HR) specialists (including a Staff Welfare Officer). but workers at Riverford are paid above the minimum rates. and general welfare issues such as accommodation for seasonal workers. that Riverford developed a more systematic approach to HR. The Welfare Officer is responsible for induction programmes.. many of whom are local and return to work on the farm year after year.pickers. free coffee and staff lunches for £1. practical and honest with staff as possible. One surprisingly popular move was a cycle loan scheme (the employer purchases a bicycle for the staff member who then pays for it over a longer period) which has attracted about 45 members. Pay rates and working conditions in the sector are governed by the Agricultural Wages Board. Also in the offices are five IT staff. was responsible for the development of policies and procedures which.50) had been available for some time.

The latter is held on the farm in order to ensure the connection with production and local food etc. This probably indicates the degree to which staff at Riverford shares the organisation’s values. He and the head chef Jane Baxter talk about and prepare a meal. but the aim is to speed this up and ensure it happens. then staff copy the process to make their own meal. Best First Book of the Guild of Food Writers (for the Riverford Farm Cook Book).The Welfare Officer is also charged with organising the regular staff parties at Christmas and in summer. a Best Ethical Business award from the Observer. They are used to encourage suggestions and discussion as well as to convey information about the business progress. As part of the objective of ensuring all staff are committed to the ethos of the business (good food. Promotion opportunities are limited by the flat structure. The first session was fully subscribed within about 5 minutes of the announcement going out on the staff email. former staff and their families are welcome to the picnic event. Best Ethical Restaurant in the Observer Food Monthly Awards. As Riverford has grown. and a Northern Foods’ ‘Rural Action’ award from Business in the Community. These include Best Organic Retailer. the renewal of IIP status in 2009 together with a bronze award. but there are often chances to move sideways. He is also very visible and ‘hands on’ and can be seen in the packing sheds or working in the fields. which show that about 95 per cent of the workforce generally support Guy’s aim and philosophy. The relatively flat structure means that significant news about the business can be communicated to all staff in about two weeks. however. There is also a staff committee of six elected representatives. Is reinforced and all staff. The company aims to grow as many . good cooking and enjoyment of same) and enthusiastic about the produce. However. Mini celebrations of the achievement of growth targets have been replaced (as growth has slowed) with celebrations for the many awards gathered in recent years. communication of this sort has become more of a challenge. There are quarterly briefing sessions on all five farms across the country open to all staff and attended by Guy and the Managing Director. a factor which helps communicate these values to staff. The staff survey too show that more work needs to be done here. more evidence of this comes from regular staff survey results. all staff is expected to be flexible and there is a strongly anti-bureaucratic ethos. A number of staff has moved from working on picking or box packing to go into management or specialist roles such as information technology (IT). Guy decided to introduce a demonstration ‘cook and chat’ session in the Field Kitchen for staff.

and his concern is not confined to improving eating habits or promoting environmentalism in the United Kingdom (UK). Riverford has run a management development programme using external advisors. five regional Sales Development Managers are being recruited to help the franchisees to become more effective at communicating this message. and in this respect we may add Riverford to the growing list of social enterprises.people from within the business as possible. the Field Kitchen and even accounts. He has also encouraged the development of sustainable agriculture in Uganda through a training initiative. In support of this. there is a staff development programme lasting ten weeks for all new and also more established staff who show an interest. For a number of years Riverford has collaborated with small scale farmers in Uganda with the view to improving trade opportunities with the UK by linking directly with producers at local level. We want to use our business to make the world a better place The term ‘social entrepreneur’ has recently come into use to describe business founders whose motives and businesses are designed around a specific principle or social problem which can benefit from a commercial approach. marketing and customer services. a passion for food/cooking and a commitment to organic values is hard to locate. . Away from Devon. and is developing in-house supervisory training. Guy Watson’s approach seems similar. Grameen Bank is one such organisation. and supermarkets are now completing both in terms of organics and home deliveries. the company has recognised that franchisees themselves need to be more sales-oriented and more confident in talking to people about what Riverford has to offer. the 110 franchisees delivering the boxes are the lifeblood of the business. this involves one day a week spent in the key areas including box planning. As the growth of 2004-6 has stabilised. so is the Fifteen Foundation. quality control. It is Watson’s belief that trade and training can bring about beneficial change. These appointments have been difficult to make as the blend of sales knowledge.

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