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,
gradually brought organic farming into the mainstream, and by
the turn of the century most major supermarkets included at least
some organic produce in the fruit and vegetable section. 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, and this often made relationships with
suppliers combative and lopsided. 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.

The business was created by Guy Watson, who grew up on his

father’s farm in Devon. However, it took Guy’s wider business
expertise, partly gained during a brief consultancy career in the
mid 1980’s, to create the network of farms and the distribution
system which forms the basis of the organisation today. His
insight, which seems to have helped formulate the Riverford
strategy, 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. This insight has meant that, whilst true
to the values of organic farming and environmentally sustainable
operating systems, Riverford has been able to become a very
large player in business terms. In 1992 Watson’s vegetable box
delivery scheme was typically small-scale, local and focused
around a single grower, serving about 200 customers in the south
Devon area. In 2008 the company made on average 47,000
deliveries a week in England and Wales, with sales reaching £33
million.

Five regional farms, each supporting a co-operative or grower

group of local farms, now form the network of regional producers
that operate under the Riverford banner, and the boxes are
delivered by 110 local franchisees, who do the rounds which put
the vegetable boxes on customer’s doorsteps. 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.

Why organic?
Watson often explains his decision to produce organic vegetables
in personal terms.

“When I was growing up on our family farm, it, like

most others, used loads of chemicals in the growing
process. As a teenager I got ill after getting careless
while spraying chemicals on the sweetcorn, whilst not
 wearing protection. My brother got paraquat
poisoning. Agribusiness uses chemicals to grow our
food, while neglecting the health of the soil.”

His farm gained organic status as far back as 1986, and the door
to door delivery scheme helped reduce the farm’s dependence on
major supermarkets for its sales and distribution. This was a
commercial decision, inspired by his experience of dealing with
supermarket buyers who, he believes, ‘make second-hand car
salesmen seem like priests’.

The move proved particularly significant after Univeg, the local

wholesaler via which farms supplied supermarkets, went bankrupt
in 2004. By then, Riverford had teamed up with nine other farms
to form the South Devon Organic Producers co-operative, since
one producer was no longer able to keep up with the growing
demand either in terms of quality or variety of produce. 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 co-
operative.

This approach became the business model for the emerging

Riverford brand, and it enabled the business to be scalable in a
way which had been hitherto impossible for similar box schemes.
Since one of the tenets of organic farming is to focus on local
produce, further extension of the business relied on forming
partnerships in other regions of the country, and by 2008 farms in
Peterbough, Yorkshire, Hampshire and Cheshire were added to
the Riverford sisterhood. Each regional farm operates the same
delivery model, and they share the original’s expertise, research
findings and marketing tools.

The creation and growth of the box scheme also coincided with
the rapid extension of information technology (IT) into food
retailing. 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. The aim is to build long term
relationships with customers that will sustain organic
consumption, and although this has inevitably led to some
compromises such as the careful inclusion of imported produce
when necessary, 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, get information about the week’s contents, can change,
add to, cancel or even make a one-off order at the click of a
mouse.
The company portrays a modern, lively and efficient image, and
Watson himself is keen to make organic produce popular rather
than worthy.

“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. Preaching and guilt will never
work.”

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, on
average only 10 per cent more expensive than supermarket non-
organic produce and significantly cheaper in a direct comparison
with supermarkets’ organic fruit and vegetables.

“The myth that supermarkets are the cheapest places to

shop is extraordinarily persistent. To most of our customers
ethical trading, the environment and, above all, flavour
seem to be at least as important as price. But we all need
reassurance that our principles are not bleeding us dry.
Every month we compare our box prices with Tesco,
Sainsburys, and Waitrose. We are consistently cheaper; last
month by 26% on average (Tesco by 15%, Sainsburys by
30% and Waitrose by 35%)”

The wider agenda

Watson’s commitment to organic farming is part of a wider
environmental agenda, and a significant amount of time and
effort is devoted to researching and communication information
about these associated issues. One section of the website is
devoted to discussion of the environmental impact of the
business, and research currently being undertaken in conjunction
with Exeter University which will help to improve its performance.
Some of the research challenges a number of widely accepted
‘green’ practices and assumptions. 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; indeed the reverses seems to be true.

Similarly, 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. The distribution model has
also been tested for its environmental credentials; the results
appear to show that home deliveries have a lesser impact than
individual customer shopping round trips of more than 7.4km.
The organisation’s website is becoming much more than a virtual
greengrocer; it is a source of information as well as a means by
which consumers can access research findings that have a wider
relevance.

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. 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.
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, and in 2007 opened up a patch of
land on the farm for the school children to use to grow their own
vegetables. The ‘whole package’ is what resulted in Riverford
being chosen as the Observer newspaper’s ethical business of the
year in 2009, and the resulting publicity is a further platform for
Guy to spread his ideas about ethical business. But there is more
to being an ethical business than being ‘green’. He described the
importance of ‘doing the right thing’ in the following terms:

“One of the characteristics of the business is long-term

relationships, combined with good communication and
a constant search for the 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 Information
Technology (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.”

Down on the farm

Riverford employs on average 350 people, the majority of whom
are permanent staff who work in the packing sheds and the
general administration of the business. The parent farm also
employs a significant number of seasonal field workers and
pickers, many of whom are local and return to work on the farm
year after year, working in teams of about five with a supervisor.

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.

The average staff turnover rate of about 15 per cent is relatively

low for the sector.

Pay rates and working conditions in the sector are governed by

the Agricultural Wages Board, but workers at Riverford are paid
above the minimum rates. 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.... Disputes were frequent, comradeship lost and
less experienced workers got obsessed by how much
they were making that they often wore themselves out
before lunch.”

Office staff is based on the farm in open-plan accommodation

above the packing sheds. Guy Watson’s desk is in one corner;
close by and within earshot are the 14-15 marketing and
customer services staff. Also in the offices are five IT staff, four
Human Resources (HR) specialists (including a Staff Welfare
Officer), and accounting and other support staff. The Welfare
Officer is responsible for induction programmes, translation
services for overseas workers, and general welfare issues such as
accommodation for seasonal workers. Slightly away from the
packing sheds is the Field Kitchen restaurant.

It was during the rapid growth period of 2004-6, when staffing

levels rose from about 50 to 350, that Riverford developed a more
systematic approach to HR. The current HR Director, Charlotte
Tickle, was responsible for the development of policies and
procedures which, though necessary, reflect the organisation’s
ethos of being as straightforward, practical and honest with staff
as possible. Benefits in kind (for instance free ‘grade out’
vegetables and fruit, free coffee and staff lunches for £1.50) had
been available for some time, but additional benefits were
developed such as contributory pension scheme and childcare
vouchers. 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.
The Welfare Officer is also charged with organising the regular
staff parties at Christmas and in summer. The latter is held on
the farm in order to ensure the connection with production and
local food etc. Is reinforced and all staff, former staff and their
families are welcome to the picnic event. 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. These include Best Organic Retailer; the renewal of
IIP status in 2009 together with a bronze award; a Best Ethical
Business award from the Observer; Best Ethical Restaurant in the
Observer Food Monthly Awards; Best First Book of the Guild of
Food Writers (for the Riverford Farm Cook Book); and a Northern
Foods’ ‘Rural Action’ award from Business in the Community.

As part of the objective of ensuring all staff are committed to the

ethos of the business (good food, good cooking and enjoyment of
same) and enthusiastic about the produce, Guy decided to
introduce a demonstration ‘cook and chat’ session in the Field
Kitchen for staff. He and the head chef Jane Baxter talk about
and prepare a meal, then staff copy the process to make their
own meal. The first session was fully subscribed within about 5
minutes of the announcement going out on the staff email. This
probably indicates the degree to which staff at Riverford shares
the organisation’s values; more evidence of this comes from
regular staff survey results, which show that about 95 per cent of
the workforce generally support Guy’s aim and philosophy. He is
also very visible and ‘hands on’ and can be seen in the packing
sheds or working in the fields, a factor which helps communicate
these values to staff.

As Riverford has grown, however, communication of this sort has

become more of a challenge. The staff survey too show that
more work needs to be done here. The relatively flat structure
means that significant news about the business can be
communicated to all staff in about two weeks; but the aim is to
speed this up and ensure it happens. There are quarterly briefing
sessions on all five farms across the country open to all staff and
attended by Guy and the Managing Director. They are used to
encourage suggestions and discussion as well as to convey
information about the business progress. There is also a staff
committee of six elected representatives.

Promotion opportunities are limited by the flat structure, but

there are often chances to move sideways. However, 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). The company aims to grow as many
people from within the business as possible; there is a staff
development programme lasting ten weeks for all new and also
more established staff who show an interest; this involves one
day a week spent in the key areas including box planning, quality
control, marketing and customer services, the Field Kitchen and
even accounts. Riverford has run a management development
programme using external advisors, and is developing in-house
supervisory training.

Away from Devon, the 110 franchisees delivering the boxes are
the lifeblood of the business. As the growth of 2004-6 has
stabilised, 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.
In support of this, five regional Sales Development Managers are
being recruited to help the franchisees to become more effective
at communicating this message. These appointments have been
difficult to make as the blend of sales knowledge, a passion for
food/cooking and a commitment to organic values is hard to
locate.

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. Grameen Bank is one such
organisation; so is the Fifteen Foundation. Guy Watson’s
approach seems similar, and his concern is not confined to
improving eating habits or promoting environmentalism in the
United Kingdom (UK). 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. He has also encouraged the
development of sustainable agriculture in Uganda through a
training initiative. It is Watson’s belief that trade and training can
bring about beneficial change, and in this respect we may add
Riverford to the growing list of social enterprises.