Meaning of trade: mutual trading and members clubs: mutual associations: specific activities: agricultural co-operatives: introduction and layout of guidance
Over the years farmers, market gardeners and fishermen have set up co-operatives. These co-operatives provide a variety of facilities to their members including:
- acting as marketing agents for members’ produce
- providing facilities for members (for example, grain storage/drying) and
- bulk-buying operations for members.
Governments have in the past encouraged this process through the Central Council for Agricultural and Horticultural Co-operation (CCAHC), later called Food from Britain.
The following guidance covers:
|BIM24720||Points to watch|
|BIM24730||Taxation of agricultural co-operatives|
|BIM24735||Position if not conducting a mutual trade|
|BIM24740||Taxation of the co-operative’s members|
You should establish whether the agricultural co-operative’s constitution says that:
- only members can use the facilities and services the co-operative provides,
- if the co-operative is a marketing agency,
- the co-operative sells on behalf of the growers and never owns the produce,
- members agree to market a certain amount of produce through the co-operative or provide a certain amount for processing,
- any surplus is shared out among members according to the amount of business they have done with the co-operative recently.
If a co-operative buys produce from members who grow it, then sells it to a third party, the trade is not mutual. However, if a co-operative sells the produce as an agent for the members and makes a surplus from the service, the trade is mutual as long as it passes the other tests for mutuality - see BIM24100.