what we do
X Y Z Farms Ltd (the Company) is intended to be a local company, locally owned, locally managed and serving the local community. The farm would specialize in growing natural (organic) fruit and vegetables and would grow as wide a variety of produce as possible. The organic produce will help people to better maintain their health and the wide variety of produce will help reduce the incidence of food intolerances which are made worse by repetitively eating a limited range of foods. The farm would seek certification of its organic status by the Soil Association.
By selling direct to shareholders the company should be able to achieve a higher selling price for the produce at the farm gate than would normally be commercially available while offering shareholders a discount on High Street prices. Besides the advantage of a loyal and self motivated customer base the higher selling prices should help to ensure the long term viability of the farm. Shareholder owners would be issued with a credit card size membership card and showing this card at the time of purchase would ensure a discounted price while other customers would pay full price.
A number of such farms in differing locations would enable a large number of people to gain access to healthy organic produce and encourage practical and social cooperation in ensuring the success of their joint enterprises. Because there would be no competition between these farms information about the success or otherwise of the differing management styles would help to increase the efficiency of all. Also farms that had surpluses of different produce could simply swap them to the benefit of all the shareholder customers.
This presentation is concerned with organic farms because of the need to improve the health of as many people as possible. However the form of company proposed could apply to any other kind of business.
the company
The Company will be owned by a fairly large number of shareholders who own no more than one share each. These shareholders will also be the main customers of the company and they will be expected to take a closer interest in the activities of the Company than the shareholders of companies quoted on the stock exchange.
Every company is made up of the same three elements: the shareholders, the employees and the the customers. Market forces usually coerce commercial companies to maximise profits and therefore share value above anything else to keep shareholder loyalty and avoid being taken over by other companies. This means that customers end up paying higher prices and that employees (other than top management) tend to receive lower wages. X Y Z Farms Ltd will face no such market pressures and therefore shareholders, employees and customers should be treated more equally than elsewhere.
Because of the absence of normal commercial pressures the Company will have two big advantages.
1. High profile and expensive directors and executives will not be necessary. Neither will expensive cars, stock options, performance bonuses and large payments when such a person joins the Company or leaves. This will help the Company to be more profitable while offering fair prices to customers and fair wages to employees.
2. Directors, managers and employees can give 100% of their time and attention during working hours to managing and operating the farm. No attention at all need be given to office politics, competing companies, the uncertainty of losing a job in a takeover situation or stock market and other commercial pressures.
Nevertheless some spur to progress is needed and it is hoped that a number of such farming companies up and down the country, each serving it's local community and each run in its own way, could compete to see which company is giving better service.
the management
The Board of Directors will be expected to run the company as simply and as efficiently as possible. Also, as the shareholders will mainly be the customers, the Directors will be far more open in giving out information on a regular basis. The Directors should be experienced managers and should there be four of them then two should stand for re-election at the annual general meeting and the other two at the next annual general meeting. Directors should preferably be chosen from the shareholders of the farm. In addition a different person each year from among the shareholders should be director for a year only.
As there will be no takeovers of other companies, no stock options, no concentration of influence, no excessive payments on joining the company or leaving, no stock market listings and no power struggles with other companies then the directors should be able to concentrate entirely on managing the farm. In addition there should be no company cars and no mobile telephones.
The key employee is the farm manager who should be a full time professional farmer with total control of all agricultural employees and the right to attend all board meetings. The farm manager will hire and fire agricultural employees as well as decide their salaries but at all times he will keep the directors informed of these decisions. The board of directors will decide the terms of employment of the farm manager.
The other key employee is the commercial manager who would be responsible for all the commercial activities of the farm and who would also have the right to attend all board meetings.
The company secretary, who will also be in charge of the farm accounts, will be a qualified accountant.
The salaries of the directors and the company secretary will be proposed at the annual general meeting each year and be voted on by the shareholders.
The farm management will not only arrange for a shop where produce will be sold but will provide space where shareholders will be able to meet. There should be a regular programme of events where shareholder/customers will be invited to the farm, informed of the developments taking place in their company and involved in social events.
shareholders
The shareholders will also be the main customers of the farm and will therefore have every incentive to support the company and keep it operating in the long term. If they do not then they will lose their investment. Shareholders will be expected to be as active as possible in buying produce, voting whenever possible, attending open days and doing paid work if the farm manager requires additional hands during the harvest for example or if the directors require help in the office.
At the time of purchasing shares the shareholders will be given a credit card size membership card. It will be necessary to produce this card in order to buy produce at concessionary prices. Any customer not producing a membership card will pay market prices. Non members will hopefully be encouraged to be customers by the quality of the produce and the friendliness of the staff. Once such a farm company has its full compliment of shareholders any non member customers who wish to become shareholders should be encouraged to band together, form another company and buy another farm. Naturally all possible assistance would be given by the existing company to help the new company to start.
If a number of such companies are set up then it is expected that shareholders of one company will be able to buy at concessionary prices from any other company on production of a membership card. At need all such companies would be expected to provide assistance to each other and also swap excess produce by barter to the benefit of shareholders in general.
Shareholders would not have right of access to the farm at any time nor the right to involve themselves in the working activities of the farm. At all times the farm manager would decide on access and involvement. This would not apply to the shop or to the shareholder meeting place where access would be unlimited during opening hours.
shares
Shares will not be traded on a stock exchange in anticipation of a capital gain, no dividends will ever be paid and only individuals will ever own shares. No companies, trusts, pension schemes or partnerships will ever own shares. Because of this there will be no subsidiary companies, parent companies, take overs or too much influence concentrated in a few hands.
Each individual will own only one share and if any person is found to have beneficial ownership of more than one share then the excess of shares over one will immediately be cancelled and the share purchase monies returned. Whenever a vote is required there will simply be one person, one share, one vote.
Shares will only be sold direct by the Company to each shareholder and one shareholder will not be able to sell to another. The intention is that a shareholding is long term only and without any capital gain. If a shareholder dies then the share will be bought back by the Company. If a shareholder moves home and cannot participate in the farm then the share will also be bought back by the Company. It is not anticipated that shares will be bought back for any other reason unless the shareholder can show a very good reason such as financial hardship, bankruptcy or bereavement.
Each share will have a nominal value of £200 of which £100 will be payable on application and the balance by four calls of £25 each.However a call will only be made if the Directors arrange a meeting of shareholders, show good reason for the call and more than 55% of those entitled to vote actually vote in favour. Over the course of time inflation will cause the above figures to change and also the amount needed to buy the farm and the number of shareholders available will also affect the purchase price of each share. However the price of a share should not beset too high and the principle of a high deposit and four subsequent calls should be maintained.
The amount payable on application is expected to provide the funds to buy the farm. The first call will raise enough money to pay wages and anything else necessary to start the farm working until the first produce is ready for sale. The second call may well be necessary but the third and fourth calls are intended for long term emergency use only. By having a system of four subsequent calls after the deposit the farm can raise funds when necessary without going to the bank or stock market. At the same time shareholders know the limit of their investment before they commit themselves.