Staff ownership ensures organic veg firm Riverford doesn’t forget its roots

Employee ownership, better known as the John Lewis model, remains a niche approach to business in the UK. But it is growing, and one West Country agricultural entrepreneur is the latest backer of an idea that has been embraced by more than 300 British companies.

Guy Singh-Watson is handing more than three-quarters of his Riverford Organic Farmers business to its 650 employees as part of plans to create a structure where the staff will have a say in the firm’s future.

Singh-Watson started Riverford, an organic vegetable box service, by growing produce in a Devonshire field he rented from his brother. He now presides over a business that has a £60m turnover and distributes nearly 50,000 boxes of produce a week, and says he wants to protect the Riverford brand from venture capitalist investors who do not understand the business.

“I’m on a mission to show that a better way of doing business is commercially possible – and desirable,” says Singh-Watson, tall and dapper in his boho farmer kit of colourful jumbo cord and cashmere, as he strides around a broccoli field that is still recovering from last month’s snow and ice.

“I don’t think you get most of what staff can offer by motivating them just with money. All the research tells us that’s rubbish. With a lot of planning and work, we can achieve a lot more.”

Staff will not have to buy shares under the employee ownership plan; their 76% stake will be held in a trust overseen by a board that will be involved in running Riverford alongside a staff council.

Workers will share about 10% of annual profits, as they have since the 1990s, and a loan from ethical bank Triodos will let the business pay £6m over four years to Singh-Watson, who turns 58 this month.

The business is worth more than £20m, and Singh-Watson, who added the Singh to his name in 2014 after his second marriage, could have walked away with a much bigger pile if he had entertained an offer from one of the many City types seeking a slice of the fast-growing food delivery market.

Such investors are helping fuel the rise of schemes such as Farmdrop and Hello Fresh, which have moved into a field Riverford has ploughed for more than 20 years. Singh-Watson set the company up in 1986 as experiment in growing organic vegetables on the family farm. He sold to supermarkets at first, then in 1993 started using an old Citroën to deliver the produce to about 30 friends.

Today, the business has moved from the original family site to five farms – in Devon, Cambridgeshire, Hampshire, North Yorkshire and France. It delivers about 50,000 veg boxes a week, supplied by its own farms and a network of about 40 others. It also has a fledgling recipe box service – with ingredients delivered ready to prepare a meal – a restaurant at its headquarters in Buckfastleigh, Devon, and a gastropub in London.

Riverford posted a 9% rise in sales to £56.7m for the year to May 2017, but profits fell by nearly 17% to £590,000 as the company invested in a more sophisticated packing system.

Singh-Watson first thought about handing ownership to staff more than a decade ago, but sales of organic vegetables were hit after the financial crash, just as the company was beset by problems with its website. The plan was put on hold as Riverford got to grips with being “an internet retailer, not a bunch of straw-chewing farmers”.

But Singh-Watson says he has had no problem resisting the lure of a big cheque. “What would I do with it? Would it make me happier? I’m pretty confident it wouldn’t, and it would leave the company with a lot of debt.”

He plans to invest his payout from the deal in a compost-making business and to pay off the mortgage on a new farm where he wants to experiment with permaculture and forest-garden agriculture.

Singh-Watson has long made it clear that he will not be handing over the cash as an inheritance – he has four children from his first marriage and a stepchild from his second – a decision with which he insists they seem “pretty happy”.

He is keen to preserve the legacy of a business that puts fair treatment of staff and suppliers at its heart. Unlike many supermarkets, Riverford cuts long-term deals with farmers and works with them to get as much of the crop as possible on to punters’ plates. “This is my mausoleum, my folly on the hill. It’s what I was put on the planet for,” Singh-Watson says.

Similar motivations have driven more than 300 British firms to move to employee ownership, from Arup architects to John Lewis, with recent converts including the Sawday’s holiday guides group and ethical beauty brand Lush.

The Employee Ownership Association says its membership is growing by 10% a year as business founders, particularly in companies with an ethical or community focus, look for a way to preserve their legacy.

“Growth is driven by businesses which have a definite set of values not wanting to sell to the highest bidder and walk away,” says Deb Oxley, the association’s chief executive. She says the process also allows business owners to make a more gradual exit than financial or trade buyers might allow.

A long list, pinned up on the canteen wall at Riverford, of the things Singh-Watson is responsible for makes it clear that will remain very much involved. After years of gutsy self-determination and experimental business ideas, it could be tricky for the keen surfer and sailor to let go of the tiller. But Singh-Watson insists he is stepping back.

Does he worry, though, that he is cashing out and handing more responsibility to the staff just at the point where Riverford is facing the challenges of Brexit and a raft of well-financed competitors? Singh-Watson admits it is “quite irritating that a lot of people are stealing our clothes and being propped up by City money”.

But he adds that many of these businesses are chasing growth to satisfy the financiers while finding it hard to make money. And that is the trap he wants Riverford to avoid.