Farmer-owned grain co-op Grainfarmers is back in the black after boosting its profitability by over £4.5m.
According to the group’s accounts for the year ended 31 July, 2007, it reversed a £2.6m loss in 2006 to a pre-tax profit of more than £2m based on a turnover of £371m.
Its grain marketing business returned an operating profit of £2.5m before tax and interest in the last financial year.
Grainfarmers Group has undergone a drastic restructuring process its managing director Tim Davies called “fundamental and far-reaching”. The company had shed 55 jobs – about a quarter of its workforce.
The business had also radically re-organised the way it operates, centralising administration and finance at its Colsterworth site in Lincolnshire, Mr Davies said. This had led to total cost savings worth £1.7m.
And Mr Davies was quick to point out that the company’s results had not been influenced by the sudden upswing in cereals values. “These are a clean set of results uninfluenced by any property sales.
“We saw decent trading around most commodities but not the uplift seen in the last six months. We set out our stall to break even this year. It’s the restructuring that has delivered the profits.”
Security and continuity
He added: “The contract recently secured for the supply of milling wheat to Sainsbury’s is a clear indication that end-users and consumers are looking for security and continuity of supply in a volatile market.
“We believe this trend will continue and that Grainfarmers with its long term partnerships and network of farmer-owned central stores is uniquely placed to meet this demand.”
Mr Davies said he believed the outlook for Grainfarmers business was now very positive. “Our owners are leading-edge arable farmers and there are now real opportunities for them to re-invest in their own businesses.”
But he was cautious about endorsing biofuels businesses as key to Grainfarmers’ future growth. “We will be involved in biofuels in some way, but we have kept a watching brief for now. All the projects we have looked at are still at such an early stage that we are not ready to sign contracts with farmers.”
Yet Mr Davies warned that a backlash of opinion against biofuels could rob the UK of a bite of the cherry. “I’m concerned we may lose the opportunity for a biofuels industry in the UK, although the price of cereals must put the financial viability of some projects in doubt.”
Grainfarmers chairman Andrew Christie-Miller added: “We have taken steps to ensure we have a leaner, more efficient business that is able to compete in a rapidly changing market.”