Barley is tipped into a grain intake© Tim Scrivener

Challenging market conditions have prompted Cambridgeshire-based Dalmark to announce it is withdrawing from grain trading and concentrating on its seed business.

The company revealed it is divesting its grain trading business, suggesting its place in the grain market is “no longer realistic”.

A statement stressed the business had no liquidity or solvency issues and was fully cross-guaranteed by JE & VM Dalton (which trades as Dalton Seeds), a business with net assets in excess of £7m.

See also: Grain market prices

This means all creditors will be paid on time and in full.

However, the shareholders have agreed in principle that Cefetra will take on the stock and forward book – an agreement expected to be finalised and executed during February.

‘Sad day’

Managing director of JE & VM Dalton, Peter Fox, said: “Given that our grain business has been in existence for over 40 years, naturally this is a sad day.

“We are fully committed to UK agriculture and have done everything we can to avoid this day, but given the structure of the market place, have had to finally accept that our involvement in grain is no longer realistic.”

Speaking to Farmers Weekly, company director Matthew Dalton said while it had been a painful decision, the shareholders had been keen to come out of grain trading in a managed way, so avoiding any risk to creditors.

“Wellgrain quite clearly did not manage that and we did not want to get into the situation they were in,” he said.

“We made sure we took this decision long before it had an impact on the balance sheet and weren’t able to come out of it in an orderly fashion.”

Mr Dalton said as a smaller merchant they had found it “nigh on impossible” to make enough of a margin for the numbers to stack up.

“Market conditions for anybody are particularly challenging. The Openfield financial figures bear that out and they are not a small business,” he said.

“I would be very surprised if there isn’t further significant consolidation [in the grain market] in 2018.”

Dalmark Grain has been trading 200,000–250,000t of grain on an annual basis, dealing with 500-1,000 farmers.

Cefetra is now one of the leading agricultural traders within the UK with a trading volume of more than 4m tonnes of grain and products per year.

It acquired Wessex Grain in 2015 and announced in December 2017 that it had also struck a deal to buy specialty crop merchant Premium Crops.